incentive2innovate – Tool #2: Incentivized Competition

The second panel at the incentive2innovate conference at the United Nations was on incentivized competition. The panel was moderated by Matthew Bishop (Chief Business Writer/US Business Editor, The Economist; Co-Author “Philanthrocapitalism: How the Rich Can Save the World”):

Paul Jansen, Partner, McKinsey & Company
Jonathan Bays, Social Sector Consultant, McKinsey & Company
Peter H. Diamandis, M.D., Chairman & CEO, X PRIZE Foundation
Alpheus Bingham, Ph.D., Founder and Board Member, InnoCentive
Anthony J. Tether, Ph.D., Former Director, Defense Advanced Research Projects Agency (DARPA)

Rather than trying to recount the discussion, I thought I would present the Top Insights from the panel:

1. McKinsey did a study of whether or not prizes work in philanthropy. They found that prizes are a unique & powerful tool to drive innovation. Prizes have been used for a long time – including the Orteig Prize that rewarded Lindbergh for his transatlantic flight with $25,000. Download the study as PDF
2. The growth rate in available prizes is running at 14% a year. Almost half has come from foundations or non-profits established between 1995 and now. The majority of prizes used to be for the arts and now they are for the sciences.
3. Prizes can employ as many as seven different mechanisms to achieve their goals. Here are seven ways that prizes deliver change:
1. Identify Excellence
2. Focus a Community
3. Influence Public Perception
4. Identify and Mobilize New Talent
5. Strengthen Community
6. Educate and Improve Skills
7. Mobilize Capital
4. Successful “Solvers” often are very distant from the solution. This a good reason to create interdisciplinary teams to seek solutions.
5. Achievement of a prize helps to transform what the broader population believes is possible. A hidden but powerful benefit!
6. There are six major prize types
1. Participation
2. Exemplar
3. Network
4. Exposition
5. Point Solution
6. Market Stimulation
7. The new healthcare Xprize could help transform healthcare from reactive medicine to proactive, personalized medicine.
8. We create stories around the Aha! moments that result in success, ignoring the unsuccessful attempts that helped drive that Aha! moment. We should celebrate the role of failures in successes.
9. “Money is not the reason for kids not getting into science. We haven’t been giving them interesting, difficult challenges to inspire them.” – Anthony Tether
10. The key to Open Innovation is defining the problem and then identifying the crucial barriers that need to be overcome to solve it.
11. DARPA Grand Challenge competitors were actually more interested in the trophy than the millions of dollars. When doing an innovation prize, it is important to understand what the motivation is of your potential competitors – money is not the only draw.
12. If there is not a sustainable community that will continue beyond prize achievement, then the prize may not succeed.
13. “Entities that underinvest in execution of the prize to offer a larger prize, will often be underwhelmed by the results.” – Paul Jansen
14. Informational power is widely distributed, financial power is concentrated – both can be used to drive innovation – powerful together.

What do you think?

Braden Kelley (@innovate on Twitter)