President Barack Obama delivers a speech at a grassroots event at the Summerfest Grounds at Henry Maier Festival Park in Milwaukee, Wisconsin on September 22, 2012. (Marvin Joseph/The Washington Post)

This piece is part of a roundtable centered around innovation prescriptions for the new Congress and President Barack Obama’s second term. Read more about the roundtable here.

Prizes have been used for centuries to spur innovation. – Large-scale, incentivized competitions have been held to bring about technological breakthroughs that can kick-start, or transform an industry. The premise of canning food was in response to a prize offered by Napoleon in the 18th century to prevent his troops from starving as they marched into Russia. Charles Lindbergh’s groundbreaking trans-Atlantic flight was in response to a prize offered by a hotel magnate in 1919.

A catalyst of today’s multi-billion dollar commercial space travel industry was the $10 million Ansari X PRIZE, awarded in 2004. Today, the U.S. government has the opportunity to be at the forefront of launching prizes, with the concept embraced by both Democrats and Republicans. In the past few years, President Obama and Congress have recommended the increased implementation of government prizes, and have granted agencies the broad authority in order to do so, and now we are seeing hundreds of smaller cash prizes launching across dozens of agencies.

In looking at some of the key issues facing the administration – access to affordable healthcare, education, further development of clean energy, job creation and economic growth, and gun control, among many others– how can we bring about radical breakthroughs in these areas? First, we must take risks. Why? Because the easy, simple solutions have nearly all been tried and have failed. We need new thinking, new minds and new approaches to these issues, and prizes are a means to that end.

What separates prizes from traditional R&D or other funding mechanisms is that the burden of risk is wholly on the teams, since the prize is designed to only reward success. The competitiveness and the high-profile nature of incentivized competitions inspire teams to embrace this risk but in doing so, they must also embrace failure. But failure is a necessity to invention, because innovation requires multiple failures before it succeeds.

Peter Diamandis is Chairman and CEO of the X PRIZE Foundation. (Courtesy of X PRIZE Foundation)

The day before anything is a breakthrough, it’s a crazy idea.

An ambitious and well-designed prize can result in a disruptive, not just incremental, societal improvement, and can give us another Moon-landing moment to inspire a new generation and re-establish the U.S. as a leader in innovation.

Peter Diamandis is Chairman and CEO of the X PRIZE Foundation. He, along with Steven Kotler, is the co-author of “Abundance: The future is better than you think.”

The Roundtable:

Shirley Ann Jackson | Invest in what is next

Christoper Altchek and Jake Horowitz | Meet millennials in new places

Ramez Naam | Fuel energy innovation with a carbon price tag

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