Wharton@Work

April 2023 | Innovation

Uncover Breakthrough Ideas: A Repeatable Process

• Penn Medicine sought patient experience improvements
• Procter & Gamble needed ideas for reducing water consumption in the production of paper towels
• The LA Clippers basketball team wanted to enhance its fan experience

All three found breakthrough ideas using a process pioneered by Wharton professors Christian Terwiesch and Karl Ulrich: the innovation tournament. In their new book and an Executive Education program, Professors Terwiesch and Ulrich show leaders from across industries how to design and run a function typically thought of as illusive and left to chance, the province of a select few highly creative individuals. While “innovation process” might seem like an oxymoron, over a decade of experience with many of the world’s top companies proves that whether you need to create a new product or service, reduce inefficiencies, or discover solutions to current and future challenges, innovation tournaments consistently deliver high-quality solutions. Just as important, the process can be managed, controlled, and — crucially — repeated endlessly.

The Innovation Tournament Handbook

“Like sporting tournaments, innovation tournaments seek to identify a clear winner from a multitude of competitors,” write Professors Terwiesch and Ulrich in The Innovation Tournament Handbook: A Step-by-Step Guide to Finding Exceptional Solutions to Any Challenge (Wharton School Press, 2023). “In sport, players or teams compete until a winner is crowned champion. In business, an innovation tournament convenes opportunities for creating value. These opportunities might be ideas for new products, approaches to process improvement, names for a new venture, or candidates for entirely new lines of business. And they can originate from individuals, teams, or organizations.”

The new book follows a previous volume, published in 2009. “Since that first book,” says Professor Ulrich, “we learned so much more, organizing more than 100 tournaments for thousands of business students at the Wharton School and for many of the Fortune 500 companies. We have run tournaments in Silicon Valley; on Wall Street; and in Buenos Aires, Kuwait City, Shanghai, and Moscow. Examples from them illustrate every chapter, but the new book is lean. It’s more a cookbook, a how-to, than an explanation of a theory. You can use it as a guide, following steps one through nine, or work through only the chapters that address a specific challenge you are facing.”

The Innovation Tournament Handbook is also informed by the dozens of tournaments run in Mastering Innovation: Strategy, Process, and Tools. The program offers participants a hands-on introduction, learning how to design and run a tournament directly from its creators. Professor Ulrich notes, “In one running of the program, a health care system CEO attended to figure out how to run a tournament across his entire organization virtually. That challenge stretched the parameters of all of our previous tournaments. After the program ended, we met weekly with his teams, providing guidance and an external voice.”

Key Features

The tournaments move innovation “from the seeking of an individual idea to a process,” says Professor Terwiesch. “And that process is democratized. The dominant innovation model is one in which an idea comes from the top and is pushed downward — the ‘I have seen the light and will now come down from the mountain and enlighten you’ type. But we offer another way: bottom up. There are many more employees and other community members than members of top management. That adds up to more eyes to see and brains to think, which give you more ideas to play with. When you start with that large, broad input, engaging the whole organization in the creation of a portfolio of ideas, you get more and more diverse inputs.”

Professor Terwiesch says the tournaments are designed to be run with “complete transparency. You mitigate the concern that senior leaders who champion one idea will emerge victorious. When everyone sees the entire selection process, even top management knows they might be disappointed. Using this process gets biases and other obstacles out of the way, dispelling assumptions about what will be valuable.”

Start Wide, Narrow Later

The objective of a tournament is not to zero in on the one most promising idea: it surfaces a number of good ones that organizations must then invest in to learn which one(s) should be pursued and which one(s) should be abandoned. As Professor Ulrich explains, “The tournament primes the participants for a sense of possibility. It takes the focus off of one perfect solution by asking ‘how might we…’ instead of ‘how should we.’ That framing engenders the right behaviors and directs resources to the right ideas. It rewards investing a little to learn a lot, even celebrating the abandonment of opportunities that hold no real promise.”

To find the desired mix of opportunities, Professor Ulrich says leaders should resist the temptation to keep the scope narrow. “By going broader, you may surface ideas that solve other challeges. That’s what happened when we worked with P&G to find ideas for reducing water consumption in the production of Bounty paper towels. One idea actually increased water consumption, but dramatically lowered energy use. That was incredibly valuable in another area of the business, and it’s a great example of what can be gained by allowing ideas that go beyond the focus of the tournament. It’s always easier to bring order and constraints in later than at the beginning.”

After running hundreds of tournaments, Professor Terwiesch says he is still struck by “how much people care. We all spend so much time working, and innovation tournaments provide a conduit to express our dreams and ambitions for improving the workplace. It’s not selfish or done to get a pay raise. Participation is driven by the desire to create a better place, and there is real meaning in that.”