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Tuesday, August 04, 2009


I saw this in McKinsey Quarterly (registration needed but its free):

by Jonathan Bays, Tony Goland, and Joe Newsum

The use of prizes by philanthropies and private businesses to encourage innovation and achieve social benefits is burgeoning. A McKinsey study of prizes worth more than $100,000 suggests that the aggregate value of such large awards has more than tripled over the past decade, to $375 million. Moreover, the role of prizes is changing: nearly 80 percent of those announced since 1991 have been designed to provide incentives for specific innovations rather than to reward excellence in general. An understanding of the characteristics of effective prizes and of how they are evolving would be useful for not only philanthropists but also public- and private-sector players hoping to harness their potential for innovation.

To learn how prizes are meeting the goals of the philanthropies that finance them, and how their effectiveness might be improved, we studied 219 prizes, each with a value of $100,000 or more; interviewed about 100 experts on innovation, prizes, and philanthropy; and surveyed the sponsors of 48 major awards. Further, we conducted in-depth interviews with the sponsors and administrators of 12 public, private, and philanthropic prizes that have particularly interesting strategies, designs, and management practices.

...the expansion of prizes in areas such as science, engineering, aviation, space, and the environment. By contrast, prizes related to the arts and humanities represented one-third of the total a decade ago but make up less than 10 percent today.

When are prizes more effective than other kinds of philanthropic instruments? Our research suggests that three conditions are paramount: a clear objective (for example, one that is measurable and achievable within a reasonable time frame), the availability of a relatively large population of potential problem solvers, and a willingness on the part of participants to bear some of the costs and risks. Teams competing for the $10 million Ansari X PRIZE to develop spacecraft capable of entering space and returning safely twice within ten days, for instance, spent more than $100 million in the pursuit.

If one or more of these conditions can’t be met, potential prize givers should consider alternatives such as grants or a combination of prizes and other instruments. Indeed, some prize sponsors have adopted a portfolio approach to social change. The Mo Ibrahim Foundation, for instance, offers a $5 million prize for a retired head of state who provided effective leadership in Africa and publishes a quantitative index of African governance. The index builds on the publicity generated by the prize to start a wider debate about the importance of good governance, a debate intended to prompt important changes in public attitudes as much as individual behavior.

... Since SpaceShipOne took the Ansari X PRIZE in 2004, public and private investors have spent more than $1.5 billion to develop this nascent industry.

...Our research also revealed a critical (and often neglected) area in the development of prizes, measuring their impact and making appropriate changes in response. An organization sponsoring a prize aiming to strengthen a particular community, for example, could periodically examine collaborative projects resulting from the new networks created. But in our survey of prize administrators, only 23 percent of them annually evaluated the impact of their prizes. Sponsors should regularly appraise prizes by measuring their impact and revise them when they fall short of meeting the broader goal, whether it’s generating investments for a winning proposal or sustaining a newly created community of participants.

Ultimately, the ability of prizes to mobilize participants and capital, spread the burden of risk, and set a problem-solving agenda makes them a powerful instrument of change. They offer a valuable form of leverage to sponsors that use them as part of a well-designed strategy.

The accompanying graph shows that from 1997 to 2007 prizes have increased:

Total in million $s ------- 74 --- 315 (x 4.3)
Space/Aviation ------ 12 ---- 88 (x 7.3)
Science/Engineering 18 ---- 88 (x 4.9)

Environment ------------ 6 ---- 77 (x12.8)
Arts ----------------------- 27 ---- 30 (x 1.1)
Other --------------------- 12 ---- 33 (x 2.8)

At that rate by 2017 we will have combined space prizes of $640 which is definitely in the ballpark of Jerry Pournelle's statement that 2 prizes for an orbital shuttle, $500,000 for 1st, $250,000 for 2nd, would do it.

This article, combined with the fact that government, which could fund all this out of petty cash, does nothing useful in this field makes me rethink a bit on the whole idea of funding X-Prizes & government's competence at promoting progress. I will proceed on that tomorrow. The most useful government X-Prize I have seen is the £0m Scottish Saltire Prize which, being for a commercial sea turbine is an interesting mixture of innovative thought in pursuit of a useless political goal.

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On of the more challenged Branes has commented on that site (but not here):

"It seems ‘Professor’ Craig’s lack of scientific expertise was exposed recently when he fell spectacularly for a scientific hoax that claimed climate change is caused by “saprotrophic eubacteria”:

Quote from “Prof” Craig:

this paper could not be more damaging to manmade global warming theory
eu bacteria – must be every HYSers deepest fear.

on 03 Aug 2009 at 4:53 pm norman foster fanclub

I said prof Craig was found out recently, actually it was a couple of years ago.

My reply which I am also keeping to hand:

Mr fanclub, if you had actually read the article you found (good research since I blogged about it day before yesterday) you would find that the quote you give wasn't actually from me. You are quoting the alleged author of the warming alarmist hoax & therefore of the quote, quoting himself on his blog, quoting a newspaper, quoting Reuters, incorrectly quoting me as having originated the quote which actually was me quoting the hoax article which the alleged author clearly hadn't read.

I thank you for providing yet another level of misquotation to this - may I quote you.
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