Open innovation is rapidly changing the way organizations tackle tough problems, explains Crowdsourcing.org editor Anton Root in his superb article on the topic. Even the United States government loves open innovation, using its Challenge.gov platform to monitor pollution, improve employment opportunities for people with disabilities, and crowdsource a “next-generation” combat vehicle, among other initiatives.

ChallengePost, which runs Challenge.gov for the federal government in addition to software competitions for private companies, firmly believes that competition breeds innovation. We spoke with Brian Koles, business development manager at ChallengePost, who explained the myriad benefits of open innovation. Check out that conversation below.

Eric Blattberg, Crowdsourcing.org: Tell us a little bit about ChallengePost. How did it get started?

Brian Koles, ChallengePost: The way the company got started — and it actually wasn't me, it was our CEO Brandon Kessler who started it — but a guy named Colin Nederkoorn (who was actually our product manager for five years) put a post on Reddit saying, "I'll put up 100 bucks for anyone who can get Windows XP to work on a Mac." At the time, this wasn't doable. Then a bunch of other donors piled them, and it turned into this organic, $14,000 software development competition. A website (http://winxponmac.com/index.html) was put up, and a guy from New Mexico and a guy from Berkeley teamed up and solved it.

When Brandon [Kessler] was graduating from business school, he discovered this organic, self-made competition, and thought, "Wow, this is a business and this is good for the world." Everyone banded together to solve a problem they were all experiencing, and the solution came from two random guys that nobody knew about, and they wouldn't have had the opportunity to address this problem had the crowd not decided to put some money behind this and go after it. So that's actually how ChallengePost started: a crowdsourced competition happening off a Reddit post that turned into $14,000 for people who could solve this problem.

I suppose it's kind of fitting that ChallengePost, an open innovation platform, started organically on Reddit, a distributed knowledge platform.

Yeah, that was the impetus for how ChallengePost got going; like, let's take this crowdsourcing phenomenon and the power of competition, and put them together, creating a marketplace for open competition. There was some early work with the city of New York and a few other organizations, but the big boon for the company was in 2009, when the federal government put out a request for information about one central platform for all U.S. federal agencies to be able to challenge the public to take on open government problems. So a bunch of companies submitted their stuff and ChallengePost was selected, and we still run challenges for the U.S. federal government, where any U.S. federal agency can challenge the public to do anything; we've done videos to teach healthy habits, ideas to fix healthcare, Apps for Energy...

That one closed recently, right? Is that a yearly competition?

Hopefully, but we can't say that yet; this was the first one. We have a Beat Down Blood Pressure competition with the American Heart Association — lots of cool sort of public health related ones.

How do you balance the government competitions with the private competitions for various companies?

It's evolved over time. As of now, we are only doing software development competitions for non-U.S. federal agencies, period. So the government work is open, it's a free platform that they can basically use however they please, but for everyone who is not associated with a federal agency, we are now really focusing on software development competitions — crowdsourcing software development for meaningful competition.

The reason is you can't be everything to everyone. If we tried to do video competitions for all sorts of companies, for example, we would end up not serving anyone very well. There's plenty of platforms that the business plans and videos in those sorts of things, but were focusing really on software, because software is really sort of taking over every facet of every industry so we want to be in the middle of that. We think the best way of making change is empowering people to use technology for meaningful purposes.

You and a lot of other companies that specialize in open innovation brand the people not as a crowd, but as a community. Why do you think it’s important to highlight that it’s a collaborative effort from the people and not market it as a more competitive venture?

All we do is competition. Every project that we do is a closed-in competition. We very much believe in competition, that’s our whole business — issuing challenges and seeing who rises to the occasion in that challenge. Where the community part comes in — well, we’ve built a solver community in which people trust us to bring them interesting, meaningful, lucrative competitions, that they can enter and win and do good. So we do closed competitions, we just combine that with a community of solvers who may enter one or several of our competitions because they trust us to being them good stuff, as opposed to a company or an organization who might try to do it on their own. And they have no built in community, and people don’t necessarily trust them yet, to give back the social reward. They feel like they may enter, they might get a monetary prize, they may get a press mention, but they don’t trust these companies to really adequately reward them for participation. But because we run so many competitions, people trust us to run good, quality competition with adequate incentives and rewards with high caliber companies.

So we believe very, very much in the power of competition, that’s essentially our whole business. But we think that if people are going to enter a competition, if they’re going to dedicate time to try solving your problem, they need to trust you first. So that’s what we do. We’ve built a community that trusts us to bring them interesting competitions.

