How challenge prizes might be integrated into Innovation Missions

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How challenge prizes might be integrated into Innovation Missions

Ambitious Missions of the kind announced in the Innovation Strategy are new to UK innovation policy and there is no ready-made blueprint for how to design and execute them effectively in the UK context.

Although the specific focus of the individual Missions has not yet been determined, it is reasonable to expect that they will be diverse in character, demanding a flexible and creative approach to their management individually and as an overall programme. We offer here preliminary reflections on how Missions might be conceptualised and organised, and based on these the role that challenge prizes could play in their execution.

A Mission may usefully be conceptualised as a coordinated portfolio of investments that evolves over time with a view to achieving a specified goal. Although the objective of the Mission overall will remain constant, what the Mission needs to accomplish at any moment in time en route towards that objective will change. For instance, at any moment in time it could be the case that:

• The ‘best’ future roadmap, or sequence of problems to be solved to achieve the Mission, is clear, though the best solutions to these problems are not clear. In this case the

Mission will focus on navigating that part of the roadmap it has reached; or • It is still unclear which of several possible roadmaps to achieve the Mission is best. In this case the Mission will focus on comparing and evaluating different possible roadmaps.

Taking this perspective of a Mission as an evolving portfolio of investments, key challenges for those with responsibility for leading a Mission will be:

• Identifying and creating the ‘best’ portfolio of investments at a particular point in the

Mission’s lifetime; and

• Planning and preparing for how the portfolio should evolve over time under conditions of considerable risk and uncertainty.

Because Missions aim to achieve specific measurable outcomes, they will need over time to converge on a preferred roadmap and solutions. What that journey towards convergence looks like, and in particular what it means for the planned evolution of the investment portfolio over the Mission’s lifetime, depends on the Mission’s starting point – Missions may start with the preferred roadmap more or less well defined. For example, the roadmap for a Mission addressing a complex societal challenge may at first be quite unclear – for instance, how best to address regional disparities in life expectancy across the UK. Such a Mission may start with a period of experimentation and evidence-gathering before converging on preferred solutions. The roadmap for a more narrowly technological Mission – for example, achieving the cost effective deployment of carbon capture, usage and storage in the UK – may be more well established based on expert technical consensus.

As a consequence, both the use of challenge prizes in the portfolio of investments, and the type of challenge prizes undertaken, may vary between Missions and over time.

In the early stages of a Mission, when a high degree of convergence on the preferred roadmap may not have been achieved, a portfolio of methods, with each playing to their known strengths, could be particularly effective as a method for discovery and exploration of the solution landscape and of the barriers that will need to be navigated on different roadmaps. Grants may focus, for example, on more speculative research by research institutions at the relevant knowledge frontier, while challenge prizes are used more to engage a wide range of innovators (regardless of sector) that may have value to bring to the Mission, and to learn which innovation opportunities private sector investment is currently prioritizing and how this may evolve. Challenge prizes at this stage might target quite broadly defined (rather than very focussed, measurable) objectives, may require relatively little investment from innovators to participate in order to encourage the widest possible participation, and may be relatively short in duration with a focus on early stage prototyping rather than achieving scaled adoption.

Two key categories of challenge prize – ‘first’ and ‘best’

Although an underlying feature of all challenge prizes is that they provide rewards conditional on outcomes, they are a flexible and adaptable method. A key difference is between challenge prizes that reward ‘firsts’, and those that reward ‘best’.

Prizes for ‘firsts’ reward the first in time to achieve a specified goal. Because of this they can be indeterminate in length, or may determine a cut off after which the prize will not be awarded. The original Longitude Prize in the 18th century for a practical and reliable method for determining longitude at sea, and the modern Longitude Prize run by Nesta Challenges, are examples of such prizes. But in practice contemporary challenge prizes today are more often for ‘bests’ – they reward whoever provides the ‘best’ solution to a specified problem within a given timeframe. This model is attractive for funders and for participants because it determines in advance when the prize will end – but at the risk that, with more time, better solutions might have been developed. The outcome of a ‘best’ challenge prize depends crucially on the quality and diversity of the participating innovators, so such challenge prizes are open by design and creating profile is a key success factor. Because the Innovation Missions themselves will be time-bound, challenge prizes for ‘bests’ are likely to be a natural fit.

Over time, as the preferred roadmap for achieving the Mission and the nature of the expected barriers and opportunities along the way become clearer, the role that challenge prizes (and other methods) play would evolve.

• Challenge prizes may increasingly be used to target specific, measurable technological advances that have been identified as barriers or opportunities • There may be a greater focus on challenges that require cross-sector collaboration and private sector co-investment, with a view to the ultimate scale-up and adoption of solutions

• As the solution landscape becomes clearer, opportunities to coordinate policy and regulatory inputs to facilitate the timely adoption of solutions will become clearer.

For example it may be that the timely scaling of promising solutions identified by a challenge require regulatory input that can be brought in in parallel with the challenge rather than sequentially.

As Missions converge on a preferred roadmap, it will often be the case that achieving the Mission objective requires significant input from the private sector – for example to find the best ways to scale up adoption or distribution. Because challenge prizes are a particularly powerful method for tapping into the ingenuity of private sector innovators, where this is the case we would expect to see challenge prizes play a growing role in the Mission portfolios over time.