Public Services Lab Blog

Can challenge prizes give solutions?

Vicki Purewal - 04.03.2011

"Clarity of both programme design and the challenge you set are critical to success"

We explore the debate around what makes a successful prize challenge to promote public and social innovation.

We recently brought together 20 people with a range of experience across innovation, public services, social change, online platforms and prizes to discuss social challenge prizes. 

Topics ranged from how the concept sits with third and public sector cultures, the use of prizes to build new networks, to the relationship of challenge prizes to commissioning.

Let us know what you think

This blog tries to pull out some of the main points from the discussion.  I would encourage those who attended, as well as anyone else with an interest in the topic to use the comment below, or use our social media channels, as a way of extending the debate.

The 6 main characteristics of a social challenge prize

A challenge, or inducement prize, has the following four characteristics:

1. A clearly defined and measureable challenge
2. Outcome focused: the reward goes to the best results rather than proposals
3. Non-prescriptive: the challenge is prescribed; the solutions are not
4. Open to a wide field of potential innovators, with a low barrier to entry

A social challenge prize, as we at NESTA defined and tested it through our Big Green Challenge programme, has the four characteristics above, plus:

1. A staged approach: with value for competitors at each stage
2. Support: to refine, deliver and measure solutions

What are the benefits?

The benefits to funders and innovators can include de-risking the process of finding or developing new solutions (for funders, and in part for competitors); generation of evidence of impact; a sense of focus and momentum for ideas; recognition and legitimacy for new and less experienced innovators; freedom to innovate; leverage of further support and funding – for competitors, funders and new fields of practice.

The decision to use a social prize challenge prize (or any kind of inducement prize) should not be taken lightly.  There will be situations and conditions in which their use will be more or less appropriate, and it is important that we try to understand what these are.

There are huge shifts in perceptions and culture required, for both funders and potential innovators, to enable engagement in a challenge prize.

People experienced in running challenge prizes have found that to help people grasp the concept takes concerted internal and external communications. Not because it is complex, just because it is different from what they’re used to. 

The concepts of competition and winners, and the idea of making greater investments in fewer solutions, feel unfair to some people. The notions of being open to not knowing what or where the best solution are, and of supporting innovators with no track record feels risky for funders and particularly statutory bodies. 

It is important to be sensitive to these concerns, which can be at least partly mitigated through good prize design. It was noted that destabilising existing ways of finding and supporting solutions could be positive in helping to find the radical innovation required to tackle many issues. That is with the caveat though that prizes are not a blanket solution. They should be used alongside grants and other forms of philanthropy, as well as alongside commissioning.

You need to be clear, confident and unapologetic in using a prize to reward the most successful results. What you can do, by using a staged process and offering support, is to build value in for competitors at every stage. Through this they can gain even if they don’t win, and you can help strengthen overall responses to the challenge during and beyond the prize. There is a lot more that can be explored in relation to designing successful routes out of the process for non-winners, and using prizes to build new networks, social capital, and to create new markets for new solutions.

What makes a successful prize programme?

Clarity of both programme design and the challenge you set are critical to success. You need to be absolutely clear whilst also allowing yourself room to be surprised.  This can be achieved by setting a clear challenge without prescribing the type of solution, and by creating opportunities for new innovators to come forward. Finding the right approach to measuring results is also important and can be tricky. In the Big Green Challenge I don’t believe we got the approach to monitoring right. It worked in that it generated evidenced figures to prove that Finalists reduced CO2 by 10-42% over a year. It didn’t work in that it created too much of a burden on our Finalists. The trick is to find an approach that is good enough (to be robust without risking it becoming a disincentive).

There is a long history of different ways of designing and using grants, and it has always been important to be clear about your process, aims and offer. With the development of challenge prizes, social investment funds, Social Impact Bonds, and different forms of commissioning – it becomes more critical than ever as a funder to be clear in your language, criteria and process; about what you are offering, timescales, what is expected of competitors, and what they can expect to get, as well as what you – with the competitors - are trying to achieve.

It was clear from the discussion that we’ve only scratched the surface of what is possible in the use and design of challenge prizes themselves. It was also clear that there are several unexplored, potentially groundbreaking, avenues for their use. Could social challenge prizes be used as a way of cultivating new solutions and suppliers and linked formally to a commissioning process? Could they be used to generate and support a pipeline for social investment funds?  What relationship could they have with social impact bonds? What use could be made of the input and results data drawn from across challenge prizes? What research might be needed to support the topic – to build empirical evidence or to assess the right policy frameworks to support more effective use of challenge prizes?

As with any emerging practice, there is much more to discuss and practically test so that we can find the most effective ways and right moments in which to use challenge prizes.