The Rapid Evolution of Prize-Based Innovation

Posted by Dwayne Spradlin on Jan 12, 2009 10:17:58 AM


In recent discussion titled "Prize-based innovation for the public good" on the Open Innovation discussion group on LinkedIn, a thoughtful comment by Chris Townsend (@chris_townsend_) from Forrester Research prompted me to do some thinking about how far prize-based innovation has come, and in a relatively short timeframe.  The question was whether prize-based innovation was appropriate for broad-based "business critical" challenges, or was only applicable for narrowly focused, more discrete individual problems.  I'd like to share some of my thoughts on this topic, also posted within the discussion forum.

Incentives are the single most powerful tool we have to drive behavior and align efforts toward common purpose as a society, economy, and as discrete organizations.  Prize-based innovation in its simplest form simply packages the need, clearly states the goal, and makes clear the incentive.  However, prize based innovation is evolving quickly and has become a rich field in recent years.

Among the most interesting developments is that concrete notions of prize-based innovation are developing for new classes of problem solving.  Some of the most interesting work we are doing right now concerns the notion that complex, multidisciplinary, highly coupled,  and/or inherently non-specific (ambiguous in terms of solution criteria) problems may be broken down into multiple units (or Challenges) and run in series or in parallel.

For example, InnoCentive will routinely run "Ideation" Challenges for organizations to get the novel ideas, who then run a "Theoretical" challenge to develop the most interesting ideas into specific approaches (generally solved by different Solvers).  They may then post "Reduction to Practice" Challenges to develop prototypes or to demonstrate viability and finally, organizations without in-house development capacity may run electronic Requests for Proposals to identify development or manufacturing partners.  Each of these may require different prize-based designs and need to take into account the stage in the innovation process, audience, type, complexity, and volume of work needed, etc.  Some organizations will start in the middle and some will do end to end with InnoCentive.


The point is this: the art and science of orchestrating these open incentive systems is evolving quickly.  I believe that we are already in a very strong position to advance innovation agendas for organizations that want to run highly bounded and specific scientific problems and well as for the "Save the World" kinds of problems we all care deeply about as well.

We are in fact doing that today.  Examples of businesses seeking much more complex and open ended solutions include: "Redesigning the 3 Ring Notebook", "Social Networking for Enterprise Applications", "New Pricing Mechanisms", and "Looking for Marketing Videos"  In the public good camp, we see challenges like "Redesigning the US Healthcare System" and "Ideas for Increasing Public Transportation Use to Reduce Greenhouse Gases in Chicago".  Realize that all these Challenges are designed to drive subsequent units of work within their organizations and/or new Challenges to hone and develop solutions further.  In other words, these Challenges are pieces of broader efforts to achieve broader ends.

Finally, we are now working on collaborative project rooms and broad discussion based capabilities which will drive communities and groups of Solvers to engage at entirely new levels - all within the prize -based model.  The state of tools, practices, and methodologies are evolving quickly - allowing open innovation to be applicable to virtual any kind of innovation need.  We see no limits to its applicability.  Some needs will be met with single Challenges, some by a well orchestrated sets of Challenges all designed to deliver a focused outcome.

I hope this provokes further discussion.  I just wanted to shed some light on all the work happening today that is taking prize-based innovation to an entirely new level.  I believe engaging the world in solving all classes of problems is crucial - including the big complex problems.  Evolving the mechanisms of prize-based innovation to achieve these ends is well underway.



Topics: Innovation Insights

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