Reading the news these days, one cannot escape the sense that Japan is burdened with immense problems with no good solutions in sight. The clean-up of a highly toxic nuclear plant in Fukushima and the ongoing energy shortage it has exacerbated are only two of the most obvious. The government is talking about how many trillions of yen will be needed to respond to these problems, although any figure agreed to this year will surely turn out to be inadequate next year. Discussions of the inevitable tax increases have only begun; there will be more to come.
What people don’t understand is that the solution to Japan’s most immediate problems may be closer, cheaper, and more practical than anyone imagines.
The Best Brains on the Planet
We take it for granted that big problems require “big” solutions, meaning government-managed efforts, vast amounts of money, and lots of time. It is normal to think that small groups can deal with smaller issues, but that big problems require the unlimited resources of a national government. I disagree. When it comes to dealing with immense, seemingly “unsolvable” problems, we should learn from history. The fastest, cheapest, and most effective solutions to huge technological challenges have often been found not by high-level discussion, top-down management and politically-colored funding, but by presenting the problem in the form of a public challenge and awarding a prize to anyone who can offer a good solution in the shortest amount of time.
In 1919, only a little more than a decade after the first airplane flew a few hundred meters, a French-born businessman in New York offered $25,000 to the first person who could fly non-stop between New York and Paris. At the time, the goal seemed unreachable, and for five years no pilot even attempted the feat. Then, in 1927, a young man named Charles Lindbergh adopted a radically new approach to the problem and won the prize. The enormous publicity generated by that event created worldwide demand for commercial air travel almost overnight, something no government or corporation could achieve.
Looking back 200 years earlier, when England urgently needed to expand its sea trade, the government offered a series of cash prizes to anyone who could accurately determine how to measure longitude. The prize money, substantial though it was, proved to be insignificant compared to the value that this discovery contributed to global commerce.
Similar incentive-based promotions have resulted in numerous scientific breakthroughs over the centuries. The common denominator is that national governments periodically realize that innovative solutions are essential to solve their biggest problems, and that the most efficient, cost-effective way to generate those solutions is to create and incentivize open competitions.
The same spirit is very much alive today. In 1996, the first X PRIZE was created by a US-based group inspired by the Lindbergh story. In order to prove that privately-funded manned space flight is both possible and practical, they decided to invite the best brains on the planet to compete for a $10 million prize. Over the next eight years, 27 teams from seven different countries took up the challenge. Not surprisingly, the winning team spent much more on their development efforts than the prize was worth, but the publicity and related business opportunities stemming from the prize more than rewarded their efforts. Even more significantly, the other 26 teams developed many worthwhile ideas, approaches, and technologies that will not go to waste. In fact, one of the interesting results of this kind of competition is that excellent teams that did not manage to win first prize later combined forces, pooling their ingenuity and brainpower to win the next competition. In other words, even though government and society profit tremendously when a competition like the X PRIZE is won, the profit is multiplied again by the spin-off ideas and new project teams that the competition produces.
Looked at in terms of pure economics, it is difficult to even estimate the return on investment. I have heard people say that the ROI on incentivized competitions is 100:1, but even that seems low. Lindbergh’s $25,000 payout catalyzed what is today a $300 billion industry, but even that figure represents only a tiny fraction of the social and commercial benefits we have derived from air travel. How can we measure that return? The point here is not the numbers, but the fundamental fact that the relatively small awards in such competitions can lead to unimaginably large benefits for the societies they affect. [Might be good to contrast that with the conventional top-down approach to government funded R&D which usually offers lower (and often negative) ROI.]
Since the first X PRIZE for sub-orbital space flight, the original group has created a series of prizes in different fields, including energy, education, life sciences, and new realms of space/oceanic exploration. The prize money is often sponsored by private companies, but everyone understands that the exponential gains to science and society will far outweigh the dollar value of the awards.
Examples of X PRIZE Challenges
The X PRIZES are all about bringing together the smartest people in different fields to do what has never been done before. For example, the Oil Cleanup X PRIZE (officially, the Wendy Schmidt Oil Cleanup X CHALLENGE) aims to discover drastically improved solutions to oil spills. It offers a $1.4 million prize to the team that can recover oil from the ocean’s surface quickly and with the highest recovery efficiency. The competition, which will be judged later this year, should help nations worldwide to cope with one of our biggest environmental threats.
Another competition, the Archon Genomics X PRIZE, is aimed at developing a radically new technology to reduce the time and cost of sequencing the human genome. It offers $10 million to the team that can accurately sequence 100 genomes in 10 days at less than $10,000 each. Success will mean the beginning of “personalized medicine,” allowing doctors to look at a patient’s genetic “map” to predict susceptibility to various diseases and reactions to specific medications. Patients will be able to make lifestyle changes prior to the onset of disease, and if and when they do become ill, physicians will be able to prescribe more effective medicines with fewer side effects. The promise of this X PRIZE is nothing less than improved health and decreasing health care costs worldwide.
There is a whole range of prizes focusing on space exploration, and now that NASA has retired the Space Shuttle, the need for private business to take over routine space flights has become even clearer. The original Ansari X PRIZE in 1996 challenged a privately-funded team to build and launch a spacecraft capable of carrying three people 100 kilometers above the earth’s surface twice within 14 days. That prize was claimed in 2004, and, just as an example of how an incentivized competition can lead to profitable business, the technology used to win the competition was immediately licensed by Sir Richard Branson, who made it the basis of his commercial space flight operation, Virgin Galactic.
The next prize in the space exploration sequence was the Northrop Grumman Lunar Lander X PRIZE Challenge, which offered $2 million to teams that could routinely fly vertical take-off and landing (VTOL) rocket vehicles that could be used in lunar exploration. That prize was won two years ago.
Today the Google Lunar X PRIZE is pushing the technology to an even bigger stage: the Moon. The Prize offers a total of $30 million to the first privately funded team to safely land a robot on the surface of the Moon, navigate 500 meters from the landing site, and send video and other data back to Earth.
There are more prizes in various fields, and more will be created every year. Private, corporate, and government sponsors are lining up to support these prizes because they not only capture the global imagination but also provide real, tangible benefits to humanity here and now.
I believe Japan needs to harness exactly that kind of global effort to solve its biggest problems.