Of the things I've seen reportedly happening at Ubiquiti, that one makes more sense than some.
Businesses put projects out to tender all the time, and other businesses that can provide what is wanted invest sometimes very considerable resources into putting in a bid, knowing that if they don't make the winning bid then those resources will mostly likely be completely wasted. Evidently it is still worth operating a business on that basis because the benefits when you do win outweigh the costs of the failed bids, and those costs might include reducing morale in a team who worked on a failed bid.
If that is the case across industries as a whole then economically it might make sense for a business to operate on the same basis internally for their Next Big Thing. Run multiple independent teams at the start, give them all the same brief, then see which team comes up with the most promising starting point. I don't see much of an argument for continuing the internal competition beyond the concept to prototype stage, though, unless perhaps it turned out that more than one team could produce a product that was viable in its own right without competing for the same market.
Businesses put projects out to tender all the time, and other businesses that can provide what is wanted invest sometimes very considerable resources into putting in a bid, knowing that if they don't make the winning bid then those resources will mostly likely be completely wasted. Evidently it is still worth operating a business on that basis because the benefits when you do win outweigh the costs of the failed bids, and those costs might include reducing morale in a team who worked on a failed bid.
If that is the case across industries as a whole then economically it might make sense for a business to operate on the same basis internally for their Next Big Thing. Run multiple independent teams at the start, give them all the same brief, then see which team comes up with the most promising starting point. I don't see much of an argument for continuing the internal competition beyond the concept to prototype stage, though, unless perhaps it turned out that more than one team could produce a product that was viable in its own right without competing for the same market.