By Joel Achenbach
Washington Post Staff Writer
Friday, April 30, 2010; A18
The U.S. government is giving away prizes. In seeking solutions to problems, it has discovered the magic of contests, or challenges -- also known as open grant-making or open innovation. Or crowd-sourcing.
Whatever you call this new way of doing business, it represents a dramatic departure from the norm for the bureaucratic, command-and-control federal government. To be sure, the agencies won't abandon the traditional method of doling out grants to predictable bidders. But in the new era of innovation-by-contest, the government will sometimes identify a specific problem or goal, announce a competition, set some rules and let the game begin.
Anyone can play. The idea is to get better ideas, cheaper, and from more sources, using the Internet and social networking and all the Web 2.0 stuff as a kind of vast global laboratory.
NASA is already doing it -- offering prizes for more flexible astronaut gloves, a lunar rover and wireless power transmission. The Defense Advanced Research Projects Agency, a Pentagon think tank, meanwhile, has staged "Grand Challenges" that lured inventors to create self-navigating robotic vehicles. And on Friday, hoping to scatter the concept more broadly throughout the government, the White House and the Case Foundation will team up with federal employees from 35 agencies in an all-day strategy session titled "Promoting Innovation: Prizes, Challenges and Open Grantmaking."
"A day before something is truly a breakthrough, it's a crazy idea," said Peter Diamandis, chief executive of the X Prize Foundation, and one of Friday's scheduled speakers. "The difficulty is that large corporations and government agencies have a hard time trying crazy ideas that could be breakthroughs, because they could also be dismal failures."
The X Prize Foundation has played a key role in making prize competitions a trendy font of innovation. The Ansari X Prize, named for the family that provided funding, dangled a $10 million carrot for anyone who could build a spaceship that could carry people 100 kilometers (about 62 miles) above the Earth's surface twice in a span of two weeks. A team led by aerospace engineer Burt Rutan won the prize in 2004.
The X Prize modeled itself on the Orteig Prize, announced in 1919 by hotelier Raymond Orteig as a spur for innovation in aviation. The $25,000 award would go to whoever could fly from New York to Paris, or vice versa, nonstop. Eight years later, Charles Lindbergh claimed the purse with his solo dash across the Atlantic. Diamandis said the key element of the story is not Lindbergh's triumph, but what came afterward: "Within 18 months of Lindbergh's flight, the number of passengers rose from 6,000 in 1927 to 180,000 in 1929."
Last September, the Obama administration released the Strategy for American Innovation, which called on agencies to use prizes and challenges. The obvious advantage of the prize approach is that the government pays only for results. The competitors invest their own money in research and development.
Prizes also diversify the pool of problem-solvers. Solutions to technical problems, for example, are often found by people in seemingly unrelated fields. A prime example involves the oil spilled by the Exxon Valdez in 1989, said Dwayne Spradlin, chief executive of InnoCentive, and another of the speakers at the Friday session. Spradlin said the Oil Spill Recovery Institute of Cordova, Alaska, had trouble cleaning up the oil at the bottom of Prince William Sound. When exposed to low temperatures, the oil would turn nearly solid. InnoCentive helped the institute put together a $20,000 contest for the best solution.
A construction engineer in the Midwest realized that the problem was analogous to the difficulty of keeping concrete from hardening prematurely when pouring a foundation. His winning solution used industrial vibrating equipment, placed on barges, which kept the oil pumpable.
"We don't even call this outsourcing," Spradlin said. "In this model it's 'diversity.' You're trying to get to as many potential solvers as possible."
Contests and crowd-sourcing aren't foolproof, say veterans of the game. If the rules aren't carefully structured, someone can win a prize with an approach that has no practical value. The goal also has to be specific and realistic.
"You can't just ask, 'invent for me antigravity'-type of questions. Or 'cure cancer,' " said Karim Lakhani, assistant professor of management at Harvard Business School, who has written extensively on open innovation.
Rob McEwen, chief executive of U.S. Gold, will speak Friday about his approach to finding gold when he was the head of a then-small company called Goldcorp. His company owned an old gold mine. With in-house geologists uncertain about where to drill in the mine, McEwen turned to the public for ideas. He published online a massive amount of data about the mine and created a $575,000 contest seeking suggestions for where to find 6 million ounces of gold. About 1,400 people from 50 countries participated. Many had novel ideas for where to drill, and soon Goldcorp was up to its ears in gold.
Lots of people thought it was a crazy idea at the time, McEwen said.
"There's enormous inertia, and somehow you have to break through that," he said. "You have to give control to people you normally wouldn't give control to."
Government agencies are famously inertial, and it remains to be seen how much they will embrace the contests and prizes. But governments have done so in the past to great acclaim. One of the most famous contests was sponsored in the 18th century by the British Parliament in a desperate bid to determine longitude at sea as ocean-going commerce was exploding. A clockmaker, John Harrison, won the bulk of the prize, worth 20,000 British pounds, with a marine chronometer capable of keeping precise time in rough and changing sea conditions.
"No one expected a craftsman to win it. They expected one of the great astronomers to win it using some kind of astronomical approach," said Andy Petro, manager of NASA's Centennial Challenges program.
Petro noted that NASA's most recent contest for a better astronaut glove was won by an engineer who built his first glove on his kitchen table. Second place went to a Brooklyn costume designer working in the theater industry.