Ever wonder why matchboxes usually have a sandpaper strike on only one side? Well, it didn’t used to be that way. For decades, people could use either side of the matchbox to light their matches. But this changed in the early 1900s, when a worker at a Swan Vesta factory pointed out this apparent redundancy in the design and suggested that the company could reduce production costs substantially by placing sandpaper on only one side of the matchbox. This simple idea has influenced matchbox design ever since, leading to millions of dollars in savings for manufacturers.
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Employees often have creative ideas that can help their organizations. These breakthroughs range from ways to make the production process more efficient, such as the matchbox design proposal, to ideas for new products, like Frito-Lay’s Flamin’ Hot Cheetos. Those very spicy chips were invented by Richard Montañez, at the time a janitor at the Frito-Lay Rancho Cucamonga plant in California. According to Montañez, he was inspired by a video message from the president of the company that encouraged employees to “act like an owner.” He pitched the chili-based snack to company executives, which led to Flamin’ Hot Cheetos becoming one of Frito-Lay’s most lucrative products. Other innovative ideas that stemmed from employees in nontraditional ways include the McDonald’s Happy Meal and Southwest Airlines’ humorous approach to its flight safety instructions. But how can companies best tap into the vast array of ideas that their employees dream up?
Innovation contests have become a popular answer. The idea behind these contests is good, but new research shows that the way many organizations conduct them needs improvement. The biggest takeaway: When leaders run innovation contests, they need to design the contest to match the organization’s objectives.
Some key decisions that leaders must weigh:
- Who should judge the contest?
- Are we seeking highly useful or highly novel ideas?
- Should we use a winner-takes-all approach, or offer multiple prizes?
Our research shows that these factors will significantly shape the number and diversity of participants, how much time they spend developing the ideas, and the type and quality of their ideas. Let’s explore the implications of each approach and how to choose among them, depending on your organization’s goals.
1. B. Hofstra, V.V. Kulkarni, S. Munoz-Najar Galvez, et al., “The Diversity-Innovation Paradox in Science,” PNAS 117, no. 17 (April 28, 2020): 9284-9291.
2. R. Kornblum, “Stanford Professor: Older Founders Don’t Need VCs,” Business Insider, June 16, 2016, www.businessinsider.com; and I.H. Lang and R. Van Lee, “Institutional Investors Must Help Close the Race and Gender Gaps in Venture Capital,” Aug. 27, 2020, Harvard Business Review, https://hbr.org.