September 21, 2009

(Non)monetary incentives for external innovation

Crowdsourcing is a form of open innovation (and in some cases, user innovation) that attempts to get a large pool of outsiders to solve a problem. Product recommendations at Amazon etc. are probably the most often seen example.

As Scott Gallagher & I noted in our 2006 book chapter, many of these contributions are motivated by nonmonetary incentives. Reputation and publicity are the most likely rewards — whether they can be monetized to get a job or sell a product, or just as a way to stroke an ego.

However, some organizations are using large (e.g. $1 million) prizes to encourage a supply of external innovations. Two examples this morning were the Netflix algorithm challenge and NASA’s search for a new lunar lander. More on both at my Open IT Strategies blog.

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