Case: economic impact of InnoCentive challenges

This study illustrates the financial impact of using InnoCentive Challenges for open innovation in the research and development department of a large consumer products organization.

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Executive summary

In January 2009, InnoCentive commissioned Forrester Consulting to examine the total economic impact and potential return on investment (ROI) enterprises may realize by deploying InnoCentive Challenges. InnoCentive Challenges is an innovation solution that gives users access to InnoCentive’s Web community of experts. In this solution, the users (also known as “Seekers”) post a unique problem, called an InnoCentive Challenge, to the community in InnoCentive’s Open Innovation Marketplace (collectively referred to as “Solvers”). The goal of an InnoCentive Challenge is to solicit solutions from the Solver community and ultimately choose the one that best fits the criteria set out by the Seeker. Challenges can be large or small, short-term or long-term. If a solution is selected as “best” by the Seeker, the Solver receives a financial award, which varies per Challenge.

This study illustrates the financial impact of using InnoCentive Challenges for open innovation in the research and development department of a large consumer products organization.

The organization interviewed as the basis for this case study is a leading consumer products company in Europe, but the group also holds strong positions in North America, Latin America, Asia, and Australasia. The organization has over 50,000 employees and over €10 billion in annual sales. InnoCentive Challenges was implemented in the Personal Care division, one of the four major divisions of the company.

Within the organization, the research and development department of the Personal Care division used the InnoCentive Challenges solution to enhance its own open innovation program. The division is also currently investigating expanding use of InnoCentive Challenges to other departments, such as marketing, within the division.

In conducting in-depth interviews with this existing customer, Forrester found that the organization achieved:

• Cost savings.
• Resource savings from a faster research process through open innovation.
• Access to a diverse network of experts.
• Fostering a more innovative research culture.
• Improved ability to frame research problems in all areas of R&D.
• Smoother IP transfer process.

Forrester calculated that the organization achieved a return on investment (ROI) of 74%, with a payback period of less than three months from the benefits quantified in the study.

In addition, Forrester believes that there are benefits associated with using InnoCentive Challenges that are extremely difficult to quantify. For example, as some solutions to client Challenges are integrated into a company’s R&D process, they may contribute to significant commercial product successes and help these products go to market faster. Due to the vast amount of elements that may contribute to these commercial successes (such as the company’s development process or marketing capabilities), we have not quantified them in this case study. Nonetheless, we believe they represent significant benefit of using InnoCentive Challenges.

source: http://image.email.innocentive.com/lib/fef91270706102/d/1/The%20Total%20Economic%20Impact%20of%20InnoCentive%20Challenges.pdf