Has our great ideas machine really broken down? Peter Thiel recently quipped that innovation in America is "Somewhere between dire straits and dead...we wanted flying cars; instead, we got 140 characters."
And, he has a point. We are still relying on the out-dated intellectual property system to fuel and reward the creation of new ideas and startups. The lure of the acquisition lottery is leading smart and talented entrepreneurs to invest their time in low impact problems; while, traditional venture capital funds are avoiding the outliers or 'black swans', which often lead to revolutionary ideas.
Let us be thankful then for foundations like Peter Diamandis' X-prize that are sparking radical new ideas using a new competitive model. The X-prize foundation has already experienced remarkable success in a wide range of fields and has several more in the pipeline. This is only the beginning. For as Steven Johnson eloquently argues in his recent book Future Perfect, the world needs an 'X-prize for everything'.
Although innovation prizes have been around for centuries, they have never been used to their full potential.
When an innovation can be specified, prizes are vastly more efficient for incentivising, diffusing and promoting new ideas in comparison to the messy Western intellectual-property system. Put simply, patents grant ownership of an idea consequently restricting both the ideas' diffusion rate and the ability for others to further innovate upon it. Prizes on the other hand let innovators profit handsomely from their ideas without owning them.
If you add up all of the worldwide philanthropic prizes the total is not much greater than $375 million. This sounds like a big number yet in a global economy typically measured in trillions of dollars, it is barely a drop in the ocean. Let's apply Larry Page's moonshot thinking: imagine a pool 1000x bigger than the current philanthropic innovation prize total available. Here is one radical suggestion for what that might look like:
Lets revolutionise global incentive mechanisms for innovation by creating the world's first crowdfunded innovation prize.
Could a crowdfunding model be applied to innovation prizes in order to create a new incentive mechanism for global innovation? KickStarter has shown us the potential of crowdfunding, but there is so much more to come. Yvon Chouinard pioneered the '1% for the planet' campaign and raised well over $50m to protect land in Patagonia. He achieved this by crowdfunding money from hundreds of different companies who all committed just 1% of their sales. It was a simple, yet powerful strategy.
What if instead of a donation, these companies had pledged their 1% towards an innovation prize pool? This pool of money would follow the same model as Kickstarter - such that if the total amount was not raised or no innovations were made within the specified time period - none of the money would have to be donated. It is effectively a win/win for the company.
What if the philanthropic icons such as Richard Branson committed his Virgin Empire to backing this concept? What if he courted the media and charmed the Fortune 500 CEOs? How much could he and others collectively raise? $1bn? $10bn? Maybe even $100bn?
Imagine if we achieved the monetary target and then divided this prize pool into 50 different innovation goals/prizes. An X-prize for drugs, climate-change, you name the category. These goals/prizes could be researched and determined by globally minded thought leaders and academics, such as those working at the Singularity university.
Imagine also if the focus of these prizes centered not just on expensive/impressive prototypes, but on scalable products and process innovations. Instead of being patented and hidden under lock and key, these breakthrough innovations could be released to the commons for anyone to adopt, replicate, re-innovate and distribute.
Now, think of the serendipity explosion this new incentive mechanism would create. Past innovation prizes show that the total spending on research is many times the total prize winnings. For example in the Ansari prize, 26 teams collectively spent over $100 million in pursuit of a $10million prize.
Archimedes said 'Give me a lever and a place to stand and I will move the world'. Innovation prizes are that lever. Who knows what would happen if the brightest minds on the planet had powerful economic incentives to work on audacious, make-a-dent-in-the-universe type projects. Peter Thiel might just get his flying car after all.
This material published courtesy of Singularity University.