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.
The Hidden Pitfall of Innovation Prizes
Why winner-take-all prize structures increase churn among participants.
November 27, 2017
Summary.
Over the last decade, companies have begun taking advantage of online platforms to tap into the “wisdom of crowds” for innovation ideas. These systems typically give monetary rewards to people who submit the most promising ideas. But there’s a problem with this system: By rewarding just a handful of people, companies are reducing the incentives for people to participate multiple times, and as a result, churn rates on crowdsourcing platforms is high. This article describes research into the problem–and suggests solutions.
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HBR Learning
Innovation and Creativity Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Innovation and Creativity. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Unlock your team's curiosity and willingness to take smart risks.