An evaluation of short innovation contest implementation in the federal context
Emily Dawn Calandrelli · 2013
Technologies over the past three decades have democratized the tools of knowledge creation, thus creating increasing communities of innovators outside traditional organizations’ boundaries. Cost effective ways of leveraging these innovative crowds can be imperative to creating and maintaining value. One specific way for organizations to tap into this diverse audience is through the use of short innovation contests. The purpose of this thesis is to better understand the application of this strategy as a tool for technology procurement in the context of government. Through a contest, participants approach a well-defined challenge independently, conducting different experiments to find a solution. The combination of these various “trials” leads to an increased probability for a government agency to find one particularly good, extreme-value solution. Contests can also allow government agencies to engage individuals who are normally unable or unwilling to compete in traditional government contracts, thus alleviating certain imperfections in the competitive market of government contracting. This open design strategy for procurement is fundamentally different than traditional procurement methods. For this reason, there is inherent uncertainty in the organizational implications contest implementation will have in government agencies which has made program managers hesitant to employ this strategy in their programs. This thesis sheds light on the cost structure, program management implications, and policy considerations for short innovation contests. An empirical analysis is presented for four short innovation contests used for technology procurement in different government agencies. For each case study, the cost of the contest was compared to traditional procurement and key program management considerations were identified. Additionally, recent policy initiatives passed for prize-based contests were analyzed for their applicability to short innovation contests. It was found that three of the four contests procured technology solutions for estimated costs of less than half that of traditional procurement methods. It was also found that recent contest policy initiatives were unsuitable for short innovation contests. This thesis provides recommendations for policies appropriate for short innovation contests and considerations that must be made to expand the use of this strategy as a tool for technology procurement in government agencies. Thesis Supervisor: Eric von Hippel Title: Professor Sloan School of Management