The Hidden Pitfall of Innovation Prizes

Item Type Journal paper

Although companies use crowdsourcing more and more to fill their innovation pipeline, it is not so easy to get people to submit their ideas to online innovation platforms. Our data from an online panel reveal that 65% of the contributors do not come back more than twice, and that most of the rest quit after a few tries. This kind of user churn is endemic to online social platforms — on Twitter, for example, a majority of users become inactive over time — and crowdsourcing is no exception. In a way, this turnover is even worse than ordinary customer churn: When a customer defects, a firm knows the value of what it’s lost, but there is no telling how valuable the ideas not submitted might have been.

Despite this limitation, companies still get a lot out of crowdsourced ideas. Encouraged by early successes, many now routinely use crowdsourcing contests to find fresh solutions to various problems, increasing the demand for innovators willing to share their ideas. PepsiCo, for instance, has already used contests nine times to crowdsource creative Super Bowl commercials for its Frito-Lay’s Doritos brand, offering prizes of up to $1 million for the winning submission. Other companies, including GE, DELL, and Starbucks maintain their own platforms on which they continuously source ideas from customers.

Authors Hofstetter, Reto; Zhang, John Z. & Herrmann, Andreas
Journal or Publication Title Harvard business review : HBR
Language English
Subjects economics
Refereed No
Date 27 November 2017
Publisher Harvard Business School Publ.
Place of Publication Boston, Mass.
ISSN 0017-8012
Official URL
Depositing User Manuela Spirig
Date Deposited 05 Dec 2017 16:09
Last Modified 13 Jul 2018 07:47


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Hofstetter, Reto; Zhang, John Z. & Herrmann, Andreas (2017) The Hidden Pitfall of Innovation Prizes. Harvard business review : HBR, ISSN 0017-8012

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