Making the Best Even Better: How Idea Pool Structure can make the Top Ideas Exceptional

Abstract

In any pool of ideas, it is often the case that a small fraction of top ideas have significantly higher quality, both in absolute terms and relative to other ideas in the pool. This study formulates a model of idea pools, and examines the impact of the “structure” of idea pools on the extent to which the top ideas in an idea pool are exceptional. Our results demonstrate that the dispersion of ideas in the pool (defined in terms of the dissimilarity between ideas in the pool) has a positive impact on the value derived from the top ideas. The empirical content of the model is assessed by examining the citations received by top patents in a patent pool, and results consistent with the theoretical model are found. Finally, the study examines the optimal design of idea pools, and managerial rules-of-thumb are derived for the optimal choice of idea pool size, and the dispersion of ideas within the pool.

Keywords: Innovation Tournaments, Pareto principle, idea pools, patents