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Policy

The Power Of Prizes

The federal government is using more competitions in an attempt to spur innovation

by Andrea Widener
July 21, 2014 | A version of this story appeared in Volume 92, Issue 29

SCIENCE PRIZE
The e-Genius aircraft is pulled out to the runway for the miles per gallon (MPG) flight during the 2011 Green Flight Challenge, sponsored by Google, at the Charles M. Schulz Sonoma County Airport in Santa Rosa, Calif. on Tuesday, Sept. 27, 2011. NASA and the Comparative Aircraft Flight Efficiency (CAFE) Foundation are having the challenge with the goal to advance technologies in fuel efficiency and reduced emissions with cleaner renewable fuels and electric aircraft.
Credit: NASA/Bill Ingalls
NASA uses competitions like the Green Flight Challenge to push innovation.

Last month, the National Aeronautics & Space Administration (NASA) released a treasure trove of climate data: global land surface images, vegetation conditions, climate observations, and climate projections.

Rather than wait for scientists to dig in, though, the agency issued a challenge to the public to come up with ways to use the data. The Open NASA Earth Exchange challenge will award up to $60,000 in prizes for the best ideas, then follow up with a second competition to turn the ideas into reality.

This challenge is just one example of a push by federal agencies to use prizes to spur innovation. The government has offered 330 prizes from 50 federal agencies since 2010, a far cry from the handful offered earlier. The competitions include many different types of projects, such as redesigning astronaut gloves, cleaning up oil spills in oceans, and designing energy conservation apps.

The impetus for change has come from the top. Congress greatly expanded the government’s ability to use prizes under the 2010 reauthorization of the America Competes Act, and in 2012 the White House Office of Science & Technology Policy (OSTP) created the position of assistant director for grand challenges. That is held by Cristin Dorgelo, formerly of the XPRIZE Foundation, which was made famous by its multi-million-dollar prizes for feats like landing a robot on the moon or cars that can reach 100 mpg. Its prominence in part prompted the government to move toward offering more prizes.

The idea of using prizes to motivate innovation is centuries old. A 1714 prize spurred the first practical way to calculate longitude, and in 1927 Charles Lindbergh flew across the Atlantic Ocean to get a prize.

But prizes are fairly new to government, and agencies are still working out the best way to design a competition that will produce a useful solution: which questions are ripe for prizes, what monetary or other incentives to offer, and how to reach the right audience to solve a given puzzle. They are also grappling with when prizes are the right solution and how they fit into the larger federal research scheme.

“Prizes are a great way to stimulate clever, inventive, and entrepreneurial people to solve problems” that involve bringing together existing technologies, says Christopher T. Hill, a retired George Mason University public policy professor. “When we want to explore the unknown and push back the frontiers of knowledge, I don’t think prizes have much relevance.”

Prizes have several advantages over traditional research support models. Among the most attractive is that funders pay only for results. Another plus is that competitions can attract people from outside traditional agency grantees, people who may have new insights into difficult research problems.

NASA, in particular, has found that to be true. “People just really want to solve a NASA problem,” explains Jenn Gustetic, who oversees NASA’s prize competitions. “They want to participate in something that they never thought as an adult they would be able to be part of.”

The Defense Advanced Research Projects Agency, the Department of Energy, and NASA have all been trying out prizes on a small scale for a decade as a way to stimulate creative solutions to technical challenges. An advantage of prizes is that they force traditional research agencies to look at innovation differently, explains former Xerox executive Mark Myers, who chaired a 2007 National Research Council study that recommended experimenting with using prizes at the National Science Foundation. “The goals of the prize have to be set at the outset—plus the criteria for success.” That’s a shift in thinking from the traditional investigator-initiated research model, he says.

The in-depth thinking required is just the beginning of deciding whether a research problem can be solved through a prize. Prizes need to have an easily definable problem. The solution has to have specific criteria that would identify a winner. And the research has to be general enough that a broad community can engage in finding a solution.

At NASA Gustetic asks, “Can we sufficiently generalize the problem to make it a problem where you don’t have to speak astrophysicist language to address it?”

If the answer to that question is no then maybe the basic understanding of the topic hasn’t come far enough to allow for a competition. Prizes work best when you’re asking competitors to bring existing knowledge together to solve a tough technical challenge, not tackle a basic research question with an unknown answer, George Mason’s Hill says. “Prizes don’t answer why questions, they answer how questions,” he says.

Hill explains that some questions are just not ready for prizes. “Why not give a prize for a cure for cancer? The National Institutes of Health could do that, but there is a lot of fundamental knowledge that we are going to need to know to cure cancer.”

NOW WHAT?

Arsenic Prize Didn't Lead To Commercialization For Chemist

 

Abul Hussam, a chemistry professor at George Mason University, knows what it’s like to win a major prize. He was awarded $1 million in 2007 when he won the National Academy of Engineering’s Grainger Challenge Prize for low-cost ways to remove arsenic from drinking water.

