Insights on crowdsourcing from Innocentive: part 5 of 5
Written by Noah Flower on Wednesday, November 11th, 2009
Filed under Synthesis
Not too long ago I had the privilege to sit down with Alph Bingham, founder of Innocentive, where he pioneered the use of prizes to solicit solutions to technical challenges in the commercial world from experts anywhere in the world. Alph now shares his thoughts on innovation and business strategy at InnoBlogger.
Q: Tell me about the role of money in asking for help from the crowd. How much does it make sense to offer, when should it be offered, and how do you know whether to offer it at all?
When we were putting Innocentive together, the question came up of whether it should be based on intellectual stimulation or funding. I was adamantly opposed to doing it without funding. On the commercial side, I think it’s shameful that the benefactor would benefit and not share. But when it comes to the philanthropic side, sharing your intellect is a donation in-kind. That could be a perfectly acceptable way for social institutions to further leverage their capital.
For me, the key to whether there’s a prize etc. is absolute transparency every step of the way. Be clear about why you’ve posted it, what the benefits are intended to be, and why you’ve decided for or against a prize. You should be completely open about what the model is, how it’s funded, and what we’ll try and do to help defray your expenses. Then you let the marketplace decide whether you’ve offered something reasonable.
I’m very much in favor of foundations funding prizes. Let me ask you, what percent of foundations that have more than five million dollar budgets have unpaid or volunteer CEOs? Very few. So they don’t really have a problem with paying someone for working on their behalf. I would argue that finding solutions is a good use of donor dollars. And, you can give individuals the option of donating the prize money back to the organization. The compensation may be a combination of dollars and societal benefit. In fact, if we really wanted to solve disease problems like malaria, we’d approach them that way, because there’s not enough money available in that market to make it worth it for purely financial reasons. We’ve drawn artificial boundaries between commercial and nonprofit models. I think we should be very open to all of the mixed-utility models in between.
This is the final section of our interview with Alph. If you haven’t read his earlier points, catch up on part 1, part 2, part 3, and part 4.)
