Q&A: Dwayne Spradlin on leading "a marketplace of innovation," InnoCentive

A standalone company since 2005, InnoCentive has grown considerably over the years. At last count, there were 135 challenges currently up for grabs, promising awards from $500 up to $1 million. The company's 267,000-solver network has tackled more than 1,200 challenges already, finding answers for commercial, government and nonprofit organizations including NASA, Procter & Gamble, Booz Allen Hamliton and the Rockefeller Foundation.

Dwayne Spradlin, InnoCentive's president and CEO since 2006, spoke with us about the power of open innovation, his company's role as "a marketplace of innovation," and some of the knottier problems that InnoCentive solvers have untangled.

What is open innovation and why is it important?

Open innovation as a term was coined by Henry Chesbrough in 2003. He recognized that organizations involved in innovation traditionally would invest their R&D teams in building breakthrough innovations, some of which they'd decide to commercialize. It was very much an inside-out view of the world.

In the 2000s, all of a sudden organizations have very porous boundaries. We don't have to think about R&D as the labs with thousands of researchers the way we used to. We can think about the entire world as creating innovation potential for organizations. Open innovation is a business process that allows organizations to draw innovations from the outside in a much more sophisticated and open and fluid way. They can now connect their innovation efforts to an entire planet of creative and inventive people on-demand in real-time to solve some of the toughest problems.

You've called InnoCentive "the eBay of innovation." Can you expand on that and explain your company's basic mission?

We are a marketplace of innovation. We connect organizations to problem-solvers all over the world in a prize-based challenge model. We help those organizations identify the problems that are critical to their success — it might be a product development challenge for a corporation, it might be a better way to distribute vaccines in sub-Saharan Africa for the Rockefeller Foundation, it might be a better way for the U.S. Air Force to drop humanitarian aid in war zones — and we do that in this price-based competitive model that has aspects of social networking. It has aspects of competition and markets because our online market has new problems every day that problem solvers can work on.

Who evaluates the solutions?

It's typically the seeker, but I have a whole team of Ph.Ds that work for me. We help the clients review and score solutions and we also make sure that the competitions are being managed fairly. But ultimately, it's the seeker's decision who wins.

How do you ensure that you're attracting people who will offer useful solutions rather than getting suggestions from random crackpots?

We don't vet our network. Anyone can participate or put through solutions. In a lot of ways, it's self-selecting. We have more than 260,000 solvers from over 200 countries in our core network. Of those, 61 percent have master's degrees and Ph.Ds. We've got Nobel laureates and academics and entrepreneurs and high-school teachers. But they're all problem solvers who have chosen to participate on our network.

These are really hard problems. You don't get a lot of crackpots out there that want to spend two months trying to solve a really difficult problem because they just want to be heard. To submit a solution takes a lot of time and energy, so very few individuals or groups will do that unless they think they can solve the problem. We're not asking if they have a great idea for something fun to do tomorrow. We're asking people to create bio-markers. We're asking people to help solve problems related to market failures for vaccine distribution. The people involved in that kind of problem-solving are self-selected. They're not necessarily experts in that specific area, but they're phenomenal problem solvers and they're bringing great solutions.

You mention "individuals or groups" as solvers. Have you seen smaller companies emerge that are trying to make a business out of solving the problems you post?

We typically talk about solvers as individuals, but if you look at the solvers we have, about 10 percent are companies or teams or academic labs. That means we've got something like 26,000 companies and labs and teams at various stages of work on current and past projects. That's a pretty staggering number in its own right.

We first recognized that we had teams and companies working on these a couple years ago. There was a solver in India who was one of the most prolific we'd ever seen. We couldn't figure it out. We started working with him and he said, Look, I've put together a group of nearly 12 people and on any given day we'll look to see if there's a problem on the InnoCentive network that we can solve. I look to you like one person but you're getting the power of 12 problem solvers here and we love it. Your solution amounts are big money in our country, so we're doing this every day.