Damaging arsenic levels in drinking water is a problem that is pervasive in Hussam’s native Bangladesh, so he had been working on it in his spare time since 1998. The prize did motivate him and his research group to finalize the Sono filter, which clears water through locally available river sands, wood charcoal, and brick chips, with the addition of a composite iron matrix.

After he won the Grainger Prize, Hussam expected companies to want to develop the filter, but George Mason did not get much interest. “As a scientist you go to the field, you have a product, and you may not be prepared for [what to do next],” he says.

Hussam spent his prize winnings primarily on developing a manufacturing facility and lab in Bangladesh, and a half-million people are now using the filter. But progress has been slow, he says. “You need help to actually educate the local people and develop a protocol to popularize the filter,” Hussam says. “You give someone something, even for free, and they may not use it.”

Since the award in 2007, Hussam has kept his eye out for prizes—and has worked on several sponsored by the Gates Foundation—but he hasn’t seen many that apply to chemistry.

In academia, for the most part, “you are not solving any practical problems,” he says. Outside of the filter, “we never developed anything to speak of that I can say somebody used, any product or even a concept of a product.”

Competitions also have to walk the fine line between being challenging enough to capture the public’s imagination but focused enough to be solved in a relatively short period of time. Only two NASA challenges haven’t had winners, Gustetic says, and that is because the problems turned out to be too complicated.

Engaging the broader public is an important first step to getting a creative solution, she explains. “Innovation research shows that breakthrough ideas oftentimes come when one field introduces an idea into a different field,” Gustetic says. NASA has seen a wide range of people jump into their competitions: entrepreneurs, retirees, academics, students, engineers, computer programmers.

A BETTER GLOVE
[+]Enlarge
Credit: NASA
Prizewinners can use competitions to demonstrate how well their products work.
Peter Homer, using the vacuum chamber, demonstrates the dexterity of his prizewinning glove.
Credit: NASA
Prizewinners can use competitions to demonstrate how well their products work.

One way to reach those communities is good old-fashioned publicity, which is a much bigger part of a prize competition than of a traditional grant or contract process. Agencies often team up with websites that host outside competitions, which are especially popular among computer programmers. For example, NASA is teaming up with Amazon Web Services and InnoCentive, which supports Internet-enabled competitions, to sponsor the Open NASA Earth Exchange challenge. Another way to reach different audiences is to team with private sponsors—companies interested in the research topic, for example—who can help get the word out.

The Obama Administration has created a website, challenge.gov, that brings together all government prizes. Last year the website won the Innovations in American Government award from Harvard University’s Kennedy School of Government. “There is no reason why a state or large municipal or county government couldn’t do something similar” to challenge.gov, Harvard spokesman Daniel Harsha says.

Smaller governments may not be able to offer what federal agencies can: a major reward. But that may not be an issue. Many federal competitions have a small prize or no prize at all. A Deloitte University Press study of public prizes showed that the average government cash award was just $10,270 in 2013.

OSTP’s Dorgelo says that many competitions woo competitors with incentives other than money. A few examples are business advice, independent testing data, and intellectual property rights. Agencies are trying to find “the right mix of monetary and nonmonetary incentives,” she says.

Prizes aren’t always about just solving a problem, Dorgelo explains. Agencies often have other goals, such as attracting new ideas into a research area or trying to encourage more entrepreneurs or businesses to enter the marketplace. “In the last four or five years we have become increasingly savvy in prize design,” Dorgelo says. Agencies “are looking to drive multiple outcomes with a prize competition.”

One big advantage of prizes—and what has made them popular with Congress—is that funders pay only for success. But that means those who decide to compete must either pay for the time and materials needed to meet the competition’s goals or find someone else to help with those costs.

For small competitions, that might not be a problem. Competitors will put off buying a new car or take money from their 401K to participate, observers say. But for the competition to, say, build a lunar lander, that’s usually not going to be enough.

“Where is the money going to come from to support all of these prize guys? That is the Achilles’ heel of the prize scheme,” Hill says. Usually it comes down to well-intentioned rich guys who will invest, either personally or through venture capital schemes, he says. That won’t work for every problem, though. “Mostly these guys are looking for the kind of problem that is really exciting, really big, really strange and unusual.”

Prizes come with other potential issues. The Deloitte study showed that the administrative costs are much higher than for traditional grants because they require such intensive time both to publicize the competition and to judge it. That said, the study concluded that the overall costs are lower than traditional R&D funding mechanisms.

Observers point to another concern, one that comes from overuse. The Administration’s push could mean that the creative thinkers drawn to prizes won’t be working on the most important questions. Agencies could also feel pressure to abandon their traditional funding mechanisms to award prizes for problems that might not be a good fit.

The Deloitte report also showed that there aren’t really best practices in place for government yet. “In sum, incentive prize design for the public good turned out to be a brisk, messy business,” with every agency doing its own thing, it says.

The report does make recommendations for how to best conduct prize competitions, but it didn’t look at the larger question of whether such competitions are effective. That’s a question that may require more research—maybe through a traditional grant.  

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