Challenge prizes – which offer a cash incentive to those working to solve a particular problem – are becoming a force for change by allowing entrepreneurs and innovators, often overlooked by existing grant and procurement systems, to develop solutions to the world’s greatest problems.
They have a long history. In 1927, Charles Lindbergh received the US$25,000 Orteig Prize for aviation when he made the first non-stop flight from New York to Paris in the Spirit of St Louis, catapulting aviation forward in the process. Earlier, in 1714, the £20,000 Longitude Prize went to John Harrison, a watchmaker from Grimsby and inventor of the chronometer, who came up with a timepiece reliable enough to accurately measure longitude and inspired a whole movement of other approaches to navigating at sea.
In the early 2000s, the Ansari XPRIZE launched challenge prizes into the modern era. The competition incentivised the development of privately funded space travel and had a US$10m prize purse. Breakthroughs made as a result of this competition contributed to a private space industry worth over US$2 billion today.
There’s no shortage of problems that would benefit. Climate change, artificial intelligence (AI), urbanisation, an ageing population, and a host of other factors, are altering the environment, economies and societies at breakneck speed.
So how do we solve the issues that these changes generate?
How they work
The challenge prize formula is simple: offer a financial reward for the first or best solution to a problem, attract the best innovators from a wide range of specialisms, and give them support to compete. In 2009, a McKinsey study concluded that when challenges have been well designed and run, “they have helped the world meet some of society’s greatest challenges, and overcome some of its most difficult problems”.
Our team partnered with Toyota Mobility Foundation, for example, to create Mobility Unlimited, a global challenge to come up with radical improvements in mobility and independence for people with lower-limb paralysis through smarter assistive technology.
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Innovators from around the world submitted new technologies – and the five recently-announced finalists received US$500,000 each to develop their ideas. The overall winner, announced in 2020, will receive US$1m.
Innovations so far include a smart wearable leg sleeve that helps people with partial lower limb paralysis regain their mobility, and a highly mobile, powered exoskeleton which offers fast, stable and agile upright mobility.
The US recognises that challenge prizes can be a more effective driver of innovation than grant or procurement funding, especially when you are unsure where the best innovation will come from. Rather than attract innovators from a very specific area and background, as existing grant and procurement systems can, challenge prizes cast the net wider – they are essentially open to all. This means that potential solutions to a problem are worked on by people from a diverse array of fields.
In fact, in America, they are actually supported through legislation in the form of the US Competes Act and the US government uses all sorts of challenges to develop breakthroughs, ranging from subterranean technologies to redesigning dialysis.
Garden shed to global change
Challenge prizes incentivise innovators from the unlikeliest places and from any background to use technology or other solutions to solve serious problems.
For example, the 2017 Inventor Prize was funded by the UK government to uncover Britain’s “hidden inventors” – the garden shed and kitchen table creatives whose gizmos could transform the lives of others, if only they knew about them.
Finalists included a high-tech catheter, a Kindle-like device for the blind, a smart gum shield that could save athletes’ lives by monitoring head movement, and a 3D-printed prosthetic arm for babies and toddlers, designed by a father for his young son. The winning NeuroBall aims to revolutionise – and make fun – stroke rehabilitation by pairing a person’s hand movements with progress on video games that can be played at home.
But cash prizes don’t just create solutions to narrow, technical problems, they can raise awareness of a broader issue, shape policy and inform regulators. Done right, they can create whole new technologies and markets.
Launched in November 2014 with a £10m prize fund, the prize challenges researchers around the world to invent an affordable, accurate, fast and easy-to-use test for bacterial infections. Over 250 teams from 41 countries entered – and 82 teams from 14 countries are still in the race to win the final £8m payout.
Many challenge prizes are tackling environmental problems, too. The Global Cooling Prize is a great example, incentivising the development of a residential cooling solution that will have at least five times less climate impact than today’s standard units. This could both reduce climate emissions and enhance the living standards of people in developing countries
The Data Driven Farming Prize, meanwhile, was launched with the US Agency for International Development (USAID) in February 2017 and challenged innovators from around world to harness technology to create apps, sensors, software and widgets capable of improving smallholders’ productivity through the provision of information on things such as fertilisers, pest control and soil moisture.
Four winners – two came from Nepal and two hadn’t worked in agriculture before – were announced in September 2017. They included db2Map, from Nepal, which created GeoKrishi, a web and mobile platform with agricultural information tailored to a user’s location, and PEAT’s Plantix app, a “plant doctor for your pocket”, which provides instant diagnoses of crop diseases from pictures taken by farmers on their mobile phones, as well as advice on how to treat them.
As the world becomes ever more complex, we need creativity to quickly and efficiently solve the problems of the future – and challenge prizes are an effective way of ensuring we uncover the very best innovations.
About the Author
Tris Dyson, Executive Director of Nesta’s Challenges, Nesta and Piotr Gierszewski, Researcher, Nesta
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