Technological Innovation and Prize Incentives
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Technological Innovation and Prize Incentives

The Google Lunar X Prize and Other Aerospace Competitions

Luciano Kay

In this in-depth study, Luciano Kay focuses on three recent cases of prize competitions in the aerospace industry: the Google Lunar X Prize, the Ansari X Prize and the Northrop Grumman Lunar Lander Challenge. Using a combination of real-time and historical analysis based on personal interviews, workplace visits and questionnaire and document data analysis, the author examines the particular dynamics of the prize phenomenon and offers a comprehensive discussion of the potential of prizes to induce innovation. This fascinating volume also sets out a systematic method to studying prize incentives, offering a concrete innovation model and case study design approach that will prove highly useful to further research efforts in the field.
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Chapter 2: Innovation, policy and prizes

Luciano Kay


In the last 20 years hundreds of prizes have been offered to accomplish very diverse goals. A report by McKinsey & Company estimates that all these prizes may be worth as much as $2 billion if the rewards offered by all types of prizes are added up. Inducement prizes (with a number of targets, including technology development) are those that have grown the most since 1991, offering rewards for about $236 million between 1991 and 2007 (McKinsey & Company, 2009). Scholars also note this growth in technology prizes and identify at least 38 innovation inducement prizes between 1990 and 2008, which includes at least 14 competitions organized by different USA federal agencies (KEI, 2008; Masters and Delbecq, 2008; Stine, 2009). Dozens of new private and USA federally funded prizes have been announced since then, but there is still no centralized information source to track this activity. This investigation had access to four recent studies that have sought to compile lists of the most significant prizes offered since at least the 16th century (Table 2.1). Three of these lists have broader coverage but prizes are not systematically categorized in all cases. There is also a compilation of government prizes limited to USA federally funded prizes. The top technology areas of prize implementation in terms of number of competitions vary depending on the data source. Aviation/aerospace, climate/environment and medicine are among the top areas. Other more prominent areas include transportation (e.g. automotive), energy, defense, computing/software and chemistry. In spite of the variety of technology focus, a significant use of prizes in the aviation sector since the early 20th century and in aerospace since the 1990s suggests that prizes may be more effective in particular fields. The size of prize rewards varies considerably as well.

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