Crowdsourcing: Leveraging Innovation through Online Idea Competitions: For Collecting Ideas to Feed the Product-Development Pipeline, Idea Competitions Are More Efficient and Effective Than Traditional Tools

In 2007, Cisco initiated its first online idea competition to collect ideas for innovative IT network solutions; to ensure the suggestions offered were feasible, participants were asked to submit business plans to support their ideas. Besides identifying innovative fields for new business development, the idea competition allowed Cisco to test its network-based collaboration tools, as participants who worked together as international virtual teams could use Cisco technology to facilitate their work. Within five weeks, the company collected 2,500 ideas from contributors in 104 countries. Participants provided initial evaluation of submitted ideas, by giving them points. The ideas with the most points were then scrutinized by a Cisco steering committee, which invited 450 inventors with particularly promising proposals to an idea pitch session hosted on a WebEx platform. Of these presentations, the best 12 were presented to Cisco's top management team via telepresence. The winner was Anna Gossen, an informatics student from Karlsruhe. Together with her husband Niels and brother Sergey, she won the $250,000 top prize for an idea pertaining to energy efficiency. Anna was offered a position in a newly founded business unit built around her idea, in which Cisco had invested $10 million. As Cisco's experience shows, online idea competitions can be a highly efficient means of bringing outside knowledge into the company. Such outstanding examples of successful online competitions raise the interest of many companies in such tools. Yet the merits and challenges of this tool can only be fully understood when the costs and benefits of idea competitions are compared to other tools for idea generation and evaluation. At the fuzzy front end of product innovation, where idea competitions are most frequently used, the focus of idea gathering is on finding new product ideas that are attractive to current or potential customers. Focus group workshops have traditionally been used in market research at this stage to gather explicit and implicit new product ideas from outside the company and to get spontaneous feedback on the attractiveness of ideas from the point of view of the potential customer. Given that online idea competitions offer another avenue to gather some of this same information, a comparison of costs and benefits between focus groups and online idea competitions as methods to find ideas for product innovations may prove enlightening. With this in mind, we designed a study to compare the outcomes of the two processes in identifying new mobile phone products and services for senior citizens in Austria. An idea competition and focus groups were run in parallel, all focused on finding new products or services that could increase the utility and value of mobile phones for the elderly. The results suggest that idea competitions and focus groups have different strengths that managers will want to consider when planning an effort to solicit ideas for new products from consumers. While focus group participants tended to interact with each other to develop ideas more fully, the idea competition produced nearly four times as many usable product ideas as the focus groups. This suggests that the choice of tool should be guided by the goal; if the object is a more elaborated set of ideas that provide insight about a particular group of consumers, focus groups may be more effective. But for gathering ideas to feed the product-development pipeline, idea competitions are clearly more efficient and effective. Idea Competitions at the Fuzzy Front End of Product Innovation Gathering consumer insights in the early stages of the product-innovation process--the fuzzy front end--requires tools for identifying opportunities, generating concepts, and evaluating ideas (Koen et al. 2001). A range of tools are available for each of these functions, including both Web 2.0 and traditional methods (Figure 1). While online idea competitions function primarily as tools for idea generation and concept development, focus groups have a broader range. …