From self-driving cars to private-sector space exploration, from budding entrepreneurs across Africa to innovative and inventive users of information technology, prizes and awards programs are being used not only to honor and recognize landmark achievement, but also to incentivize learning and motivate organizations and individuals to invent solutions.

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Kirkpatrick: Next we have a session that is kind of an interesting lens on what’s happening with creativity and innovation because it’s really about new ways to motivate and reward innovation and creativity, and how prizes in particular are becoming a very leverage‑able tool to really change the way the economy works.

So to interview Jean Case, the CEO of the Case Foundation, whom we are very pleased to have, we also will have Jeff Green, who is the bureau chief in Detroit for Bloomberg. So Jeff and Jean, join us on stage if you are ready. Thank you so much.

Case: Thanks, Dave.

[APPLAUSE]

Green: So thanks for coming out. We have been talking back stage a lot about prizes, and you probably already know that for the last two or three hundred years prizes have been—at least two or three hundred years—prizes have been around as a motivating factor to get people to change behavior and invent things that society needed. One the inventions we were talking about was the longitudinal prize. And just for kicks I converted the 20,000 pounds from the 1700s into today’s dollars, it was 500 million bucks which would motivate a lot of people to come up with an invention that could be useful to basically save lives on the open seas. It was a very innovative prize. Based on your accuracy, you could get more money. And there were little spur grants, seed grants. If you looked like you were doing well, you could get a few more dollars sent to you. And that’s the kind of thing, 300 years later—

Case: That’s right.

Green: —that Jean of the Case Foundation is trying to bring to the broader community. And we are going to talk for 15 minutes give or take, depending on the lines at the microphones, and try to get a sense of the pros and cons of the prize. Jean is very much about the pros.

Case: I’ll be talking pros.

Green: And I will interject some con.

Start out first, why do you think this is effective? What is the value of a prize? And then please share a failure for us so we know that it’s not all with a silver lining.

Case: Sure, happy to do that. I am delighted to be here. And for those of you who don’t know the Case Foundation, the Case Foundation is our private family foundation, started about 16 years ago after I retired from AOL. We had the wonderful opportunity, my husband and I did, of building that great company, which to us was very much a mission‑based effort. And the mission was about democratizing access to ideas, information, communication, and content. So when we think about the opportunity today around open innovation, prizes, and challenges, it’s essentially taking that effort, which really became the Internet revolution as others joined in and a new sector was built, and really leveraging it, taking advantage of a really simple concept when you think about it. And the simple concept is, it turns out that the smartest people in the world usually work for somebody else. But there’s this opportunity to harness what they know and what they’ve done, and how they might see the world, as we look to innovate in our society. So it may make a lot of sense to us coming out of our technology background, as we did, to focus on this area.

Now, we heard even in the last panel some discussions focused around open innovation and prizes and challenges, but particularly the area that we’re passionate about is around areas of great challenge in our society, in our communication—in our communities. When you think about it, major sectors—transportation, healthcare, education—need to be disrupted. They need to be disrupted in the best of ways and made to reflect all that’s possible today. And to do that, we have access in an unprecedented way, to millions of people around the world who can bring their brightest ideas to helping us address some of these challenges. And that’s the work we’ve been engaged in. And what we find is it’s a really exciting path to innovation. So we’ve been working with companies and entrepreneurs, but more importantly, we’ve been working with the public sector, where, you know, hampered today with not enough budget dollars, when you think innovation, you usually don’t think about the government, and yet we’ve seen some really cool and interesting things, that I’m hoping we are going to talk, about come forward out of public sector efforts around open innovation, prizes, and challenges.

Green: One of the main sort of criticisms of the prize movement, a couple of them, is it focuses too much attention on preparing for the prize, the eligibility requirements, doing endless entries for a limited amount of dollars, 300 entries, one winner. The other thing is that it focuses on ideas, not necessarily successful implementation.

So what do you say to those criticisms, that we should get rid of the prizes and just spend the money directly using your brains and not bother to make it a contest?

Case: Yeah, well, what we say is there really is a lot to be said around the design of challenges. And often what goes forward both in terms of the level of innovation we see and what’s brought forward and then its ultimate execution has a lot to do with the way the program is designed in the first place.

So let me talk a little bit about what’s happened at the federal government level because it’s actually very exciting. So a few years ago we got together with some other folks in Washington and we had for the first time, as many of you know, in the Obama administration, the nation’s first chief technology officer, and worked with him and worked closely with the White House to really ask the question, how can we begin to innovate in some of the key areas that the federal government is involved in, in trying to link its citizens more closely with the government and address citizen needs?

So the president wrote a presidential order basically compelling federal agencies to try some work and prizes and challenges to see what might break through. We hosted a summit on innovation. It was co‑hosted by the Case Foundation and the White House. We had 35 federal agencies joined by 35 organizations from the private sector trying to outline on whiteboard and imagine: so what would this look like? And a lot of it really did come down to design. We learned early on at the Case Foundation through some of our early efforts that we took forward and then published the learnings from, everything is about the design.

So, for instance, you said, you know, you have one chance to win. A great challenge or design doesn’t have one chance to win. It has all kinds of dynamics that keep people in the game, that provide almost daily incentives to keep trying. Because if it’s clear someone is really out front, think about it, if you’re in a race and someone has now lapped you, you’re going, oh, geesh, what are my chances of catching up? So the great designs provide great incentives through the whole process to keep people in the game. It may not be the grand prize incentive, but it’s going to be something that’s an incentive to keep people going. And we saw this in some of the programs and pilots put forward by the federal agencies.

