Innovative State

by Aneesh Chopra

  The government needed to more consistently achieve that sort of payback on innovation investment. That was a frontier Kalil sought to explore further, after joining the Obama administration in 2009 as the Deputy Director of the Office of Science and Technology. He and I worked on the President’s Strategy for American Innovation, which included a call for agencies to increase their use of prizes and challenges as a tool for stimulating innovation. By March 2010, the White House Office of Management and Budget would release instructions to agencies, encouraging them to use prizes and challenges, even if they had yet to receive explicit authority. And by January 2011, with the reauthorization of the America COMPETES Act, Congress would cement that status, granting explicit authority for all agencies to spend up to $50 million per prize.11

  As the prize authority scaled across the government, Kalil and I took turns attending the annual Visioneering Workshop hosted by the Diamandis’ nonprofit X PRIZE Foundation. This is where prominent philanthropists, CEOs, public officials, and even celebrity activists such as Will.i.am of the Black Eyed Peas would gather, on the grounds of Fox Studios in Los Angeles, to identify critical problems and then, over a three-day period, funnel ideas from broad to specific, until they were worthy of presentation to the public in the form of measurable, actionable challenges. I joined one conversation between Diamandis and a Qualcomm executive about the possibility of developing a noninvasive, instantaneous diagnostic medical device.

  Six months later, at the 2012 Consumer Electronics Show, Diamandis and Qualcomm CEO Paul Jacobs announced the Tricorder X PRIZE, named after the multifunction handheld device used for sensor scanning, data analysis, and recording data in the fictional Star Trek universe. The contest, with a $10 million top prize, gave entrants three-and-a-half years to develop a device capable of diagnosing 16 distinct conditions and five vital signs in a pool of people over a three-day period in late spring of 2015.12 Within a year, more than 230 teams from 32 countries had signed up to compete for the $10 million prize, including Dr. Anita Goel, a friend running a Boston-based nanotechnology startup, Nanobiosym, with an entry that runs a genetic analysis on saliva.

  Also at the 2011 Visioneering Workshop, Google chairman Eric Schmidt and his wife Wendy shared an update about a challenge that had emerged from the wreckage of one of the nation’s most tragic embarrassments. In April 2010, the Deepwater Horizon rig had exploded in the Gulf of Mexico, killing 11 men and causing the largest oil spill in history. Day after day, for more than three months, television viewers watched oil gush into the gulf. Ultimately, a SWAT team of sorts, under the leadership of Nobel Prize–winning Energy Secretary Stephen Chu, in collaboration with British Petroleum, contributed to the successful capping of the well. Yet that still left the massive chore of slurping up all the sludge that had seeped into the water and toward the shore.

  While the well was gushing, Diamandis received plenty of e-mails, asking him whether the X PRIZE Foundation considered contributing to the cause of capping the well. But he didn’t believe BP would cooperate enough for his organization to play a constructive role. He did, however, see a role in the cleanup, especially since technology in such efforts had not advanced much in more than two decades. Within 24 hours, Wendy Schmidt committed to serve as the sponsor. The Department of Interior offered technical support. The Shell Corporation provided some financial support. That allowed the X PRIZE Foundation to advertise a purse of $1.4 million, with $1 million to the grand prize winner, for the teams that could prove they could recover the most oil on the sea surface, at a minimum of double the existing record rate. Roughly 350 teams preregistered, with 35 ultimately revealing their designs. Ten were then selected for testing in New Jersey at Ohmsett, a Department of Interior facility with the largest saltwater wave tank in North America.

  Diamandis anticipated that, at most, one team might achieve a doubling of the top rate through their efforts over the course of the 15-month competition. Even competitors with the deepest understanding of the industry initially thought his goal was too bold. Still, an Illinois-based company named Elastec took a shot, getting outside the box, asking its workforce of 140 to work around the clock to design a unique grooved skimmer.13 In the official test trial, winner Team Elastec recovered oil at a rate more than three times better than the gold standard, at 4,670 gallons per minute and an efficiency of 89.5 percent, and more than five times what had typically been recovered at Ohmsett. Six of the other top-10 entrants achieved the minimum requirement of double the record rate. That alone would have rendered the challenge a success. But that would ignore two other important insights: first, the amount of private capital relative to the prize purse, which Diamandis estimated at 20-to-1; second, the diversity of the participants, which included teams hailing from Norway and the Netherlands; a family from Alaska that used a father’s savings; and Team Vortex, led by a designer who doubled as a tattoo artist and partially funded by one of the artist’s customers.14

  “You never know where the innovation will come from,” Diamandis said.

  That idea, that innovation can come from anywhere, was the inspiration behind InnoCentive. Founded in 1998, and then spun out of the pharmaceutical company Eli Lilly a few years later, it is a for-profit marketplace that searches for problems in a variety of industries and then frames and poses those problems to potential solvers.

  During his stint as InnoCentive CEO, from 2006 through 2012, Dwayne Spradlin attempted to perfect the art and science of challenge creation and presentation, in order to ensure that a competition would be a better tool than the tired strategies that have been tried again and again. That required paying attention to each step in a series: identifying a difficult problem, designing the applicable challenge, engaging the appropriate audience, dangling an attractive prize, and stimulating the development of a fresh, innovative potential solution.

