Prizes can drive technological breakthroughs

Dec. 16, 2016

Need a technological breakthrough? Offer a prize. Robert Lee Hotz in The Wall Street Journal cites the example of Edgar Sarmiento of Bogotá, Colombia, who won an $8,000 prize from Phoenix-based startup Local Motors. His idea: an electric driverless shuttlebus that can be summoned on demand. Local Motors has 3D-printed two of the vehicles and is testing them in Berlin and National Harbor, MD. (See the cover story in our January print issue for more on Local Motors and 3D printing.)

Hotz notes that businesses and governments alike are offering prizes to leverage the ingenuity of the crowd. “At a time when the pace of innovation seems to be slowing,” he writes, “prize sponsors hope that today’s hackers and makers can step into the breach and jump-start progress in a way that today’s research institutions—with their many constituencies and restraints—are struggling to do.”

Hotz quotes Karim Lakhani at the Harvard Business School’s Crowd Innovation Lab as saying, “You name it, there is a prize for it.” Lakhani has helped run 650 innovation contests over the past six years.

“In addition,” writes Hotz, “crowdsourcing companies such as InnoCentive, NineSigma, and Kaggle have posted hundreds of these lucrative research contests on behalf of corporate and government clients, offering cash prizes up to $1 million for practical problems in industrial chemistry, remote sensing, plant genetics, and dozens of other technical disciplines.” These companies can draw on the talents of 2 million registered freelance researchers. Hotz cites McKinsey & Co. estimates that more than 30,000 significant prizes totaling $2 billion and growing are awarded annually.

Hotz quotes Zenia Tata, executive director of XPrize India, as saying, “A prize allows for crazy open innovation to test a new idea, to take a gamble, to take a risk which you cannot do with grant money.” “Crazy” may be the key word here—representing a trait that institutions, with, as Hotz puts it, “their many constituencies and restraints” lack. XPrize India expects to launch a $1.7 million prize for a way to extract drinking water from the atmosphere.

Speaking at DesignCon in January 2014, Eileen Bartholomew, then senior vice president for prize development at XPrize, elaborated on the craziness. “Before anything is a breakthrough, it’s a crazy idea,” she said. The problem, she suggested, is that we humans, lacking an operating-system upgrade over the last 50,000 years, have a hard time recognizing the difference between, on the one hand, local and linear, and on the other, global and exponential. Lacking the OS upgrade, we may need to pass through “crazy” on the way to “breakthrough.”

GE is one of the companies that has sought out the wisdom of crowds. Speaking at an NIDays event in Boston in the fall of 2015, Joseph J. Salvo, director of computational sciences and architectures, said GE communicated the need for a jet-engine bracket design. About 700 teams responded, he said, with a winning team that had never worked in aviation before submitting a design that reduced mass by 85%.* Hotz also cites this project, noting that the competition, posted on GrabCAD, generated close to 700 designs from 300 contestants from 56 countries.

Salvo said the bracket design is an example of the democratization of the tools of creativity that allows GE to expand its team of 50,000 engineers to 50 million through cloud-driven technology.

*My original report on Salvo’s NIDays presentation listed the winner as from Malaysia. The winner was M. Arie Kurniawan, based in Salatiga, Indonesia, who sells electronic parts imported from China and makes aluminum pens for export to the United States. Hotz quotes him as saying, “After I won the competition, a lot of [engineering] orders came, mostly from outside Indonesia. It’s not easy to sell innovative products here in Indonesia.” Read more at GrabCAD.

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