An Open Innovation Dilemma

April 30, 2008  

As mentioned in my previous post, I decided to use open innovation for the development of a logo.  OK, it is quite small scale, but I wanted to see the results.

Here are two quick interesting observations.

Signal to Noise Ratio:  This is my favorite measure of the innovation process.  This is the ratio of a signal (what you want – that is, good ideas) to the noise (what you don’t want – the duds).  Higher ratios are better.  Traditional suggestion boxes have a low signal to noise ratio because you get ideas about everything, even things that don’t matter.  And although campaign-based innovation (including open innovation) can yield a higher signal to noise ration, unless you are quite specific with your brief, you will still get a fair amount of “noise.”  There has been more noise in this process than had I used just one designer.  But given the limited number of entries (<50), this has not been an issue.  Had there been thousands of entries – or if the designs being submitted were more complex (e.g., chemical compounds), the evaluation process would have been tedious.

Building on Ideas of Others: Here is the most interesting observation.  In the beginning, few designs were of interest.  But after a period of time, some good concepts emerged.  The website I am using,, allows the other designers to see every logo submitted. They can also see my feedback on which designs I like the most.  As I created my short-list, certain designers decided to “build on” (plagiarize?) the concepts I liked.  Although this resulted in an improved design, it also presented an ethical dilemma.  Only one designer is awarded the prize.  Do I select the best design – even if it is a variation on earlier work by someone else?  Or do I do the “fair thing” and award to the person who developed the original concept? 

Building on the ideas of others is critical to innovation.  Let’s face it, most new ideas are just improvements on old ideas.  But financially-based, winner-take-all competitions can impede collaboration and innovation.  They may force knowledge/creative hording. 

In this situation, a reasonable solution might be for me to split the award money; a percentage to the person who developed the winning concept and a percentage to the person who developed the best final product.  But that is not an option with this open innovation website.

We want collaboration and open innovation.  Yet, if people feel their ideas are being stolen, this will have the opposite effect.

What thoughts/observations do you have on this topic?

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11 Responses to “An Open Innovation Dilemma”

  1. Mary on May 1st, 2008 7:31 pm

    The transition from a competitive to a cooperative economy is rife with difficulties, as your dilemma indicates.
    In a way, anyone submitting freely to the web loses ownership of that material. It will remain in perpetuity in the public domain. Can we collectively wrap our minds around this new generosity, this free sharing of property? It contradicts fundamental understanding of commerce. Yet the web is forcing us to change ….
    Your winner is the design itself, accredited to the entire community of participants in your event. Prize money, perhaps, could go to a selected charity.

  2. Karl Staib - Your Work Happiness Matters on May 1st, 2008 9:44 pm

    I think that people should share ideas so they can build from each other. Einstein said he stood on the shoulder of giants. I think that these designers can stand on each others shoulders and reach heights that they never thought possible. I don’t know what to do about the reward dilemma.

    Maybe you can reward the few that spurred on a better logo, but didn’t win with a small cash reward or a thank you of some sort. I don’t know how you judge that though.

    So it comes down to the rules. I guess if they knew what they were getting into then it’s up to them to go along with the rules. If they feel they were cheated then they shouldn’t have competed in the first place.

  3. Brendan Dunphy on May 2nd, 2008 3:36 am

    Great observayions and very relevant questions. Maybe there is an intermediate step required where the original inputs are “blind” i.e. only visible to the client. If the client then wants further refinement they modify the brief and re-submit to the providers along with the ideas they like best?

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  5. Stephen Shapiro on May 2nd, 2008 10:06 am

    Thanks for all of the comments. See the post I just put up today – but wrote the other day. We all have somewhat similar perspectives on ways to do these types of open innovation efforts.

  6. thealphaswarmer on May 6th, 2008 6:06 am

    Building on Karl Staib’s initial suggestion – it might be worthwhile to explore a globally based reputation management system in the face of emerging ‘open innovation’ based initiatives/models.

    For example of the logo design – reputation ‘points’ could be awarded for the ‘incremental’ value someone puts on the logo by taking a previous design (value added) and to the final winner who synthesizes the designs together can perhaps be awarded some form of bonus points!

    OFcourse – this is a very simply suggestion and I am sure we would face significant questions such as privileges – but isnt that where the Web 2.0 problem lies? WITH the PRIVLAGE?

    Perhaps the Web 3.0 designers/pioneers of our kind should think about certain ‘transparency’ systems that builds reputation!

    Perhaps something to explore!

    - thealphaswarmer| mAx

  7. Rita on June 4th, 2008 7:58 am

    Interesting topic. Just yesterday I was thinking about how lucky I am to be born in the period I am in. I was cooking a steak on the grill, realizing I didn’t have to raise or butcher the cow, didn’t have to carve the meat. All I had to do was go to the grocery store pay $8.99 a pound and voila! I was ready to eat the meat. Even a century ago this wasn’t possible. Just about everything we do is a result of working off the innovations of others.

  8. 7 Ways Innovation Can Recession-Proof Your Business | Business Innovation Speaker and Consultant Stephen Shapiro on October 23rd, 2008 9:04 am

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  11. Jan on January 14th, 2010 7:21 am

    This is the most relevant question with regards to open innovation (or more general: open ideas sharing) approach that we have to face.

    How to ensure “fair” profit distribution based on collaborative production in a world where the product itself (innovative idea) is interesting because it can help the owner of the idea on competitive markets where the winner takes it all.

    In other words: innovation should differentiate companies, so that they can be the No. 1 on the market (competitive distribution) – that’s why they innovate, but we are struggling with profit distribution among idea creators who must cooperate to create such unique idea (collaborative distribution).