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The DNA of open innovation

11.21.2013
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Open innovation has been around for a little while now, but has really taken off in the last few years as organisations have begun to appreciate the wealth of talent that is available outside of their formal employee base.

As the concept has slowly entered the mainstream, there has been a greater emphasis on how to engage in open innovation successfully.  Research from the W.P. Carey School of Business forms the latest in the canon of work looking to understand and therefore optimise open innovation.

The research consisted of three papers that aim to unearth what makes a successful project, and how such a project differs from a less successful one.  It looked in particular at the design parameters, project characteristics and market environment that underpin a great competition.

Lets look at each in turn.

Design parameters

The design parameters are the fulcrum of any competition brief.  They include the why people should get involved, how they should get involved, and what they get out of the project.  After analysing 2,000 competitions however, the researchers unearthed a few best practices that delivered strong results in this phase of a competition.

  • Above-average prize amounts attract more contestants for idea-based projects. But they have little or no effect on the number of contestants in expertise-based projects, where contestants’ time is scarce.
  • For idea-based projects, shorter descriptions attract more contestants. The brevity seems to allow for more creativity.
  • For expertise-based projects, longer descriptions attract more contestants. The details give contestants a better sense of what the seeker wants.
  • A contest of longer duration attracts more contestants, but the number of new entrants declines as the contest continues. Seekers should weigh the benefit of gaining entrants with the cost of maintaining the contest.

Project characteristics

This section sets out the details of the project itself, and in particular the output you’re hoping for from the competition.  The research suggests that if, for instance, the project is a complex one, that dividing it into a modular approach can achieve better results.

“We know that some people are really creative, but they might not be very good in implementation,” they said. “So it is always a good idea to break the project into two parts – the idea part and then the execution part.”

This might see a short project description used in the ideation phase, to allow participants to use their creativity, whilst the execution phase would have a more detailed description that helps to ensure a successful implementation.

The research concludes with the following tips for delivering a good competition:

  • To attract the most contestants, seekers should match contest design parameters to the type of solution they are seeking: high prizes and short descriptions for idea-based projects, for example, and more detailed descriptions for expertise-based projects. If the project is complex, find ways to reduce complexity, i.e., by breaking up the projects into different modules or serious of smaller projects, and attract more contestants and better results. It will be very useful to break projects into idea phase and executing phase by launching two different contests. Give feedback to good ideas, especially early on, and consider using “open evaluation” with private voting to bolster internal evaluations.
  • To increase the chances of winning, solvers should know that expertise matters. So does timing: early entry gives them a chance to get feedback and improve their solution, while late entry means they are more likely to devise a unique solution. Submitting mid-contest gets them neither benefit.
  • Contest operators should design a feedback system that is easy for seekers to use. Educate seekers on the benefits of giving feedback and on ways to make feedback useful.
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