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13 November 2008 ~ 3 Comments                                       

Part 4: The Competition Model

One aspect of many crowdsourced efforts is the ever-present competition. From the X-Prize to Innocentive, prizes for innovation, new ideas, designs, and problem solving are SO hot right now. Sometimes its simply a publicity stunt other times it is the core business strategy of a firm. The model has been around for centuries in various forms, in the arena of architecture for example: a slew of architects produce concepts for a building and the owner decides whose design wins. And of course, competitions in general are everywhere in which one might put forth a huge amount of effort, lose, and have nothing to show for it. What I focus on here are newer incarnations which the Internet has helped to flourish.

Prizes are generally set up such that someone posts an issue they want resolved or work they want done or a community of enthusiasts works to give an award for work around a specific area on an ongoing basis (Threadless). They set their price for successful completion and anyone can contribute – professional, amateur, moron, and genius alike — that is where the power arises. A winner is chosen and the prize awarded. The issue, though, that many have with this approach is that it can be exploitative and opens up businesses to… let’s say ethical challenges, in that the work is completed in some cases and the company can abscond with your work without paying.

Further, looking at it from an economic perspective: if you post a $300 reward for a logo and 50 people do, say, $150 worth of work each, that is a total of $7500 worth of effort. Or $7200 worth of “wasted” effort. (Of course many of these people might be doing this for fun as a hobby or with free time in which case it’s not technically wasted effort but effort that would not have been utilized in the first place.)

Some controversy has arisen around these, particularly in the design worlds: Pros hate it because it lowers prices paid for work and potentially the quality of the work (in their view), amateurs love it given that this creates a way to make a few extra dollars doing something they love anyway, and small businesses who might not have been able to afford professional prices obviously benefit. It is distinct from spec work in that spec work entails one professional or company creating a work in the hopes of selling it but without any guarantee or prior commitment from anyone that it will be bought.

A variety of sites which will be and have been covered in the past here employ this strategy so here are a sampling of them:

Competition examples:
Idea Crossing
Fujitsu-Siemens Innovation Contest
Netflix Prize

Derek Powazek – Pixish, Spec Work, and Graggers
The Power of the Prize

Related Articles:

3 Responses to “Part 4: The Competition Model”

  1. George from eLogoContest 13 November 2008 at 7:38 pm Permalink

    Don’t forget eLogoContest.com – we specialize in Logo Design Contests.

  2. Anil Rathi 14 November 2008 at 6:43 am Permalink

    Hi Tom,

    Glad to find your blog. Thanks for mentioning Idea Crossing. We are an enabler of innovation prizes/competitions.

    We help any organization launch their own prize/competition using our platform and process. This week, we just launched the Healthcare Innovation Challenge in partnership with Arizona State University (modeled off our 6th Annual MBA Innovation Challenge) we are also working with foundations, small businesses, corporations, etc.

    You are certainly right that these competitions are popular right now and I personally think that time-boxed competitions are great vehicles for individuals to acquire/refine skills or get ideas from others…rather than just make money. I haven’t seen any articles that focus on that particular topic.

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