‘We are experiencing a resurgence of innovation through prizes,” writes Jaison G. Morgan in the most recent issue of the journal Innovations. In an interesting article, Morgan (who is in the prize business himself, as part of the staff of the X PRIZE Foundation) examines prizes as a tool to spur innovation. The current trend toward innovation contests is a topic I’ve blogged about very briefly, but Morgan takes a look at not only the rich history of such prizes — one of the most famous was the British Longitude Prize, established in 1714 by the British government and won by the inventor of the marine chronometer — but also their efficient design.
Morgan also points out one of the reasons well-designed contests can be effective: Innovator optimism. He notes:
Prizes work because they generate much greater interest and investment than the net value of the purse offered.