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For companies looking to thrive, innovation is a must. And that goes double for those that rely on advanced technologies.
Governments recognize this and promote innovation through things like research and grants. But few have gone as far as the Ohio state government to promote the innovation process itself.
In 2002, the Ohio Development Services Agency (ODSA) launched the Ohio Third Frontier initiative, whose aim is to create an innovation ecosystem in the tech- and science-friendly state. Ohio Third Frontier funds a number of investment and development programs, all aimed at driving economic growth and bringing jobs to Ohio.
One of the newer programs is the Open Innovation Incentive (OII), which seeks to “incentivize and assist Ohio middle market companies with in-sourcing innovations needed to overcome technical obstacles with a next-generation or new product, service, or process.”
“The goal is to use open innovation to accelerate time to market and reduce development costs so that new generation products and services can be brought to market quicker,” explained ODSA’s Katie Sabatino, “thus improving the competitiveness of Ohio companies, and resulting in economic benefits in the form of jobs and revenue.”
In August 2012, two open innovation intermediaries, NineSigma and Yet2, were selected to work with the middle market companies (those with revenues between $10 million and $1 billion).
Ohio’s role is to help foster the relationships by raising awareness of the initiative and subsidizing half of the open innovation intermediaries’ fees. The state awarded NineSigma $2,097,563 toward this goal, while Yet2 got $1,767,100. Sabatino clarified that there are some fixed costs included in the awards, but the majority of the funds will be used to run innovation challenges.
“The transactional costs to work with either Yet2 or NineSigma are $25,000 for a particular innovation challenge and the state subsidizes half of that, or $12,500,” Sabatino told Crowdsourcing.org. “Ideally, we would see a number of these Ohio innovation challenges as the program gets under way.”
Aside from that, the ODSA takes a very much hands-off approach in the process. The open innovation companies figure this to be the correct method.
“ODSA has, basically, two functions,” said NineSigma’s senior program manager and director of the Open Innovation Incentive Dr. David Feitler. “One is that they’re committed to helping the marketing of this program – they’re sponsoring forums, events, things like that. And they handle the finances – they pay us. Other than that, they have done something that’s really cool and really neat in terms of the government program: they made it simple, and they kept it simple.”
Feitler says that the relationship between NineSigma and the middle market companies is the same as it normally is – ODSA is not involved in any of the decision making process, and the contract is between the open innovation intermediary and its client.
“You can imagine that in some places, [the clients] might have to pay us and then file for reimbursement from the state – no, they simply pay us a reduced rate,” Feitler said. “The company doesn’t have to file anything with the State.”
NineSigma, which is based in Cleveland, has worked with one other state body to spur innovation in the past – a regional government in Italy. Neither Feitler nor Sabatino, however, are aware of any other government agencies in the U.S. – federal, state or local – running similar initiatives.
Feitler said the ODSA is asking his company to keep track of the program’s successes, in order to decide whether the initiative should continue after the current program ends. Helping companies create jobs and innovative products in a state whose economy is roughly the size of Poland’s seems like a no-brainer to us. We’ll be sure to follow the initiative as it moves forward.