NASA, and the Defense and Energy departments have led the field in expanding their use of prizes, and the government has established the Center of Excellence for Collaborative Innovation at NASA to provide guidance on designing, implementing and evaluating prizes. Pilot programs are underway with the Health and Human Services Department, Environmental Protection Agency, U.S. Patent and Trademark Office and others.
Use of prizes is broadening as agencies become more familiar with them, and learn when they make sense. “As experience in the public sector has increased, so has the savvy in designing challenges,” says Dorgelo. Competitions can make sense, she says, when the problem is tough or the target audacious, “and you want lots of new minds on a problem, citizen-solvers from other fields.” Prizes also appeal “because you pay only for success, which provides security and risk-mitigation for agencies.”
As the number of challenges grows, OSTP and the NASA-run center of excellence are capturing the lessons learned. These include how to structure the incentives, which can range from monetary prizes to an advanced market commitment—the promise to buy the resulting innovation—depending on whether a challenge is targeted at students or large manufacturers. Incentives can be “exposure to experts or celebrities, public awareness through marketing and PR, or advice on how to take a product to market,” she says.
While many government prizes are targeted at individuals, or university teams, some are aimed at encouraging innovation in existing industries. The Energy Department's SunShot Prize aims to spur low-cost rooftop solar-power installations by offering $10 million in prizes to the first three teams to demonstrate an average of $1/watt for non-hardware installation costs. To win, teams must deploy 5,000 small-scale rooftop systems before the end of 2014. “They are trying to move an entire sector,” says Dorgelo.
The government also gets involved in external competitions, she says, citing the X Prize Foundation's Progressive Automotive X Prize, a global competition that in 2008 awarded $10 million to three teams for cars that achieved the equivalent of at least 100 mpg in real-world driving. The competition drew 111 teams and the $5 million top prize was won by Virginia-based Edison2 with its 110-mpg Very Light Car.
Dorgelo also singles out online challenges conducted by the U.S. Air Force Research Laboratory (AFRL) and NASA. AFRL awarded $25,000 to a retired engineer in Peru for a method of stopping a fleeing vehicle at a checkpoint. NASA awarded $30,000 to a retired radar engineer in New Hampshire for an algorithm that predicts solar-particle events “better than NASA's own engineers could,” she says.
Based on his research, Kay suggests challenge designers consider some key parameters. First is to offer a set of incentives, not just a cash purse, but also publicity, prestige and contract opportunities. Second is to set a deadline that recognizes prizes tend to attract informally organized teams that not only have to develop the technology, but find resources and hire people. “You have to look at the timeline, and not just the technology availability,” he says.
Third is to choose a topic carefully because competitions do not work in every field. “Sometimes challenges can be very difficult to accomplish because of the knowledge base needed to start. For example, a prize for faster-than-light travel might need 50 years of research,” he says. “You need pre-existing solutions for the technologies. That tells us about the fields you can apply this to. You cannot find solutions to things that are completely out of this world.”
The Ansari X Prize, Kay says, built on research already conducted in supersonic and exoatmospheric flight, most notably by the North American X-15. Similarly, for the Lunar Lander challenge, “something already existed, from Apollo and the McDonnell Douglas DC-X. It was a low-budget competition to increase the efficiency of something that was already in place.”
The Google Lunar X Prize, meanwhile, has been designed “to set project management conditions rather than targets for technology,” Kay says. “The constraints of budget, source of funding and time set new conditions for managing a project that are in line with an open-source, low-budget approach to spaceflight.” This is encouraging competitors to “use open-source technology, things they can find, and not try to do something fancy.”