Scientific knowledge markets: the case of InnoCentive

Today I came across HBS working paper “The Value of Openness in Scientific Problem Solving” by Karim Lakhani, Lars Jeppesen, Peter Lohse and Jill Panetta (link to 58 page PDF is here). The paper studies InnoCentive, a knowledge market similar to 3form that corporations use to solve their research problems unsolved by corporate R&D labs.

InnoCentive was founded by Eli Lilly & Company in 2001 and shares a significant similarity with 3form in organizing the distributed problem solving process, except that it does not broadcast solutions it receives, keeping them private for the corporation that posted the respective problem. As a result, the innovation process at InnoCentive while being distributed is not open: the solvers can’t modify or recombine the solutions proposed earlier or learn from them, as they do at 3form. However, the working paper shows that sharing problems by itself has many advantages over the traditional corporate practice of keeping them closed.

We show that disclosure of problem information to a large group of outside solvers is an effective means of solving scientific problems. The approach solved one-third of a sample of problems that large and well-known R & D-intensive firms had been unsuccessful in solving internally.

There are many interesting observations in this paper that might be relevant to 3form as well and are likely to be interesting to the members of 3form community.

Problem-solving success was found to be associated with the ability to attract specialized solvers with range of diverse scientific interests. Furthermore, successful solvers solved problems at the boundary or outside of their fields of expertise, indicating a transfer of knowledge from one field to others.

Here are the results I found the most interesting:

  • the diversity of interests across solvers correlated positively with solvability, however, the diversity of interests per solver had a negative correlation
  • the further the problem was from the solvers’ field of expertise, the more likely they were to solve it; there was a 10% increase in the probability of being a winner if the problem was completely outside their field of expertise
  • the number of submissions is not a significant factor of solvability
  • very few solvers are repeated winners

The authors of the HBS paper draw analogy to local and global search to explain effectiveness of the problem broadcasting. They suggest that each solver performs a local search, implying that broadcasting the problem to outsiders makes the search global (”broadcast search” in authors’ terminology). Indeed, if solvers don’t have access to solutions of other solvers (the case at InnoCentive), all they can do is a local search (hillclimbing). From the computational perspective, the InnoCentive problem solving process is analogous to a hillclimbing with a random restart: each new solver performs a local search and returns a locally optimal solution, finally, the best of those locally optimal solutions determines the winner.

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