Business Model
InnoCentive adopts the electronic marketplace business model. Through its Open Innovation Marketplace, InnoCentive seeks to match a global network of Solvers with R&D Challenges faced by a number of Seeker organizations.
Seekers post Challenges, along with the associated financial award, by paying InnoCentive a fee of $35,000 (this fee is lower if the Seeker buys a bundle of Challenges). Seekers are allowed to post Challenges anonymously to avoid competition related issues. Solvers can view the Challenges and submit solutions to any Challenge without being charged anything. If the Seeker is satisfied with the workability of the solution to a Challenge provided by a Solver, then the Seeker provides this Solver with the pre-specified award in exchange for the acquisition to the IP rights to the winning solution. The Seeker also pays InnoCentive a commission on the amount awarded. InnoCentive ensures Intellectual Property protection for both Seekers and Solvers and facilitates the transfer of Intellectual Property rights from the Solver to the Seeker.
The value proposition that the business model offers is two-fold: Firstly, InnoCentive allows Seeker organizations to reduce their R&D budget by tapping into the wisdom and innovative capacity of a network of more than 200,000 Solvers in order to find solutions to their difficult problems (Challenges). Secondly, InnoCentive gives the opportunity to Solvers to focus on a range of challenging problems of their interest with the hope of receiving a financial reward.
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