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January 2012

Q&A with Jaison G. Morgan, Managing Principal, The Common Pool

The Common Pool (TCP) is supporting the design and development of EDA's Strong Cities, Strong Communities(SC2) Challenge, a series of prize competitions to be hosted at six cities across the country to bring forward new strategic economic transition planning to communities in need of comprehensive revitalization. By using new authorities granted under the America COMPETES Act, EDA is working with the White House Domestic Policy Council and other federal departments and agencies to implement "challenges and prizes," in addition to traditional grant-making approaches to sponsored programs. Rather than awarding a grant and tracking a single organization's efforts, the SC2 Challenge will motivate a wide range of participants to compete by submitting their best solutions for each city. Local authorities will invite competitors to spend their own resources developing winning entries, but they pay only for the answers that meet their unique needs. EDA has recently secured the counsel of TCP, an internationally recognized firm with specific expertise in developing challenges and prizes for government and corporate sponsors.

Jaison G. Morgan

Jaison G. Morgan is the Managing Principal of TCP. He has been hailed by the BBC as the "world's leading expert" in designing challenges and prizes. In 2007, he helped establish a lab at MIT to study the use of incentive systems to drive innovation. Mr. Morgan has developed prizes and challenges for the X PRIZE Foundation, the First Minister of Scotland, the United Arab Emirates (Masdar City), Google, the Bill and Melinda Gates Foundation and other partners. Mr. Morgan is a graduate of the University of Chicago and is a frequent lecturer on the subject of incentive engineering and the history of prizes.

Q: What are the benefits of challenges and prizes and how can government leverage these strategies to foster collaboration and ensure better outcomes?

A: It’s important for us to define what we mean by “challenges and prizes.”  For a lot of people, those words remind us of sweepstakes and carnival games.  However, governments and philanthropists have been using them since the 1500s to solve important problems.  Long before patent rights and intellectual property, there were few incentives for newcomers to invest their time or resources developing new solutions.  Stronger interests could simply steal them and drive weaker innovators out of business.  Closed networks of trade guilds and merchant unions controlled basic know-how.  But, every now and then, those closed networks got stuck; they would run out of answers.  So, governments would offer cash rewards for the first person to meet their needs.  At a time when class and social standing meant everything, challenges and prizes were remarkably democratic.  It didn’t matter where you went to school or who you knew; if you could solve the problem, you would win fame and fortune.  Over hundreds of years, the method yielded amazing outcomes.  By opening participation and rewarding winners based on the merit of their achievements, governments attracted new mindshare and investment from people who were otherwise disenfranchised.  Today, we use “challenges and prizes” to define a strategy that predates basic assumptions of fair and open market exchange, but deserves just as much credibility.

An important benefit of challenges and prizes is leverage.  By delivering a fair and open process of participation, we can attract a wide range of new approaches and increase our chances of success.  Competitors invest their own capital developing solutions, and those total investments typically are exponentially greater than the cash rewards.  So, EDA gains the benefit of a large and focused pool of players attempting to meet a specific goal, but pays only for outcomes.  At TCP, we design prizes and challenges so that everyone gains from the experience, and we’ve learned that the value for both partners and participants increases when we offer a process that facilitates collaboration and feedback.  We try to answer the question, “what does an entrant get if it does’t win?”  Often, the reward is the ability to connect to other competitors, the value of frank assessment from expert judges, the assurance that top performers will gain exposure for their effort…  those are the hallmarks of a well engineered challenge or prize.  The competitions attract stronger and more viable competitors.  We pride ourselves in understanding best practices and translating those recommendations into real programs for our clients.  So, while we seek to deliver financial leverage or pay-for-performance, we have found that final outcomes can include building a community of key opinion leaders and new talent, who are pleased with the overall experience and who can be useful to our clients in a wide range of other applications.

In 2008, I was fortunate to participate in a study conducted by McKinsey & Company, in which we reported the reemergence of demand for challenges and prizes. Over a decade, use of these models surged by an average of 18% annually. The dramatic increase coincides with use of new social networking tools and software to facilitate online participation. Today, we can deliver challenges and prizes that are hosted virtually, that tap into communities of interested players in an instant, and that rely on a universal understanding of our approach. Our clients include serious investors who have offered as much as $25 million to induce breakthroughs in medical science, but every client benefits from the public’s seemingly trivial understanding of Facebook or American Idol. It’s important for us not to underestimate the strength of these developments. The history of governments using challenges and prizes is remarkable, but now, as governments seek to get more from each dollar spent, they are realizing a convergence of new tools and a public disposition that is perfectly suited for challenges and prizes. EDA’s commitment to the SC2 Challenge is well timed.

Q: The Obama administration has prioritized challenges and launched www.challenge.gov to promote federal competitions that accelerate job and economic growth across the administration. How has this level of commitment and investment advanced this framework and how does it complement national initiatives and programs?

