Why Innovators Should be Paying Attention to Prizes

Innovators—including government innovators—should be paying attention to prizes because they work, because they add another tool to their innovation tool belt, and because they are already being used by a typical late adopter—the government. I’ve been a student of prizes and competitions in government for several years now—there is always something to learn: a new success story, an understanding of new enabling legislation, a new prize structure you’ve never seen before, etc. It’s a fascinating field because every prize is different: if you’ve seen one prize… you’ve only seen one prize.

So why do prizes, in fact, matter? Why should the next generation of leaders be thinking about them? Bottom line: they work. (Check out the Prezi I created for a recent lecture I gave at MIT on this topic for more details on the assertions and examples below)

Before I dive into some examples of how they’ve been proven to work though, it’s important to set context: I’m not only referring to app contests and video competitions, which can be great introductions to Agencies about the process for conducting a prize, but more importantly prizes that are specifically designed to solve root cause issues that have been pervasive in their sector for some time.

Often government is a very late adopter of new tools, technologies or approaches, but that’s not the case when it comes to prizes. Prizes are resulting in real value and tangible technology innovations. And there’s not just one example—the list of success stories is growing every day. For example, prizes have brought real solutions to bear for many sticky problems, including:

Transportation Energy Efficiency: This October, NASA awarded the first place prize of $1,350,000 in the Green Flight Challenge sponsored by Google to of State College, PA, and second place prize of $120,000 to eGenius of Ramona, CA. The winning teams, which were both electric powered, shattered the fuel efficiency requirement by achieving about twice the required 200 passenger miles per gallon.

Energy Efficiency: The first L Prize (a prize sponsored by the Department of Energy) category targets the 60-watt bulb because it is one of the most widely used types of light bulbs by consumers, representing roughly half of the domestic incandescent light bulb market. As the first entrant in the 60-watt category to successfully meet the full competition requirements in Fall 2011, Philips Lighting will receive a $10 million cash prize as well as L Prize partner promotions and incentives.

International Development: The Gates Foundation and USAID have partnered for the Haiti Mobile Money Initiative (HMMI), a $10 million incentive fund to jumpstart financial services by mobile phone in Haiti and expedite the delivery of cash assistance to victims of the country’s devastating earthquake by humanitarian agencies. This initiative lays the foundation for advanced banking services that could help millions of Haitians lift themselves out of extreme poverty. In January of this year, Haitian mobile operator Digicel won a $2.5 million award for being the first to launch a mobile money service in Haiti, Tcho Tcho Mobile, that meets the competition’s stringent criteria. The second operator to launch a mobile money service within 12 months will receive $1.5 million. Another $6 million will be awarded as the first 5 million transactions take place, divided accordingly among those that contributed to the total number of transactions.

The fact that prizes have been shown to incentivize the creation of new and innovative solutions, when designed and executed properly, means that innovators should be paying attention to them.

We have to keep in mind that each prize is unique because of incentives, solvers, structural designs, and sequencing required to solve the problem at hand are each unique. And because there’s no formula to do them correctly they are very hard to teach (though folks like McKinseyJaison Morgan, the General Services AdministrationTom KalilPeter DiamandisKarim Lakhaniand others have published great information about what makes them tick). The truth is, there are many flavors of prizes that each have their own unique benefits and drawbacks. An understanding of different prize types is a huge resource to add to your innovation tool belt. Actually, I think it’s an innovator’s responsibility to understand them.

A large case for the value of prizes can be made but I can’t neglect to mention that there are also naysayers. Prizes are one tool in a rather large tool belt to stimulate innovation. Grants, contracts, loans, concessions, public private partnerships, and a host of other tactics can also be applied as appropriate. Given this context, questions about prizes as a legitimate government procurement mechanism have been raised and others feel like prizes can be seen as a “waste of taxpayer dollars” when the government is footing the bill. Personally, I think a debate on this issue is very healthy.

So what do you think? Has enough of a business case been made to get more innovators thinking about using prizes? Or are there areas of study and concrete examples that still need to be explored? What would help you make the best case for adding prizes to your “innovator toolkit”?

As always, if you have any questions feel free to reach out to me at @jenngustetic.

(Note: Originally posted on the Phase One Consulting Group, Government Transformation Blog for a special featured Govloop series when I was an employee there.

