Selecting Your Trusted Innovation Service Provider: a multiple choice test

Everyone has his or her sense of order. My daughter, for example, arranges her clothes in the alphabetical order of brand names.

The growing adoption of open innovation tools in corporate innovation practices has resulted in a rapid proliferation of firms providing open innovation platforms and services. Often called open innovation services providers (or vendors or intermediaries), these new entities are rushing to fill the new and potentially lucrative niche; some experts put the worldwide number of OISP at around 200 and counting.

The multiplicity of OISP is good news for organizations trying to incorporate open innovation approaches into internal R&D processes: with a plenty of available options, they can select a platform that would best fit their particular need. The bad news, though, is that just navigating this complex, still very immature, marketplace is a challenging job by itself.

This is why a recent report by Forrester Research, “Innovation Management Tools, Q3 2013,” comes so timely. Aimed at bringing some order into the fragmented world of OISP, the report analyzed and ranked 14 most significant players in the open innovation management field. The 17-criteria analytical tool used by Forrester can obviously be further applied to evaluate the performance of OISP not covered in the present study.

While representing a significant step in the right direction, the Forrester report is not without certain limitations. In particular, the report did not pay enough attention to the differences in specific business models employed by the OISP it analyzed. As a result, the same metrics were applied to companies as diverse as designers of collaborative innovation management software (Brightidea and Spigit), innovation consultants (Imaginatik) and providers of crowdsourcing-based solutions (InnoCentive).

In order to help companies extract more value from existing and emerging OISP, some classification needs be established to help potential users better understand what kind of specific services could be expected from each OISP. It would seem logic to divide OISP in at least two large categories. The first category would include providers of innovation management software, such as Brightidea and Spigit. Recently, Spigit has merged with Mindjet, the designer of project management software. The combined company may well become a “Swiss army knife” in the field of innovation management support.

The second category would include the so-called crowdsourcing companies, i.e. companies employing large numbers of external experts (or solvers) to address specific client needs. A great variety of business models exists within this category. Some companies provide an “expert-on-demand” service, allowing their clients to rapidly find a qualified expert in a particular field for an on-line or telephone consulting session. U.S.-based YourEncore and Maven and Presans of France fall into this sub-category.  Another flavor of the crowdsourcing approach is provided by U.S.-based Yet2.com, the creator of an on-line marketplace where companies could buy and sell promising technologies, licenses and know-how. Finally, a number of providers use large crowds of highly diverse “solvers” to crack specific R&D problems posted by their clients. U.S.-based InnoCentive and NineSigma and Canadian-based IdeaConnection represent this brand of the crowdsourcing approach.

One might argue that because many OISP offer more than one specific platform or service, such a classification would be difficult to create. True, providers of innovation management software always combine their products with some sort of consulting, and crowdsourcing companies routinely develop stand-alone software products that could be sold separately. Yet, the note of the multifunctionality of OISP does not negate the need for their classification. Rather, it calls for this classification being more sophisticated and purpose-oriented.

Every single morning, a myriad a men and women around the world, including my daughter, face a difficult choice: what to wear for the day. No one can help them in this daunting endeavor. But we can make the process by which global companies choose their innovation service providers less stressful and more efficient.

image credit: bigstockphoto.com

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Eugene Ivanov is innovation consultant helping organizations establish internal and external innovation programs. He also assists his clients with selecting and defining R&D problems that can be successfully solved by using crowdsourcing approaches. He tweets at @eugeneivanov101.