So two years later we said, all right, it’s really time to go back and look at what happened there. And we were really excited to see that hundreds of challenges have gone forward. But more importantly, we worked with the federal agencies to house a center of innovation at NASA. And a site has been launched, if you don’t know about it, called challenge.gov. And today you can go on and see every challenge that every federal agency has put out there and invites the public to be part of solving some of our most critical issues.

One of my favorite ones that came out was actually around public safety. So it turns out—and I didn’t know this—it turns out that high‑speed chases are a big issue in law enforcement. And they usually don’t have happy endings.

Green: You don’t watch CNN.

Case: I don’t. There’s often a lot of collateral damage in the process as well, so it’s not really just about apprehending the person on flight, it’s really about trying to avoiding the collateral damage. So one of the challenges was put out by the Department of Justice to address that. Someone designed basically a remote controlled balloon that can be laser guided to stop a car. It basically is put out in front of the car and kind of blows up and stops the car in its tracks, avoiding the need for a man chase, and vehicles, what not.

Green: For people who are thinking about a prize model, what is something to avoid? What is something you have learned? Hey, you have had a lot of experience in thinking about this. What are a couple of things to avoid when you design your prize if you want someone to solve a problem? We talked about the city of Detroit; it’s designed like spokes coming out of a wheel. And it’s really difficult, if you don’t own a car, to get from the East side of Detroit to the West side of Detroit. So let’s say we wanted to design a contest to encourage the bus riders in Detroit to come up with a solution that gets them quickest—quickest solution to get people from East Detroit to West Detroit.

Case: There’s a lot of lessons. And we did talk about that as we toured Detroit yesterday and saw that there are all kinds of transportation challenges.

I think a common mistake in both companies and in any organization is to not have the people you’re trying to serve at the table with their voices. One of the things we love about challenges and prizes is it gives everybody the opportunity. Usually it’s the person who is trying to solve that problem because they have a personal need, who’s really thought it through and can bring forward innovative ideas and move it forward.

But in terms of things that we think are important, I talked about the design, I talked about making sure you have stay‑in‑the‑game incentives, you know, that are part of what you are doing. Even your time frame did make a difference. If they go too long, you see a significant drop‑off in terms of entries.

Prize money. We, in our early testing in social media around some democratization of philanthropy ideas, we thought we had to put significant money up to get people into the game. When we came back and re-did the pilot a few years later, we used a much lower level of prize money to see the difference it would make and we actually had more people participating in the second round than we did in the first. And all of these findings are published in things that we’ve put out on sort of best practices together, by the way, with the Knight Foundation who does the Knight News Challenge and has done some smart stuff here based on that news challenge that they have. But we’re both publishing and writing as much as we can, not just for ourselves, but in talking to others and trying to figure out what does the best design look like to take forward?

Green: And maybe really quick before we see if there’s any questions, you mentioned the importance of failure.

Case: Yeah.

Green: That one of the things that people are trying to avoid failure in their design, and maybe failure is the point in some cases.

Case: Ultimately what we’re after is innovation. It turns out innovation doesn’t happen without risk taking. And any time you are taking a risk, failure is an option. So it really has to start with an understanding that failure is an option, but if it happens, fail fast, fail forward. Move on and learn from it. And if you can, it’s better to let others know what your lessons were as well so when they enter the game, they’re a little further along too.

So what we find is, you do have to have a risk tolerance to jump in this game. But if you look back, as Jeff stated, there are hundreds of years of examples of significant innovation that took us out of this prizes and challenges work.

One of my favorite sort of failure quotes is Thomas Edison, who said, “I haven’t failed, I’ve just found 10,000 things that didn’t work.” Any time we see progress and innovation, we’re going to see a road littered with tries that maybe didn’t work out so well. So failure has to be an option. Embrace that and move forward boldly anyway. Be fearless.

Green: Before I ask another question, is there anyone who wants to ask a question from the audience?

Going once, going twice. We’ll give a prize for the person with the best question.

Case: Yeah. We didn’t design this prize very well. I’ll also comment on a failure. One of the earlier prizes and challenges that we did was when the election was coming around in 2008, and there was a growing concern that it was being painted at that time that the government was going to solve everything. So we really wanted to build a dialogue around engaging citizens on what they saw they needed and how they saw their own role in solving problems. But part of that was asking them to identify what did they consider the most significant issue facing the nation as they were thinking about a presidential candidate.

So we partnered with a nonprofit to do this. We designed the challenge, et cetera, again with a promise to report out. And when we basically saw the results coming forward, some were public, some were not, we learned that actually what was coming out as the number one thing was legalization of marijuana. And it wasn’t that we really had an issue with the fact it was legalization of marijuana; it was just completely out of sync with where we knew the electorate was.

So when we went back and looked at the design of the new program, what we learned was that there were significant causes and movements that got overly engaged in the voting process and the voting process didn’t have a way to balance that out. That is something I think in any prize we have seen online; you have to give very careful consideration to how you weigh a vote, how you measure a unique vote, and making sure groups that are highly passionate don’t come in and almost crowd everyone else out.

Green: One last question as we kind of close this out, if you could sort of predict maybe the two or three areas, especially in social causes, where you think prizes are going to be—increase the most, the most prevalent, the biggest shift, where do you think those areas would be?

Case: Yeah, so I think the big innovation in developing solutions to our social challenges will not come from the government. I know this isn’t a big surprise. But I think they will come from the private sector, and I think they will come from individual entrepreneurs and innovators across this nation and across the world. And I think they will be in areas, and we are starting to see some of these, like healthcare, like transportation. We are already seeing it in education with some of the Ed movements going on.

These sectors put together represent a significant part of our GDP. Still a huge economic opportunity as well as an opportunity to impact, change the world, and we are really excited about the innovation we are going to see as we move forward.

Green: Thank you. I think that’s our time. At least the clock up here has turned to three zeros.

Case: Thanks.