Skip to Content

Thinking of Running an Open Innovation Contest? Think Again.

Open competitions can help find an optimal solution to a well-understood problem, but they are a poor way to innovate.

Open innovation contests are gaining popularity with companies. The thinking is that since not all the smart people work for your company, and technology is developing so rapidly, why not hold a contest to get the best minds competing to innovate for you? While 99 percent of the entries will fail, those entries aren’t on your company’s income statement. And when that 1 percent succeeds by pulling off a true breakthrough, then your company will be the big winner.

It sounds really good, and in certain contexts the approach does work. Yet, when it comes to real innovation, something essentially necessary is missing…

It is this: real innovation is always the outcome of ongoing discourse among a small group of innovators who truly understand the importance of what they’re working on. No matter where we look, from the American Revolution to the digital revolution, it’s always a small group of obsessed individuals who know and talk to each other that are responsible for big innovations. As John Stuart Mill observed: “Persons of genius, it is true, are, and are always likely to be, a small minority.”

Innovators are not obsessed with proving they’re smart. Rather, they’re obsessed with bringing to life paradigms that will empower human beings. Nicholas Negroponte said of the founding of MIT Media Lab: “We came together in the early 1980s as a counterculture to the establishment of computer science, which at the time was still preoccupied with programming languages, operating systems, network protocols, and system architectures. The common bond was not a discipline, but a belief that computers would dramatically alter and affect the quality of life through their ubiquity, not just in science, but in every aspect of living.” It’s that belief in the paradigm of “Being Digital” that motivated the researchers of MIT Media Lab to give us innovations like E-Ink, FabLab, and the touchscreen. These didn’t come from one-off contests.

True, contests have been associated with big breakthroughs. But, such contests have been embedded in already existing discourses. Both the British Board of Longitude’s contest, which, in 1714, promised a 20,000-pound prize to whoever could solve the problem of determining longitude at sea, and, more recently, DARPA’s 2007 Urban Challenge, which promised $2 million to any team that could build a driverless vehicle, are associated with breakthroughs. But both contests were episodes in already ongoing discourses. The first began in 1503, with Amerigo Vespucci’s letter Mundus Novus (“New World”); the second, some say, began with Leonardo da Vinci, and can be traced in modern times to the General Motors “Futurama” exhibit at the 1939 World’s Fair, where the automaker envisioned “abundant sunshine, fresh air (and) fine green parkways” upon which cars would drive themselves.

In each case, the discourse that produced Harrison’s H5 marine chronometer, and that which produced Tartan Racing’s driverless car “Boss,” involved a small community of brilliant innovators, including personalities like Isaac Newton and Edmond Halley, and more recently, Red Whittaker and Chris Urmson. Just as important, cash grants to bring about these inventions were made by both the Board of Longitude and DARPA to the few contestants who “got” the paradigms of empowerment: safe travel on the high seas, and a world where driving is less dangerous and inconvenient. Innovation is no “free lunch.”

Contests sound easy. But without understanding deeply and embracing a paradigm of empowerment, how can a company pick winners? The Edison Company never ran a contest to invent a car for the great multitude. But, if they had, Henry Ford would not have won it. Before founding the Ford Motor Company, Ford was forced to leave the Edison Company as its chief engineer for refusing to abandon his experiments on a gasoline engine for automobiles. Its president told him: “Electricity, yes, that’s the coming thing. But, gas—no.” Like most people at that time, the president of Edison Company believed the car for the masses would be an electric one. He didn’t “get” the paradigm of mobility that Ford did—that of granting to average rural families, in Ford’s words, “hours of pleasure in God’s great open spaces.” So, the president of Edison Company didn’t realize the problems that needed to be solved: a car has to have long range and high power density. To this day, these technical hurdles still daunt developers of electric vehicles.

Executives shouldn’t begin by thinking that all the smart people work for someone else. Instead, they should begin by asking: what is the paradigm that is leading my company? Risk-averse companies don’t lead—and they do not lead because they do not understand the paradigm that is driving the demand for their products—or someone else’s products. Steve Jobs understood very well the paradigm of the digital revolution. Risk-averse Kodak had very smart people who invented the first digital camera—and did nothing with it because they didn’t “get” a paradigm that made their photographic film irrelevant.

The Model T and iPhone weren’t the outcomes of contests, and genuinely world-changing innovations won’t come from competitions run by risk-averse firms. Instead, executives should seek out those discourses that are like hurricanes, whose eyes are paradigms, which will either propel or destroy them. They will do far better by embracing the discourse of the 1 percent that “get” the paradigms of empowerment, and with them, risk creating the future, than betting their futures on entries to solve problems that may not matter from a crowd of contestants they don’t even know.

Randall S. Wright is senior liaison officer with MIT’s Office of Corporate Relations. He has more than 25 years of experience advising senior executives of Fortune 500 and FTSE 100 firms on innovating with MIT. His articles on innovation have appeared in MIT Sloan Management Review.

Keep Reading

Most Popular

This new data poisoning tool lets artists fight back against generative AI

The tool, called Nightshade, messes up training data in ways that could cause serious damage to image-generating AI models. 

Rogue superintelligence and merging with machines: Inside the mind of OpenAI’s chief scientist

An exclusive conversation with Ilya Sutskever on his fears for the future of AI and why they’ve made him change the focus of his life’s work.

Data analytics reveal real business value

Sophisticated analytics tools mine insights from data, optimizing operational processes across the enterprise.

Driving companywide efficiencies with AI

Advanced AI and ML capabilities revolutionize how administrative and operations tasks are done.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.