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New insights into the craft of incentive prize design By Jesse Goldhammer, practitioner at Deloitte Consulting LLC / June 2014 / 2 Comments

Prize competitions increasingly serve as a creative mechanism for foundation and government leaders to engage the public, drive innovation and pay for results. In a new report, my co-authors and I at Doblin (the innovation practice of Deloitte Consulting LLP) explore how governments and philanthropies can solve public sector problems through the use of incentive prizes. The report, The Craft of Prize Design: Lessons from the Public Sector offers the most exhaustive exploration yet completed of incentive prizes within and around the public sector and provides new trend data, practical design guidance, and case studies that can be applied to the public, nonprofit and philanthropic sectors.

This report was generously supported by six leading U.S. foundations who work to promote innovation and efficiency in and around the public sector. Their goal was to provide an up-to-date, comprehensive guide to prize design, in order for prospective prize managers to have access to the necessary resources for their efforts to be as effective as possible.  These foundations include Bloomberg Philanthropies, the Case Foundation, the Joyce Foundation, the John S. and James L. Knight Foundation, The Kresge Foundation, and The Rockefeller Foundation. In addition, my co-authors and I liaised with leadership from the White House Office of Science and Technology Policy, as the Obama Administration has taken steps to accelerate public-sector adoption of prize competitions as a tool to spur innovation and solve tough problems, as part of President Obama’s Strategy for American Innovation.

The Craft of Prize Design features three important contributions to the growing body of information about prizes. Using quantitative and qualitative analysis, it characterizes six of the most important outcomes that prizes designers try to achieve through the use of various incentives. It also highlights the elements of prize design, the fundamental ingredients of all prizes that are necessary to achieve particular outcomes. Finally, the report provides practical guidance for prize designers, so that they can learn how to combine the elements of prize design to achieve the outcomes that they desire.

In the last four years, the Federal Government has engaged citizen solvers in more than 350 prize competitions from more than 50 federal agencies and departments. U.S. philanthropies are also designing and launching sophisticated prizes in increasing numbers to tackle different types of challenges – from strengthening communities to encouraging more sustainable energy consumption to cultivating innovative solutions from city governments.

Prizes are powerful tools for innovation because they incent a diversity of individuals or organizations to cooperate with each other and compete against each other to solve hard problems. If effectively designed, prizes can create bold, transformative results. For example, while prizes have long been used to develop ideas, technologies, products, or services, recent competitions have focused on creating new economic opportunities and stimulating markets. For instance, the MIT Clean Energy Prize, which includes the U.S. Department of Energy as a sponsor, is a national student business plan competition that helps turn clean energy ideas into successful businesses. The prize awarded a $1 million purse to winning teams and helped to expand the clean energy market by attracting $85 million in capital and research grants for competition participants.

Public sector leaders are also increasingly using prizes to engage people, organizations, and communities in bold transformation and behavioral change. An excellent illustration of this trend is the Rebuild by Design challenge administered by the U.S. Department of Housing and Urban Development (HUD), which mobilized a community of leading engineering, architecture, and design firms, as well as highly regarded research institutions from around the world, to develop scalable, resilient design solutions for rebuilding communities impacted by Hurricane Sandy. The challenge was named one of CNN’s 10 Best Ideas of 2013.

We wrote the report to be a practical guide for public sector leaders who wish to take the plunge and build their own prizes. For the first time, leaders who want to drive innovation can now access the collective wisdom of experienced prize designers in the public and philanthropic sectors.

2 Comments to New insights into the craft of incentive prize design

Juli Betwee
June 26, 2014

Very useful. How does this methodology (crowd sourcing) in social innovation compare to approaches and results used by for profit companies. I assume it is similar. Can you comment or provide comparative research?
Thank You Juli

Anna Richter
July 23, 2014

Thank you!

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