Aired March 12, 2007

Years ago, when a company wanted to develop a new product or improve an old one, it turned to its own in-house research and development department. More recently, several companies have slashed their R&D budgets and now look to outside help for product ideas. Finding the right help though is tricky business. ideastream's Tasha Flournoy reports on a local firm with a solution.

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Ever wonder how your crumpled dress shirts got to be wrinkle-free? Or how laundry detergent adds bleach to your dark clothes without staining them?

That's where NineSigma, Inc. comes in. They're a Cleveland-based firm that plays matchmaker to companies around the United States looking for innovations. The firm takes product development requests from all types of businesses and farms them out to a global rolodex of researchers and scientists.

Vice President Paul Stupay says today's companies are going beyond their office doors to gain the most advanced research in hopes of discovering the next big idea.

Paul Stupay: If you can actually put your needs out there as a large company, you can sort of steer how people are investing their own R&D dollars. That's how you make this sort of porous organization between the people inside your company and the broader market on the outside.

The name NineSigma is a twist on the business process, six sigma, a method some companies use to problem solve and measure success. The company has run more than 700 technology search projects since it began in 2000, and has carved a name for itself in the market known as open innovations. Fortune 500 companies make up 30% of NineSigma's clientele.

Mehran Mehreghany, founder of NineSigma, says Proctor & Gamble came to them on one occasion with a rather unusual request.

Mehran Mehreghany: There was a solution for one consumer product Proctor & Gamble was looking for and that was writing on certain found.

Proctor & Gamble executives thought trivia questions on their Pringles potato chips would boost sales. But they didn't know how to go about it. They needed a cost-effective way to produce edible dye. So, NineSigma helped them find the answer from a professor in Europe.

Mehran Mehreghany: This is a solution provider in Italy that had the technology to write on food and we connected the two together.

As a start-up, NineSigma went looking for venture capital and found investors such as University Hospitals which contributed five million dollars to jumpstart the company. The investment has helped the company expand to several offices in the U.S., one in Germany and another in Japan.

One thing that gives NineSigma an edge in the market, Mehreghany says, is its ability to find solutions from unlikely sources. Take the case involving Kraft Foods, another large NineSigma client. It needed a method for packing certain kinds of food in water. Here's Kraft's Senior Vice President Todd Abraham.

Todd Abraham: We would have never thought about going to the waste water industry to help us solve a problem we had in the food area because it's just not some place you'd go think to look.

But that's just where NineSigma looked and found a match. In the end the project didn't pan out, but Abraham says NineSigma nevertheless provides Kraft with an important service.

Todd Abraham: Because there's just too much technology that could potentially cut across industries for any one group to ever know everything going on everywhere.

Case Western Reserve University Professor Dale Flowers says open innovations is a growing trend in product development. And, cites Nine Sigma as an established leader.

Dale Flowers: The basis for a lot of their success is their database. You know they've been working very diligently for a number of years now at development of this database that becomes their intellectual property.

As the open innovation trend has grown, so has NineSigma. It's jumped from 17 employees to 47 in the last 18 months. Tasha Flournoy 90.3.