This new twist isn’t really that new. As long ago as the 1600s, prizes were used to encourage innovation by compensating research results with monetary rewards or medals. Historically, these prizes have been used to spark innovations in areas such as mathematics, medicine, and technology. For example, the British government sponsored a prize in 1714 for the first inventor of an instrument for accurately measuring longitude at sea. And a privately-funded prize encouraged Charles Lindbergh to become the first solo pilot to fly nonstop from New York to Paris in 1927.
Currently, these kinds of awards are being sponsored mainly by the federal government or by private foundations. However, states and localities could get into the business as well, with prize money leveraged through local foundations.
Federal Prize Efforts Provide Guidance
Public officials should start by looking at what the federal government has been doing in recent months. Congress passed legislation late last year enabling agency heads to sponsor prize competitions, and the use of contests and awards has been a visible element of the Obama Administration’s innovation efforts. These include:The SAVE Award: Piloted in 2009, OMB sponsors an annual “SAVE Award” – an acronym for “Securing Americans’ Value and Efficiency” – where federal employees can submit their ideas for how money could be saved, and citizens can vote on which ideas look to be the best. The winner gets to present his or her idea directly to the President.
Ideas generated by the contest – more than just the winner's -- are then implemented by agencies. For example, the Department of Agriculture adopted an idea to move to electronic pay stubs for 640,000 employees, saving thousands in printing and mailing costs.
(This idea was seen as compelling in the UK, where the British government conducted a similar contest this past year for the first time and had an even greater response than in the US, with over 100,000 ideas submitted.)
OMB’s Prize Memo: Back in March 2010, the Office of Management and Budget issued Guidance on the Use of Challenges and Prizes to Promote Open Government. The guidance encouraged agencies to identify internal champions for the use of prizes and competition, promised to create the Challenge.gov website, and offered potential legal authorities agencies could use. The memo also offered some cautions that agencies would need to keep in mind (several of these have been overtaken by the new law).
Challenge Grants: The Obama administration announced a new website in the Fall of 2010: Challenge.gov. The site is designed, as the White House put it, to make it “. . . easier than ever for Federal agencies to mobilize American ingenuity to solve our Nation’s most pressing problems.” The kinds of problems posed by agencies ranged from new gloves for astronauts to new recipes for nutritious school lunches. Currently, 27 agencies are sponsoring 66 different competitions. They’re worth a look!
Cautionary Guidance for Local Officials
States and localities shouldn’t just jump into the use of prizes, awards, and challenges without first thinking them through. A thoughtful piece on the Governing People website by Richard Fahey, "Promoting Innovation Through Prize and Challenge Programs," examines lessons and strategies from a Case Foundation study on the use of challenge grants, which is worth reading before developing your own program.Similarly, blogger Alexander Howard writes that crowdsourcing the solution to government challenges has “the potential to leverage the collective expertise of citizens.” Like the Case Foundation, he offers several design issues that need to be factored in by the prize sponsor, such as the anticipated output and being clear about the purpose and goal of the challenge.
Designing and Managing an Innovation Contest
What are some of the lessons learned in how to design, manage, and evaluate an innovation prize contest? A new IBM Center report, Managing Innovation Prizes in Government, by Luciano Kay, lays out a set of best practices based on case examples of successful prize programs.
In his report, Kay says a proper design requires:
• Defining an exciting prize challenge
• Setting a prize reward that considers commercial opportunities and other non-monetary benefits of participation for prize entrants
• Crafting simple and transparent prize rules
• Defining a scheme to finance the program that considers alternative funding sources
For the implementation of the program, sponsors should:
• Collaborate and seek co-sponsors or allies
• Use strategic opportunities to announce the prize and make it visible
• Respond to the feedback from entrants
• Select winners objectively
The evaluation of the program should consider different metrics of effectiveness and efficiency, and not lose sight of the fact that prizes may have different impacts during the competition and in the longer-term.”
Kay concludes “successful programs have been based on meticulous work in all stages and posed challenges that were exciting for both entrepreneurs and the general public.”