ROI on US “Campaign to Cut Waste” from the UK Experience

This story summarizes some twitter conversations that relate to several US Executive Orders on Customer Service and website consolidation. There are a lot of orders being released, but it's unclear what the ROI on the responses to those orders will be. This story brings that discussion together in one place. Read the complete Storify log for more details. [View the story "ROI on US \"Campaign to Cut Waste\" from the UK Experience" on Storify]

Observations from a Judge: Three Takeaways for Federal Prizes from MIT’s Global Challenge

Over the past few weeks I had the pleasure of serving as a global judge for the MIT Global Challenge which ended in an exciting awards ceremony Monday in Cambridge, Mass. The Challenge is designed to connect students” with the passion and talent to improve the world with the experience and resources of the MIT community worldwide.” MIT views innovation and entrepreneurship as public service through this annual competition that awards up to $25,000 per team for the best ideas to tackle barriers to well being. A snapshot, borrowed from the challenge website, illustrates the structure of the challenge:

Framework for MIT Global Challenge

Through the course of judging this challenge three invaluable ideas stuck out that I think can help all of us  as we continue to explore the use of prizes in the federal government:

(1)    Team judging is a great option for the participating teams: The global challenge set up the judging process so all judges were assigned to judging teams (I was in team “Thundercats”).  Teams consist of 4-6 judges who all independently review 5 submissions and then work together to schedule interviews with the teams to clarify any outstanding questions. Furthermore, the interaction with the teams doesn’t end with those interview calls. I found that many judges wanted to stay in touch with the teams after the challenge was over and continue to mentor them to help contribute to the success of their ideas. Also, the teams I spoke with at the awards ceremony are genuinely excited to continue a relationship with their judges to help make their idea a reality—even if they weren’t a winner. My major lesson here was that in as much as prize competitions can help develop relationships between the participating teams and judges, an ongoing mentoring network can be set up organically.

(2)    Team judging is also great for the judges themselves: Working together to interview the teams was by far the most valuable part of the experience for me. Through the planning, interviewing and follow-up conversations we had, I got to know a truly phenomenal group of MIT alum that are passionate about development. Membership on my group was diverse including a doctor, a USAID innovation leader, a 3M senior engineer, and a DC-based strategy consultant. I’m excited about continuing my relationship with those folks in years to come. I learned a lot about where the cutting edge, innovative concepts at the university level for development currently are, was able to give back to my alma mater, but also developed relationships that are incredibly valuable to me as well. All the right incentives were in place for judges in my mind.

(3)    Leveraging a strong, existing network drove high participation: The MIT IDEAS Challenge relies on one major network—the MIT student and alumni network. Eligible participants are within that network, judges are within that network, and many sponsors come from that network. By focusing on a community that was vested in continuing the growth, development and health of that community, an existing incentive structure was already baked in. The result? In 20 days, 117 countries and 14,000 voters participated in the public judging process for the awards. Also, over 50 judges from across the world participated in the juried awards. A community didn’t need to be DEVELOPED for this challenge—they leveraged one that already existed. This community was primed for challenges and has responded accordingly.

Overall, I had a wonderful experience participating in the judging process. I would do it again in a heartbeat and look forward to the impact the winning teams will make in the developing world in the next year.

In addition to liveblogging the awards ceremony (see the coverage on the live site here), a couple of the teams I evaluated ended up winning several prizes; congrats to Innobox and AQUA for their great ideas!

(Note: Originally posted on the Phase One Consulting Group, Government Transformation Blog for a special featured Govloop series when I was an employee there.

Mind the Gap: How Innovative Partnerships Can Help Fill the Funding Gap

In my introductory posting in the “jennovation” series for Govloop and Phase One Consulting Group’s Transformation in the Federal Sector Blog, I introduced you to an innovative platform known as the Department of Education’s Innovation Portal. This week I want to describe a little more about how that portal, in combination and the i3 Foundation Registry, demonstrates how government 2.0 technologies can help to create secondary markets to fill funding gaps. This is making a bit of a jump from my last posting, where I focused on Public Private Partnerships (PPPs) in infrastructure development. However, both examples, whether it be building a road through a PPP or funding innovative education solutions, demonstrate how in many instances private capital must supplement federal funding to solve the grand challenges of our time.

