Ideagora, a Marketplace for Minds

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Just Rewards

For the winners in these tight-knit community contests, cash prizes are secondary to the potential for recognition that could jump-start a career. TopCoder claims it can be a "write your own ticket" kind of event. For competition sponsors, the contests provide a low-cost, low-risk way to identify and test out new talent.

Contests aren't perfect though. After all, contest winners may not actually make great employees. And critics question the ethics of contests in which thousands sign over the rights to valuable knowledge, while only a handful of winners take all. To be sure, sponsors such as Google, Microsoft, and BT Group have much to gain. If they launch a multi-million dollar service based on contest output, then $25,000 in prize money looks like a pittance.

While these challenges are real, TopCoder Chairman Jack Hughes says that although 3% to 4% of the 100,000 members grab the lion's share of the rewards, 20% of their content participants have sold some code through the network. Moreover, TopCoder is putting its money where its mouth is. Wu Yingying, 21, is the new vice-president of Asia operations, fresh off of leading her own university team to victory in a 2005 programming contest.

Ideagoras into Action

Ideagoras like InnoCentive and TopCoder offer companies access to a wealth of new ideas and uniquely qualified minds, but learning how to tap the potential of a global ideagora means turning the R&D organization on its head. Companies would no longer invent first and ask questions later. They would ask, "What do our customers really need?" and then scour the "eBay for innovation" for the necessary inventions and technologies.

R&D labs would be ambidextrous: building on core capabilities internally, while acquiring the greatest, most complementary ideas externally. The deep-rooted "plan and push" modality would give way to a new approach to innovation in which companies engage and co-create with the best available talent.

These changes won't be easy or automatic. "It requires a lot of trust to believe that you can accomplish your goals by relying on freelance scientists to come up with solutions," explains InnoCentive founder Alf Bingham. "Most people at big companies aren't ready to entertain that idea." After all, the modus operandi of R&D departments is to invent, not to acquire outside ideas. CEO leadership and a commitment to appropriate staffing, incentives, and organization in R&D will be critical to success.

Searching for Smarts

For starters, companies need new capabilities to create, transfer, assemble, integrate, and exploit knowledge assets. Sensing external opportunities is just the beginning. The really hard work starts with conceiving the ultimate customer offerings, and then executing smart decisions about acquiring intellectual property and partners to design, assemble, and deliver the final value. As P&G's Larry Huston reminds us, "Once an external idea gets into the development pipeline, it still needs R&D, manufacturing, market research, marketing, and other functions pulling for it."

It's no surprise that smart people remain as valuable as ever, if not more so, in today's economy. But for smart companies, the notion that you have to motivate, develop, and retain all of your best people internally is old. Of course, you will still need great internal talent. But increasingly, assume that many of the best people are to be found outside your corporate walls. With an eBay for innovation, however, a massive reservoir of talent would be a few clicks away.

Don Tapscott, author of Grown Up Digital: How the Net Generation Is Changing Your World, is the founder and chairman of nGenera Insight. Other books he has authored or co-authored include Wikinomics, Paradigm Shift, The Digital Economy, and Growing Up Digital. Anthony D. Williams is an author, researcher and former lecturer at the London School of Economics. He is vice-president and executive editor at New Paradigm and co-author of Wikinomics.