‘Challenge.eu’: The call for a
European Challenge Prize Platform
Alexander L.E. Mäkelä
Halfway through the EU’s Horizon 2020 framework it is time to consider which areas could be improved for both the remainder of the framework's lifetime and for its eventual successor. One of the policy innovations taken by the current Commission was the introduction of the Horizon Prizes, a series of challenge prizes designed to stimulate and reward innovations addressing specific social issues.
Challenge prizes are not new in themselves; in fact they have been used for hundreds of years and have led to substantial shifts in a number of areas including aviation, space, food preservation, and more. Recently, the private sector has increasingly started using challenge prizes as a tool to find innovative solutions to industrial problems; the European public sector has however lagged behind.
While the Horizon Prizes were a step in the right direction, the concept of using challenge prizes as an active public policy tool should be taken further. Here we can gain inspiration from our American counterparts. Five years ago, digital.gov launched ‘Challenge.gov’, a centralized online directory for challenges prizes hosted by various US agencies. The idea was to have a one-stop location where the public could discover and engage with large crowdsourcing competitions. The main goal behind challenge.gov was to break down barriers to innovation and digital collaboration while also allowing government representatives to interact with a wide range of problem-solvers (Challenge.gov, 2016).
With the US platform in mind, this paper will propose and briefly discuss the potential of a European equivalent or a 'Challenge.eu'. But instead of restricting it to EU institutions, a European platform should open to all relevant stakeholders, including: (1) public actors on supranational, national, regional, and even city levels (2) major industrial and private stakeholders (3) third party organizations.
Within this discussion there are three areas worth exploring. First, what are challenge prizes? When and how can they be utilized? Secondly, how do they relate to the priorities set by the Commission? And lastly, what are steps needed to pursue this policy course?
Starting off, challenge prizes are competitions used to find and reward result-based solutions to pressing challenges. A host usually announces a set of specific criteria around a particular challenge and sets a prize to incentivize problem-solvers to find a creative solution. The shape and form of a challenge prize is largely malleable depending on the challenge area. They can vary in scale, prize sums, actors involved, and can even have multiple competition stages if appropriate. For instance, one option could be to fund contestants who have reached a certain stage and help them further their solution. It could also be possible to include elements of public voting (Ballantyne, 2014).
In recent times, challenge prizes has shown potential of delivering results more cost effectively in comparison to conventional R&D processes and funding schemes. One key reason for this is that challenge prizes incentivize competitors to use their own resources and ingenuity to come up with solutions. You only have to pay the winner. Depending on the set of competition criteria, it is also possible to foster multiple approaches and allow for a spree of innovation and out of the box thinking. This tends to happen as many of the participants are not established players in the respective field of the challenge. Solutions can come from anywhere or anyone, effectively prompting inter-industrial knowledge transfers (Diamandis, 2015). A McKinsey report has also shown that challenge prizes are most effective when fostering near-to-market solutions, especially as they can be used to highlight new innovations to investors and existing industrial players (McKinsey & Company, 2009).
To give a sense of challenge prizes, H&M used one to foster circular economy practices in the fashion industry (Globalchangeaward.com, 2015), meanwhile Netflix used several to improve recommendation algorithms (Netflixprize.com, 2009), and even Carlsberg launched one to promote sustainability within the beer industry (Sustainia, 2015). In the case of Challenge.gov, competitions are being utilized to design and build small-scale satellites to be used near and beyond the moon (NASA, 2014), encourage youths to create mobile apps and learn coding (Congressionalappchallenge.us, 2015), and even generate ideas on how to streamline the US tax system (Challenge.gov, 2016).
The past decade has also seen the emergence of a number of service providers helping others design and implement their own challenge prizes. With these tools at our disposal and with the potential for challenge prizes spanning across industries and policy areas, the question is how do we effectively integrate them with the public sector in Europe?
To answer that, we must look to the needs of Europe and the priorities set by the Commission. With the aim of becoming a ‘smart, sustainable, and inclusive economy’, Europe has launched several initiatives focused on streamlining a single digital market, creating low-carbon and resource-efficient economies, strengthening social inclusion, and promoting innovation across the union. The challenge is to translate these goals into impactful outcomes.
In most cases this will require cross-policy thinking. With a focus on sustainability, smart cities and regions, and addressing social challenges we have to find new ways to bring European ideas and innovations to market. This will mean fostering ‘inclusive innovation’, by which we invite multiple approaches and fresh thinking to innovation. The creation of a European challenge prize platform is one such step and there are multiple reasons for it.
Firstly, such a platform would allow engagement with problem-solvers across Europe, be they youths, academics, start-ups, or other innovators. We could highlight crucial challenges and leverage our collective talent and knowledge pool via collaborative and open innovation while also promoting deeper citizen engagement with pan-European issues.
Secondly, via the growing digital market, a platform could attract and showcase high-potential newcomers, something which could promote for cross-European transfers of investments, innovation, and best practices. By fostering a single market for innovation, we support start-ups and SMEs in need of financing while also providing investors and existing firms an agile way of identifying and working with talent. This will be needed in a world where international competition is growing. There is also potential to expand this into areas of crowdsourcing and digital public procurement. If solutions can come from anywhere we need to give public actors further access to them.
Thirdly, by being open about challenges and encouraging solution-led engagement we will create actual and impactful results. Given that challenges exist on city to European scales and range across areas pertaining to the environment, energy, health, food, learning, space, security, and more, high degrees of involvement is a necessity to facilitate rapid innovation and promote positive social outcomes.
Relating to a number of relevant EU policy areas, a European challenge prize platform hosted by the EU would be a logical evolution of the Horizon Prizes. The idea is not to have the EU host challenge prizes on behalf of various stakeholders but merely provide a central directory where prizes can be shared across Europe. It is also worth mentioning that with the marketing of challenge prizes being one of the largest cost burdens, the critical mass of and attention drawn to a European platform would be a welcome development. That being said, there are a number of obstacles.
With a small number of EU countries having active experience in using challenge prizes there would be a need to convince other national actors of their potential. But with growing usage and success stories emerging, it is plausible that others would become more likely to engage with this instrument. Additionally, it would require facilitating knowledge of how to organize and run prizes. To maximize success, stakeholders need to know when it is appropriate to use challenge prizes (toolkits such as Nesta’s “Challenge Prizes: A practice guide” is an excellent example of the type of resource needed). It would also be good to include existing challenge prize service providers who could share their expertise and help public and private stakeholders across Europe. To ensure this, the platform should be free and marketed merely as a pan-European directory for challenge prizes. Existing service providers and other practitioners could post their challenges on the platform whilst linking them to their own proprietary websites.
Efforts would also have to be taken to ensure accessibility. Currently many of Europe’s research funding schemes come with complicated application procedures and daunting webpage layouts. Any platform would have to be easy to use and epitomize the emerging digital market. Imagine a crossbreed between Challenge.gov, Kickstarter, and an EU institution website.
If done properly, a European challenge prize platform could enable more stakeholders to address societal challenges. By operating on every level of the public sector, it could promote the type of social engagement, knowledge and technical transfer, and investments in cutting edge innovations needed to achieve Europe’s goal of becoming a vibrant 21st century economy. As challenge prizes are showing, solutions can come from anywhere and anyone. For Europe to realize its innovative and competitive potential it needs to take steps to make this process more inclusive, the creation of a challenge prize platform is one such step.
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