mercredi 23 septembre 2009

Netflix Prize A “Turning Point” For Open Innovation

With Netflix Inc. paying out a $1 million prize on Monday to a team of outside researchers that improved its movie recommendation algorithm, two venture-backed start-ups are overjoyed that the “open innovation” model is spreading.

BellKor’s Pragmatic Chaos takes the price for Netflix’s recommendation-improvement contest.

Open innovation “like any big change in business takes time to promulgate,” said David Ritter, the chief technology officer of InnoCentive Inc. “The Netflix prize is a bit of a turning point.”

InnoCentive provides a platform for companies to host challenges seeking outside solutions to problems. Prizes and challenges range from a $5,000 reward from a company seeking creative ways to get men to shave more often to a $1 million prize for finding a biomarker for Lou Gehrig’s disease.

InnoCentive has seen a steady rise in “the number of companies that we’ve talked to that are feeling a sense of urgency” and not just curiosity about developing open innovation practices, Ritter said. For its role in the process, InnoCentive charges corporations a fee to post their proposals and takes a cut of the reward money. The company is backed by Spencer Trask Ventures.

Another company, NineSigma Inc., is similar to InnoCentive, except that it takes a more active role in helping corporations find the individuals or groups best suited to solve particular problems. It’s also selective about the researchers included in its network, whereas InnoCentive will let anyone join. The idea is to make the open-innovation process more efficient and cost-effective. “It surprised us that [Netflix] didn’t go through us, they could have saved a lot of money,” said Matthew Heim, the company’s president.

NineSigma doesn’t make inventors register in advance to send in proposals, and it doesn’t set prizes in advance, but instead lets its clients and the inventors negotiate the price of the intellectual property and determine the relationship the two will have.

Besides Netflix, a handful of major companies like Clorox Co., Kraft Foods Inc. and Procter & Gamble Co. have now built these practices into their businesses. That’s caused NineSigma to adjust its product offerings to meet the needs of customers who have fully embraced open innovation, rather than those who are looking to experiment, Heim said. NineSigma, backed by Blue Chip Venture Company and River Cities Capital, charges the companies a fee for searching and a larger fee if a proposal is accepted.
Source : WSJ, 23/09/09

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