Can Innovation Prizes Encourage Innovation in Policy?

Ideas to Impact Research Lead Michael Loevinsohn
By: Ideas to Impact Team On: Aug 10, 2015

Ideas to Impact is testing a big idea: Innovation prizes can make a significant contribution to solving longstanding development problems and so make a difference in the lives of poor people. Prizes have been shown to be an effective means to stimulate innovation on hard technical problems facing developed economies and societies. Can they do the same for the obstacles marginalized communities in developing countries face in relation to water, sanitation and hygiene; safe and affordable energy and adaptation to climate change? As Bryony Everett explains in her blog, the challenges in these situations are more often about ensuring access to good ideas and to services adapted to the needs and conditions of poor people than they are about inventing shiny new pieces of kit. Regulation and governance – the province of policy – are often central.

As we survey this landscape in particular countries and assess the prospects for change that a prize might stimulate, the choices often appear to be either to accept and work within the limits policy imposes or move elsewhere where policy is more enabling. We are also considering a third option.

Policy actors as "solvers"

Might a prize encourage or support policy actors – people who shape or implement policy – to innovate in what they can influence? A local government official, say a district commissioner, may be keenly aware of the obstacles impeding access to new ideas and services and might also see a possibility to alter policy locally – creating a niche where innovation by others can flourish.

To pick one example: Unregulated extraction of groundwater is in many places depleting a resource on which the rural poor depend for their domestic needs. The price they pay for water increases as the water table falls. Developing more efficient pumps might bring down the cost initially but would also encourage more pumping, worsening the problem.

A policy innovation which assigned people clear and spatially-defined rights to groundwater would be a critical step in the emergence of effective local governance which can stabilize extraction. Once governance is secured, social and technical innovation that brings down the cost of pumping might then benefit the poor.

For the district commissioner, a prize might provide welcome funding for an unbudgeted program, raise her profile with her constituents and enlarge the space for negotiation with her political superiors. It’s unlikely that a prize on its own could bring about policy change that hadn’t already at least been considered but it might hasten it being tried. The careful evaluation that Ideas to Impact will undertake may help persuade superiors that this would be a useful test of an alternative to what is now clearly not working.

New policies have often emerged from such experiments on a small but meaningful scale: the Household Responsibility System in Chinese agriculture is one of many examples.

The Innovative State

Perhaps the biggest obstacle to using prizes to encourage innovation by policy actors is the widespread assumption that innovation is the purview of the private sector. The record doesn’t bear that out, even in what have become defining technologies. It was the publicly funded US National Science Foundation which supported the elaboration of the Google algorithm in the earliest stages of R&D, when venture capital was unavailable.

It might also strike some people as absurd that governments or parts of them would willingly enter a competition. However, there is extensive evidence that governments regularly compete against each other for investment, support and prestige, domestically and abroad. This can be seen in governments’ response to their ranking on international scales, for example measuring commitment to reducing hunger and malnutrition. Some are examining the programs that other countries, higher ranked but no richer, have used, apparently to good effect.

Policies are bulky innovations: they are large and difficult to change. Typically, one has direct experience of the workings of only one or a very few. If Ideas to Impact can encourage the emergence and testing of more policy options in the three thematic areas, then it can play a very useful role in expanding the scope for comparison and support policy evolution.

As we continue the detailed design of prizes in the countries where we believe they could make a difference, it is important that we look at the evidence of and prospects for innovation not just in social and technical terms but also in relation to policy. We’ll need to take account of this in the way we phrase and communicate the prize competitions so as to ensure that policy actors can see that there is an opportunity to take forward ideas that they have been discussing, in and outside of government.