Is a hackathon right for your business? Here's what you need to know.

The opinions expressed by Entrepreneurs contributors are their own.

Talk about a "hackathon," and the image that might come to mind is of a group of computer enthusiasts competing to devise a brilliant but obscure programming solution.

There is some truth to this, but the hackathon has come a long way since its original incarnation and deserves more attention from businesses. I would say almost every company should think about how they can use hackathons to unlock innovation and build teamwork, especially now. This practice is a powerful way to retain and attract the right people in the post-pandemic world where employees demand more value and meaning at work. It is also a major morale booster, provides the opportunity for significant professional development and creates new relationships that span all industries.

The modern hackathon isn't just about coding, though technology often plays a big role in the resulting ideas. I like to think of it as a meritocracy of ideas. This frees employees from their usual daily work structure, allowing them to focus on innovating to solve problems.

The world's most transformative companies have embedded this approach into their cultures, ensuring that employees regularly take time to reflect on the impromptu that doesn't necessarily yield immediate results. Google's "20% rule", which allows employees to spend one day a week on side projects, led to the development of Gmail and Google Maps.

Related: Microsoft Announces Hackathon for Future Ready Apps

The hackathon culture can take many different forms, from a tightly structured one-day event to a looser arrangement like Google's. The bottom line is that it establishes a web of new organizational connections and gives teams the freedom to dream big and fail. It should be part of a larger culture of innovation within a company, rather than a one-time event that compensates for a lack of innovative work the rest of the time.

Done well, it can create a virtuous flywheel of innovation, helping to make your company a place where people feel engaged and excited to work. So it's surprising that many companies still don't. Many leaders, especially CFOs, may refuse to allow employees "time off" that doesn't contribute to the bottom line in an immediate or easily measurable way.

The first step to instilling a successful hackathon culture is to ensure buy-in from the entire leadership team, especially finance leaders. Start small, using funds from an existing budget to minimize cost and risk. This gives you the opportunity to prove the concept and convince skeptics who will get a first-hand view of the excitement and energy a good hackathon creates. We gave our CFO a seat on the judging panel, a not-so-subtle way to get him personally involved in the event.

Hackathons should not just tolerate failure; they should actively celebrate it. The goal is not to offer incremental improvements; it's about sparking the kind of 10x transformative ideas that probably wouldn't arise in the normal course of work. When teams aim this high, failure must be accepted and encouraged as part of the process without fear of negative judgment. Today's flop may contain the seeds of tomorrow's success. At the University of Phoenix, we introduced an Icarus Prize at our quarterly two-day hackathons to reward the idea that got closest to the sun before it bombed.

It is important to take steps to ensure that the spirit of the hackathon does not end with the event. He should...