Why Innovation Competitions Backfire

Why Innovation Competitions Backfire


Understanding the evolution of breakthrough ideas can be the key to a successful innovation program.

Why do innovation competitions — aimed at delivering breakthrough ideas and improving morale and engagement — so often have the opposite impact; sometimes even causing the most innovative employees to leave? Often the reasons are clear. Favoritism, poorly defined guidelines, and lack of universal access are common culprits, though it’s not always that obvious. I have seen innovation programs and competitions fail for a much more insidious reason.

Many, perhaps most, innovation competitions I have seen offer a one-time prize in the form of some sort of finite funding (e.g.: several thousand dollars in “one-time” budget) or time (e.g.: one month to work on the winning idea).


Here’s a dirty little secret about innovation: Successful, new ideas cost more as they evolve.

Work early in an idea’s life might simply involve talking to potential customers to determine they actually have the problem the idea solves, and whether they would pay for a solution to the problem. That work may only require one or two people for several weeks, or a few months. If the idea resonates, it will be time to build the product. That may, for example, mean bringing on a development team of five to ten people. That is a steep cost increase. Perhaps as much as 500% or more, plus any new equipment or resources that may be required. This type of increase will continue well into the life of the idea.


Sponsors of innovation initiatives often fail to ask this most important question:

What happens if they succeed?

As a result, the winner often has just enough time to prove the idea resonates with potential customers before they run out of funding and have to stop working on the project. That can be way more demoralizing than not having the contest. The innovator now has proof they have a good idea; and they have to abandon it. They get frustrated, some may leave, sometimes to pursue their idea elsewhere. Worse, some stay and begin to do just enough to keep their job, because that’s what is rewarded. There have even been cases where the innovator was laid off because they “weren’t contributing” to the mature organization’s objectives.

The impact can be very broad

Friends of the innovator, and others who learn of it, can also become frustrated and demoralized. Not only do they feel bad for their colleague, they have also just received a message that the organization does not value innovation. In some cases, the message is that innovators will be punished.

It’s not all bad news

Innovation competitions can be very energizing and can lead to amazing discoveries. There are a few, simple things that can be done to increase the probability your program will have the positive impact you want it to.

  1. Be clear about the objective of your competition. (Are you looking for a new product, new business model, specific technology domain, etc.?)
  2. Be clear and specific about the award.
    (A pitch to leadership? Funding? How much? How long? What happens when it’s gone?)
  3. Ask yourself, what happens if the winning idea gets traction with customers?
  4. Plan for increased investment in successful ideas.
  5. Be transparent and set expectations properly.

There are many others, though item five is the most critical. If your team’s expectations are set properly, your program is much more likely to have the positive impact you want it to. If you do not have second-order funding, make that clear at the outset and ensure participants understand what that means. If you are concerned there may be no viable ideas in your area of interest, clearly state the evaluation team has the right to declare no winner.

If you are transparent and set expectations properly, your team is much less likely to interpret your contest as innovation pageantry. Or better still, plan for success – and if you don’t find it – fund another competition.


About the author

George Watt is a Partner at Becker-Carroll, a Converge Company, and is responsible for Strategy and Lean Innovation. A transformative leader, George has spearheaded initiatives that have enabled businesses and global enterprises to address complex technology problems, deliver new business benefits, and drive millions of dollars in savings and productivity gains. He has delivered innovations of his own such as a knowledge base for a neural network-based predictive performance management solution, one of the earliest private clouds (2005), and a lightweight event management agent.

As VP of Strategy for a multibillion-dollar technology company, he was responsible for global scientific research, worldwide innovation initiatives, and the design and operation of an innovative startup accelerator program. He has held many national and global leadership positions and has led global teams spanning North America, Europe, Asia, and Australia. George is co-author of “The Innovative CIO” and “Lean Entrepreneurship” and tweets as @GeorgeDWatt.