The use of prize incentives to motivate problem solving is well established. While some debate continues vis-a-vis effectiveness, especially in contrast to more traditional modes of research and discovery, most of that analysis has been from the ‘receiving’ end of the spectrum, that is, by the proposed ‘users’ of the innovation. Less so has ‘effectiveness’ been addressed from the inventor’s or contributor’s perspective.

Perhaps it seems all too obvious. The solvers of such puzzles as the Longitude Problem or a Millennium Problem must surely be motivated to work in exchange for the substantial cash reward; it’s no more complicated than any employment contract. Of course, people do things for lots of reasons. I think, over time, that prize systems have evolved to meet specific NON-CASH interests of the solvers and it would be interesting to see how two systems have developed, characterized by InnoCentive on the one hand and the X-Prize on the other.

To generalize, the X-Prizes have large cash awards (multiple millions of dollars) and the InnoCentive prizes (referred to as ‘awards’ or ‘bounties’) are considerably more modest… in a typical range of tens of thousands of dollars. At first blush it would seem that the X-Prize would dominate if problems were tackled solely on a return basis. In reality, I think this is probably not the case. While the X-Prizes are substantially larger in amount, the challenges to which they are attached are complex and expensive to execute against. It would not be surprising to imagine that more than 10 million dollars was consumed (even by just the winner) in the work that led to the awarding of the Ansari X-Prize for space travel. More akin to a Nobel prize, the X-Prize has a very well publicized existence: when the prize is offered, as work progresses, and when the final awarding takes place. This public footprint serves not only to motivate for reputation and notoriety but it likely helps ‘SHAPE’ the research agendas of individuals and institutions as they derive benefit from the publicity associated with working on a public, important problem.

In contrast, the smaller InnoCentive bounties are not individually publicized, the ‘Seekers’ do not receive an advertising benefit and the cash amounts, while important and substantial, are not likely to be ‘front page stuff.’ Of course, even in these more modest circumstances reputation and notoriety play a role. Folks like to succeed where others have tried and fallen short. There is healthy competition among chemistry professors just as we might find among actors, politicians, executives or athletes.

InnoCentive-type awards are intended to elicit a response via a different set of motivations and produce a different outcome than large public awards. While a 25 million dollar Earth Prize might shape a research agenda, a $40,000 InnoCentive award likely will not. What it WILL do is appropriately broadcast a challenge of a scale more adaptable to the resources of numerous individuals and small team efforts. Thus, the diversity of approaches to the problem is magnified many fold, and the likelihood of finding a solution – especially a very novel solution – goes up with this massively parallel attack on solution space.

In an InnoCentive-type model, larger problems are not ignored, but they are broken down into this “bite-size” scale and solutions may then be re-aggregated to larger applications. One advantage solvers see is that the greater number of problems, available at any moment, allows solvers who deliberately set out to tackle a bounty-based challenge (i.e., retirees not ready to hang up their minds or students looking for a flexible opportunity) to scan the choices available, and “swing only at the pitches they think they can hit.”

Prior to launching InnoCentive, the concept was reviewed with several researchers to determine whether they would even have any interest in participating. A Stanford professor replied, “…I’d never set out to work only on a problem I saw posted — but, I’m always looking for new ways to synthesize dehydroamino acids, and I’d be happy to put ‘your’ compound in ‘my’ table.” (i.e., in a scientific publication). Ultimately it was about challenges that aligned with his interest and existing motivations. (Of course, he indicated that he would cash the check and that the bounty amounts needed to be fair in exchange for the information sought.)

Finally, there is one last thing that needs to be said for incentive prize systems that I feel has been overlooked in many of the effectiveness commentaries. It is true that innovation is often “for mankind.” But we can never forget that it is also “BY mankind.”

A few years ago I followed Tom Friedman on a speaking platform shortly after the publication of “The World is Flat.” As he walked through the notions of Globalization 1.0 to 3.0, I realized that systems like InnoCentive were specifically addressing this 3.0 phenomenon. (As a brief reminder: 1.0 was the globalization of nations, 2.0 was the globalization of corporations and 3.0 was the globalization of individuals.)