A: In 2009, the White House, Office of Science and Technology Policy, started reaching out to a handful of experts to discuss how the Administration should promote challenges and prizes. At the time, I was serving both as an adviser to the United Arab Emirates and the government of Scotland, and both were making substantial investments in challenges and prizes. However, while many other government interests were testing these models by focusing on a handful of initiatives, the White House has been more diligent and thoughtful. They have taken the time to address many of the roadblocks that other governments have failed to confront. Passage of the America COMPETES Act is a good example of their approach. The law was enacted in January of last year, and it provides broad authority to use the models. It overrides conflicting legislation, and it was accompanied by memoranda from the Office of Management and Budget and guidance to departments and agencies from General Services Administration. For those of us who supported those efforts, it has been rewarding to see a community of practice emerge. And, as now required under law, those departments and agencies that are using challenges and prizes are reporting results to each other. By educating our civil service and allowing them to understand the risks and potential rewards of challenges and prizes, I think that we are going to realize a longer and more informed commitment to their use.

The Administration has hosted events to inform leadership of those risks and rewards. And many of us remain hopeful that efforts to educate departments and agencies will continue. There are many challenge and prize types, and each one presents different obstacles. Unfortunately, challenges and prizes are not a one-size-fits-all strategy. So, rather than trying to offer a single framework or a centralized approach, the Administration supports exposure for each effort by offering www.challenge.gov. It is a place to visit and view the challenges and prizes that are sponsored by our government. It is important to note that while some challenges and prizes are remarkably similar, each one can use different tools and employ varying levels of expert counsel. Over time, we hope that the range of challenge and prize types will grow, and it’s critical to understand that there is a place to track those efforts.

Q: How will you help EDA enhance the Strong Cities, Strong Communities (SC2) Challenge?

A: At TCP we deliver design and development services for challenges and prizes. This allows us to work across a wide range of disciplines or “verticals.” For example, we are currently developing a prize that includes partnerships with consortia representing 44 state departments of education, where we’re focusing on new machine learning techniques for grading standardized student tests. While our expertise is not specific to the vertical, we have to learn a lot about the underlying discipline with each client engagement. For the SC2 Challenge, we have built a team that includes experts who have already worked with EDA and who understand the priorities of the agency. And, we’re currently delivering research to inform EDA’s decisions on the levels and sources of funds for the SC2 Challenge.

Our position is that government sponsored challenges and prizes work best where there is a market failure or where there is insufficient investment or talent to bring about meaningful change. So, we begin our research by investigating what current incentives exist to compel qualified participants to help us solve the SC2 Challenge. By informing EDA of those financial drivers, we can better offer our counsel for setting the appropriate cash rewards or for offering a sizable amount that would attract players who might otherwise seek more compelling opportunities. Similarly, we are investigating the typical costs to deliver a solution for a City, depending on that City’s size and other requirements. This allows us to view the prize framework from the perspective of the most qualified entrant. By starting with an understanding of the competing rewards and potential costs for those parties, we provide EDA with critical information that is specific to challenge and prize design; we call it “incentive engineering,” and we offer it so that it may be supplemented by their in-house expertise.

Once we receive final decisions from EDA regarding the level of funding and source constraints on those funds, we begin by outlining the basic workflow and stages or gates that participants must follow. We deliver software specifications and provide language to address warranties, guarantees and other requirements. Then, we deliver a toolkit that is specific to each city, so that the city's leaders are ultimately in control. We will work closely with EDA and each designated city, to ensure that those tools are used effectively and that tracking techniques are in place to measure and report success.

Q: How does the Common Pool support the success of economic development efforts?

A: TCP is a firm that remains committed to a basic premise. Our programs can only work well when there is open, fair, and transparent competition. We are fortunate to work with an agency that is equally committed to those principles. The SC2 Challenge will attract meaningful participation when both cash and non-financial incentives are structured properly, much like our economy, and when players can appreciate that their efforts will support the revitalization of some of our country’s most disadvantaged communities. For TCP, the SC2 Challenge is an embodiment of EDA’s mission. We stand behind building prosperity through competition and ensuring that the results of creative innovation benefit both private concerns and the public good.

Spotlight

Challenge.gov - Obama Administration Leverages Prizes and Challenges to Bring the Best Ideas and Top Talent to Bear on Nation's Most Pressing Issues

For most of our country’s history, the U.S. government has obtained goods and services and carried out its mission in two ways – contracts and grants. In 2011, another method – challenges and prizes - began to prove itself as a viable third option.

Challenges have been used for years by NASA and Defense agencies, but challenges are finally being used more widely and getting their day in the sun. The launch of Challenge.gov, and the success of challenges and prizes, is shining light on this alternative way for the federal government to solve problems.

In a March 8, 2010, memo from OMB’s Jeffrey Zients, GSA was asked to build a free, governmentwide challenge platform. One hundred and twenty days later, Challenge.gov was launched. It is a portal to all the federal government’s challenges and prizes, and was built through an innovative, no-cost contract with ChallengePost of New York.

Challenge.gov is a one-stop shop, where the government can launch challenges and the public can submit solutions. Thirty-seven different agencies have used Challenge.gov to launch over 140 challenges. The public can also “follow” challenges they are interested in, share them with their friends and family through email and social media, vote for their favorite submissions, and ask questions on discussion boards.

