Prizes are a powerful spur to innovation and breakthroughs

John Thornhill in the Financial Times: “…All too often today we leave research and innovation in the hands of the so-called professionals, often with disappointing results. Winning a prize often matters less than the stimulus it provides for innovators in neighbouring fields In recent years, there has been an explosion in the number of professional scientists. Unesco estimates that there were 7.8m full-time researchers in 2013.

The number of scientific journals has also increased, making it difficult even for specialists to remain on top of all the latest advances in their field. In spite of this explosion of knowledge and research spending, there has been a striking lack of breakthrough innovations, as economists such as Robert Gordon and Tyler Cowen have noted.

Maybe this is because all the low-hanging technological fruit has been eaten. Or perhaps it is because our research and development methodology has gone awry.

Geoff Mulgan, chief executive of Nesta, is one of those who is trying to revive the concept of prizes as a means of encouraging innovation. His public foundation runs the Challenge Prize Centre, offering awards of up to £10m for innovation in the fields of energy and the environment, healthcare, and community wellbeing. “Setting a specific target, opening up to anyone to meet it, and providing a financial reward if they succeed is the opposite of how most R&D is done,” Mr Mulgan says. “We should all focus more on outcomes than inputs.”…
But these prizes are far from being a panacea. Indeed, they can sometimes lead to perverse results, encouraging innovators to fixate on just one, original goal while ignoring serendipitous surprises along the way. Many innovations are the happy byproduct of research rather than its primary outcome. An academic paper on the effectiveness of innovation prizes concluded that they could be a useful addition to the armoury but were no substitute for other proven forms of research and development. The authors also warned that if prizes were poorly designed, managed, and awarded they could prove “ineffective or even harmful”.

That makes it essential to design competitions in careful and precise detail. It also helps if there are periodic payouts along the way to encourage the most promising ideas. Many companies have embraced the concept of open innovation and increasingly look to collaborate with outside partners to develop fresh ideas, sometimes by means of corporate prizes….(More)”.