Outsourcing: Matthew Heim, President of NineSigma (Part 2)

Sramana Mitra: Now that I have the basic framework, let’s start peeling the onion. Help me understand more of your business, and help the audience understand more of your business.

Matthew Heim: Sure.

SM: So, it sounds like you have created a global network of solution providers through academia and other kinds of research and development organizations is that accurate?

MH: Yes, and entrepreneurs as well. We don’t only rely on our network. For each project that we conduct, we look to the outside world as well to see if there is anybody who is not on our network. We will conduct a global search to find out if there are other solution providers that could respond to this, and we will physically send them an RFP. They will receive an RFP in their inboxes. So, it’s not like some models that you may see where people are just posting a technology on a website and hoping that people are going to visit. We do that, but in addition, we do a proactive search within our network and outside of our network. And then send the RFP directly, too.

SM: What does that search entail? How would you find companies that may be able to fulfill your requirements?

MH: Well, we have a proprietary search platform we use for this.

SM: Do you do an Internet search?

MH: Yes, it’s public domain for outside. Now, of course, the sum of the information that we have is not public domain. It’s just what people respond to within our network and developing their profiles within our network. We have access to information that’s not public domain, but the public search that we do is going through the public domain. It’s based on our taxonomy and keyword search that we develop. We have a search team, and they will identify likely candidates who could respond to this.

The beauty of how this works is we will send a large number of RFPs out to individuals and somebody may receive this and say, well, this is interesting, but I have a research colleague down the road who is more likely to be able to solve this problem, and then send it. Because this is nonconfidential information contained in these RFPs, the RFP process becomes viral. Approximately 30% of the responses that we receive are from people who never received an original RFP directly from NineSigma. They are coming from other sources, people who are passing this onto other people. That’s the beauty of the viral nature of the open innovation model that NineSigma has.

SM: Interesting. You are saying that you are also in the network of solution providers; you also have entrepreneurs?

MH: Oh, absolutely. Actually, it’s more in mid-sized corporations, let’s say small, medium and large corporations are 60% of our network. Approximately 25% is academia, and, of course, we have almost every major university in the world in there and individuals within the universities. The rest are typically research laboratories, government and nongovernment research labs that often respond.

SM: What are the areas where you work? What are the verticals or industries where you have most of your work going on?

MH: We work in virtually every industry. We are intentionally industry agnostic. Let’s say a consumer products company approaches and says, look, we have a packaging issue. Our packaging is leaking, and it’s leaving a sticky residue on the packages, and people don’t buy our products off the shelf. We have looked everywhere within the packaging industry; we can’t find a solution. So, they would come to us — and this is a true story. We found a solution for them outside of their industry. It was a manufacturer of the crash test dummy. Now, if you can imagine all the leak detection and so forth, and they were looking for leak detection solutions on the packaging itself. We were able to find a technology that they were able to embed in the manufacturing process, which cost them a lot less money. It was a very elegant solution. This is just one of many examples that we have of this cross industry connection that we have.

The people who are program managers at NineSigma are typically PhD-level scientists and engineers. When they listen to the problem, they write the problem statement in the brief that is distributed in the RFP in a manner that is industry agnostic. They will talk about the technology itself and the problem, and the technology that’s required. Therefore, they are able to distribute it to multiple industries, and it’s very often the case that even disruptive technologies and disruptive opportunities come from other industries that have been mainstay technologies in other industries.

This segment is part 2 in the series : Outsourcing: Matthew Heim, President of NineSigma
1 2 3 4 5