Tell us about some of the recent competitions you've run, maybe some of the more interesting software competitions.

Sure. This was the third year that we've done New York City BigApps with Mayor Bloomberg, where he opens up all of New York City's data — about the trains, the parks, where there's free Wi-Fi, where there's smoking and non-smoking [areas] — and says, "Take this data and make life better for people in New York City." So that one just concluded last month. We got 96 apps built to make living in New York better. It was a real big deal, a huge success. San Diego actually ran a very similar competition that just ended recently: the San Diego app challenge, sponsored by AT&T. Same concept: open up the city's data and let people go nuts with it. With New York City BigApps, we have had people that entered and won, empowering them to actually leave their jobs and go full-time into entrepreneurship and make businesses out of this. We've had companies that created apps, get seen by investors and actually get funding, turning into multi-city businesses because of the competition. Examples of that include MyCityWay and Roadify.

We're working on a number of other cool things right now, including a project with Bon Jovi's soul foundation, which runs soup kitchens. He realized that the staff and these homeless shelters didn't have good resources for guiding the homeless people towards other resources; they didn't know where the other soup kitchens were, they didn't know where the shelters were, they didn't know where the counseling centers were, and so on. So Bon Jovi actually went to the White House, and said, "What can we do about this?" This turned into Project Reach, a competition to create apps for workers in homeless shelters that help them do their jobs better. That's actually happening right now. It's pretty cool: one of the biggest rock stars in the world creating a competition to create apps to help homeless caretakers better take care of the homeless. And then, some of them are more corporate, like with Samsung we do apps for their galaxy note and their smart televisions.

So how is your business model structured? I presume that you charge a fee for each competition you run. Is that correct?

So for the government stuff, for the federal agencies that use challenge.gov, it's free. Yes, they put up the prize money, but they can use it all day, every day, for free. If they do any extra customization or some sort of crazy design, there's some additional fees associated with that, but the basic platform is there for them.

Now, there's sort of two different ways that we work with corporate clients. The first is, they can use our platform and get their contest listed for our community and put it up themselves, or we can run the entire thing for them. The way we usually work is we'll set up the website, broadcast the competition our community, and then will actually run the competition for them. So we'll do everything from writing the rules to testing the apps, to going to hack-a-thons and meetup groups and doing outreach, to doing affidavits on the winners to make sure they're actually who they say they are and we can pay them in good faith. So we sort of act as the competition management and promotion company, in addition to providing the technology and community.

So the short answer is three parts: we set up the website, we have this built in community because every time we run a competition, we roll that whole crowd into the next one, so our group of solvers gets bigger and bigger and bigger. We now have 276,000 developers, designers, and tech enthusiasts that subscribe to us and say, “Let me know about interesting, meaningful competitions that we can participate in.”

Wow, that's quite a crowd.

Yeah, so that's a big part of our secret sauce. We have this competition management platform that's great, and we can set up a website, but having this building community and bringing those eyeballs to your cause is a big part of our value. And then, frankly, running competitions is a bit of a pain. It seems easy, but there's discussion forums with questions all day, and technical glitches, and always ongoing community management and outreach that we handle for people and make sure it's done right. So they pay us to run it, and then they put up the prize money.

Does ChallengePost have any role in judging the quality of the submissions?

The judging is two-part. We hope for some sort of celebrity judge panel, so usually some execs from the company, an incubator, a VC, or a nonprofit. We get the biggest names we can on the judging panel that are relevant to the competition, and then we also encourage everyone to do a popular choice or a fan's choice type prize, because when you do that everyone tells everyone they know about it to get them to vote for them. It ends up being more of a popular choice prize and maybe the highest quality, but it's fantastic for getting awareness for what you're doing and him.

So when you take a look at the open innovation space in general — either your competitors or other organizations doing interesting stuff — who really stands out from the crowd, so to speak? Who is doing some really innovative work, and what have you learned from other organizations? And also, do you see any grievous errors in the space? You don't have to name them specifically, but is anyone really doing it wrong?

Let me start with the second one. The biggest mistake we see is people put up a blog post, tweet about it, and then they expect people to get excited about what they're doing. They don't show they’re committed; it's basically a landing page they put up quickly and they don't provide a central rallying point for people to get excited. As much as meaningful things are great, having proper incentives is really important. So if you're asking people to develop apps that cost $20,000, don't put up a prize of $500 or an airplane ticket, because that's not going to get it done. So it's two things: its people not creating a central place to access and rally around this competition, this initiative, and it's misaligning prizes and hoping that meaning is going to be enough. People love doing the right thing, but they still needed a little bit of incentive to do it, and relying on people to do it just because you think it's meaningful isn't going to keep their attention.

