In the world of cryptography, an institution organizes a competition to find the best cryptographic algorithm to become the new standard, one currently active being the NIST hash function competition. They previously did this for AES (Advanced Encryption Standard) and the process achieved great results.

I think competitions could be organized to choose other standards as well, such as the standard format for HTML5 video, or a replacement for JPEG (WebP being one contender). As it is now, the "free market" decides the next major standard, and it's usually the corporation with the deepest pockets that wins. Currently, h.264 is the most popular video codec on the web today, but it's patented technology. It's one of the contenders for HTML5 video, and there's fear that the patent holders could choose to charge fees at any time to license their codec.

During competitions like these, every contender is allowed to scrutinize each other standard to point out weak points or shortcomings. Then the standard can be changed and improved upon, thereby achieving a greater result. For example, WPS (WiFi Protected Setup) has a flaw which allows an attacker to connect to a network in a matter of hours. Had a competition been organized to choose a standard for WPS, this flaw could have been discovered early on and fixed, thereby avoiding this situation.