  First, in Spradlin’s view, it is essential that large organizations of all kinds—commercial, government, or charitable—run a rigorous “problem management program” prior to issuing any challenges. Pointing to the old adage that asking the right question gets the questioner 80 percent of the way to a solution, he lamented that “organizations are not terribly good at this discipline today.” In his view, an organization needs to identify a market need and manage “a very thoughtful process of structuring that into something that is well defined, understood; something that ties back to the strategic levers of the organization, which comprehends all the work that has succeeded and failed in the past” to shape a well-defined problem with specific associated criteria.

  “Spending this time up front to thoroughly wrestle a problem to the ground before trying to solve it is not only the best use of up-front resources, it also fundamentally changes the character of the problem-solving efforts,” Spradlin said. “I get a much better picture now of what needs to be done, why it needs to be done, and who may be able to help in solving that problem.”

  Once the problem is precisely defined, organizations can prioritize it against others and assign proper resources to effect a desired outcome for their consumers, shareholders, benefactors, or—in the case of government—constituency. “What is it, why are we doing it, what is it going to impact, what levers does it touch, why have things failed in the past?” Spradlin said. “Then at the next stage, what audiences are we trying to target? And then with those audiences, you can define what those incentives will be, and based on those incentives, you finalize the competition design. Now I can roll that program out.”

  One prize does not fit all. Thus, competition designers must carefully consider what will induce the desired audience to engage, understanding whether to appeal to intrinsic or extrinsic motivations. In the case of a public-good problem, such as slowing malaria in Sub-Saharan Africa, Spradlin found the dollar amount to sometimes be a “disincentive,” with participants wanting to work on a problem that matters, focusing on how many they can help and perhaps, secondarily, on their own
opportunity for fame and credit. So he recommended many foundations minimize money and maximize exposure—spending resources on inviting the world’s participation and celebrating those who succeed.

  In most commercial challenges, however, Spradlin found that extrinsic motivators tend to take precedence, and “people want to get paid,” either in the currency of a cash prize or in the “opportunity for highlighting what you do in front of a crowd that could include venture capitalists that may fund your ideas as a startup.” After all, the participant is choosing not to engage in some other activity to allocate time to this one, and is aware of the possibility that someone else may profit from their solution. “You need to know, deep down, that you won’t feel foolish for this a year from now, so I sure hope the upside is worth it,” Spradlin said.

  Spradlin places many governmental challenges in the middle of the motivational spectrum, between those presented by nonprofit and commercial entities: “If you are trying to drive a technical solution to a big problem for the Environmental Protection Agency, very often the problem itself won’t carry the same kind of public draw that a challenge for clean water in the third world would draw. Therefore, you sort of blend the motivations. We often recommend to those organizations a healthy prize amount and a reasonably healthy amount of money to be spent on driving awareness of the challenge and its impact for the public good, for public health, or for air quality . . . To do both.”

  Spradlin applauded the federal government’s fundamental “changing of the environment,” helping to enable prizes and competitions as problem-solving multipliers; he called the reauthorization of the America COMPETES Act that authorized them “a monumental step forward.”

  “I think government is taking it very seriously, moving extremely quickly to sort of catch up to what has been available in the private sector,” Spradlin said late in 2012, adding that he had observed the federal government posing the correct questions and running the necessary pilots. “What I’ve seen happen in the last two, or two-and-a-half years, I would have guessed would have taken ten.”

  While he spoke of government’s experimentation with prizes as still in its nascent stages, with looming questions about policy application, he was convinced these approaches were embedded enough to outlast any Presidential administration: “I don’t think either party has a vested interest in rolling back programs that can drive better government, more democratic involvement, and better and low-cost solutions.”

  It would be odd for any person or entity to object to what the Air Force accomplished in 2011, with Spradlin’s assistance.

  The Departments of Homeland Security and Defense had shared a common interest in addressing the issue of uncooperative ­vehicles—to reduce the risk to anyone here or abroad who might be endangered by a vehicle that violates a checkpoint or is fleeing an urban combat zone, or might be endangered by the use of presently available lethal tools designed to stop it. The Department of Homeland Security (DHS), in 2005, had initially turned to a typical government procedure. Through its Small Business Innovation Research Program (SBIR), DHS issued a request for proposals on the topic “uncooperative vehicle stopping using non-lethal methods,” and awarded a contract eventually worth $850,000 to the Arizona-based Engineering Science Analysis Corporation.15 That investment produced the SQUID, which entangled the wheels without harming the vehicle. But the SQUID, produced in 2009, had limitations: it needed to be prepositioned and then triggered into action at exactly the right time as the vehicle runs over it.

  In 2011, the Air Force took off in a different direction, partnering with InnoCentive for the Vehicle Stopper challenge.16 “Quite wisely, the government opened up this challenge to new and novel ideas from anyone and anywhere in the world,” Spradlin said. The $25,000 prize attracted 1,071 initial competitors, 119 of which submitted detailed proposals. The winner was a sexagenarian from Peru, Dante Barbis. The retired mechanical engineer chose to implement currently available technology in an unconventional manner.

