Systematic Research Challenge
Use incentivized competitions to explore valuable ideas beyond core work
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 6
- Confidence
- 90%
The Systematic Research Challenge turns an underexplored strategic question into a structured internal competition. Leaders choose a strategy, asset class, or research problem that does not fit the core daily program, define incentives and evaluation criteria, and invite teams to develop solutions. Participants receive a reason to spend time on uncertain research with a longer upfront R&D cycle. Submissions are tested against the stated objective rather than treated only as a ranking of colleagues. Useful ideas can then enter the normal research process, while contributors receive recognition and rewards. The mechanism combines focus, experimentation, and talent development without requiring leadership to prescribe the winning technical approach.
Origin
Extracted from Masters in Business, where Gary Chropuvka described WorldQuant's systematic internal competitions for non-core research projects.
Core principles
- 01Define a strategically valuable problem before launching a challenge
- 02Reward work that falls outside normal responsibilities
- 03Compare submissions against an objective rather than against personalities
- 04Give exploratory research enough time to mature
- 05Promote collaboration alongside healthy competition
How to run it
- 1
Choose an exploration target
Select a strategically relevant problem that is unlikely to receive enough attention through ordinary work.
Pro tip Favor questions with meaningful upside and testable outcomes.
Watch out Do not use a competition to disguise routine work that should already be funded.
- 2
Define the challenge
State the target strategy, constraints, available resources, and success criteria clearly.
Pro tip Allow freedom in methods while keeping the outcome concrete.
Watch out Vague criteria create political rather than productive competition.
- 3
Align incentives
Reward participants for taking time away from core responsibilities and for producing valuable work.
Pro tip Recognize collaboration and reusable learning, not only the top score.
Watch out Winner-take-all incentives can suppress knowledge sharing.
- 4
Enable broad participation
Invite qualified people or teams across locations and disciplines to contribute.
Pro tip Use diverse teams to generate genuinely different approaches.
Watch out Nominally open participation fails if managers penalize employees for joining.
- 5
Test consistently
Evaluate every submission with the same data, constraints, and realistic implementation assumptions.
Pro tip Include robustness, originality, and practical value in the scorecard.
Watch out Selecting only by headline performance encourages overfitting.
- 6
Integrate the learning
Reward contributors, document findings, and move promising ideas into deeper validation or production.
Pro tip Publish lessons from unsuccessful approaches when they can prevent duplicate effort.
Watch out A challenge becomes theater if winning ideas are never adopted.
In the wild
A quantitative firm wants to assess an unfamiliar asset class but cannot displace its core equity research. It launches a six-week challenge with shared data, capacity constraints, and robustness criteria, rewarding both the strongest strategy and the best reusable research tool.
→ The firm discovers whether the asset class merits a permanent research program while developing employee skills.
Teams from several offices compete to develop signals that improve execution during fragmented trading. Submissions are judged on out-of-sample results, transaction costs, originality, and operational feasibility.
→ A promising signal advances to formal validation without narrowing the search to leadership's initial ideas.
Common mistakes
Rewarding only raw performance
A single performance score invites overfitting and ignores robustness, originality, capacity, and implementation costs.
Punishing time away from core work
People will not participate seriously if the organization rewards the challenge but their managers penalize the required time.
Letting competition block collaboration
Poorly designed incentives can make teams conceal methods and weaken the organization's total learning.
Is it for you?
Best for
It is best for research organizations with capable teams, testable outputs, and promising problems outside the normal workflow.
Not ideal for
It is not ideal for ambiguous cultural problems or work whose quality cannot be evaluated fairly.
From the transcript
“I think one of the unique things about this firm is that we have many different competitions where uh, you know, where people can our…”
“we're saying, okay, here's a particular UM strategy that we want to spend some time on. Let's see what you can develop UM.”
“we want to incentivize them to go out and um, you know, and really think creatively about about capturing and we incentivize them accordingly because…”
From the episode
Gary Chropuvka on Financial Engineering (Podcast)
Gary Chropuvka