There has been a tremendous amount of interest in using large monetary prizes to help solve some of the world’s thorniest problems. Everyone has probably heard of the X-Prize, a multi-million dollar price to encourage the private development of space technology to put people into orbit. Some may have heard of Sir Richard Branson’s $25m Earth prize to find ways of converting CO2 into something more useful that destructive greenhouse gas.
In terms of behavioural theory on rewards, the prize should be an attractive stimulus to encourage individuals to take an interest in the problem, and devote their own resources to solving the problem. Some prizes may be primarily financial, others may focus more on the recognition aspect. An example of recognition would be the story of the math professor (whose name escapes me) who used to give $100 checks for students to solve very complex problems. The professor was so famous, that the very fact that one received a check from the master for solving the problem, was recognition enough, and many never cashed the check.
The problem, and I will shorten my response as I have some time constraints today, is that the winner-takes-all nature of the prize means that there is virtually no sharing between the parties working to solve the problem. Indeed sharing any information could disadvantage any or all of the players, to the extend that all the behavioural components are in place to prevent any form of sharing, beneficial or otherwise.
Now, if one looks at the real issue, one must question the intent of the prize. If the goal is to solve the problem, the prize approach itself is just one incentive method to achieving the goal. There are other, potentially better, ways of incenting behavior to achieve the same goal. These methods may be safer, less damaging to individuals, easier to explain, and faster to solving the problem itself.
In terms of problem solving, the critical behavior that has been removed from the incentive scheme is that of sharing, ‘connecting the dots’. I am a huge believer, based on a decade worth of my own research and practice at Imaginatik and before that at Cass Business School in London, in the power of collaborative innovation, joining a diverse set of brainpower and concentrating that brain energy on a specific problem.
To solve the ultimate problem, one must connect brains together.
The top prize approach stops this from happening.
Ergo, prizes are a bad approach.
Ergo, for those people with the wisdom and desire to help the world solve its thorniest problems – and who love prizes (you know who you are, I met some of you at Davos) – think again whether the ‘prize’ solution to solving the actual problem is the right approach.