Mumbai: One question firms often grapple with is how to foster creativity and innovation to beat rivals. The answer might lie in introducing some competition among the innovators or those engaged in creative production, according to a new National Bureau of Economic Research (NBER) paper by Daniel P. Gross of Harvard Business School.

Creativity here refers to novel ideas that are relevant to the goal at hand. To study the impact of competition on creativity, Gross analysed 122 logo design competitions, where companies commissioned designers to create custom logos and other commercial graphics.

These logo design competitions are structured as tournaments of successive rounds where designers can modify their submitted designs based on feedback from the sponsors. During the tournament, participants can see a gallery of competing designs and how they have been rated by the sponsors, thus allowing them to gauge the intensity of competition while the contest is underway.

Analysing these contests and measuring creativity using image comparison algorithms, similar to those employed by Google Images, Gross finds that some competition can substantially spur high-quality designers to be more creative. In this context, creativity refers to a designers’ appetite to try different logo designs in various stages of a competition. Gross shows that in the absence of competition, designers with high ratings from sponsors were more likely to stay the course, make only small alterations to their original designs and were less likely to be creative.

However, when faced with competition from even one high-quality competitor, creativity increases and the tendency to try more original designs in successive rounds doubled.

But the effect of competition soon wears off and can even kill creativity: when faced with too much competition, many of the same designers underperformed and stopped being creative.

Gross’ analysis suggests there exists an optimum or “goldilocks" level of competition where creativity is maximized, but it is less clear how a firm can determine the desired level of competition before it embarks upon its creative project.

READ | Creativity Under Fire: The Effects Of Competition On Creative Production

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