Challenge prizes create pathways to developing, testing and scaling innovation

Challenge prizes are a way to deliver innovation around a specific mission.

They are well-suited for complex problems that lack obvious, straightforward solutions: challenges set out a problem to be solved, but don’t specify the route to the desired outcomes (unlike procurement exercises, where the solution is readily defined). They allow a wider range of actors to propose solutions, and welcome proposals that are potentially more risky and experimental, but only reward those that work best. Challenge prizes offer a series of incentives and support to develop, test and scale solutions, with a final prize given to whoever can first or most effectively meet a defined goal.

When applied to the right kind of problems, challenge prizes can:

Create breakthrough innovations

Radical new solutions are needed to respond to the climate crisis – to generate and scale cleaner energy production, to produce enough food, to build and rebuild our cities better. Challenges guide and incentivise the smartest minds to create the solutions we need quickly. Because challenge prizes only pay out when a problem has been solved, you can support a cohort of long shots, radical ideas and unusual suspects. This allows funders to make the ambitious bets that the climate crisis requires without losing precious time to solutions that do not deliver expected results.

Mobility Unlimited Challenge

In partnership with the Toyota Mobility Foundation, we designed and delivered the Mobility Unlimited Challenge, a $4M global challenge to support radical improvements in the mobility and independence of people with lower-limb paralysis through smarter assistive technology.

The challenge aimed to harness creative thinking from across the world to accelerate innovation and encourage collaboration with endusers, in order to result in devices that will integrate seamlessly into users’ lives and environments, enabling greater independence and increased participation in daily life.

Ten promising entrants were supported to develop their solutions and five finalist teams accessed further funding and support. The final winner, who created an ultralightweight manual wheelchair made from carbon-fibre using smart sensors, was awarded a $1M prize to develop their innovation further and take it to market.

Help innovators thrive

Through cash and capacity building, challenge prizes help to develop a cohort of thriving innovators around a problem. It’s not just about one winner, but about supporting and cultivating a collection of promising innovators by providing funding, expertise, profile raising, investment and networks. The urgency of the climate crisis means that we must remove the barriers solvers face and expand the community of innovators acting to tackle the crisis.

Climate Smart Cities Challenge

In collaboration with UN-Habitat and Viable Cities, we designed and delivered the Climate Smart Cities Challenge, a €300K, two-stage global innovation competition to accelerate the shift to climate neutrality in cities and create a better future for all, by empowering innovators and communities to collaborate in designing and demonstrating solutions to the climate crisis.

In partnership with four cities – Bogotá (Colombia), Bristol (United Kingdom), Curitiba (Brazil), and Makindye Ssabagabo (Uganda) – we engaged a broad collection of public officials and industry stakeholders to define specific climate-related challenges. We launched an open innovation competition to invite innovators globally to solve the city challenges (focused around climate neutral, affordable housing; optimising freight systems; and creating zero-carbon neighbourhoods integrating waste, energy and mobility). The four cities worked closely with 45 finalists in an intensive cocreation phase to target different aspects of the cities’ climate and sustainability challenges with the purpose of achieving multiple, largescale and transformative outcomes. Four winning teams will go on to plan a system demonstrator in each city, a portfolio of connected innovations that uses multiple levers – not just technological innovation, but also institutional, legal, regulatory, cultural, and behavioural change.

Unlock systemic change

The high profile of a challenge can guide policy and investment decisions and shape the future development of markets and technologies. Challenges are a route to identifying best practice, shifting regulation and sparking policy change. Given the transformational change needed to address the climate crisis, challenge prizes can simultaneously support better solutions while unlocking other enablers, such as signalling funder intent, creating new markets or informing the development of better regulation.

Open Up Challenge

We designed and delivered the £4.5M Open Up Challenge, backed by the Competition and Markets Authority together with the UK’s five biggest banks, to radically improve the financial services available to the UK’s five million small businesses, by creating a more vibrant and innovative marketplace for banking services.

Applicants were invited to develop new products and services enabled by recently-introduced open banking regulations. Innovators gained access to an exclusive data sandbox, funding and expert capacity-building support covering legal and regulatory considerations, user experience, investment readiness and marketing. Insights from the challenge informed the evolution of open banking regulations. We followed up with a second challenge, Open Up 2020, a £1.5M challenge in partnership with the Open Banking Implementation Entity, to transform and open up the UK banking industry by giving people control over their financial data and enabling the development of innovative, personalised products. The challenge highlighted the potential that open banking has to revolutionise financial services — bringing significant benefits to both consumers and small businesses and holding particular promise for people partially or entirely excluded from access to fair financial services. Fifteen innovators were supported with funding and other types of support, and four were selected as winners.