IS3321 Information Systems Solutions
for the Digital Enterprise
Lecture 9: Open Innovation, Lead Users
and Contests
Rob Gleasure
R.Gleasure@ucc.ie
robgleasure.com
Open Innovation, Lead Users and
Contests
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Last session
 Social Media
 The Crowd and Social Media for Content Distillation
 The Crowd and Social Media for Content Distribution
Today’s session
 Open Innovation, Lead Users and Contests
 Generating creativity from individuals
 Incentivising creativity from individuals
Consider the Following Problem
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We produce protective cases for smart phones. Customers have
complained that the transparent part of the cases are difficult to
clean without making them cloudy - we want to
outsource/crowdsource a new solution for these cases that won’t
have this problem
We could go to a specialist but there’s no guarantee they’ll figure it
out
We could go to the crowd but what does the average person know
about production materials?
Jumping Off Point
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Up to now, we have leveraged the power of consensus and
coordination offered by the crowd as a collective. But some
problems are so specialised that the average crowd-member has
little to add to the creative process
For this problem we don’t want consensus, we want access to
outliers of brilliance!
Put differently, we aren’t looking at the wisdom of crowds, we’re
looking for wisdom in crowds
Open Innovation
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“Open innovation is the use of purposive inflows and outflows of
knowledge to accelerate internal innovation, and expand the
markets for external use of innovation, respectively”
(Chesbrough 2003)
Comes from organisation’s realisation that not all of the smart
people work for them, many clever ideas are floating around outside
of the organisation’s boundaries
This typically takes two forms
 Lead-user innovation
 Innovation contests
Lead-User Innovation
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Lead-user innovation is based on the idea that some users will be
more advanced or intensive than others, hence ahead of the needs
curve (Von Hippel 1986)
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Because they are more invested in the area, these needs also tend
to be a high priority, meaning they tend to find creative workarounds,
adaptations, and solutions
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Organisations may thus try to leverage the power of the web to find,
communicate with, and collaborate with these individuals to
integrate and improve upon their solutions
Lead-User Innovation
Image from https://hbr.org/1999/09/creating-breakthroughs-at-3m
Example: Manufacturing and 3M
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3M is a large materials company in the US producing products such
as adhesives, abrasives, laminates, passive fire protection, dental
and orthodontic products, electronic materials, medical products,
and car-care products
The 3M’s Medical-Surgical Markets Division was making $100
million/year in surgical drapes but there had been no breakthroughs
in almost 10 years – doctors loved their drapes but insurers found
them too expensive
To combat the price issue, they looked at
 Doctors in developing countries
 Vets operating on pets
 Makeup artists
Example: Social Work in Developing
Countries
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Jerry and Monique Sternin were working in Vietnam in 1990 on a
project to decrease malnutrition in 10,000 villages
 65% of Vietnamese children under age 5 were malnourished
 Government projects were failing
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The Sternins decided to find 6 families you were unusually well
nourished despite being “very, very poor” and noted they
 Ate several small meals, rather than a few large ones
 Added small shrimps, snails, crabs, and greens to their rice that
others felt were dangerous
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Within a year, only 20% of their 1,000 children enrolled in their
project were malnourished
Example: Web-Based Enterprises and
HashTags
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The idea of hashtags (e.g. #rivetinginformationsystemslecture)
wasn’t introduced by Twitter, in fact Twitter founder Evan Williams
thought they wouldn’t catch on as they were ‘too nerdy’ and they
would group content themselves using more sophisticated data
analysis behind the scenes
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A couple of innovative users began using them and it started to take
off
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Twitter saw how they worked and changed their UI to encourage
their adoption among all users
Advantages of Lead User Methods
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Reduced cost of R&D
Potential for improved productivity – you know the solution works
Gather feedback early
Identifying lead users alone is useful for marketing and planning
Potential for future collaborations with external innovators
Potential for viral marketing
Disadvantages to Organisations
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Potential reveal of sensitive information
Potential loss of competitive advantage as innovations are typically
hard to protect
Lead users may have agendas
Multiple lead user groups may exist with different trajectories
Possibility that inviting others into the design process means
innovations are travelling both directions
Innovation Contests
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Sometimes completely new innovations are needed and our lead
users haven’t solved them or aren’t willing to share them
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For these reasons Innovation Contests have become increasingly
popular
 A challenge is set, along with a reward for the best solver
 Solvers submit solutions
 The challenge-setter selects the best solution for the reward
Example: Innocentive
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InnoCentive is probably the most established contest platform at
present
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InnoCentive was set up in 2001 within the Eli Lily umbrella, it later
spun off in 2005 to form its own company proper
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The Solver community includes 355,000 people from nearly 200
countries
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Nearly 2,000 challenges have been posted
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Cash prizes are generally $10,000 to $100,000
Example: Innocentive
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The idea is that challenges are posted across areas as vast as
 Business and Entrepreneurship
 Chemistry
 Information Technology
 Engineering
 Food and Agriculture
 Life Sciences
 Math and Statistics
 Physical Sciences
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In 2005 InnoCentive also added a non-profit area designed to
generate science and technology solutions to pressing problems in
the developing world
Advantages to Companies
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Gain access to a large database of innovative thinkers who enjoy
difficult problems
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No staff outlay (pay on demand)
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Opportunity to compare contrasting options
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High chance of finding solution, compared to getting in a
consultancy
Advantages to Solvers
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Work from home
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Reputation
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Gets to see cutting-edge problems in different fields
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Opportunity to apply specific techniques repeatedly
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Interesting work
Disadvantages
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Have to post problems in a very public forum
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Tends to require/attract one-shot solutions, e.g. hard to come back
for ongoing development
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What if the requirements had a loop-hole?
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Solvers are pragmatic and tend to avoid problems where
competition is high – may not be much of a ‘contest’
Readings
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Chesbrough, H. W. (2003). Open innovation: The new imperative for
creating and profiting from technology. Harvard Business Press.
Moore, G. A. 1991. Crossing the Chasm: Marketing and Selling High Tech
Products to Mainstream Customers. Harper-Collins, New York.
Von Hippel, E. (1986). Lead users: a source of novel product concepts.
Management science, 32(7), 791-805.
Von Hippel, E., Thomke, S., & Sonnack, M. (1999). Creating breakthroughs
at 3M. Harvard business review, 77, 47-57.
Brief history of hashtags on Twitter
 http://readwrite.com/2011/02/04/the_first_hashtag_ever_tweeted_on_twi
tter_-_they_s#awesm=~ojXlyc6l507vMl
Description of Vietnamese nutrition project in
 Brown, T., & Wyatt, J. (2010). Design thinking for social
innovation.Development Outreach, 12(1), 29-43.