Innovation Inducement Prizes at the National Science Foundation (2007) / Chapter Skim
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2 An Experimental Innovation Inducement Prize Program at NSF
2 An Experimental Innovation Inducement Prize Program at NSF
Pages 18-39
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From page 18... ...
There is much to learn about how to determine the appropriate goals and objectives for inducement prizes, 1There is precedent for an experimental approach to innovation policy. For example, in the early 1970s interest emerged in using federal procurement to induce technological innovations thought to be of national importance.
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From page 19... ...
Within an experimental program early progress can be made on relatively straightforward approaches to contest administration, leaving time for later development of more complex contests and mechanisms. In the following sections the committee outlines an approach to the design of an inducement prize program that emphasizes learning and program improvement in the formative years, leading to more ambitious contest goals with greater visibility and higher stakes for participants and NSF.
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ADMINISTRATION AND DESIGN ISSUES We begin with a general description of an innovation inducement prize program and then discuss a number of specific issues regarding such a program. The committee recommends that NSF establish a multiyear, continuing innovation inducement prize program.
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From page 21... ...
Each contest would have a set of rules tailored to the specific circumstances, as discussed below. "First-past-the-post" and "Best-in-class" Contests There are two principal types of innovation inducement prize contests.
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In the case of the prize program, in-house personnel costs (for, say, a program director, two professional staff, and one administrative staff) would be modest; but the cost of planning and consultation to determine the topics of prize contests, advertising the contest to a wide range of potential participants, and ongoing evaluation could push administrative costs higher than the average for NSF programs, whether or not these functions are contracted out.
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From page 23... ...
They were selected for purposes of exposition of the design choices and their implications. We can envision that other intermediate types of prize contests will evolve as NSF gains experience with an innovation inducement prize program.
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At present the legislative authority for the NSF innovation inducement prize program is limited to guidance from the House Appropriations Committee in the FY 2006 Science, State, Justice, and Commerce Appropriations bill and associated committee report language. In the committee's view it will be important to the long-term success of the prize program, including its financial stability, for NSF to seek formal authori
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NSF needs the flexibility within broad legislative grants of authority to experiment with the design and administration of a prize program if it is to be successful. Role of Non-NSF Entities in Program Administration and Funding We anticipate that teams from the private sector and nonprofit institutions will be the principal contestants for innovation inducement prizes.
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From page 26... ...
We anticipate that colleges, universities, and other nonprofit organizations will be active supporters of teams competing for some NSF innovation inducement prizes, either using discretionary resources or teaming with for-profit entities. For example, some of the leading participants in the DARPA autonomous vehicle prize competition (including the 2005 grand challenge winner)
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From page 27... ...
There may be important benefits to NSF in contracting through the Office of Inducement Prizes with one or more external organizations to assist in designing and, even, administering some aspects of each prize contest, perhaps with different organizations under contract for each prize. These organizations would bring specialized expertise to bear in crafting the technical rules necessary to specify the objective of each of the prizes or in judging whether a contest objective has been met.
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From page 28... ...
Following announcement of the initial set of prize contests, the committee envisions a more extended process for selecting the more ambitious prize topics, determining the prize goals within those topics, and designing the objectives of each contest to best match the circumstances that surround likely goal achievement. INDUCEMENT PRIZE CONTEST RULES Innovation inducement prize contests would be governed by a number of rules.
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From page 29... ...
Some inducement prize contests have required payment of an entry fee both to defray part of the cost of prize administration and to discourage frivolous applications. The committee recommends against charging such fees at initial registration, especially since one purpose of the prize program will be to encourage the widest possible participation, including
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Conflicts of Interest The issue of conflict of interest may arise in connection with NSF's (or any other government agency) offering inducement prizes for accomplishments in areas in which it also awards grants.
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Awarding a prize for a technical advance that may ultimately be commercialized is not the same as supporting fundamental research with the intention that the results be available to all. We recommend that eligibility for NSF's innovation inducement prizes be limited to U.S.
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From page 32... ...
While contest termination may be unsettling for NSF and the registered teams, it is certainly preferable to having to award a prize to a team demonstrably not best in class or first to achieve the contest objective. Contest rules should specify how NSF would acknowledge the accomplishments of the noncontestant entity and how it would notify contestants in the event of contest termination.
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From page 33... ...
Intellectual Property We recommend that the federal government not seek to own or control the disposition of intellectual property developed by contestants in the course of seeking NSF innovation inducement prizes, with one exception. The exception would be that if the winner of a prize chooses not to put the winning innovation into commercial practice within a reasonable time period and if it declines to license it to another U.S.-based entity wishing to commercialize the invention, the winner would be required, as a condition of the award, to enter into good faith negotiations with the other party for a license to be awarded under terms and conditions typical for the industry or technology sector.
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From page 34... ...
In the committee's view crafting these prize-specific rules is likely to be a challenging and different task for each contest. The experience of other organizations, including DARPA, NASA, and the X-Prize Foundation, has been that writing contest rules requires extensive consultation with experts, affected parties, and potential contestants to ensure that the stated prize goals are clear, understandable, and unambiguous; that the proposed prize goals represent important societal needs and opportunities; that the contest objectives embody a significant yet achievable advance over the current state of the art; and that it will be possible to determine in a relatively unambiguous way whether a particular innovation should qualify as the winner.
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From page 35... ...
An NSF inducement prize program can play a valuable role in this process not only by identifying sound technical solutions to problems but also by conferring a "halo effect" that may help winners attract further investment. In every case the challenge is to determine what should be set as the concrete objective of a prize contest.
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From page 36... ...
Framing an energy supply contest around broader definitions of the societal goal may lead to more significant developments, yet may also make it challenging to define contest objectives that are sensible and for which winning can be objectively assessed. Conversely, framing an energy supply contest around a narrow goal may yield interesting innovations within the scope of the contest, yet fail to stimulate innovations that might be of greater overall importance but that would fall outside the contest objective.
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From page 37... ...
The committee recommends the broadest possible outreach by NSF to the technical, professional, public interest, and industrial communities in defining prize and contest goals and objectives. Form of the Prize Most innovation inducement prizes feature a single cash award to the winner.
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From page 38... ...
AWARDING INNOVATION INDUCEMENT PRIZES One of the purposes of an innovation inducement prize program is to raise public awareness of the importance of innovation to the economy and society and to generate excitement about the enterprise. Prizes should be awarded in a manner consistent with this purpose.
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From page 39... ...
Instead, a formative evaluation strategy would focus on measures that would provide insight into whether the program's anticipated short-term impacts were being achieved on a continuing basis, and which features of the prize contests are more or less successful. Among the relevant indicators of positive near-term program impact could be • whether the contests attract large numbers of contestants; • whether those contestants are a more diverse group than the traditional NSF constituency; • whether, to what extent, and from what sources private funds are forthcoming to support the research activities of contestants or even to augment the prize purses; • whether prize rules and processes functioned well; • whether the contestants make related innovations that are successfully spun off from the main prizeseeking activity; • and whether the program significantly advances innovation in the area of the prize topics.
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