Uso De Premios Para Impulsar La Inovación

Département de génie de construction

GES 863 – FINANCEMENT DE L'INNOVATION: DE L'IDÉE AU MARCHÉ

Analyse de cas

Cash prizes as a catalyst for innovation: Strategies & Policies

Préparé par :

Carlos MUNAR MUNC 26055907

Professeur: Stéphane Lacharité

Ete 2013

Table des matières

1 LINKING RESEARCH AND POLICY 3

2 FROM PATENTS TO PRIZES 4

3 X-PRIZE 4

4 US GOVERNMENTAL PRIZES 5

4.1 Darpa Grand Challenge 5

4.2 Nuclear Used Fuel Prize 5

4.3 Other US governmental Prizes 5

5 OTHER PRIVATES FUNDED PRIZES 6

5.1 Virgin Earth Challenge 6

5.2 Two successful experiences 6

5.2.1 Super Efficient Refrigerator Program (SERP) 6

5.2.2 Advance Market Commitment (AMC) 6

6 KEYS OF A SUCCESSFUL PRIZE POLICY 7

7 CONCLUSION 7

8 REFERENCES 8

1 Linking research and policy

Governments have promoted innovation with cash incentives through the last three centuries. Such strategies can be traced to 1714 in Gran Britain ( ) and to 1795 in France( ). The facts are the global cash amount of inducement prizes has increased in the last three decades —from $55 million for the period of 1990 and before, to $302 million between 1991-2007— and the number of prizes has had an exponential growth as well. (McKinsey’s Company, 2012) . A breaking point was The Brookings Institution ( ) launching of The Hamilton Project with the opening speech of then-Senator Barak Obama (Fflambeau, 2007) . The project proposes expanding the US government’s policy of prizes and AMCs( ) in five key sectors: (Kalil T.,2006)

1. “Space exploration

2. African agriculture

3. Vaccines for diseases of the poor

4. Energy and climate change

5. Learning technologies”

“President Obama’s 2009 strategy for innovation called for increased use of challenges by all agencies, and the America Competes Reauthorization Act of 2010 granted all federal agencies authority to conduct incentive challenges to spur innovation and solve problems. Since its launch in September 2010, the Challenge.gov portal for public-sector prizes has posted more than 235 offerings from 45 agencies.” (Washington, G.W., 2013)

Opposite to previous existing prizes (such as The Nobel), which reward past accomplishments (“recognition prizes.”), “Innovation inducement prizes,” are focused in attaining specific scientific and technical goals that have not been obtained by the traditional technology funding method due to perceived market failures.

2 From patents to prizes

Previous initiatives, such as The Medical Innovation Prize Act of 2005, stand for a prize system to boost incentives of the current patent system. The proposed Act would allow the government to set specific goals and drive research to certain areas. (Wei M., 2007)

Nevertheless, the Global Intellectual Property Center denies, or at least criticizes, its strategic value. While some sectors of American intelligentsia advocate for the replacement of the patents system with government incentives that deliver public ownership of new technologies, the GIPC sustain that they are “risky alternatives for a proven intellectual property (IP) system.” (GIPC, 2013) .

Indeed, the shortcomings of the IP system are remarkable:

⎯ Medical R&D is a monopoly-controlled industry, which grounds in the patent system.

⎯ The ID patent system not only contributes to high drug prices, but also to global health inequality.

⎯ Accordingly pharmaceutical companies do not invest in R&D for low-return diseases.

⎯ Moreover, traditional R&D funding strategies have yielded modest results producing affordable treatments and medicines to developing economies.

⎯ On the other hand, production of drugs has shown “little incremental therapeutic value” over the past two decades.

⎯ Furthermore, the industry gets its biggest profits from the so-called “me-too” drugs, which consist of slight modifications of blockbuster drugs whose patents are close to maturity.

3 X-Prize

XPRIZE is a NGO created in 1995, which defines itself as an innovation engine that encourages technological development for the benefit of mankind through public competitions rewarded with cash prizes. (Xprize, 2013)

XPRIZE motto “Making the impossible possible” is as inspiring as the millionaire prizes the organisation awards every year. However, its success in delivering new technologies evolving from basic research to industrial developments is due to Xprize pragmatic approach. Indeed, since the beginning the challenges have been “audacious, but achievable, tied to measurable goals. And understandable by all.”

Xprize prizes have not only lured the best of risk investor and scientist joint ventures but also (its achievements) have motivated governments to replicate the strategy. Nowadays, it is generally accepted that incentive awards are strategic tool to facilitate technology creation in exponential rates. In other words, it is more about finding out value added solutions than following R&D traditional funding mechanisms that frequently lead to duplication of efforts.

4 US Governmental prizes

4.1 Darpa Grand Challenge

Back in 2004, the United States Department of Advanced Research Projects Agency launched the DARPA Grand Challenge, a competition to produce an autonomous car (on-road and off-road) that could reach a remote target in a desert of USA. The reward was $1 million cash prize. Even though, in the first year any of the 25 competitors could finish the race, by the 2005 competition, five teams had completed it. Eventually, the 2007 DARPA Urban Challenge lured 125 competitors —among them 4 foreign teams—, the number of finalists increased to six driverless cars for a prize of $2 millions.

This DARPA initiative —funded by the United States Department of Defense—,

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