Innovation Tournaments
Tags: #🌲evergreen
Links: Innovation | Idea Quality and Success
Sources:
- 📘 (Coursera) Entrepreneurship 1 - Developing the Opportunity
- https://en.wikipedia.org/wiki/Innovation_competition
- https://www.innovationtournaments.com/files/InnoTourn-BookExcerpt.pdf
- https://executiveeducation.wharton.upenn.edu/thought-leadership/wharton-at-work/2011/03/innovation-tournaments/
- https://www.fm-magazine.com/issues/2017/dec/gamifying-innovation-with-idea-tournaments.html
Process that aims to emerge the best ideas coming from the best innovators.
The premise is that profitable innovation comes from systematically identifying exceptional opportunities rather than blindly investing more resources into R&D.
Innovation Competition is a form of Social Engineering because it has the aim of fostering an innovation culture.
Overview
It works by pitting competing opportunities against each other and then filtering out the weakest ones and eventually commit to the most promising ones.
What are Opportunities
- an opportunity is a hypothesis that value can be created with further investment
- an opportunity is always incomplete and has uncertain value
- the need and solution will change and evolve with investment
Common Types:
- newly sensed need (e.g. a product suggestion from a customer)
- newly discovered technology (e.g. a new polymer with unusual properties)
- rough match between a need a and a possible solution
Where opportunities come from
- 1/2: internally
- 1/4: interaction with customers
- 1/4: competition, insight from suppliers and sales team; collaboration with universities and independent inventors
What are Exceptional Opportunities
The mindset of innovation is different from operations management.
For instance, if we are a pizza place we typically prefer to produce 1000 fine pizzas with no problems instead of 995 terrible pizzas and 5 amazing ones. That is because there's a lot of effort being wasted involved in producing the pizzas. In innovation, you'll pursue only a few really promising opportunities and it is fine to discard most of them.
This is related to how returns of ventures are asymmetric Venture Survival and Success.
Increasing the number of opportunities
Simply: more opportunities, greater the chance to find exceptional ones.
This concept is similar to the "quantity is better than quality" in Design Repeating.
This concept can make sense when investing: analyze many, invest (commit) to a few. However, different from stocks, you can't really have a partial stake in different ideas.
What would be the cost of generating and evaluating twice as many raw opportunities?
First find how many you currently evaluate. Then, consider their sources and estimate the investment of resources needed for 2x.
What is the difference in economic value in your industry between an average innovation and one that is one standard deviation better?
How critical is the quality of the raw opportunity in determining economic value in your industry?
In some industries the raw opportunity drives the innovation process (e.g. pharmaceutical development). In others, it is merely a starting point (e.g. movie business).
Increasing the variance in the quality of opportunities
Remember that only very few exceptional opportunities will be pursued and everything else will be abandoned.
The average quality of opportunities is irrelevant. Only the extremes matter.
You want to be as inconsistent in your process as possible:
- search in places you haven't looked before
- apply a different screening than previously used
Searching in new places
- import ideas from geographically isolated regions
- identify small companies with niche products that may have a broader market
- get input from find lead users and independent inventors
Seek opportunities with large amounts of disagreement
Strong opinions, including strong levels of disagreement, may be indicators of exceptional opportunities.
Most companies would choose to advance Cardinal. However, both opportunities -- Blue Jay and Cardinal, have similar average scores (3.6 and 3.4). Yet, there are strong opinions from 3 experts on Blue Jay.
Funnel shape and dealing with uncertainty
Any single opportunity is full of uncertainty that can't be analyzed away.
The only effective strategy is:
- diversify across many opportunities
- delay commitment until further information is revealed
Requirements for the selection process:
- cost efficient
- accurate and careful (don't want to throw out the baby with the bathwater)
Solution: evaluate opportunities through multiple rounds. It is efficient because you are eliminating weak opportunities using cheap processes and careful as you give each remaining opportunity multiple assessments.
You should have a generous and cheap filter in the beginning and a more agressive and complex one at the end. This is because the uncertainty is high at the beginning and the costs are low and uncertainty is low and costs are high.
Opportunities' relative quality may change a lot in later stages. An example is Opportunity B. If we had picked the top 3 opportunities on the first filter, we'd have missed Opportunity B.
Take the highest-quality opportunity on the current filter and ask:
- what is the cost of pursuing this through the next phase?
- what is the chance that this will emerge as one of the most valuable under developement?
If the cost is low and likely to be valuable, then you should pursue it in the next phase. With this strategy you can be confident that you are not eliminating exceptional opportunities.
Absolute and Relative Criteria
Relative comparisons forces advocates to defend their opportunities and articulate their advantages.
Absolute criteria (hurdles) can filter out lots of opportunities. Thus it is useful to be applied in the beginning.
Absolute criteria can also be used to fast-track very promising opportunities.
Example: American Idol has an absolute criterion of reasonable singing ability, and only then they are judged based on relative criteria.
Apples and Oranges
Sometimes relative comparison is hard because they are relative to different time horizons. A useful strategy is to separate them first into buckets.
How to Screen an Idea [5]
- is the size of the problem relevant?
- is the solution clear?
- how is the risk/reward relation if the idea is successfully implemented?
- does the idea have strategic fit?
- will the idea improve competitive advantage?
Transparency [5]
It is important that the process be transparent: how the ideas are vetted and who is making the decisions. Employees must know that their ideas will be eventually considered.
Incentives [5]
Employees should be incentivized to participate in the tournament. Intrinsic rewards (recognition, visibility) will reinforce positive behavior even beyond the tournament.
Extrinsic rewards (such as money) should be paired with intrinsic rewards and the ability to work on a stretch assignment or high-profile project. This won't appeal to most employees, but will select for high-performing and engaged ones.
Open Selection and Generation
Most organizations should benefit from opening their tournaments.
Innovation Workshop (1-day)
- Objective: energize people and find quick wins
- Recommended as the starting point of the tournament idea
1. Select
- Groups of 15-40 employees
- Have a diverse group (employees across various departments)
- Select an area of strategic importance you want to innovate
- Challenge should not be too broad and not too narrow (use Five Whys Technique)
- Instruct participants to spend 20 minutes on individual ideation to come up with 5 ideas related to the chosen area
- note: I wonder what would happen if we said to come up with as many as you can (probably it would mean that most of them the individual would not have enough time to articulate them and would probably pick the safest one)
Emergency Stimuli
- can be used to help people that get stuck
2. Convene
- Group people into 4-5 participants to discuss the opportunities that each individual conceived
- New opportunities might come up through the discussion
- Each group should pick, from the entire set, the best opportunities and share with the full workshop group
3. Pitch
- All pitches should follow the 2-1-0 rule
- Each group member should pitch a different idea
4. Vote
- Vote and review results
- Sort by support / vote count
- Discuss how to advance the opportunities
Schedule
(suggested timeline of the workshop)
Pitches
- one page or one slide for each opportunity
- 2-1-0 rule: 2 minutes for presentation, 1 opportunity and no discussion
- voting can happen with sticker voting