Sir Richard Branson is my third favorite billionaire (easy guess who numbers one and two are). I like him because the British have a tendency to view success as some sort of embarrassment, and he has done much to resurrect the acceptability of their entrepreneurial heritage. Sir Richard recently took a page from Ye Olde English playbook, when he offered a $25 million prize for the development of an effective means of removing carbon-dioxide from the atmosphere.
The use of prize money to spur innovation is often thought of as a daring new concept – consider the recent $10 million X Prize for a privately build spacecraft. However, prize money was the original source of government sponsored research and development. Long before governments could afford to fund labs and R&D bureaucracies, they sought answers to technical challenges by offering prizes. The most famous of these was the British government’s 18th century Longitude Prize, which offered the then astronomical sum of £20,000 to whoever could develop a means for ships to calculate their longitudinal position (miscalculating positions and running into things was a major problem). The prize resulted in the development of reliable sea clocks or chronometers, which have since saved the lives of thousands of seafarers and thousands more people through the extension of more reliable commerce.
The advantage of prizes is that they unleash the creativity of human beings. Often when governments or businesses conduct research and development, they place bets on specific solutions or technologies. This narrows the range of possible solutions. Furthermore, when you pay people to research and develop, they do just that – research and develop. If anyone ever actually develops anything, then they often lose their funding! It is also common for the best connected political groups to gain government funding for their own particular solution, which leaves out the less connected and backyard tinkerer with the novel, effective solution. Not only does the promise of a prize give heart to the little guy, but it creates an incentive for entrepreneurs to search him out and support him – for a cut of the prize of course.
I cannot wait to see what comes out of Sir Richard’s contest. If the prize is ever given, then I am sure the $25 million will have unleashed more creativity than ten times as much in government expenditure. I myself, have my own entry. It is a highly complex biomechanical hybrid constructed from advanced alloys. Actually, it is a fern decorated with tinfoil in a titanium pot; but one has to start somewhere.
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