Employees at all levels of an organisation are continuously generating new knowledge, collaborating, learning about the market and opportunities for growth, creating solutions and workarounds, and identifying stress points for both the company and its clients. Tapping into this brainpower can be a powerful force for innovation.
One method is to design and launch an innovation tournament. The goal of an innovation tournament is to use a competitive format to leverage the intellectual and creative capital within an organisation. Its primary intent is to have a little fun whilst creating a pipeline of ideas that can be commercialised.
Studies indicate that, given the objective of generating ideas, people working independently will generate more ideas than if the same people worked together in a group. This is due in part to groupthink, fear of being criticised, and the sequential and linear nature of conversation. Tournaments should therefore be designed to generate and capture a great number of ideas starting with the individual.
There is no one perfect design for innovation tournaments. Details may vary depending on the industry, the size of the company, the geographic spread of employees, and other details. But several common characteristics can be found in many successful innovation tournaments.
Challenge-focused. The most important component is an emphasis on solving a specific problem or addressing a specific opportunity. The challenge should be framed in simple terms so that employees in both broad and narrowly defined functional areas can contribute. If it is framed too narrowly, only a few employees will truly understand or the ideas received will be off-base. If it is framed too broadly, the ideas themselves will lack focus. If the problem to be solved is big and complex, consider framing it through smaller, more digestible challenges.
Time-sensitive. Tournaments can be conducted over the course of one day, several months, or a year. Daylong tournaments may be well-suited for small companies or departments in which the ideas can be expressed through software coding or simple, quick prototypes, such as a new e-commerce storefront or a new marketing slogan. Longer tournaments may be better suited to solving complex challenges that require more deliberation. Either way, a balance must be struck between adequate time for employees to consider the challenge and express ideas with the need to create a sense of urgency. Too little time may result in lower-quality ideas; too much time may result in procrastination and a loss of momentum. Equally important is the time-sensitive nature of the problem or opportunity to be addressed. It should be significant for the business and inadequately addressed with existing resources.
Incentives. Setting up rewards for employee participation can be tricky. The cultural impact of incentives is long-lasting. Intrinsic and extrinsic rewards should be considered. To encourage a culture of innovation, intrinsic rewards should be emphasised as they will be more sustainable and will permeate employees' approach to innovation beyond the tournament. Intrinsic rewards include recognition, positive visibility, and creating a feeling that motivates people and encourages ever-lasting behavioural change. That does not mean that a monetary reward to the winners of a tournament should not be offered, but any offering of this kind should be paired with intangible benefits such as visibility, recognition, or the opportunity to work on a new high-profile project or a stretch assignment. While this may sound unappealing to some employees, it will be appealing to high performers — the group of employees who should be kept engaged and retained for sustainable innovation.
Transparency. The rules, processes of how ideas are vetted and selected, and who is making the decisions should be open and clear from the start. The evaluation criteria for screening and selecting ideas should also be simple and clear so that, as employees consider the challenges and express their ideas, they know how their ideas will be assessed.
Multiple rounds. To narrow the field of ideas while maintaining transparency, multiple rounds for idea selection may be ideal. A side benefit to multiple rounds is that some ideas may be combined or new ideas conjured up by building on existing ideas. This can be as simple as having an initial screening round to filter ideas followed by a voting or pitch round. A simple framework to screen ideas is to consider the size of the problem and clarity of the solution, the risk/reward of implementing the idea, the strategic fit of the idea with the company's growth ambitions, and whether the company's competitive advantage can be strengthened by implementing the idea. Voting or pitching rounds can be virtual or in-person. The ultimate winner should be selected by a group of people rather than one person. This can be achieved virtually (eg, all employees vote on the top ideas) or in person (eg, screened ideas are pitched to a panel of judges). If using a panel of judges, consider constituting the panel with a mix of executives and lower-level employees to ensure a diversity of perspective.
Tension. Seek opportunities that may spark widespread disagreement. This tension encourages more critical thinking thereby yielding creative and unique ideas. Don't be afraid to seek ideas that might cannibalise an existing business line or go against established assumptions within the business. Embrace this tension because provocative ideas such as these have the potential to disrupt industries and businesses. Progressive companies seeking genuine innovation should heed the call of provocative ideas.
