Ideas Competitions

This post is about ideas, yes, those little sparks that light up the space between our ears and which we hope can help to prolong our holidays indefinitely. Remember that this is a good time to work on them.

Steven D. Levitt, author of Freakonomics, describes how giving incentives can result in paradoxical behavior. For example, a day-care center had a problem: some parents were late in picking up their kids, which caused a nuisance for the center. The solution which they put into operation: a fine for tardy parents. Weeks later they discovered that the number of late pickups promptly went ... up.

The conclusion was that they had substituted a moral incentive for an economic incentive: now the parents were more relaxed in organizing their day because their consciences were cleared by the payment of the fine (which was actually cheaper than any baby-sitter).

This story reminded me of a conversation I had recently with two executives of large companies. In both companies they had organized “ideas competitions”. Such competitions are supposed to release the talent and creativity that lies latent in companies, according to the management books, by giving prizes for the best ideas and promote a general climate of innovation.

However, just like the day-care center experience, the results weren't exactly what they hoped for, with lackluster ideas and a feeling of suspicion and frustration among the participants. Here are some notes about their experiences:

• At the start of the competition, the large majority of ideas were from individuals and, strangely, applied to other departments. When they were examined in detail they were often found to be not practical or (more frequently) were already being implemented or even in operation. Often, the proposer would not believe these responses and would sometimes protest that they had “stolen his idea” or that it was rejected because it was “not invented here”. However, some interesting ideas were generated, even if their scope was limited and they were mostly process orientated.

• In one of the companies, in order to improve the quality of ideas, they made the following decision: to increase the prize, including a share of the benefits, but the ideas required a business case. What they found was that the proposals were made by groups and applied to their own departments. Groups wrote very elaborate business cases, although these were not particularly good. Some department heads were annoyed by the time that their employees spent on the idea or they thought that the idea was nothing other than what their employees should have been doing anyway and therefore didn't deserve any prize. What was worse, they thought that the competition was delaying the implementation of innovations because the employees were hanging on for the competition start dates, and those who had not participated in the proposals showed lower levels of commitment. There were also rumors of “corruption” in the process.

The perception of the executives was clear: the competitions did not work because their employees were a gang of wingeing mercenaries who had no idea of the business sector, or their own company, and in addition weren't particularly creative (although obviously this is not what they said in their internal communications). In contrast I began to think, as I was listening to them, that the incentives afforded by the ideas competitions were backfiring in the same way as the fines in the day-care center. It seems to me that these employees were beginning to think that putting forward new ideas was something they did in addition to their professional commitments and so should have a direct economic value. I also believe that the conduct of these competitions and their communication were very crude in that they neither took into account how new ideas are generated nor, which is still harder, how they should be put into practice.