As promised in an earlier blog post on this topic, the IBM Center now has a report, “Managing Innovation Prizes in Government,” by Luciano Kay, with the School of Public Policy at the Georgia Institute of Technology.

The use of prizes and awards is a visible element of the Obama Administration’s efforts to promote innovation in government. For example, the Office of Management and Budget (OMB) has sponsored a competition among federal employees to find cost savings and the White House has created the “challenge.gov” website where federal agencies can pose problems in hopes of getting solutions from the public.  OMB issued guidance to encourage agencies to offer challenges and prizes, as well.  

Why?  Because prizes are effective.  Under the right circumstances, they can be more effective than traditional investments in research and development. Lowery says: “After falling out of favor for decades, such high-publicity, fat-reward contest came into vogue again in the aughts in the wake of the 1996 Ansari X Prize for advances in commercial spaceflight” which Burt Rutan’s SpaceShipOne won in 2004.