Fifteen months after being awarded an Ohio state grant that subsidizes its efforts to engage middle-market firms (ranging between $10 million and $1 billion in annual sales) across the state and incent them to take on innovation challenges, NineSigma has nabbed 24 clients and become involved in innovation projects it expects to result in the creation of 120 jobs. Middle-Market Executive recently caught up with NineSigma CEO Andy Zynga and asked him a few questions about the firm’s efforts to advance open innovation.
MME: Where do you see this open innovation approach taking root today … where is it advancing?
Zynga: Using open innovation as a means of economic development is something that we’re seeing more and more of now. In the past, we’ve seen it being used in Italy, and right now we are doing a program with the country of Colombia. What you find is that more regions are taking a serious look at it, and we are reaching out to different states and sharing with them some of the successes that we have enjoyed in the Ohio program. We are aware of four or five other states that are currently considering this type of approach. When it came to the state of Ohio, there were eight different companies vying for this “hunting license,” and in the end, two were selected. Now, being selected doesn’t mean that there is a cornucopia of money coming our way. What it means is that we get to help in the state’s middle-market firm development and that the firms that participate will have half the costs of doing a technology search subsidized by the state. However, finding firms to participate is really our job. So in order to do this, we have hired a dedicated business development executive and we have outbound callers who are reaching out to companies with the right profile.
MME: Was the state of Ohio program’s 50/50 subsidization a new twist on this concept? (Under its grant agreement, the state of Ohio will subsidize half the cost of an estimated $25,000 search engagement.)
Zynga: Well, in Italy, we’ve seen the European Union subsidize firms belonging to specific technology clusters. In Ohio, NineSigma was selected, and we then found the companies, which then have to answer the question: “How large would the impact be on your revenues and job creation if a great solution is found to the particular problem that has been posted?” The way Ohio does it is really very smart. In Ohio, we have 24 clients and 29 projects, and the estimated impact now stands at $235 million and approximately 120 jobs.
MME: NineSigma’s collaboration with the firms always advances a technology search — what does this type of search involve?
Zynga: Well, since the inception of NineSigma, we’ve always been involved in technology searches. A search typically involves five steps, the first of which is project selection. Firms may have quite a few ideas for different projects, but some may be highly improbable, so we will at times have to push back pretty hard. Part of what we do is to ask our clients the question “What are you really looking for?,” and then we say, “Let’s boil it down to the most basic science.” The second step is to make a really great problem statement. What is the client really trying to solve here? The third step is really a core competency of ours: cross-industry outreach. Again, we understand where all of industry solutions may be found — not just in the client’s industry, but in many others. We identify and reach out to several thousand solution providers and invite them to submit proposals. The fourth step is helping to select the right solution provider for the client, and this is done through us reading all of the proposals and engaging in conversations with solution providers. Finally, the fifth step is the acquisition of whatever the intellectual property is that the client is seeking from the solution provider, and oftentimes we are not involved in this. Many times, the client says, “Okay, we know how to negotiate this.” You’ll find that this is the basic process that we’ve executed for more than 3,000 projects. We do this in five locations in the world: North America is headquarters, while we also have locations in Europe, Japan, South Korea, and Australia
MME: Who is it inside the middle-market firm whom you often find to be the initial point of contact for NineSigma?
Zynga: Usually the CEO, president, or COO. This is usually the case, and what we have found is that firms are most successful with this type of approach when there is top-level buy-in. Frequently, we’ll find a midsize corporate that dominates their niche. The CEO knows exactly what’s going on across the firm, so in being able to engage the CEO, we know that we can set in motion a really successful program. You can argue that the network of solution providers that we access — the global brain — is what CEOs really understand. When they say “Yes, let’s do it,” things can really get moving.