Overview of different types of innovation competitions ( inducement prizes) - providing various sponsorship opportunities for corporations to spur innovation
6. • Open
GOV
• Far-Reaching
• Inclusive
NGO
• Social
COR
• Submissions are visible
• Anyone can ‘like’ / share
STU • Entertaining
• Real time leaderboard
EMP • Bounty or Tournament structure
• Climatic ending
6
11. Skill Development
GOV Internal
Accelerator
Program
NGO (Teams)
COR +
STU Idea
Collaboration
Platforms
EMP
Engagement in Innovation
11
12. EMP
~500 Business Plan Pitches
~50
~15
Discover
CEO’s
open call
Proof of Concept Home
Accelerate
Network
Innovator
Challenges
+ +
QVF Team BU Sponsor QIN Team
Value Extraction
QIN Team Support System
• New Project Option
online tools
• Strategic Value
Social Good | Tech Marvel | Mkt • Exit Value
Leadership
Collective
Entrepreneurship
12
14. • Intractable problem,
unknown problem solver
• To fight a market
breakdown
• To fight complacency –
symbolic reminder that
life should remain a
contest for the best ideas
14
Title SlideGood morning – thanks for being here I’m Ricardo dos Santos from Biological Dynamics – Let me get started with what I mean by Innovation Competitions Prizes are booming!Mckinsey counted more than 60 since 2000 with more than $100K in prize money – totalling over $375millionTalk about the power of competitions to drive innovation
Slide 2: My Definition of Inno CompetitionsIn this context I do use the term innovation competitions interchangeably with Inducement Prize Contests – these are different from recognition prizes in that they’re trying to incentivize new activity or creations not simply recognizing work already done. This includes both bounty prizes for specific objectives being met (or progress towards those objectives, as well as tournaments where best entry is rewarded (so allowing for subjective outcomes) From an economics perspective, Inno Competitions are different from Grants and contracts.. as the payoff to participants only occurs at the end of the effort, thus they share a greater portion of the risk upfront – this sounds kind of evil genius on the part of the sponsors – I hope to make the argument that it is not –that competitions are actually very democratic and welcomed by the self-selected participants that they draw
Slide 3: Competitions – An Old InnovationWell, we’re at an Innovation conference so I apologize in advance for not talking about something new – Innovation Competitions are actually something quite old – and a bit out of favor in the last half century, but certainly experiencing a remarkable resurgence in the last few years – and their popularity seems to have no end in sight (as we’re now clearly in an era of open innovation and ubiquitous, social IT tools) Competitions have two main purposes – solve a problem and/or start new businesses – even an entire new industry. Does anyone know who this is? Not Newt Gingrich. It’s one of England’s great heroes, John Harrison. Does anyone know what problem John solved? Figuring out longitude at sea. He did this as part of England’s longitude prize in the early 18th century (started after a series of naval disasters because captains wouldn’t know exactly where they were). This wasn’t the first longitude prize, the Spanish and Dutch had also tried this but it was the first to finally succeed. I recommend reading the full story cause it is fascinating. Here I will just point out that it took John almost 30 years to come up with the H4 – the first accurate marine chronometer – John was not part of the scientific establishment which believed mostly in an astronomy solution by measuring lunar distances. John was a carpenter and self-taught clock maker. After some royal intervention by your last king (King George III), John finally won some recognition and various amounts of money for his progress, although the official $20K pound prize was never awarded – Despite all the drama, the prize was at the end of the day very successful and produced two viable methods of calculating longitude at sea.Prizes- (or inducement prize contests) - They’re hot again.. And it’s no coincidence that innovation has shifted from linear R&D to open innovationPrizes – rewards for specific inventions, spur new businesses (not general recognition awards (nobel prize)) ; together sometimes, stimulate entire new industries John Harrison – first successful maritime clock for measuring longitude at sea (a relative amateur/ carpenter). L20K pounds prize (king george III had to intervene to get him some recognintion although parliament never awarded the full prize (political intrigue)) (would be about L3 Million pounds