Ideagora, a Marketplace for Minds

Ideas and innovations are increasingly coming from outside company walls—and Web-based virtual talent pools are stepping in to fill the need

By Don Tapscott and Anthony D. Williams

As the late-19th century chemist and microbiologist Louis Pasteur famously said, chance favors the prepared mind. The same could be said of innovation. Companies face tough dilemmas everyday for which there is, somewhere, a uniquely prepared mind—someone with the right combination of expertise and experience to solve the problem. Conventional wisdom says companies should find those people, hire them, and retain them with money or perks.

But today, a growing marketplace for ideas, innovations, and uniquely qualified minds is changing the long-standing rules of innovation and talent management. Companies seeking solutions to seemingly insoluble problems can tap the insights of hundreds of thousands of enterprising scientists without having to employ everybody full-time. This shift is rippling through Corporate America and changing the way companies invent and develop products and services.

Take Colgate-Palmolive (CL). The company needed a more efficient method for getting its toothpaste into the tube—a seemingly straightforward problem. When its internal R&D team came up empty-handed, the company posted the specs on InnoCentive, one of many new marketplaces that link problems with problem-solvers. A Canadian engineer named Ed Melcarek proposed putting a positive charge on fluoride powder, then grounding the tube. It was an effective application of elementary physics, but not one that Colgate-Palmolive's team of chemists had ever contemplated. Melcarek was duly rewarded with $25,000 for a few hours work.

A Community of Ideas

Today, some 120,000 scientists like Melcarek have registered with InnoCentive and hundreds of companies pay annual fees of roughly $80,000 to tap the talents of a global scientific community. Launched as an e-business venture by U.S. pharmaceutical giant Eli Lily (LLY) in 2001, the company now provides on-demand solutions to innovation-hungry titans such as Boeing (BA), Dow (DOW), DuPont (DD), P&G (PG), and Novartis (NVS).

Today, these companies are pioneers among thousands of businesses that participate in what we call "ideagoras"—places where millions of ideas and solutions change hands in something akin to an eBay for innovation. Why would seasoned innovators like P&G have to look outside when they already employ thousands of world-class researchers? The answer is two-fold.

Today's competitive reality is that mature companies can't keep up with the speed of innovation or the demands for growth by relying on internal capabilities alone. For a $70 billion company like P&G, organic growth of 6%, for example, would require building a profitable new $4 billion business every year!

Vast Talent Pool

For years, companies pursued acquisitions, alliances, joint ventures, and selective outsourcing in the quest to please shareholders. But today, these conventional tools are simply too rigid, and not scalable enough, to drive growth and innovation at a level that will make companies truly competitive. As Larry Huston, P&G's vice-president of R&D innovation and knowledge, put it, "Alliances and joint ventures don't open up the spirit of capitalism within the company. They're vestiges of the central planning approach when instead you need free-market mechanisms."

In contrast, ideagoras create a vibrant marketplace of connections in which companies can leverage other people's talents, ideas, and assets quickly and move on.