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Promoting Innovation through Prize and Challenge Programs


Promoting innovation through prizes and challenges has steadily become an accepted policy throughout many US government departments and agencies over the past few years. Consequently, research into what does and does not work, in the development of such initiatives is increasing important in advancing best practice in this area.

Earlier this year, the Case Foundation together with the White House Domestic Policy Council and Office on Science and Technology Policy, hosted a Promoting Innovation Summit to gather lessons and strategies on the use of prizes, challenges and open grant-making.

Benefits to using prizes and challenges

In his opening remarks, Jeff Zients, the nation’s first Chief Performance Officer, pointed to the transformative power of prizes and challenges:

The productivity boom has transformed private sector performance over the past decade, but the federal government has missed out on this transformation and lags far behind in terms of efficiency and service quality. The American taxpayer deserves more bang for their buck.

Earlier this year, Zients’ office prepared a memo giving guidance to heads of executive departments and agencies on the use of challenges and prizes to promote open government. The memo outlines a number of benefits of such initiatives as tools for promoting open government, innovation, and other national priorities. These include:

  • The ability to establish an important goal without having to choose the approach or the team that is most likely to succeed
  • Enables sponsors to pay only for results
  • Highlights excellence in a particular domain of human endeavor to motivate, inspire and guide others
  • Increases the number and diversity of individuals, organizations and teams that are addressing a particular problem or challenge of national or international significance
  • Improves the skills of the participants in the competition
  • Stimulates private sector investment that is many times greater than the cash value of the prize
  • Attracts more interest and attention to a defined program, activity or issue of concern
  • Captures the public imagination and changes the public’s perception of what is possible


The memo also explained, how the federal government would make available a web-based platform for prizes and challenges. This would be used to support agencies in their execution of prizes:

This platform will provide a forum for agencies to post problems and invite communities of problem solvers to suggest, collaborate on, and deliver solutions. Over the longer term, the General Services Administration (GSA) will also provide government-wide services to share best practices and assist agencies in developing guidelines for issuing challenges. Additionally, GSA will develop, as expeditiously as possible, a contract vehicle to provide agency access to relevant products and services, including technical assistance in structuring and conducting contests to take maximum benefit of the marketplace as they identify and pursue contest initiatives to further the policy objectives of the Federal Government.

This platform – called Challenge.gov – recently went live to federal employees, and the General Services Administration (GSA) will open it to the public later this month. GSA explained the concept behind the site:

Challenge.gov is a new platform that allows federal agencies to post challenges, and at the same time, allows the public to find federal challenges. It’s now open to federal agencies to create challenges or showcase challenges from other platforms.

The platform behind Challenge.gov – ChallengePost – is already used by First Lady Michelle Obama’s Apps For Healthy Kids contest site. This has over 40,000 supporters and around 100 apps worth an estimated are worth over $5 million dollars. In exchange it is making $60k available in prizes.

Do’s and Don’ts

The Promoting Innovation report below is a summary of the lessons and shared learning discussed at the conference, and highlights some of the shining examples of the power and pitfalls of crowdsourcing ideas and innovation.

Whilst prizes and challenges can be powerful tools in driving change, the report highlights some definite Do’s and Don’ts. These include:

  • Problems must be clearly defined with measurable outcomes and objective rules.
  • Agencies must make sure authority and budgets are in place –  The Office of Management and Budget has recently issued guidance for agencies that are considering using prizes and challenges as a part of their fulfillment of the Open Government Directive.
  • Challenges should be open and transparent – Agencies should not underestimate the effort it can take to ensure fairness amongst participants.
  • Prizes don’t have to be money – The report notes how ‘a non-monetary prize that creates recognition can stimulate innovation – as can a contest that promises winning ideas will actually be used.’ As part of this, it highlights the President’s SAVE award in which the federal employee submitting the winning idea was given the opportunity to present the idea to President Obama in person, and have their idea included in the 2011 budget.
  • Use the public for the right purpose – The are stories of inappropriate ideas rising to the surface of contests as the result of groups gaming a voting system or for other reasons. The UK’s Spending Challenge has been plagued by such issues, although it’s outcome is hailed a success by some.  The report suggests “voting systems often result in the most creative solutions being dismissed. It is not clear that making final evaluations is the right use of Web 2.0 tools when it comes to such contests”.

Challenges to implementation

The Promoting Innovation report, also highlights some of the key challenges agencies can face in introducing prizes and challenges. These include how to handle failure if the results are not what was expected, ensuring internal capacity and skills are available to administer such initiatives and managing the internal change associated with using prizes and awards to further policy goals.

While some of these concerns maybe mitigated through the use of Challenge.gov, McKinsey’s research on prizes highlights some of their limits and cautions against their use versus other philanthropic instruments. They explain that prizes are a good fit if there is a clear and achievable goal, and many solvers willing to absorb the risk of the effort:

Are there limits to the effective use of prizes? Of course! Good ones require clear objectives, a rich field of potential problem solvers, and competitors willing to take risks. Prizes work best when a field isn’t already flooded with funded research and the challenge is more to create a clever application of technology than a technology itself.

A rule of thumb holds that prizes are useful tools for solving problems for which the objective is clear, but the way to achieve it is not. By attracting diverse talent and a range of potential solutions, prizes draw out many possible solutions, many of them unexpected, and steer the effort in directions that established experts might not go but where the solution may nonetheless lie.

Along with this, Zients’ memo outlines many legal issues to be addressed by agencies in structuring prize competitions. These include compliance with Federal Advisory Committee Act legislation, Ethical issues and federal endorsement of products or services, Intellectual Property and many others.

Mindful of these concerns, Tom Kalil, Director White House Office of Science and Technology Policy, explained how agencies have the strong support of the President and OMB to use prizes and challenges as catalysts for innovation and policy formation:

I hope everyone who is here from the Federal Departments and Agencies will come away from this with a renewed sense that this is an important tool, that you will go back and talk to 5-10 of your colleagues to get them excited about this, and that if you run into people who say no you can’t do this, show them the OMB memo, show them that this is in the President’s Innovation Strategy, and know that you have not just permission to do this, but a strong affirmation from the Office of Science and Technology Policy, from the National Economic Council, [and] … from the OMB General Counsel’s Office.
This echoes the administration’s policy of encouraging agencies to “Utilize prizes and challenges as tools for advancing open government, innovation, and the agency’s mission”. It represents an effective new way in the creation of more open and collaborative strategies that engage citizens in developing solutions that work.

Promoting Innovation Doc

Vivek Kundra on Prizes and Challenges

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