today)Self educated clock-maker vs. a university educated astronomer (Maskyline)H1 (which took 5 years) & H2 (another 5 years) won L500 pounds to continue experiments (abandoned H3 after 17 years (pendulum approach))After 30 years, he changed to the watch approach vs clock (advancements in steel)H4 in 1759 (took 6 years)Worked on the problem for 34 years ..finally got over the size issuesH4 (in an 81 day voyage to jamaica, it lost 5 seconds.. Problem solved)His main competitor was appointed ot the longitudenal board.. It took royal intervention (from your last king..george the III), to right a wrong and award harrison his recognition (he started competing when he was 37, got his prize when he was 81) – he died in 1776(Clocks replaced astral navigation) – ironically, famous astronomer Edmond Halley was one of his supporters (much like Edison supported Ford) – Harrison got some money from an angel investor – george graham to pursue his inventions
Slide 4: Competitions – An Old InnovationAs far as competitions explicitedly designed to help launch new companies, perhaps the best example are the university business plan competitions pioneering by the University of Texas biz school in 1984. This is actually a picture from UCSD’s entrepreneur challenge in 2009 – I was a judge at that competition and ended up joining the winning company, Biological Dynamics - and we’re still having fun!
I’ve broken down innovation competitions into five types according to their different sponsors.. there are probably more than five but there are only five Olympic rings (five continents). Before I show you some examples of each type, let me point out some common rules and trends that span most of the competitions.
Slide 6: Competitions – New RulesToday’s competitions are evermore Open, Social & Entertaining - The point is to maximize the chances of success by tapping into large numbers and diverse group of problem solvers – For the competition at hand, and for future competitions by the same sponsor – thus the need to entertain not only the participants but also the onlookers, which can include the public at large An interesting factoid here – did you know that over 25% of Americans saw the Spirit of St Louis a year after its historic flight from NY to Paris (and back) – of course the airplane piloted by Charles Lindbergh that won the Orteig prize in 1927 – sparking the commercial aviation industry. (Btw, I flew here from the Lindbergh Airport in SD)US Federal spending on R&D is about $125 Billion – NIH is about $30 billion aloneUS spends about 2-3% of it’s GDP in R&D (STEM) spending .. Israel about 4% being the highestEntertaining – attention of the public – Spirit of St Louis (25% of people saw the airplane in 1927)!!!Bounty vs Tournament structure: More important in the starting new business camp, competition is then a showcase as much as it is a contest (prizes must draw attention); myth that prizes only pay for final results.. They can pay for progress towards an end result Event, event, event (pomp and circumstance – bread and circus) - have a pitch, demo, etc. day (judges, people’s choice, etc.) – DocStoc case study
Slide 7: Gov Prizes Let’s move on to competition examples starting with Gov Prizes. Before I show you a US gov prize, let me show you the competition, if you will, that I mentioned earlier. This is an example of a grant.. certainly doesn’t look Open, Social and Fun. Did you know that the US gov spends approx.. $140 billion in R&D funds (led by NIH with $30 billion). This compared to $30-40 billion by VC’s (and a lot of that in late stage funding for things like Zynga). Grants will always be around – they are an important part of stimulating innovation where risks are too great or payouts too low. But that doesn’t mean that there isn’t room for complementary methods to spur innovation- such as Prizes. And lo and behold, the government is clearly stepping up its Prize or Grand Challenge activities, led by DARPA and NASA – They’ve even got a website dedicated to challenges – Challenge.gov where various government ages have posted over 100 prizes – so even the gov has a new found belief in Prizes.. although you can take this graphic the wrong way = that citizens don’t really know squat on how to innovate but may remember they have a genius uncle hiding out somewhere in a cave- and they’ll solve the problem!In a way, you can view patents and grants as competitors to prizes.. But they are close cousisnsNow prizes may be best applicable to creating new applications for existing technology vs technology itselfAre scientists missing their peak?Average age of an NHI investigator has risen to 