Tournaments for Ideas By John Morgan Yahoo Research and Haas School of Business, UC Berkeley And Richard Wang Haas School of Business, UC Berkeley Keywords: Tournaments, Strategy, Innovation, Information Technology John Morgan is a Research Scientist at Yahoo and the Gary & Sherron Kalbach Professor of Business Administration at the Haas School of Business at UC Berkeley. <
[email protected]> Richard Wang is a Ph.D. Candidate with the Business & Public Policy Group at the Haas School of Business at UC Berkeley. <
[email protected]> Mailing Address: University of California Haas School of Business #1900 Berkeley, CA 94720-1900 The authors wish to thank the editor and three anonymous referees for their comments. Financial support to Richard Wang was provided by the California Management Review. 1 Abstract Governments and foundations have successfully harnessed tournaments to spur innovation. Yet this tool is not widely used by firms. We offer a framework for managers seeking to organize tournaments for ideas. We present the theoretical underpinnings of tournaments. We then connect the theory with three recent innovations—the power of the network, the wisdom of crowds, and the power of love—that boost the effectiveness of tournaments. Short cases and academic studies are used to illustrate our framework. 2 TOURNAMENTS FOR IDEAS During the Age of Discovery in Europe, innovations in navigation technology were of great importance in conquering the seas. In particular, a method for accurately determining the longitude of a ship’s location was needed. Sea-faring empires created Longitude Prizes to attract inventors. In 1714 the British Parliament held a tournament and offered a grand prize of £20,000 (roughly £6 million in today’s term) to the inventor who arrived at the best solution.