What Role Does Competition Play in Innovation?

Group of colleagues facing each other with intense stares.
Is your team working together, or splitting apart?

Competition is innate in what humans do. Everybody wants to be the best at something, whether it’s their hobby, their job, or their industry. However, left unchecked, competition can become a toxic fight to win, rather than succeed. Balance is needed. That begs the question, exactly what role does competition have in innovation?

External and Internal Competition

Every business is working to be the top of its industry, best defined as external competition. However, there’s also competition inside organizations such as people jockeying for the top spot, the plum project, or the lucrative account. That is internal competition.

Both are natural drivers of innovation. If a competitor introduces a new service or something that makes it unique in your industry, the rest of the industry gets to work trying to top it, refine it, or expand on it. If someone brings a fresh idea to solve a challenge as part of the role they’re seeking, they’ll have a better chance of getting that position. Everything that’s standard in your industry now was once an unusual idea on which someone took a chance.

The problem arises when competition becomes toxic. When competition becomes about winning at all costs, that can wreak havoc across organizations and entire industries. Then innovation disappears; it’s no longer about winning but simply not losing at any cost. So what keeps competition, internal or external, healthy and driving innovation?

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Is your team working together, or splitting apart?

Keeping Competition Healthy

Healthy competition is meaningful, but it never comes with a winning-at-all-costs mentality. With innovation competition, this means having a proper balance of risk versus reward. A team member who thinks his job is on the line is unlikely to gamble on a new idea or approach. While there are people who can come up with brilliant ideas under extreme pressure, plenty of others will simply crack. Healthy competition is about motivation, not the application of pressure.

Make sure your innovation process has a clear goal and process. Having a goal will help people formulate ideas and give those ideas a direction, and a clear process will help people shape ideas by showing where an idea goes, why it went there, and why it did or didn’t work out.

With external competition, encourage learning from competitors. When a contract is won by a competitor, for example, the team should do some research as to why. When a product doesn’t perform, take a look at what happened. Treat your competitors as a yardstick for what you can do better, not as challenges to be overcome.

With internal competition, keep it healthy and work against “zero-sum” thinking. Employees shouldn’t think their jobs depend on having the “one big idea” and departments shouldn’t think they’re losing out on resources. Internal competition should be about doing your best and keeping the greater good of the team and the organization in mind.

In both cases, focus on effort, not results. In any competition, the ultimate prize should be learning and improving. Often an idea that doesn’t pan out becomes the seed of something that does, and that’s far more valuable than a packed trophy case. To learn more about healthy competition in innovation, contact us. 

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