How can innovation tournaments help shape an innovation initiative? This question is really an important question for firms who are trying to create new ideas. And we're going to take a look at this noble approach of innovation tournaments. And is really being interpreted from a book that was written, called Innovation Tournaments. And the idea of this book is that they believe, the authors believe that this innovation tournament actually serves to help select opportunities through crowd sourcing. Or a request for proposal, an RFP to interested people who might solve problems in innovative ways. So, you're casting out a request for ideas, and you're rewarding those people who come up with good ideas with some acknowledgements in a financial way. And so, you're helping solve these challenges that you need for innovation through a tournament. And so, what we're going to do is first describe it and then show how the innovation tournament actually works. An innovation tournament is really a competition to find ideas and solutions to problems, and the competitors, actually, if you think about it as a competition and as a tournament is a contest. Competitors can be employees within a firm or they can be contractor firms outside who are seeking to solve a problem or find an innovative solution. And the ideas from various competitors are actually filtered. So, you find the best one and you select that for applying it and using it as a solution. And ultimately the successful competitors are rewarded in a financial way or some other form of reward. And so, there are a couple of different kinds of innovation tournaments. There's a closed tournament, an open tournament, and then what we call a request for proposals or RFP. A closed tournament is normally run within a company and so you still have the same challenge. You're looking for ideas and you're only asking people within your own firm to run and look and explore and find solutions that might be innovative. And often this happens in contained environments like closed tournaments and within a firm when there's proprietary information involved in the solution of the problem. On the other hand, you could have an open tournament, which is seeking ideas from any source outside the company. And this is a very open thing, it's structured. And people just put out the idea and they're looking for solutions and they have a certain reward level for what the solution might be. And then the third type of innovation term is what we call a request for proposal. And firms like Innosight, or IDEO or independent inventors, are the ones who respond these kinds of things. And so, it's not open to everybody. You select a series of potential competitors for this tournament. And you place them in the tournament, and you ask them to compete against one another to come up with an innovative solution. So, here's how the opportunity filtering process actually works. You see you start on the left-hand side with a wide range of opportunities and you apply some filters. One filter, a second filter, a third filter where you ultimately evaluate these opportunities and how they fit to the need that you have. And you end up with exceptional opportunities. In this figure, you see how the opportunity gets created. Sometimes on the left-hand side you can see the opportunity creation process. It can be sometimes in could be external, sometimes it could be internal and then you have some evaluation of filtering of that. But it's an initial screening process and then raw opportunities move along in the process and then there is that quality hurdle. As you can see in the figure, a lot of opportunity ideas don't make it. They don't make over the quality hurdle. And then the exceptional opportunities are the ones that actually make it over the hurdle. Ultimately, the best opportunities are selected. In this example here is just simply was the result of the design of a whole range of toothbrushes. And there were many, many ideas the ones on the outside and the ones that were selected are the ones on the inside. And so, the design of these was looked at for a wide range of possibilities. So, what happens here again we see how opportunities are ultimately worked their way into the new product development process. And so, if you start with the filtering activity as we saw in an earlier slide. On the left hand side where ideas, you have many, many ideas, you filter and you have a second filter and a third filter. And then you end up with something that you can work with as a concept. And you use in the new development, the new product development process. You have a series of what we call Phase Gates or Stage Gates. And at the concept stage, you look and you say how well is this idea working? You develop it and you ask again how well is it working? If it's working well, you go ahead and invest in a test, and if you test it and you find it still working pretty well. And you can then go to launch and you can then put it out into the marketplace. But the idea here is to see the connection between how you translate opportunity filtering into the new product development process. And indeed, you don't start with a lot of ideas. Well, you do actually start with a lot of ideas, but you filter those ideas, so that you start the new product development process with just one or two ideas that you're actually going to build and test. And so, the take aways of the innovation tournament are that these innovation tournaments actually work best when solutions don't require sources of intellectual property. We talked about closed innovation processes where they happen inside of a firm and where there's proprietary information or intellectual property. And you don't want to expose that outside the firm. On the other hand, it can be run with competitors, either within the company or outside of it. If you don't have intellectual property concerns. And these tournaments actually provide a platform for filtering and selecting the best ideas. And they are substitute for the internal research and development function that actually requires far fewer resources. And so, innovation tournaments can be a very effective way to maybe or not substitute completely for research and development. But can be an alternative way to produce innovative result that you don't have to invest internally on.