Commitment of the organisation. The biggest risk of running an innovation tournament is letting ideas linger with no commitment to move them forward or shelve them. A commitment by the CEO, the board, or other relevant executive sponsors is critical to ensure that employees take the tournament seriously. This commitment includes moving winning ideas forward in good faith with adequate resources, attention, and follow-through. Providing feedback to employees with non-winning ideas is equally important. After all, they spent time developing those ideas and may appreciate the sincere consideration of them. The absence of these elements could have a detrimental cultural impact on innovation.
Willingness to experiment and fail. Not all ideas selected will prove to be financial or market winners. But the learning gained from executing them will be invaluable. Celebrating failures and, more importantly, learning from them is a critical element of innovation. Without the failure, lessons may not be learnt. These celebrations can reinforce the cultural acceptance of fringe ideas, which are exactly the types of ideas that companies should be considering for innovation.
Technology. A multitude of innovation tournament platforms exist that companies can buy or lease with their own branding wrapped around it. The necessity of employing such platforms depends on variables such as budget and internal expertise to design and run a tournament. If third-party consulting help is needed to get a tournament started, these types of platforms may make sense. Otherwise, building a technology solution in house or using existing internal platforms may suffice as long as the above tenets are addressed.
How Netflix gamified ideas
Innovation tournaments can also work well when they focus on soliciting ideas from external parties such as clients, suppliers, topical experts, and the general public. The same principles for design and implementation apply for externally focused tournaments.
In 2006, movie rental service Netflix wanted to improve its algorithm that predicts individual users' ratings of movies based on previously rated content. So Netflix announced "The Netflix Prize," a contest for computer programming and mathematical groups throughout the world. The company offered a $1 million prize to any group that could significantly improve its in-house algorithm by at least 10%. If no submission met that threshold, Netflix would award the top scorer $50,000, and the contest would continue with the goal of improving the top scorer's algorithm. The contest concluded in 2009 when a group had successfully improved the recommendation algorithm by more than 10%.
The Netflix Prize embodied the key elements of innovation tournament design. It was focused on solving a specific problem, had a set timeline of when submissions were to be received, was transparent in how submissions were evaluated, had an intrinsic reward of visibility and meaningful work, had a large financial incentive for contestants to spend time on it, had commitment from the CEO, and had multiple rounds for selection. By design, Netflix was able to mobilise many minds well beyond its core employee group, resulting in a fresh perspective in improving the user-rating algorithm.
8 phrases of an innovation tournament
This hypothetical example describes how a tournament might be developed.
1. Defining challenges. A review of strategic imperatives identified a need for ideas that would help the company remain relevant to customers over the next decade and beyond. A secondary challenge: How to attract customers and address those who were underserved. These challenges were considered to be of financial and strategic importance and within the scope of all employees.
2. Securing internal support. Tournament organisers attained the CEO's support and established a process to collect ideas. They recruited internal judges and decided on tournament rules. Corporate leaders partnered with human resources to ensure alignment with intrinsic rewards.
3. Inviting staff to share ideas. An online platform was established to solicit ideas. The online platform reiterated the two challenges, the evaluation criteria, and the timeline for decisions, and provided resources to help staff formulate ideas. Internal marketing encouraged participation. Staff were given two months to share as many ideas as possible.
4. Screening ideas. Tournament organisers screened each idea based on three criteria: Does it address a meaningful problem? Is it achievable? And is implementation worth the potential risk? Each idea was scored; 15 advanced.
5. Developing concepts. The 15 finalists were invited to expound upon their ideas — how it might work, potential costs, resource needs, etc. The ideas also were made available to staff, whose feedback helped finalists strengthen their concepts.
6. Hosting a pitch day. A panel of four senior leaders and four peer-level staff, with no vested interest in any particular idea, was charged with selecting three winners. A pitch day was organised during which finalists presented two-minute pitches, followed by two minutes of questions from the panel. Employees were invited to observe the session virtually and vote on their favourites. Judges considered the Step 4 criteria in their final decision.
7. Piloting winning ideas. Winners were given resources to pilot their ideas. Coaching from an innovation team steered ideas to a minimum viable product, rather than a fully developed product. This encouraged simplicity and culturally demonstrated a willingness to experiment with limited information and investment.
8. Monitoring results. Metrics for success (such as new revenue, savings, and strategic value) were established as a way for decision-makers to determine whether further investment was warranted. Prototypes were rapidly iterated so the cost of failure was minimal while learning and speed were maximised.
Mark S. Brooks (Mark.Brooks@aicpa-cima.com) is the associate director of innovation and strategic partnerships at the Association of International Certified Professional Accountants.