When is your problem a ‘Challenge’?

Ed Parkes at NESTA: “More NGOs, Government Departments and city governments are using challenge prizes to help develop new products and services which ‘solve’ a problem they have identified. There have been several high profile prizes (for instance, Nesta’s Longitude Prize or the recently announced $7 million ocean floor Xprize) and a growing number of platforms for running them (such as Challenge.gov or OpenIdeo). Due to this increased profile, challenge prizes are more often seen by public sector strategists and policy owners as holding the potential to solve their tricky strategic issues.

To characterise, the starting point is often “If only we could somehow get new, smart, digitally-informed organisations to solve the underfunded, awkward strategic issues we’ve been grappling with, wouldn’t it be great?”.

This approach is especially tantalising for public sector organisations as it means they can be seen to take action on an issue through ‘market shaping’, rather than resorting to developing policy or intervening with regulation or legislation.

Having worked on a series of challenge prizes on open data over the last couple of years, as well as subsequently working with organisations on how our design principles could be applied to their objectives, I’ve spent some time thinking about when it’s appropriate to run a challenge prize. The design and practicalities of running a successful challenge prize are not always straightforward. Thankfully there has already been some useful broad guidance on this from Nesta’s Centre for Challenge Prizes in their Challenge Prize Practice Guide and McKinsey and Deloitte have also published guides.

Nevertheless despite this high quality guidance, like many things in life, the most difficult part is knowing where to start. Organisations struggle to understand whether they have the right problem in the first place. In many instances running a challenge prize is not the appropriate organisational response to an issue and it’s best to discover this early on. From my experience, there are two key questions which are worth asking when you’re trying to work out if your problem is suitable:

1. Is your problem an issue for anyone other than your own organisation?…

2. Will other people see solving this problem as an investment opportunity or worth funding?…

These two considerations come down to one thing – incentive. Firstly, does anyone other than your organisation care about this issue and secondly, do they care enough about it to pay to solve it…..(More)’