"The day before a breakthrough, it’s a crazy idea," says X Prize Founder, Peter Diamandis, who has helped popularize the innovation-through-competition craze that has swept up organizations from Netflix to the White House. A well-crafted competition can spawn entire industries, such as how the Ansari X Prize gave birth to the current race between Virgin Galactic and Space X for dominance of the commercial space travel industry. On the other hand, Netflix’s recent admission that it never used its $1 million dollar prize to improve their recommendation algorithm highlights the need to use funds wisely.
We sat down with the X Prize team and their guests at its annual brainstorming event (or "Visioneering" as they call it) to learn about the strategies and pitfalls of prize-based innovation breakthroughs. Experienced prize managers say that a good prize begins with wild brainstorming, and needs to be followed up with a super-tight problem statement, a dedicated team, and, last but not least, aggressive marketing.
"We’ve learned time and time again that the winning team or winning solution comes from places we wouldn’t have expected, people we would have thought that might have been able to do it, and, frankly, with approaches that we couldn’t even have fathomed," says Vice President of Prize Development Eileen Bartholomew.
The genesis for X Prize’s wildly optimistic competitions begin at its all-star Visioneering event, where an eclectic group of creative experts and non-experts brainstorm solutions to the world’s great challenges during aggressively mediated topic discussions. Other than a basic introduction to the history of prizes, Visioneering’s highly curated guests are thrown into hour-long meetings and told to respond with ideas at the direction of a moderator, whose job is to categorize ideas and swiftly move teams along as they go from defining a problem to outlining a competition framework.
The first 15 minutes are dedicated to tossing out one-sentence descriptions of big problems, which participants jot down on paper and stick up on giant white boards behind the moderator. Ideas are clustered into enough categories that would divide the entire group into breakout sessions of between 3-6 people per group. In the education topic group, for instance, actor Rainn Wilson from The Office joined a group about creating schools to teach life skills and One Laptop per Child founder Nicholas Negroponte headed to a group on literacy in developing nations.
Each group is given 20 minutes to fill out a large sheet of paper that defines 1) the prize name, 2) the prize amount, 3) a one-sentence description, 4) specific breakthroughs the innovation will achieve, and 5) the measurement criterion for winning.
The brainstorming whirlwind comes to a peak as representatives from each group try to persuade their peers in timed speeches to vote for their idea, which will advance through a bracketed debate tournament in front of all guests later in the weekend.
During the entire process, moderators point out that seemingly crazy ideas should never be shot down and participants are free to leave a group and fill out a prize sheet out alone. "Allow for the rogue," says author of Never Eat Alone Keith Ferrazzi, who moderated a few of the all-star brainstorming sessions at the visioneering event.
The entire point of brainstorming with participants who often have little knowledge of the discussion topic is so that the X Prize team is made aware of problems that slipped by experts, because it was too seemingly odd or irrelevant.
"Experts are great at telling you how something can’t be done," says Diamandis.
"It’s almost like starting a new business every time", says Bartholomew. Novice prize developers often underestimate the cost of launching a prize—it can run between 50% to three times the prize purse (meaning that a 100K prize would cost between 150k and 300k). After visioneering ends, her team reaches out to countless experts and non-experts to discuss which prizes would have the broadest implications and which ones are likely to be solved by the market itself (a process that Diamandis says takes between 6 to 8 months).
"Your work is only half done when you launch the prize" says Simmi Singh, who helped run prize competitions for the Department of Health and Human Services. In addition to weeding out unfit teams, a good prize leader creates a collaborative ecosystem for the eventual competitors. While there may only be one team who wins the prize, the resulting technology could open up an industry that benefits all of the early adopters. "There’s nothing zero sum, I believe, about the prize movement," she argues. Mentoring teams, helping with fund raising, bringing competitors together for events, and keeping lines of communication open between teams increases the likelihood that at least one team will develop the basis for a brand-new industry and product line.
Recalling one quote from the Ansari X Prize competition, Diamandis said one participant told him "The first best thing is that I win; the next best thing is that somebody else wins.
Though X Prize doesn’t like to dictate solutions, the team still needs to think through all of the possible legal and logistical booby traps that could stop a good idea in its tracks. The Qualcomm tricorder X Prize aims to create "a mobile solution that can diagnose patients better than or equal to a panel of board certified physicians."
Savvy engineers might be able to create such a device that would be wholly unusable by the millions of lay parents, fumbling through the buttons as they frantically try to diagnose their child. In anticipation, X Prize mandated usability requirements for whatever device can technically meet the challenges.
But, even with foresight, clever loopholes and legal quandaries still crop up. "When we announce a competitions, we don’t announce final rules" says Diamandis, who explains that it’s important to work collaboratively with early teams before releasing a final set of rules.
"We try to make the competition telegenic," says Diamandis, who suggests that the best prizes are sexy enough to attract media attention and simple enough to describe to a friend. "Teams don’t just compete in it for the money, they compete for the glory." The buzz of an exciting, easily relatable prize helps reel in investors, developers, and talent, which fuels even more involvement.
Even for less-than-world-changing prizes, "marketing is hugely important," argues Singh, who says that even for purses of 25k or 50k, it’s still vital to attract developers from the right channels. "The big trick with small prizes is, first of all, to target the audience of entrepreneurs and innovators you want to reach."
As prize competitions become more popular, keeping these principles in mind might help ambitious organizations develop more breakthrough solutions.