Point: Companies can encourage innovation through employee contests

Story: The previous post on Harrah’s Entertainment generated some great discussion, particularly around EMC’s “innovation-by-contest” as one approach to generating innovations. Some companies (e.g., Harrah’s, HP) use themes to guide their employee-submitted innovations, and some companies (e.g., EMC) do not. This prompted me to ask Wharton Professor Karl Ulrich, author of the forthcoming Innovation Tournaments (Harvard Business School Press, May 14, 2009) about his experiences with innovation contests. In his book, Ulrich uses the metaphor of a tournament to explore how ideas vie for attention and resources during the innovation process. Ulrich’s central metaphor is that companies use figurative or literal tournaments to progressively filter incoming ideas through a series of hurdles or gates during research, development, and new product introduction. At last week’s Silicon Flatirons‘ conference, I asked Karl about his view on the theme-based approach compared to the wide-open approach for an innovation contest. Ulrich recommended a wide-open approach for the first phase, saying that the wide-open approach might show clusters of idea suggestions on a new topic. He cited a cosmetics manufacturer with whom he’s worked. The cosmetics manufacturer’s contest got a numerous unexpected suggestions for foundations (make-up) for young people — an new area that the company decided to explore further. He added that many companies mistakenly try to fund too many projects — not narrowing the funnel fast enough.

Action:

• Leverage employees’ knowledge of markets or technologies to spawn unexpected revolutionary or evolutionary innovations (e.g., EMC’s contest)
• Cluster the wide-open ideas by similarity, to create or modify themes or spot unexpected opportunities
• Use employees’ distributed knowledge to help focus attention on the best ideas (e.g., Harrah’s voting portal)