The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DInnoCentive had fewer than 30 people on its staff in 2005. According to DarrenCarroll, Chief Executive Officer at InnoCentive, the company has the potential to growduring the next five years to around 200 people (The Wall Street Transcript 2005).Today, the company has about 40 customers (all U.S. and European multinationalFortune 500 companies). Among them are Boeing, DuPont and Procter & Gamble. Thecurrent business model limits expansion as there are a limited number of potential customersthat would be able to pay the cost for using the service. InnoCentive says it isnot limited to any scientific discipline or industrial sector, but rather to what types ofproblems and challenges the customers post. More Asian companies are expressinginterest in the business model.InnoCentive is currently searching for external investors to finance its expansion intothe mechanical- and electrical-engineering sectors (The Wall Street Transcript 2005).InnoCentive envisions becoming the “e-Bay of the R&D world” (Hussein).7.3.2 NineSigmaNineSigma was created in 2000 by a university professor in Cleveland, Ohio. Thecompany currently has a staff of 17 and expects to grow by more than 30 percent in thenear future. The founder realized that companies, in contrast to government agencies,did not have good processes for producing requests for proposals (RFPs). The businessidea of NineSigma is to work closely with customer companies and write “requests forsolution proposals” that can be distributed globally. These RFPs are later sent per e-mail to between 5,000 and 20,000 selected problem solvers in North America, Europe,Asia and Australia. The problem solvers come back with a bid of a few pages, whichcould include a specific solution, which is reviewed by the company itself to see if itmatches their criteria of cost, approach, time, etc. The idea is to identify researchersand engineers that can solve the problem on a contract basis.Most problem solvers come from the U.S., Europe and Asia. NineSigma’s network ofproblem solvers is created by active networking, recommendations from othersolvers, scouting of articles, websites, etc. NineSigma has invited one million problemsolvers from universities, companies and various research organizations to jointhe network (Stupay).When the company was founded, its business was mostly research-related. More andmore work is now done in the development area, for example, packaging and materialissues. NineSigma has about two hundred projects per year within various industrysectors. According to Paul Stupay, Vice President of Business Development at Nine-Sigma, some industries are more mature than others when it comes to using an openinnovationmodel. Because the pharmaceutical and chemical industries are more mature,NineSigma does a greater proportion of its business within these two industries.174