Why Your Company Should Establish a Hackathon

From their highly niche beginnings in the tech developer world, hackathons have gone public. The U.S. Congress just held its fifth hackathon — the newest discussion group focused on how AI could be used to streamline Congressional operations. NASA, as well as many colleges and universities, hold annual hackathon events. MIT Hacking Medicine hosts events around the globe to promote innovation in medicine, including its own GrandHack.

Expanded to the corporate workplace, hackathons became settings for nurturing a spirit of collective problem-solving and innovation, connecting various workplace roles, from sales to compliance to IT. So many corporations — among them BlackRock, Vista Equity Partners, and Morgan Stanley — have hackathons that new businesses were spawned to help organize and run them. Facebook began informal hackathons as early as 2007.

If so many institutions are adopting this tool, is it still relevant? Evidence indicates a resounding yes, perhaps now more than ever.

What is a hackathon?

Hackathons began as a way to bring together teams of individuals to troubleshoot problems, generally technological issues (the “hack”), in a rigorous timeframe (the “marathon”). With the goal of finding solutions, the free flow of ideas and building from others’ creative thinking were central.

Rooted in this spirit of innovation, a hackathon has guidelines, not rules. Its setting, length, team structure, procedures, rewards, and purpose can all be customized. This is key: While some companies may deploy hackathons merely as cross-functional team-building events, more innovative companies have discovered they can be so much more than that.

Thoughtfully planned and wisely managed, hackathons can maintain a company’s forward-looking culture, encourage out-of-the-box thinking, break down corporate silos, reward collaboration, and foster resiliency — all necessary characteristics for today’s hyperpaced marketplace.

A crucible for innovation

While hackathons can have many permutations, they are inextricably bound to technology in most people’s minds — first in recognition of their origin and now as a realization of technology’s essential role in most organizations and their operations. At their best, however, hackathons are also exercises in developing innovative approaches to a wide variety of challenges.

Today’s highly innovative companies recognize how the qualities inherent in a hackathon — cross-functional teamwork, free exchange of ideas, and embracing measured risk over a binary attitude that something either succeeds or fails — are crucial to their ongoing success.

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Fostering continuous invention

While all companies want to be innovative, continuous innovation is more than a series of bold acquisitions or hiring decisions. McKinsey & Company identified eight essential characteristics of innovative companies, citing two as the most critical:

• Aspiration for innovation-led growth, with correlated targets in place to achieve it
• Demonstrated choice to invest in innovation-focused initiatives, coupled with appropriate resources to execute them.^1,2

However, management cannot achieve continuous change alone — a company must be all in. A resilient workforce enables a company to move on multiple fronts at once, which today’s competitive marketplace demands.

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Tailormade strategies

Just as sophisticated institutions have come to understand that innovation doesn’t happen by layering technological solutions over legacy processes, so too have innovative companies learned that a hackathon alone cannot be the sole driver of innovation. That said, it can be a very effective tool as part of a portfolio of strategies.

According to Bain & Company research, in a survey of over 1,200 executives actively engaged in innovation, more experienced innovators employed a larger pool of approaches to generate innovation than those with least experience (4.4 versus 2.8 tactics). In this survey, more experienced innovators also grew their market capitalization at a much faster rate than new innovators (9.5% five-year annual compound rate vs 0.5%).³

The authors of this survey noted that one of its key findings was that companies experienced in innovation recognized the value of a portfolio of complementary strategies to keep a corporate culture of discovery alive and meaningful. These ranged from business accelerators and incubators to hackathons and innovation summits.

While hackathons have traditionally focused on problem-solving for product needs, organizations use the events to successfully explore a much wider variety of issues, including moving a company forward in new employee integration, test-driving new processes, or informing resource needs.

In an interview with Forbes, Yi Ming Ng, CEO of AngelHack, a company that hosts hackathons for a variety of institutions across the globe, says, “Careful early scoping of the problem statement to be solved, well in advance of a competition, produces optimal results and avoids missteps that likely occur when you rush too fast into the process.”⁴

That makes framework questions key:

• Should the event be hosted live, remotely, or both?
• How will teams be structured for maximum collaboration?
• How will solutions be evaluated and who will do the evaluation?
• Do you want a winner, do you want an array of problem-solving approaches, or do you want thoughtful perspectives regarding persistent issues?
• How do you take the ideas generated to production?

Investment management firms, for example, may find a hackathon useful in informing decisions about resourcing for critical processes, such as client or product onboarding, or to examine vendor solutions for various data management purposes, including client reporting. A hackathon can bring key players together to discuss recalcitrant problems in an atmosphere where there are no “right answers.”

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Hackathon Arcesium-style

Arcesium has hosted an annual hackathon for the last eight years. Each year, participants are challenged to solve for product-specific issues, working in cross-functional teams over 30 hours.

With rising participation every year and exceptional solutions proposed, the event gives employees an opportunity to be creative thinkers away from day-to-day responsibilities. Senior management judges gain an opportunity to connect with motivated employees. We also generate a wide pool of thoughtful ideas that merit consideration and we even add some hacks into our R&D pipeline.

Some of the cool ideas we’ve incubated have included:

• Low-code self-service configuration management for users
• AI-driven assist for our reconciliation tools
• Mobile app for managing client request tickets
• Centralized tooling for capturing data lineage

Measuring results

As organizers define success of their hackathon, they will also want to consider how to measure it — near term as well as in the future. Did the hours of collaboration improve participant engagement or knowledge? Did new employees seem better connected to your organization following the event? How is that quantified? If annual hackathons are held, is there increased participation and employee enthusiasm? And how is this enthusiasm channeled to everyday work?

Hackathons can act as catalysts for innovation, collaboration, and learning — elements that are essential for firms operating at a fast pace and especially for those ready to transform their organization.

Just as advanced institutions recognize true innovation goes beyond simply applying new technology onto outdated systems, forward-thinking companies understand that a hackathon is not the sole catalyst for driving progress. When used as part of a comprehensive strategy, the collaborative events can prove to be a highly effective tool in fostering innovation. 

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1 What is innovation?, McKinsey & Company, August 17, 2022.

2 The eight essentials of innovation, April 1, 2015, updated January 4, 2024, McKinsey & Company

3 Navigating the route to innovation, Bain & Company, 2019

4 How hackathons are reshaping our society, Forbes, August 5, 2023