McKinsey and Company recently put out a significant report on prizes as incentives to innovate which is quite good, and very accessible. The report, And the Winner Is, offers a view of the current landscape of prizes and competitions for innovation and provides good insight in good practice. To follow are some notes.
Prizes to incentivize innovation are going through a renaissance – they’re calling these “philanthropic prizes.” Interestingly, find that, “prizes are a unique and powerful tool that should be in the basic toolkit of many of today’s philanthropists.” Some benefits of the “prize inducement” model are:
- Identify new levels of excellence
- Encourage specific innovations
- Change wider perceptions
- Improve performance of communities of problem solvers
- Build the skills of individuals
- Mobilize new talent and capital
Some promising practices identified in the report include:
- Philanthropist matching a clear goal with a large group of potential problem solvers who are willing to absorb some risk.
- Start with a clearly define aspiration for society benefit which can be translated into prize objectives that are specific, motivational, actionable, results-focused and time bound.
- A good prize will invest significant resources into its design, specifying the competitor pool, rules and award attributes.
- An effective prize process is at least as important as the prize design, which will attract candidates, manage the competition, celebrate winners, and publicize the effort.
- A good sponsor will invest significant resources in post-prize activities that convert the awards result into long-term societal benefits.