That's when we began to realize that in a lot of ways our solver community was already self-organizing. More and more, we're seeing professional problem solvers working our network not unlike people who buy and sell professionally on eBay. We've got solvers that are multiple solvers in a given year and they can make a lot of money doing that.

Have you spotted any trends in who's solving problems?

Some countries are a little bit more productive than others. Russia's incredibly productive. If a Russian takes on a problem, they tear into that problem. They're more productive than most other countries.

Harvard was doing a study on our network and they found that women are slightly more productive problem-solvers on InnoCentive's network than men. The basic rationale is that they're taking on problems much more selectively, but like the Russians in general, if they take the problem on, there's a deep commitment there.

Tell me about some of your favorite InnoCentive-born solutions from over the years.

Here's one of our favorites: NASA can predict solar flares with about 50 percent accuracy and about four hours lead time. This has been the standard for around 30 years. NASA has been really striving to improve the lead time and accuracy of their forecast for obvious reasons. After 30 years, NASA partnered with InnoCentive to create a competition that was opened up to the entire world to improve upon NASA's standard. Could a better predictive algorithm be developed which uses existing data from NASA and NOAA and other agencies to better predict solar activity in real-time?

After 90 days, a retired radio frequency engineer from New Hampshire was able to put forth and bring to NASA a better algorithm which increased the accuracy of solar flare prediction to 85 percent accuracy and eight hours. This is an enormous, monumental improvement. It's incredibly important. But there's a moral to the story here. This was a retired researcher and an amateur ham radio operator who recognized patterns in electromagnetic interference and climate data that could all be used to create a new and better model. And he wasn't a space scientist.

NASA would have never known to take that approach to solving this problem.

Do you remember what the prize was for that solution?

It was $30,000. That solution was such a big deal that the White House's chief technology officer announced the winner at the 2010 Personal Democracy Forum in Washington, D.C.

Any other favorite stories from over the years?

There was a challenge we ran last year with a public-private partnership in England. They were looking for ways to improve parental involvement in children's education. The winner of that challenge was a father-son duo from Peru and there was a certain poetry there in the challenge to better involve parents being solved by a father and son.

What did they come up with?

They had a great solution, which related to a program they were beginning to pilot in Peru. They had recognized that part of the reason parents don't get involved is a sense of embarrassment and shame that they don't know the material either. The solution was to invite parents into some of these classrooms to help them learn enough about the material to gain the confidence to help their kids. It's actually being piloted now in England.

Where do you see open innovation headed in the future?

Companies need to be thinking about open innovation very seriously right now. It will be a much different world five and 10 years from now than it is today. Companies have to look at open innovation if they're going to innovate in a more flexible way, and do it faster, better and cheaper.

It's also incredibly important that organizations begin testing these methods now. Do they work as well in apparel as they do in aerospace? Do they work as well for marketing problems as they do in product-development problems? Massive experimentation is happening all over. This is going to be a very big space.

I think that as they adopt open innovation, organizations will get more sophisticated in how they use open innovation markets and what methods are appropriate for them. Maybe a large manufacturing company should be doing 50 percent of their research in-house and 25 percent on networks like InnoCentive and outsourcing 25 percent to innovation centers around the world.

What about InnoCentive's future?

As open innovation becomes a more legitimate and pervasive business process, InnoCentive will continue to build the infrastructure and the networks and the capabilities that allow that to happen.We need to spend the next 10 years proving that big organizations can count on open innovation and companies like InnoCentive to solve the toughest problems.

Over the last several months, we've introduced something we call a "brainstorm challenge." This is a very low-cost, simple, open collaboration challenge on our network. As a company, you can actually swipe a credit card and put your own challenge right in front of our problem solvers and interact directly with them. It's a very low-cost way for you to almost self-service an open-innovation challenge and get a solution.

More broadly, our job is to change the way the world innovates. Our core belief is that nine billion people are a lot smarter than a few thousand in a lab. If we can prove that out, we'll have done some pretty amazing things and I think there's no going back.

This post was originally published on Smartplanet.com