Will 'American Idol' Approach Result in Innovation Hits -- or Misses?

Ann All

Internal R&D departments may never go away entirely, but there is no question that companies are increasingly looking to other alternatives for product development and other innovation-centric initiatives.

Battelle, the world's largest non-profit independent R&D organization, predicts that more U.S. firms will offshore R&D, not only to lower costs but also to "take best advantage of the talents that are available on both sides of an arrangement," says Battelle senior researcher Jules Duga in an IT Business Edge interview.

Some companies -- including Nokia and Electrolux -- are putting product development completely into the public domain, by sponsoring contests that invite folks to design consumer goods.

It's a great way to tap "an incredible diversity of alternate perspectives,says blogger Chas Martin, an especially important consideration as companies seek to appeal to new and niche markets.

A number of trendy terms have been suggested to describe this phenomenon, from crowdsourcing to open innovation to Dion Hinchcliffe's Product Development 2.0. Hinchcliffe says that companies that prove adept at this, whatever they choose to call it, will overtake businesses that cling to more traditional methods of innovation.

Now a group called the X Foundation is trying to expand the concept even further, by asking venture capital firms to pony up some dough to offer as incentives for entrepreneurs to create new technologies. Already, the foundation has awarded $10 million to designers of a private spacecraft.

The New York Times called the idea "something like an 'American Idol' for the technorati." A possible shortcoming of this approach, say skeptics, is that good science doesn't necessarily lend itself to a valid business model.

Still, maybe it takes a fresh eye to see business models where none have existed before. The foundation's board includes founders of Google and PayPal, a couple of companies that obviously know a thing or five about creating such models.

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