The Department of Education was appropriated $650M through the American Recovery and Reinvestment Act (ARRA) for the Investing in Innovation (i3) grant program to “provide competitive grants that expand the implementation of, and investment in, innovative and evidence-based practices, programs and strategies that significantly:

  • improve K-12 achievement and close achievement gaps;
  • decrease dropout rates;
  • increase high school graduation rates; and
  • improve teacher and school leader effectiveness.

[The funds are intended] to accelerate the creation of an education sector that supports the rapid development and adoption of effective solutions.” [1]

Instead of disbursing the funds through an entirely traditional grant program, the Department of Education has leveraged the principles of Open Government in several innovative ways to pilot “open grant making”. Their approach has opened up the entire process of grant making to make federal funding demand more visible, to encourage a more transparent award process, and to create a secondary market for unfunded applications. They are piloting how to do this through several innovative websites that provide different functions:

  • Data Visualization: The portal visualizes important information about the grant applications (no awards have been made yet): location of applications, amount requested, summaries of the projects, and the ability to filter by priority area and project type (development, validation and scale-up). This is a relatively novel way of displaying pre-award grant information. Currently USASpending and theFederal Assistance Award Data System display award information but not pre-award information. Why is this important? It’s hard for us to do the research to know who applied for funds but didn’t receive them in a systemic way. allows the public to understand trends in applications for federal funds, not just the awards,and thus get a better view at the demand for federal funds in this issue area.
  • Ideation and Challenges: The open innovation portal provides a second crucial functionality to education’s innovation agenda. This portal allows anyone to post challenges on education issues (once they are moderated). In addition, this portal acts as a gathering place for the education community to submit ideas about how to improve our nation’s education system. This platform will plug once that new government-wide challenges portal is launched in August. This portal allows new issue areas to be identified and collaborated on in a transparent fashion.
  • Secondary Market for Education Solutions: The i3 Foundation Registry, in my mind, is the REALLY cool part of this innovation triad. Typically grant programs receive applications, review and score those applications, and then award funds based on the scoring of the applications and the total amount of funding available. There are usually quite a few applications that score relatively well but can’t be funded due to insufficient funds. It’s not a revolutionary concept that federal funds are often not able to meet the demand for funding in many fields. What makes the foundation registry so cool is that it allows foundations that would be likely to fund innovative solutions in this issue area to find grant applications that weren’t successful in receiving federal funds. This site creates a secondary market for innovative education solutions.

You may have heard of, a non-profit that connects people, through lending, for the sake of alleviating poverty (see how kiva works). “Kiva empowers individuals to lend to an entrepreneur across the globe. By combining microfinance with the internet, Kiva is creating a global community of people connected through lending.” [2] On this site, anyone can donate to an entrepreneur a world away that might just need $200 to start their business. Lenders are paid back in full 98.78% of the time [2]. Often time, the entrepreneur just needs some start-up capital that doesn’t have prohibitive interest rates. Kiva allows multiple lenders to combine their resources to fund one entrepreneur. Some quick stats:

  • Total value of all loans made through Kiva: $150,250,250
  • Number of Kiva Users who have funded a loan: 468,971 [2]

Kiva created a way for lenders to find projects they’d be likely to fund through the power of the internet. The i3 foundation registry has done something very similar, albeit for projects that require much more funding. By displaying the grant applications that could not be funded, foundations that would be likely to fund these types of projects are able to find possible investment opportunities.Partnerships will be possible that would likely never have been possible before. Foundations are able to identify projects that might not have been on their radar before.

The i3 grant program is a pilot in innovative and open grant making—sharing more information throughout the grant process to leverage secondary markets to fill the funding gap between the federal supply of funds and the demand for funding.

This concept has recently had me thinking a lot about other critical issue areas where this model might work:

  • Health research
  • Transportation solutions
  • Sustainable community development
  • Energy research

The challenge in many of these problem areas however is who would constitute to secondary market. At least in transportation, many of the interested parties would largely be for-profit entities, not non-profit foundations like in education. So I turn the question around on you: In what other major issue areas for the U.S. government could open grant making principles be leveraged? What would the challenges be? Where could possible funders be better connected with those innovative solution providers out there?

As always, please feel free to reach out at any time during this series to continue to conversation.




(Note: Originally posted on the Phase One Consulting Group, Government Transformation Blog for a special featured Govloop series when I was an employee there.