In 1714 the British government offered a prize for the first person or team of persons to create a device that would measure longitude. In 1927, Charles Lindberg won the Orteig prize for being the first aviator to fly non-stop from New York to Paris. Prize-driven innovation contests have been around for a long time and have been used to change people's mindsets about the possibilities of science and art.
Like the open-source software movement, the past decade has seen an explosion in the field of prize-driven contests, in many ways enabled by digital network-based collaboration opportunities. For example, the Netflix Prize, a prize for $1 million to the first team that can improve the current Netflix recommendation system by 10% was entered by over 20,000 teams from over 180 countries. If they had hired those over-50,000 people as employees, it would have costs them much more than $1 million.
The amount of prize money being offered to the public for innovation is growing exponentially. Because of this rapid growth, the rapid change in the field, and the effectiveness of well-designed contests, prize-driven open innovation is a useful tool available to companies needing to solve a range of problems.
