[Ip-health] FT: Prizes are a powerful spur to innovation and breakthroughs

Thiru Balasubramaniam thiru at keionline.org
Tue Jul 10 03:33:53 PDT 2018


Prizes are a powerful spur to innovation and breakthroughs
Fresh thinking advanced by competition leaves conventional research in the


One foggy night in October 1707, Admiral Cloudesley Shovell grounded four
British warships on the rocks of the Isles of Scilly leading to the loss of
some 2,000 lives.

The distinguished admiral, like countless seafaring predecessors, had
fallen victim to the curse of faulty navigation. Whereas sailors were able
to plot their latitude with reasonable accuracy using the sun and stars as
guides, they were unable to determine their longitude nearly as well. This
was for the simple reason that the lines of latitude run parallel while
those of longitude converge at the North and South Poles.

The disaster prompted the British parliament to pass the Longitude Act of
1714, offering the then enormous sum of £20,000 to whomever could solve the

As Dava Sobel describes in her wonderful book Longitude, the prize was won
by a self-taught Yorkshire clockmaker called John Harrison after 40 years
of work perfecting a reliable navigational timepiece. Once you could
accurately calculate the time difference between your current location and
your home port then you could pinpoint longitude. Harrison’s invention
saved thousands of lives and helped secure the British empire’s naval

The example of the Longitude prize is a lesson in stimulating radically
fresh thinking. 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.”

Nesta’s Future Fest conference, held in London last weekend, was buzzing
with ideas about how we can use technology to improve our lives in very
practical ways. Mr Mulgan is convinced that prizes can encourage such
thinking. Winning a prize often matters less than the stimulus it provides
for innovators in neighbouring fields. “In some cases it is more rigorous
than venture capital. It is more meritocratic,” he says.

There are plenty of other historical examples of prizes stimulating
innovation. During the Napoleonic Wars, the French government awarded a
prize to the confectioner Nicolas Appert, who had succeeded in preserving
food in airtight champagne bottles. Appert used the prize money to develop
his sterilising technology and build one of the world’s first canning

In 1927 the rich hotelier Raymond Orteig awarded $25,000 to Charles
Lindbergh for making the first solo air crossing of the Atlantic. The
Orteig prize was one of the inspirations for the $10m Ansari X prize,
designed to encourage commercial space flight. That prize was paid out in
2004 to the team that developed SpaceShipOne, boosting a new generation of
space entrepreneurs.

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

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

Cocooned in their groupthink, experts do not always know best. A lesson
from the sad fate of Shovell and his sailors is that at times you ignore,
at your peril, the views of outsiders who have drawn radically different
conclusions from the available evidence. One of the sailors on Shovell’s
ship, who had been surreptitiously keeping his own reckoning of the fleet’s
location, warned the admiral that his fleet was dangerously off course.
Shovell hanged him on the spot for mutiny.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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