Home > For the lieutenants: Drive the innovation process > Diversity and Transparency: the X-Factor way to more winning ideas

Diversity and Transparency: the X-Factor way to more winning ideas

In their book Innovation Tournaments, Christian Terwiesch and Karl T. Ulrich identify four levers (and contend that there are only four) to more winning ideas:
– Coming up with more ideas (good or bad)
– Improving the accuracy of the selection process
– Enhancing the average quality of ideas
– Broadening the distribution of idea quality.

The X-Factor (alongside other talent-hunt TV shows) provides a good illustration of these four levers.Coming up with more ideas. In an idea-lottery, if you draw 1000 ideas, you are statistically 100 times more likely to come up with a winning idea than if you draw only 10. For the music producers who sponsor X-Factor, the public is a much larger pond to fish for potential talent than, say, graduates from music schools. Believing in diversity allows producers to implement a form of talent crowdsourcing.

Improving the accuracy of the selection process. It is easy to miss a winning idea: Swiss watchmakers dismissed the quartz technology that they had invented, Nokia did not exploit the potential of the touch screen, nor did Kodak recognise the value of digital photography. Examples of winning ideas being deselected by a biased selection process abound. X-Factor applies one of the basic methods to reduce biases: making decision with a panel of judges coming from different horizons and considering the candidates from different perspectives. For good measure, the judges also hear the reactions of the audience in the studio, and sometimes have the TV viewers vote. If you’re the producer sponsoring the show in order to fish hidden talents to sell more music, it makes sense to listen to the crowd. This does not make the selection process flawless, but the diversity of judges and the transparency vis-a-vis the public arguably make the selection a lot more accurate than what a lone producer sitting behind his or her desk could do.

Enhancing the average quality of ideas. By broadcasting the auditions and the feedback given to participants, and by making the selection process fairly transparent the show natural enhances the average quality of performances: the candidates can learn from other participants mistakes, they benefit from the feedback given, they get a better feel for what will make the panel tick, they can be inspired by the success of unlikely winners and pluck the courage to give it their best shot.

Broadening the distribution of idea quality. This lever is less intuitive, but no less powerful. Imagine a bell-curve distribution of ideas from worst to best, where only the tail-end of ideas on the best side of the curve manage to pass the selection threshold. If we can make the bell-curve wider (in mathematical terms, increase the variance), then the tail-end of passing ideas will be fatter and we’ll get more winning ideas. The question is: how to make the bell-curve wider? Answer: by allowing – even encouraging – more wacky entries, without bothering whether they will be at the worst end or the best end of the curve. In the talent show case, it is by allowing unlikely candidates straight out of their kitchen in a remote village that you stumble on a Susan Boyle.

From a management perspective, these four levers can be turned into processes that fit the specificities of a given business. The X-Factor has its own processes that, in all likelihood, cannot be applied universally to any business: after all, it is difficult to imagine TV viewers voting for molecules or nanomaterials. From a leadership perspective, though, the two beliefs that underpin the four levers have a stronger claim to universality: at the end of the day, when you genuinely want to fish in a bigger pond, mitigate selection biases, provide feedback for collective improvement, and broaden the distribution of ideas, you have to believe, at many different levels, in diversity and transparency.

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