Friedman pointed out that a billion people had just shown up to the global party and wondered about their new position and roles. I would have to say that the vast majority of the challenges posted on InnoCentive are problems that would otherwise be unknown to the many fine minds around the globe. Brilliant thinkers in Argentina, India, Poland, Russia, Mexico and Bulgaria wouldn’t have contributed because they’d have never been given the opportunity to do so. In the past, those problems would be assigned to isolated research groups either internal to a business or to carefully selected partners. Getting on the ‘partner’ list is no mean feat and most of the awarded solvers in InnoCentive’s history (OVER 470 prizes awarded!), would never have seen the problem, let alone solved it!

Dwayne Spradlin, InnoCentive President and Chief Executive Officer, and Alpheus Bingham, Ph.D, InnoCentive Founder and Board of Directors member, are two of the conference’s featured speakers. Others include Arianna Huffington, co-founder and editor-in-chief, Huffington Post; Filippo Passerini, chief information and global services officer, Procter & Gamble; and Dan Tapscott, Author, “Growing Up Digital: The Rise of the Net Generation.” Dan Tapscott will deliver the opening keynote speech.

Dr. Peter H. Diamandis, chairman and CEO, The X PRIZE Foundation, joins us to share more about the upcoming conference.

Hi Peter.  Thanks for talking with us today.  Can you tell us, what is the goal for the i2i conference?

The X PRIZE Foundation is a recognized leader in bringing about “radical breakthroughs for the benefit of humanity.” The i2i conference is an extension of our efforts to create such breakthroughs in the business, government and nonprofit worlds. The conference goal is to showcase and drive dialogue around two powerful yet underutilized tools that can create fundamental breakthroughs within an organization’s walls to positively impact their bottom line performance, the economy and the world.

The X PRIZE Foundation, BT and the John Templeton Foundation have seen first-hand how these tools can be used to bring about radical changes for humanity, spur the development and growth of new industries and generate innovative ideas and technologies from individuals across the globe. We want to increase awareness and usage of these tools within the business, government and nonprofit communities to help them improve the pace, cost and quality of innovation. We’ve brought together a dynamic group of innovators who, through a series of breakout sessions, will do exactly that.

Who is the audience for this conference, and what should they expect to learn?

We invite forward-thinking c-suite executives (CEOs, CTOs, CMOs, etc.), foundation, political and academic leaders, and social entrepreneurs to attend i2i. Attendees will gain an opportunity to network with peers and listen to and discuss compelling real-world solutions to some of the biggest problems organizations face in today’s economic downturn. Attendees will walk away from the conference equipped with a better understanding of how to use open collaboration and incentive prize competitions to develop practical methods for creating a culture of open innovation, concrete ways to leverage limited resources, and applications to help them drive innovation while improving bottom line performance.

What actions do you hope attendees will take in the future as a result of attending the conference?

After i2i, we hope to see more organizations looking for innovative and cost effective business solutions through incentive prize competitions. We hope they recognize the value in sourcing new ideas from employees outside of the normal decision-making chain and are better equipped to tap into the creativity of the general public.

What is the connection of the conference with the United Nations?

The United Nations Office for Partnerships and The X PRIZE Foundation share a common vision to solve some of humanity’s greatest challenges. We believe the UN is the best forum to synthesize our parallel visions.

One of the breakout sessions will focus on healthcare. How was this focus selected?

Day one of the i2i conference will focus on introducing open collaboration and incentive prizes. Day two focuses on the practical application of these tools within various industries, of which healthcare is one. The healthcare industry was chosen because of our current focus on launching a prize in this area.

Experts agree that the U.S. healthcare system is in great need of innovative solutions to increase healthcare value and improve the health of our nation’s population. To address this issue, we’re planning to launch later this year a $10+ Million Healthcare X PRIZE with our partners WellPoint, Inc. and the WellPoint Foundation. During our healthcare breakout session, J. Craig Venter, founder and president, J. Craig Venter Institute; Samuel R. Nussbaum, M.D., Executive Vice President, Clinical Health Policy and Chief Medical Officer, WellPoint, Inc.; Yury Rozenman, head of Strategy and Marketing, Healthcare and Life Sciences, BT; will highlight concrete ways the healthcare industry has used open collaboration to spur advancement. The speakers will also explain how the soon-to-launch Healthcare X PRIZE is expected to revolutionize the industry.

Thanks Peter.

To learn more about incentive2innovate or to register to attend, visit www.incentive2innovate.com. You can also find updates on the conference blog (http://i2iblog.xprize.org) and on Twitter (www.twitter.com/i_2_i).