Rewarding Brilliance, Creating Failure (and Innovation)

Brad Keywell

Co-founder of Lightbank & Groupon

In 2008 and 2009, coders, mathematicians and at least one psychologist became singularly focused on one problem: Improving Netflix’s recommendation algorithm. They were motivated by the $1 million on offer by the Netflix Prize, by the press and media storm that erupted and, likely, by the thrill of competing with the best and the brightest.



The Netflix Prize is often heralded as one of the most intriguing and innovative awards ever devised. In fact, though, the Prize didn’t work, at least not as intended. In the end, Netflix never put the winning team’s (Bellkor’s Pragmatic Chaos’s) algorithm into practice. Why? First, the planned changes would be expensive to implement while only marginally improving the accuracy of recommendations, at around an 8- to 10-percent improvement. Second—and more interestingly—by the time the winners were crowned, Netflix had already moved on to new technologies. No longer was Netflix primarily a DVD rental mail service; now, the industry was all about streaming, and the algorithm for recommending what to stream differs from what people what mailed to them. What you want to watch right now is different than what you think your future self will want to watch. (As this article points out, we all like to imagine that our future self wants to sit down for a viewing of the latest critically acclaimed dramatic film (think: 12 Years a Slave), while in the moment we prefer something lighter (think: The Hangover Part III).)
But this isn’t a story about how myopic business practices led Netflix to waste $1 million. Yes, Netflix failed to predict that we’d all be streaming House of Cards from the comfort of our own homes. However, the real power of their prize—and other similar high-profile awards like the Thiel Fellowship and the James Dyson Award—can’t be measured with these traditional metrics. Prizes like these inspire people to begin work in industries outside of their central focus, like the psychologist who decided to tackle the mathematics problem posed by Netflix. And it doesn’t just inspire these individuals to think about different problems while the Prize is ongoing. In fact, a well-designed prize will lead to winners and participants beginning to innovate in fields outside their primary area of expertise.
This fact is best illustrated in a recent working paper by economists George J. Borjas and Kirk B. Doran on the winners of mathematics’ most prestigious prize, the Fields Medal. Like the Netflix Prize, if viewed in one light, the Field Medal looks like a failure of a prize. Borjas and Doran found that after winning, researchers publish less. However, the surprising flipside is that winning the Fields Medal actually increases the breadth of what these mathematicians study and publish. The winners begin to dip their toes in areas outside of their primary expertise, bringing fresh perspectives to other fields that they might have not otherwise explored.
This is incredibly powerful, as the recognition (and compensation for) someone’s innate talent actually unleashes them to use their talent in other, more unpredictable fields. Breakout innovation comes when exceptional, curious, probing minds attack problems that most of us assume can’t be solved. Perhaps the insight into Fields Medal winners gives us a formula on how to turn a brilliant mind into an innovative mind, and how it can be applied to turn all of our minds into curious and explorative minds.
So why do these winners start, as the authors put it, “playing the field” outside of their core expertise? It’s certainly not because of the prize money—at $15,000, the Fields Medal can be a nice influx of cash for mathematicians, who make around $77,000 annually, but it’s not enough to retire on. Much more likely is that the medal’s prestige provides perceived job security that gives them freedom from the publish-or-perish atmosphere of high-level academia. This allows them instead to research areas they may otherwise not have had the luxury to look into.
There’s one other finding in the paper that I think is particularly interesting. Winners of the Fields Medal have more failures after their win. That’s right—the recognition afforded by the award gives them permission to try and permission, therefore, to fail. They publish more duds, or papers that only garner a few citations. In other words, Fields Medalists start acting like entrepreneurs and not academics: Great entrepreneurs walk a fine line of creativity and innovation that more often results in failure than it does success. Recognizing someone’s strengths gives them permission to explore the boundaries of their talents (and sometimes scary uncharted paths leading off of those talents). We need to find more ways to recognize and affirm peoples’ strengths and gifts, so that they can then use that adulation to give themselves the self-perception that it is OK to push the envelope and test their skills in new ways.
In the fast-paced, quickly evolving technological and business world, we need an award that, much like the Fields Medal, encourages experts in one field to embrace the possibility of failure and apply their expertise to new areas of study and innovation. The Netflix Prize and the Fields Medal liberated participants and winners from their own greatness, leading them to explore and innovate in different intellectual and entrepreneurial spaces.
I’m interested to hear your ideas on what kind of an award would foster more of these types of creative failures in business. I’m even more interested to start giving out this type of award. Stay tuned…