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Can Cash Prizes For Innovation Get the Economy Rolling Again?

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Contests for innovation are back in vogue and are a major component of the Obama administration's agenda for federal government support of private-sector research and development (R&D). The 1996 Ansari X Prize for commercial spaceflight advances, which offered a reward of $10 million, demonstrated that appropriately constructed prizes can be less expensive and more effective than conventional R&D.

Prize competitions encourage nontraditional thinkers from various disciplines to work together to solve a problem, and over the past 10 years the funding available for prizes has boomed to up to $2 billion, says McKinsey & Co. An often-cited 2008 study verified that prizes fuel innovation and that the quality of modern inventions is greatly impacted by them. Notable government-sponsored contests of recent years include NASA's Centennial Challenges and the Defense Advanced Research Projects Agency's competition to invent unmanned ground-combat vehicles.

Not only does open source innovation help the federal government disassemble its own research silos, but the inventions developed from contests has immediate benefits to the public. A 2009 survey by the Congressional Research Service found that the best challenges must focus on big, specific questions that are worth answering and offer prizes of commensurate value.

From The Washington Post
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Abstracts Copyright © 2011 Information Inc., Bethesda, Maryland, USA


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