Open Innovation From A Practitioner's Perspective


Do X-Prize Types of Competitions Spur Innovation?

A recent article in Business Week asked this very question.

I want to add my opinion to this debate. I’ll start by saying that, in principle, an x-prize type of competition can drive innovation, but it should not be the only strategy companies (or organizations) use to foster innovation, especially external innovation. It should be one of many tools. Other approaches include: working with third party platforms (innovation brokers), setting up your own “direct-to-market” website, having a global strategy, and working with existing external partners (consultants, etc).

Some additional thoughts about these types of competitions:

1. They focus on just one big question as opposed to a series of smaller ones. Why not break them down into smaller pieces that could open up the pool of potential solution providers? For example, instead of a prize for lunar flight, why not break it down into the most important elements (propulsion, material design, navigation, etc)? Then bring these winning teams together and if they are successful, they win the bigger prize.

2. What happens to the ideas that don’t win? From an intellectual property perspective I sure hope the non-winners get to keep their ideas! But as important, what if there are some good kernels of information there that have some inherent value? Ideally you could find a way to help these other ideas that came close. That’s something I think these X-Type of competitions need to address. Maybe hold a sort of “auction” for the runners-up to help match them with financing that could help their idea become a reality.

3. There’s little room for fast, iterative innovation. I’m a big believer in the idea of rapid-prototyping of your ideas to test them, get feedback, and improve them. These large competitions don’t allow for this. Is there a way for the participants to engage with the sponsors of the competition during the idea development phase? I’m not sure that happens.

4. I get a sense that these types of competitions do not fully encourage collaboration because everyone is in competition with everyone else. In fact, these kinds of contests can be anti-open innovation. But at the same time competition is important. It gives people the motivation to succeed. How to solve this? One of the best ‘hybrid approaches” I’ve seen is the SEVEN Fund $50K competition, which I blogged about previously. Take a look at sites like IdeaCrossing and TopCoder, both of which run smaller competitions.

In summary, I beieve these contests spur innovation, but I think there’s room for improvement to make them truly collaborative and more open.


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