The Challenge.gov team at GSA helps other federal agencies use the site effectively, and has built a repository of case studies and guidance on HowTo.gov. GSA is using its existing Web Manager University program to host webinars and live events that bring the Challenges Community together to share best practices.

The Challenge.gov team also works very closely with Robynn Sturm Steffen of the White House Office of Science and Technology Policy. She leads the 550 member Challenges Community of Practice and provides valuable challenge design advice to the federal community.

Here are a few examples of how challenges and prizes are helping the federal government and the people we serve:

For just $5,000, the Health and Human Services SMART Apps for Health Challenge produced an app that translates medication instructions into a dozen languages. FCC’s Apps for Communities resulted in apps that help Americans comment on legislation, and find transportation, jobs, farmers markets, and activities for children.

The Department of Labor (DOL) recently completed two successful challenges: InformACTION and the Occupational Employment Statistics Challenge. These challenges raised awareness of fair and safe workplace laws, and yielded tools to help workers plan education and training, make career choices, move to a new area, and negotiate pay. These victories inspired DOL to revamp developer.dol.gov and host DOL Data Days.

The potential for even greater return on investment, community building, and improved customer service is huge. Sunnier days are ahead for Challenge.gov, and challenges and prizes in general.

Check out Challenge.gov today. You can also follow us on Twitter @ChallengeGov and like us on Facebook.


Tammi Marcoullier and Karen Trebon are the managers of Challenge.gov at the U.S. General Services Administration’s Office of Citizen Services and Innovative Technologies.

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Ex-Bloomington mayor remaking role of agency targeted by conservatives

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Forbes

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In December 2011, the Council on Competitiveness released its manufacturing strategy and report to encourage a "manufacturing renaissance," in the United States. The Commerce Department also released a "Build it here, Sell it everywhere" strategy.

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Center For American Progress

20 Ideas for Job Creation

Here are 20 recent ideas from CAP’s policy teams to create middle-class jobs and promote an economy that works for everyone, not just the privileged few. Many of these ideas build on the ideas presented in "Meeting the Jobs Challenge" initiative launched in 2009. Click on the links below to learn more about each proposal.

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In This Issue


 

Obama Administration & U.S. Department of Commerce Promote Advanced Manufacturing

Secretary Bryson Delivers His First Major Address Laying Out His Priorities for the Department

As part of the Obama administration’s ongoing efforts to spur job growth, Commerce Secretary John Bryson lays out his priorities for the Department, including initiatives related to trade, manufacturing and increasing investment in the United States.

 

President Obama Names Commerce Secretary John Bryson, NEC Director Gene Sperling as Co-Chairs of White House Office of Manufacturing Policy

President Obama has appointed Commerce Secretary John Bryson and National Economic Council Director Gene Sperling as co-chairs of the White House Office of Manufacturing Policy.

Since the bottom of the recession in 2009, manufacturing production has grown 14 percent, while real goods exports have grown 29 percent. Over this same period, U.S. manufacturing has added over 300,000 jobs, the first time the sector has experienced sustained job growth in over a decade, but more must be done to revitalize American manufacturing.

To read the full White House announcement, please click here.

 
NY Times

Manufacturing Is Surprising Bright Spot in U.S. Economy

By Floyd Norris, January 5, 2012

 
The White House

White House Blog Post

December unemployment rate lowest
in nearly 3 years

 

Resources

PODCAST: Assistant
Secretary Fernandez Promotes Regional Innovation & Job Creation

Federal Reserve Bank of Atlanta

Regional Innovation: When the Sum Is Greater than the Parts

John Fernandez, the U.S. Assistant Secretary of Commerce for Economic Development, discusses how to develop and maximize the effectiveness of regional economic development strategies.

LISTEN: Play (MP3 13:03)
READ: Transcript

 
Commerce.gov

COMPETES Update: Report Provides Roadmap

Department launches interactive report at www.commerce.gov/americacompetes to highlight study’s findings and work already underway

 
The White House

White House Virtual Town Hall

Assistant Secretary Fernandez & Louisville Mayor Fischer Discuss Jobs and Innovation
Click here to read

 

calendar
Upcoming Events

January 10
Assistant Secretary Fernandez travels to Kansas to highlight the Wichita State University Center for Innovation and Enterprise Engagement Jobs and Innovation Accelerator project. 

January 11
Assistant Secretary Fernandez travels to Gainesville, Florida to participate in the opening ceremony for the Florida Innovation Hub. 

January 18 - 20
U.S. Conference of Mayors Winter Meeting
Washington, DC

January 19 – 22
National Conference of State Legislatures
Kiawah, SC

January 26
2:00 PM - 3:00 PM EST
EDA Webinar: “Building Disaster Resilient Economies” Register now!

January 29-31
2012  Leadership Summit: Empowering "Hall of Fame" Economic Development Leaders and Communities
San Antonio, TX

September 30 - October 3
International Economic Development Council Annual Conference
Houston, TX

 
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