Sometimes you have to use what someone else says. Here is a quick excerpt from Wired Magazine’s online site. The story is called Q&A With X Prize Founder: Big Prizes = Big Breakthough. It is Wired News (WN) and Peter Diamandis, the guy who is funding several great projects and funded X Prize.
WN: Why do prizes work better than investment?
PD: First of all, rather than funding somebody who might succeed, by offering a prize you automatically back the winner.
Second, you can attract a large field of potential competitors, so that
— at the end of the competition — while you’ll have a single winner,
you may have multiple contenders who have advanced their technology.
You may be giving birth to an entire industry, as opposed to a single
Prizes encourage people to take much higher levels of risk in
order to win. By encouraging that risk, you ultimately encourage
breakthroughs, because achieving a breakthrough is really a risky
proposition. It’s typically something that nine out of 10 think is a
crazy idea and not fundable by conventional funders. In addition,
prizes short-circuit bureaucracy. They say “I don’t care where you’re
from or what you were doing before. If you pull this off, you win.” So
it attracts nontraditional players and mavericks.
I was talking to a coworker the other day (OK, it was about 3 months ago). The problem we were having was around securing funding. His position was to get upper management to buy into what we were doing and have them fork over funding for us to release to other groups based on adherence to certain rules or progress. I didn’t like that idea because it is fraught with vulnerabilities and a suave group could manipulate the results without doing what the intended need for the resource is. Plus, if you have a group that has an innovative means to get to the desired result there isn’t motivation for them to save if they are guaranteed resources. If you have a budget of $5 million, you will use $5 million or at least something close. I suggested we create a prize with the funding. The prize would be greater than any individual pay out and it didn’t have to be used for the actual project (maybe going to support other areas that are getting less attention). If all goes well, each competing group will have unique and hopefully innovative results. But as Peter Diamandis says above, the risk taken would lead to breakthroughs. When teams all get resources their solutions tend to be very similar with only environmental differences between the two determining the winner.
Ultimately, my idea wasn’t used.