Innovation Inducement Prizes

From P2P Foundation
Jump to navigation Jump to search


"The Ansari X Prize, for example, has attracted over $100m in investment into the (previously non-existent) private-sector space industry. The technology used by the winning spaceship is now employed by Virgin Galactic to develop a commercial space-travel service, and many of the losing contestants have formed companies in the burgeoning sector.

The important thing about a well-designed prize, argues Dr Diamandis, is its power to “change what people believe to be possible”. Indeed, they open up innovation. A study co-authored by Karim Lakhani of Harvard Business School reviewed scores of problems solved on InnoCentive and found that people from outside the scientific or industry discipline in question were more likely to solve a challenge.

Prizes also help form new alliances. Netflix, an American company that rents films, offered a $1m prize to anyone that could do a better job than its own experts in improving the algorithms it uses in online recommendations. It was stunned to receive entries from over 55,000 people in 186 countries. The seven members of the winning team, who collaborated online, met physically for the first time when they picked up the prize in 2009." (


"Such prizes are not new. The Longitude Prize was set up by the British government in 1714 as a reward for reliable ways for mariners to determine longitude. And in 1795 Napoleon offered a prize to preserve food for his army, which led to the canned food of today. In more recent times incentive prizes have fallen out of favour. Instead, prizes tend to be awarded for past accomplishments—often a long time after the event. As T.S. Eliot remarked after receiving his Nobel prize, it was like getting “a ticket to one’s own funeral”.

Incentive prizes do spur innovation. A study led by Liam Brunt of the Norwegian School of Economics scrutinised agricultural inventions in 19th-century Britain and found a link between prizes and subsequent patents. The Royal Agricultural Society awarded nearly 2,000 prizes from 1839 to 1939, some worth £1m ($1.6m) in today’s money. The study found that not only were prize-winners more likely to receive and renew patents, but that even losing contestants sought patents for more than 13,000 inventions." (


"In this context, it is important to differentiate between incentive prizes and accomplishment prizes. The latter are given for past achievements, like the Nobel price as the most prominent example." [1]

More Information

  • Special page of Knowledge Ecology International: KEI has an interest in the general topic of prizes to stimulate innovation, with a special focus on the use of prizes to stimulate medical innovation. The work on medical innovation prizes covers proposals for both high- and lower-income markets, and proposals that target new medical knowledge, as well as product development.


  1. Scholarly and Technical Articles and Books on Innovation Prizes (KEI Research Note 2008:2)
  2. News stories and blogs on innovation prizes
  3. KEI policy blogs on innovation prizes.

See also: Medical Innovation Inducement Prizes

  • Interview about Prizes: Eyes on the Prize: Incentivizing Drug Innovation without Monopolies, Multinational Monitor, MAY/JUN 2009, VOL 30 NO. 3