Innovators innovate for the passion of innovating, yes that is true. Then why give away rewards?
Between the guy who won’t innovate for you and the guy who will anyway innovate, there are a large number of people who are capable of innovating. To get the attention of this large number of people - you need upfront mentioning of reward. And for the guy who will anyway innovate, it is one way of saying ’you care’.
How much should be the reward?
This does not matter as long as you make it in some way proportionate to the benefit you will derive from the innovation. There is no right or wrong answer for what should be the proportion, the key is that you value the contribution and you are being fair. The best way to get the answer is ask these questions a) Will you yourself work on it for the given reward b) What is the innovation budget?, and c) How much will it cost me if I get it done from a third party innovation firm?
Having found how much I should reward, how do I decide between monetary and non-monetary rewards?
Monetary rewards are quite a safe bet in most of the cases. However if you decide to go with non-monetary rewards like fully paid vacation for two, then you must make sure that the winner is able to use it without any additional cost. Similarly if you are rewarding a Gadget, then you must consider how you will transport it to the winner. It is best to choose the non monetary rewards like Amazon gift coupons which are redeemable from anywhere in the world.
I am only partially satisfied with the solution and I like more than one solutions.
It is likely. Award partially and distribute it among the top three solution providers.
Should I distribute the reward to all who participate, this way I can be safe from any conflicts?
Once, to prove the issues with socialism, a professor agreed to average the grades. After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test results rolled out, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little. By the time 4th test rolled around, the average was D. When reward for merit is taken away, no one will try or want to succeed.
The greatest indirect benefit of giving away rewards is, it builds trust and curiosity, both of which can immensely help in your subsequent innovation challenge.