Royal beginnings, how innovation prizes are used today, and keys to success
Innovation prizes are challenges that set an ambitious goal without determining how it should be achieved or who should achieve it, while offering a financial reward. But when did innovation prizes begin, where are they used today, and how do they really work? Jonathan Slater of The Blue Globe Consultancy breaks it down.
The History of Innovation Prizes
The concept may seem modern, but innovation prizes have been around for thousands of years. The first known example was in around 265 BCE, when King Hiero II of Syracuse wanted to know the weight of gold in his crown. Archimedes was the one to solve this challenge for the King, after discovering the principle of displacement (while he was taking a bath, if legend is to be believed), and he was rewarded for his solution.
Fast forward nearly two thousand years and we see another example of innovation prizes in history: the Longitude Prize, a challenge set by the British Government in 1714. They wanted to understand how to determine a ship’s location at sea using longitude, a feat that would allow Britain to dominate the world’s oceans.
Then came the Orteig prize in May 1919, a challenge for the first person to fly across the Atlantic singlehandedly. The winner, who received $25,000 for completing the challenge, was Charles Lindbergh, in his custom-built plane, the Spirit of St. Louis.
Innovation Prizes Today
Innovation prizes, sometimes called inducement prizes or grand challenges, burst back onto the scene in 1996 when the Ansari X Prize challenge was launched. This scheme, designed to get an individual or non-government organisation to fly a reusable vehicle into space twice in two weeks, changed the aerospace industry as we know it today.
Why Run Innovation Prizes?
Instead of an individual or organisation solving a problem, by launching an innovation prize the power of a global knowledge bank can be harnessed, while participants are rewarded for their time and knowledge.
Unlike grants, which fund proposals, innovation challenges reward participants for what they’ve managed to achieve. And there’s value to those who don’t win, too; namely, the satisfaction of solving a problem and, for many, the enjoyment of taking a risk.
Factors to Consider When Creating Inducement Prizes
Finding the right participants who can solve a specific problem is often key to managing a successful innovation prize. Is the challenge targeting twenty-something men, or thirty-something women, for example? What drives those who make up the target group?
In many cases, the participant who solves the problem might not even belong to this group. So how can the pool of participants be expanded in order to find the one person who can actually help? These are the questions that are key to success.
Defining the Goal:
Finding people who are interested in researching and understanding the goal with enough time and resources to solve it, is an important step towards a successful innovation prize. But for potential participants without time and resources, this can be a barrier to entry, meaning that all participants are not equally able to contribute.
This leaves us asking a number of questions around the traditional model of innovation prizes. For example, does capacity building to support participants mean it’s not a true innovation prize? Does the model need to hybridize with elements of grant programmes like technical support and other support mechanisms help participants with capacity building to contribute to the programmes?
Structuring the Reward:
Motivation for participation in an innovation prize can be based on personality as well as social experience. History shows us that countries not well known as entrepreneurial nations don’t see as much success with innovation prizes, as people tend to be more risk averse, and more likely to expect grants to participate.
There are a number of elements to keep in mind when structuring a reward. Financial compensation, recognition for the winner (or winners), and even the level of personal satisfaction for participation all need to be considered. Although financial reward might not be the primary motivation for entering, there’s no doubt that it gets people interested.
After running over 450 prizes, I’ve made my own mistakes in setting rewards, from extremely high figures ($250K to a single participant for an idea) to such small prizes that no one wanted to participate. So setting the reward is key, although it could vary from £500 to £10 million, depending on whether you want solutions in a short time frame, ideas rather than full prototypes, or implementation of societal change programmes.
Length of the Prize:
In setting a time frame for innovation prizes, it’s important to give people enough time to solve the problem, but without the risk of them forgetting about it. Different industries use different lengths of time, with anything from three or four weeks, to three or four years (and plenty in between). Getting that period right comes from experience, as well as using the right platform to run and manage a prize.
As you can see, there are many different factors that contribute to a successful innovation prize, and there’s no one size fits all approach.