In the space, there's just lots of specialties. What we’re seeing are people starting to focus on niches. So some people are focusing just on internal challenges, where a company or organization really wants to focus on harnessing all of their internal talent. Other people are focusing on business plan competitions, other people are focusing on ideas competitions, and there are tons of companies doing video stuff.

The other thing I would advise against is running a competition on the Facebook page. It seems like a good idea because everybody knows where it is, but it tends to be sort of a one-night stand. They come by, they like it, and then that's the end of their engagement. When it shows up in their feed, they're likely to unlike it later. There's not enough real engagement, it is letting them off too easy.

Does that represent a larger change in the mindset with which organizations approach open innovation, you think?

Yeah, people are realizing that people don’t want a one-night stand. If you’re going to commit to open innovation, crowdsourcing, and inviting the public, make that your identity. It’s going to take more than a hack-a-thon or one event or some short-term project, it’s more about having a long ongoing conversation with people. That means letting them in on the good and the bad — admitting mistakes and giving them full access, not just showing a sneak peek and then taking it away later.

So we’re seeing a lot more of a commitment to long form open innovation, as opposed to short open projects. Sometimes people will do one thing, will ask for ideas of what people want and then we’ll develop the ideas in-house. That’s not real open innovation. If you’re going to be open, open the whole way and keep the whole process open to the world. Luckily, we’re seeing a shift from short open innovation projects to a commitment to making it a part of the company’s policy.

After the challenge is completed, how well do companies integrate the solutions into their businesses?

It all depends on what it is. Sometimes, if it’s something like USDA and we did the Apps for Healthy Kids, it’s just about creating the ecosystem. So the apps are out there, they’re in the Android marketplace, they’re in Google Play, they’re in the Apple app store. And if the whole goal is just to get in that space, when it’s done, we close there.

For other companies, like Samsung or Thompson-Reuters, we become long-term pieces of their technology ecosystem and people build businesses off of them. It varies project to project. Sometimes the goal is to build a business, and sometimes the goal is just to create something for the public good. And sometimes it is for a company to expand their partner base, and they do that because we do long competitions. In the software world, what happens with hack-a-thon oftentimes is that it’s a weekend event, something people throw together quickly. We do longer competitions, long initiatives that are meant to last a while. We do some that last as long as six months. People invest a lot more blood and sweat into it, and they’re much more likely to stay committed over the long term.

That makes sense. Do members of your community come together and form teams?

Absolutely. A big a part of we do is a discussion forum for our events, and one of the most common things is looking for partners — who are you and what skills do you have? It might be a software developer meeting with a designer, or it might be a videographer who finds someone who he likes to be in front of the camera. So we do a fair amount of teambuilding within the community. Sometimes what clients do is a meet-up tour, or some sort of hack-a-thon to get teams formed. But yeah, a lot of it is “I’m interested, but I can’t do it on my own. Who else is interested?” and people come together, and we give them a forum to raise a flag and say, “who wants to help me?”

So do you have a particular favorite competition you run? Perhaps something that really interests you personally, or maybe a favorite competition result?

Yeah, I mean, there's some cool case studies. For instance, we did Communities on the Move, a video competition in partnership with Michelle Obama's ‘Let's Move!’ campaign, and an 11-year-old kid from Texas put together a video that got a lot of press in the local market. Basically, it was a combination of martial arts as being good for healthy habits and also good for anti-bullying, in that kids should learn not to fight first but should be able to defend themselves. It was really cool that an 11-year-old kid — instead of a parent or some PTA person — put together a video to teach healthy habits and anti-bullying.

With the New York Metropolitan Transit Authority, which runs all the city’s trains and other public transit, we ran MTA App Quest to make getting around New York easier. You would think the winner would come from New York, but a 20 year-old college kid from California actually won that competition.

We love New York City BigApps, because we're in New York, a lot of us are natives of New York, so we think it's awesome. It probably gets the most press, too, so that's nearest and dearest to my heart. We've run it every year. It was one of our first major competitions, and it remains a center of the whole open government thing we're trying to champion.

Fantastic, I think that about covers it. Is there anything else we should know about ChallengePost that we haven't discussed?

If you have an API or an SDK or some dataset — basically, tools for developers — and you want developers to take that and build apps, add-ons, and integrations that enhance your product and create an ecosystem of technology around your core stuff, we'd love to work with you and get that done.

Well, keep up the good work. Thanks so much for talking to us today.