51 years old from 39 in 1980. Half will be over 70 by 2020.The average age of a new NIH biomedical granteewas 42 in 2008, compared to 36 in 1980. Nobel prize winners avg age is 41.. Yconclusion: you have to get a nobel prize before you get a grant… (a draw back of the peer review process)NIH has a budget of over $30 billion a yearAmerica Competes act in 2010 – Pres Obama made it easier for fed agencies to launch their own prize competitiosnUS Federal spending on R&D is about $125 Billion – NIH is about $30 billion alone (3% of GDP)Compare that with VC investments of about $25 Billion a year, and a lot of that money for late stage investments US spends about 2-3% of it’s GDP in R&D (STEM) spending .. Israel about 4% being the highestGrant, all that’s done upfront is a proposal .. In a prize, participants bear some of the costs upfront
Slide 8: Non Profit Prizes Non Profit prizes are perhaps the most common or at least well publicized prizes – renowned examples include the Xprize, Bill & Melinda Gates challenges, the Methuselah Foundation (I interview their CEO on Monday as part of my research) and also some focused on startup formation. Note that Peter Diamandis (my friend.. on facebook) of XPrize was inspired to start his foundation after reading the story of the Spirit of St Louis – even got the support of the Lindbergh family in St Louis. 2009 mckinsey study found that philantropic prizes accounted for about half the money (and mostly towards science and engineering, health, etc. Vs. Arts)The X Prize Foundation has created challenges since 2004 that have brought about innovation and new discoveries in fields such as space flight and automobile design. By attaching prize money to each challenge the X Prize foundation takes the vital practice of Research and Development out of the hands of slow paced governments and grant writing scientists toiling away in an isolated bubble and makes it a very public process accelerated to the speed of market driven business. From SpaceShipOne to cars that get 100MPG the X Prize Foundation is promoting innovation in areas where new solutions are vitally needed. Harnessing the creative power of designers and engineers everywhere, the X Prize Foundation is a brilliant model for cultivating innovation.Mass challenge – an incubator set up as a prize competition (various totalling $1million), not taking equity stakes such as techstars or y-combinator(sponsorships and donations)Largest prize in history (spaceshipOne) - $10million for private space exploration- since then, more than $1.5 billion has been spent on private space exploration(important to note that the participants in the x-prize space exploration edition, spent more than $100 million in the pursuit)Google-Lunar X-prize - $30 Million In 1919, when New York hotelier Raymond Orteig offered $25,000 to the first aviator to fly nonstop from New York to Paris (a prize claimed by Charles Lindbergh in 1927), the U.S. was mired in the post-World War I recession. Nevertheless, the war in Europe had underscored the importance of trans-Atlantic transportation, and Mr. Orteig hoped to transform aviation into a stable industry with reliable, high-performance technology.
Slide 9: Corp Prizes Corporations have stepped up their prize activity – here are some of the best known examples – Some of the sponsors are the cr&d depts., open innovation efforts or event the corporate VC arms – in the case of aiding startup formation vs directly solving a touch technical challenge per se. After 41,691 submissions from 4,670 contestants, Netflix has found a winner. The winner was found last month after 3 years of the contest running. Innocentive acquiredOmniCompete – to add to its grand challenges platform
Slide 10: Student Competitions Moving on Student competitions – these are different in that the participants are also part of the sponsoring organization – like the employee competitions I’ll show next. Lots of activity here starting at the high school level, with the student run, biz school competitions attracting the most money – Rice’s competition gave up $1.5million in prize money. Formats also vary – I’ve been mentoring a startup that’s running ‘Hackathons’ vs. more classic biz plan writing exercises.Moot Corp competition (rename Venture Labs investment competition) is the nation’s oldest – 29 yearsMission is to get high-potential businesses off the groundRice’s competition offers more than $1.5 million in prize money; MIT has added an ‘accelerator’ program to its competitionIt’s what these people do during the competition and learn that’s important – the art of bootstrapping, mentorship, connections, etc.
