Public-Private Partnerships for Organizing and Executing Prize-Based Competitions
The Boston Consulting Group
Karim R. Lakhani
Harvard Business School - Technology and Operations Management Group; Harvard University - Berkman Klein Center for Internet & Society; Harvard Institute for Quantitative Social Science
Berkman Center Research Publication No. 2012-13
Prizes can be effective tools for finding innovative solutions to the most difficult problems. While prizes are often associated with scientific and technological innovation, prizes can also be used to foster novel solutions and approaches in much broader contexts, such as reducing poverty or finding new ways to educate people.
Now that the America COMPETES Reauthorization Act has given all government departments and agencies broad authority to conduct prize competitions, agencies may find themselves looking for resources to learn about prizes and challenges. This paper describes how government agencies can design, build, and execute effective prizes – though these models can easily be adapted to meet the needs of foundations, public interest groups, private companies, and a host of other entities with an interest in spurring innovation.
Prizes can have numerous advantages over conventional means of research and development. First, they can greatly increase the cost effectiveness of developing ambitious solutions to hard challenges. If an agency uses a vendor or provides a grant to a third party, the agency is obligated to pay for all results; however, if the agency uses a prize, it pays only for the winning entry. Second, prizes can help identify solutions faster. Instead of the slow patterns of sequential innovation often found in the private sector, prize competitors can work in parallel, motivated by the need to meet a deadline. Third, prizes can dramatically increase the number of minds simultaneously tackling a problem. The most valuable and innovative solutions often come from the most unexpected corners. Finally, prizes can stimulate private sector investment in amounts far greater than the cash value of the prize. Winning teams in prize competitions are often magnets for private sector interest.
Government agencies need not administer prizes on their own. Rather, agency involvement in prizes falls along a spectrum, from prizes developed internally to those developed entirely by external partners who invite the agency to contribute. An agency can play a variety of roles in partnership arrangements: as the “host,” it generates prize ideas, oversees operations, and solicits partners as needed (as sponsors, for instance); as the “coordinator,” it develops the prize but finds external partners to implement the operational components; and as the “contributor,” it enables external actors to handle the prize design and operations, while the agency contributes in other ways (for instance, by providing data sets, overseeing the judging process, or offering testing facilities). Over the course of a prize lifecycle, the agency may move between these broad categories, or combine them according to its specific needs, capacity, and skillset. Various partnership arrangements affect the agency’s cost, control, and coverage of the prize lifecycle.
As an informational guide to promote the use of prizes within government agencies, with an emphasis on opportunities to form different types of private-public partnerships, this paper:
• Provides an overview of the prize lifecycle to help agencies better understand when to use prizes and the various elements involved in developing a prize;
• Presents a framework outlining the various roles agencies can fill in the prize process and the importance of using partnerships to maximize the effectiveness of a prize; and
• Highlights important steps and considerations regarding partnerships with other organizations.
Drawing on interviews and secondary research on existing prizes that rely on multi-sector partnerships, this paper explores every aspect of forming partnerships and implementing prizes across the broad range of activities that occur within various stages of the prize lifecycle.
While prizes may not be suited to solve every type of problem, they offer a powerful complement to government agencies’ traditional channels of innovation. As the use of prizes in the government sector increases, new practices and novel ways of structuring competitions and partnerships will undoubtedly emerge. To share best practices, agencies are encouraged to collaborate by offering lessons learned from previous competitions and seeking opportunities to assist other agencies in conducting prizes when objectives overlap.
Number of Pages in PDF File: 26
Keywords: prize, competitions, government, agencies, best practices
Date posted: June 13, 2012