  “Imagine taking a remote-control go-cart and making it launchable, so it can be shot very quickly from a vehicle at high speed and then controlled,” Spradlin said, with estimates of that speed at 130 miles per hour within three seconds of launch. “Now imagine this thing has an air bag on top of it, so we shoot it underneath the fleeing vehicle; we guide it right there, the airbag deploys. The fleeing vehicle then loses traction, spins, and comes to a stop, and then those in pursuit can surround and take control of that situation. A brilliant idea. Does it meet the generally logical needs of existing, dependable technology that can be deployed? Check. Relatively low cost? Check. Deployable in a variety of situations? Check. Highly effective? Check.”

  At press time, the project was still in testing, but undeniably promising. Spradlin called it a “win-win-win across the board,” for the civilian population, for the military, for anyone involved in the process.

  “Just a wonderful example of the potential here,” Spradlin said. “You compare this kind of program to what might have been a fully funded, long-term government program to come up with new nonlethal approaches to manage a situation like this, and it’s hard to imagine that not being a program in the tens or hundreds of millions of dollars. This has all the properties you want. Fast, quick to market, these are the kinds of things that can change the economics of innovation and drive very quick solutions.”

  You might wonder from where the government-challenge competitors, and solutions, might come.

  You might not think to look inside a Sizzler steakhouse. But that’s where Victor Garcia, an immigrant from Mexico, was working while pursuing an engineering career. At the time, he was taking classes in computer-aided drafting at ITT Technical Institute in California, but he wasn’t satisfied. Since he was a child, he had dreamed of becoming an inventor. Then, while waiting tables, he saw a commercial about a technical center that was designing muscle cars.

  “I was like, ‘That’s cool!’” he recalled.

  It was cool enough to alter his direction. He pursued a bachelor of science in transportation design from the Art Center College of Design in Pasadena, then spent two years after graduation working with BMW in Newbury Park on all sorts of vehicles, including semitrucks, until landing in Texas as a part-time designer for Peterbilt Motors. There, in the Lone Star State, Garcia and his pregnant wife were waiting for the birth of their first child. They did so with excitement, but also apprehension. Without health insurance, Garcia was concerned about the costs of caring for a newborn. That’s when a different sort of challenge, a DARPA challenge, caught Garcia’s eye.

  Acutely aware of the out-of-control costs and lengthy time lags inherent to acquisitions, the Department of Defense had set an ambitious goal: reducing the time it takes to design and develop weapons systems by 80 percent, while significantly cutting expense. To catalyze that effort, DARPA called for the design of an Experimental Crowd-Derived Combat-Support Vehicle or XC2V. It promised a modest $7,500 top prize, and promoted the contest through Local Motors, an open source automotive manufacturing enterprise with a community of 25,000 hobbyist innovators, from enthusiasts to engineers to fabricators.

  “Immediately, my mind starts running,” Garcia said. “I grew up with GI Joes. I still have a ton and I collect them. I’m a big military buff, World War II, Civil War. It just intrigued me to do a military vehicle. And since it was funded by the government, DARPA, it seemed very real to me. I didn’t know exactly what it would look like, but I had a ton of ideas, so I had to jump on it.”

  He had to, and not simply due to his desire to support his wife and unborn son. He had to, because he believed he had it in him. He believed he could win, even though the project was outside the scope of his usual work, even though many may have deemed someone with his background a sizable underdog, and even though he only had four weeks to complete what amounted to an immense undertaking. Buoyed by a supportive wife and boss, Garcia spent every a
vailable extra hour, late into the night, on sketches, illustration, and research. Too short on time to perfect the illustration, he felt good about the potential of the unique shape he submitted in March 2011. “I knew I would be in the top 10,” Garcia said. “But to hear the CEO of Local Motors say, ‘You are the winner—’ I was a little emotional calling my wife to say that I did it. I knew it was a huge thing for my family, to be able to cover my son. That was a huge weight off my back. And then, by June 21, he was born.”

  Three days later, Victor met President Obama in Pittsburgh, for the unveiling of his creation: the XC2V FLYPMode. “I was very, very happy,” Garcia said. So was DARPA, learning plenty through the exercise about the power of social media for future R&D projects. And so was Local Motors, which earned a new client in Peterbilt. After a promotion to senior designer at Peterbilt, Garcia convinced the company to engage in its own private sector open innovation endeavor, inviting the Local Motors community to compete for a $10,000 prize, for the design of a fuel-efficient Class 8 sleeper cab tractor truck. And when Jay Rogers, CEO of Local Motors, spoke with Peterbilt, he was told, “They did 40 man years’ worth of work in four weeks.”

  Garcia sees his unlikely story as representing a potential “paradigm shift” in America’s approach to major issues, including those related to the ways the nation protects its people, at home and abroad. For the conception and implementation of critical government projects, why must sluggish and expensive be the norm? Why should the idea hunt be limited to the same tired terrain, inhabited by the same so-called experts, directed toward the same established, expensive contractors? Why not venture into the wilderness, tapping into talent that others might have missed, talent itching to be taken seriously?