Slide 11: Employee Competitions Finally employee competitions – I use to run this at Qualcomm. For me this was the insight – that if it was only about engagement, an idea management system platform and some offline committees would suffice, and maybe not even a competition format per se. But to deliberately embed a training component for self identified intrapreneurs – then the competiion format became appropriate, especially when couple with an ‘accelerator’ program that encouraged team formation, mentorship, formal classes, and mostly learning by doing an actual plan and concept hack or demo. When you put those two together – you get what I specifically called a Venture Fest (It was like Innocentive or Spigit (or any other vendor), marriying Y-Combinator or TechStars and having a baby. The key thing besides the crowdsourcing upfront and the accelerator in the middle, was the translational phase to implementation, starting with pitch and demo day to the CEO and other top execs. He was first inspired to do it when he heard how Twitter began. Before there was Twitter, there was Odeo. At a certain point, founder Evan Williams decided the company needed a complete restart so he broke up the team into small groups and gave them the assignment to come back with a new, killer business idea. Jack Dorsey came back with Twitter. If it worked for them...Emphasis on innovation culture vs single innovation (goose vs golden eggs)
Slide12: Qualcomm Venture FestWhen you put those two together – you get what I specifically called a Venture Fest (It was like Innocentive or Spigit (or any other vendor), marriying Y-Combinator or TechStars and having a baby. The key thing besides the crowdsourcing upfront and the accelerator in the middle, was the translational phase to implementation, starting with pitch and demo day to the CEO and other top execs.Competition is a ruse.. Everyone has the choice to continue with their idea.. But now they have a head start (better plan, connections, mentors, exec feedback, etc.)Masschallenge.org does seem to combine competition with the accelerator programNote – employees do not get prize money personally – but an experience, ideas turned into reality as the ultimate prizer
Slide 13: Qualcomm Competitions Qualcomm has actually ‘gone wild’ on competitions – notable example being the sponsorship of the Tricorder (startrek) XPrize.
Slide 14: When are Competitions appropriate Competitions are not a Panacea. When are they most appropriate – here are my thoughts on that. Call attention to the second point – To fight a market breakdown.. This could be lack of students studying STEM fields (thus Dean Kamen’s First Robotics competition or the Mouse Prize to fight the perception that anti-aging efforts are unethical) – the third point which is that competitions don’t just have to be reactive – they can be a proactive tool for corporations to stir the innovation pot For corporations.. When are competitions most appropriate: US Federal spending on R&D is about $125 Billion – NIH is about $30 billion aloneUS spends about 2-3% of it’s GDP in R&D (STEM) spending .. Israel about 4% being the highestThe participants must also be able to bear some of the costs – thus if they see a training short term benefit, for example, they’ll be more willing to particiapte and the prize will be more cost effective (and the corp should think this cost is acceptable)It is about sharing the risk between sponsors and participantsWhy award a prize rather than put money into research? Firstly, it allows for the broadest possible range of approaches; you are asking for the diverse ingenuity of the world rather than relying on your own ingenuity to select the approach you will fund. Secondly, far more funding will be devoted to research as a part of competing for the prize than stands in the prize purse. We humans rise to the challenge of a contest, as research prizes have shown over and over again.Inducemnt prizes major flaw: Initial fundingGrant’s major flaw: judging biasPrizes can be for inventions, applications, improvements or diffusion
Slide 15: Final Quote Leave you with a quote from a sci-fi writer and friend in SD – davidbrin If you ask me what motivates participants in competitions (I mentioned they put In 5, 10, 50 times the effort compared to the Prize amount)… It’s that it’s not just about the Prize – It’s the adventure during and the adventure possible after the competition - the competition is many times just a ruse to make people do what they need to pursue their dreams.A 2009 McKinsey & Company report found that total funds from prizes have more than tripled over the past decade and now surpass $375 million.It can bring non-traditional tech to the mainstream – marine clocks, single engine ariplanes and air-launched space ships as examples (burtrutan’sspaceshipone)What’s motvating these people – perhaps a mystery but I would venture to say it’s not just the prize money or the proverbial ‘Gold’ but the adventure of it all R
