How Do Prizes Induce Innovation? Learning From
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HOW DO PRIZES INDUCE INNOVATION? LEARNING FROM THE GOOGLE LUNAR X-PRIZE A Dissertation Presented to The Academic Faculty by Luciano Kay In Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the School of Public Policy Georgia Institute of Technology August 2011 Copyright © Luciano Kay 2011 HOW DO PRIZES INDUCE INNOVATION? LEARNING FROM THE GOOGLE LUNAR X-PRIZE Approved by: Dr. Philip Shapira, Advisor Dr. Diana M. Hicks School of Public Policy School of Public Policy Georgia Institute of Technology Georgia Institute of Technology Dr. Juan D. Rogers Dr. Alan W. Wilhite School of Public Policy School of Aerospace Engineering Georgia Institute of Technology Georgia Institute of Technology Dr. Gordon Kingsley School of Public Policy Georgia Institute of Technology Date approved: June 29, 2011 To my family ACKNOWLEDGEMENTS This project is the culmination of three years of arduous work to both increase our understanding of the effect of technology prizes on innovation and, more generally, contribute original research and lessons to policy sciences and innovation policy. Many people and organizations have made this possible and I generally extend my gratitude to all of them. In particular, I am very grateful to the following. First and foremost, I must thank Dr. Phil Shapira, my Academic Advisor and Committee Chair. His constant encouragement and support have been essential for the completion of this challenging dissertation project. Also his savvy advice has been key along the way in both developing this research and managing administrative aspects of the project. Certainly, I have also benefited from the encouragement and support of Dr. Diana Hicks, Dr. Juan Rogers, Dr. Alan Wilhite, and Dr. Gordon Kingsley—valued members of my Dissertation Committee—to pursue and complete this project. I am very grateful to them. Their qualified comments and suggestions have also been very important to improve this research. Dr. Jan Youtie, though not part of my Committee, has also provided valued advice in a number of topics related with this research. Undoubtedly, this research would have been impossible without the valuable and unselfish contributions from key informants, interviewees, and leaders and members of the teams participating in the Google Lunar X Prize (GLXP.) In particular, I must thank William Pomerantz, X Prize Foundation‘s Director for Space prizes. He helped to contact a number of GLXP teams, collaborated in the initial steps of the process of data gathering, offered an interview to learn more about the GLXP, and provided general insights about this and other competitions. I am also grateful for his invitation to attend the 4th annual GLXP Summit held in the Isle of Man (U.K.) in October 2010—my participation in this event was very useful to collect additional data and meet some GLXP iv team leaders. I also thank Amanda Stiles from the X Prize Foundation, who provided access to the archives of the GLXP forum. I am very grateful to GLXP team leaders and members, particularly those who, despite their hard work and focus to compete and win the prize, were trustful and willing to collaborate with this research project and accepted interviews and visits to their workplaces. Other team members were also very kind and collaborated with interviews, filled out questionnaires, and contributed valued comments. All of them have been very generous to divert their attention from the competition and use their time to help me with this research. The author is especially thankful to William "Red" Whittaker, Ruben Nunez, Andrew Barton, Neven Dološ, Robert Boehme, and Dumitru Popescu. Also to Rex Ridenoure, David Gump, Dillon Sances, Steve Murphy, Aad Eggers, Christian Bennat, Mario Kulczynski, Karsten Becker, Sebastian Rattay, and Simona Popescu. Other team leaders and members that kindly collaborated are Bob Richards, Richard Speck, Michael Joyce, Pete Bitar, Adil Jafry, Izmirov Yaminovich, Palle Haastrup, Markus Bindhammer, Marc Zaballa, Alex Last, and Nikolay Dzis-Voynarovskiy. A number of prize and industry experts also collaborated with interviews and key insights for my research on prizes, and I am very grateful to them: Ken Davidian (Director of Research at the FAA Office of Commercial Space Transportation—AST,) Dennis Stone (Assistant Manager for NASA's Commercial Crew & Cargo Program,) Jeff Greason (Founder and President of XCOR Aerospace,) G. Thomas Marsh (retired Executive Vice President of Lockheed Martin,) Gregg Maryniak (Vice President of Aerospace Science, St. Louis Science Center and X Prize Foundation‘s Advisor,) and Norman Whitaker (DARPA's Deputy Director of The Transformational Convergence Technology Office.) From the School of Public Policy at Georgia Tech, I have to thank Clark Bonilla, who helped in the process of grant application and administration, and Jade Charnigo, for her support with mail processing in the stage of data gathering. Also Georgia Tech v students Tara Garland and Corey T. Bone, who helped with interview transcriptions. Luis Miguel Cortés-Peña, Greg Dubos, and Vasileios Lakafosis, graduate students from the Satellite Communication and Navigation Systems class of Fall 2007 at Georgia Tech, also generously helped in the process of testing questionnaires for data gathering. This project would have not been feasible without the appropriate economic support. This work has been supported in part by the U.S. National Science Foundation under Grant Number SBE-0965103 (any opinions, findings and conclusions or recommendations expressed in this work are those of the author and do not necessarily reflect the views of the National Science Foundation.) I am also thankful to The IBM Center for the Business of Government for the support given for the preparation of the report Managing Innovation Prizes in Government, which seeks to translate research findings into practicable recommendations for policy-makers. Last but not least, I am very, very grateful to my family and friends. They are always there to both encourage you when you are going through tough times and celebrate with you all the accomplishments and great moments. vi TABLE OF CONTENTS Page ACKNOWLEDGEMENTS iv LIST OF TABLES xi LIST OF FIGURES xv LIST OF SYMBOLS AND ABBREVIATIONS xvii SUMMARY xviii CHAPTER 1 INTRODUCTION 1 2 INNOVATION AND PRIZES 6 2.1 Prize renaissance 6 2.2 Types and structure of prizes 10 2.3 Prizes and other incentives for innovation 12 2.4 Prizes and S&T and innovation policy 17 3 RESEARCH QUESTIONS AND HYPOTHESES 23 3.1 Incentives and motivations of prize entrants 23 3.2 Prize R&D activities 29 3.3 Prize technology outputs 35 3.4 The overall effect of prizes on innovation 40 4 METHODS AND DATA 46 4.1 Methodological approach 46 4.2 A model of innovation applied to prizes 49 4.2.1 Prior work 49 4.2.2 The model 52 vii 4.3 Case studies 60 4.4 Data and data gathering 64 4.4.1 Pilot case studies 64 4.4.2 Main case study 66 5 A FIRST APPROACH: THE ANSARI X PRIZE AND THE NGLLC 72 5.1 The Ansari X Prize 72 5.1.1 The prize 72 5.1.2 The context 75 5.1.3 Prize entrants 76 5.1.4 Motivations 77 5.1.5 R&D activities 77 5.1.6 Technology outputs 79 5.2 The Northrop Grumman Lunar Lander Challenge 82 5.2.1 The prize 82 5.2.2 The context 85 5.2.3 Prize entrants 85 5.2.4 Motivations 86 5.2.5 R&D activities 87 5.2.6 Technology outputs 88 5.3 Discussion 91 5.4 Lessons for next steps 94 6 A CLOSER LOOK: THE GOOGLE LUNAR X PRIZE 96 6.1 The GLXP Prize 96 6.1.1 The challenge 97 6.1.2 History 101 viii 6.1.3 Organizers, sponsors, and partners 101 6.2 The context of the competition 103 6.2.1 Planetary robotic exploration 103 6.2.2 Sector structure 107 6.2.3 Technological capabilities/gaps 113 6.2.4 Technology scenarios 119 6.2.5 Technology-related incentives 123 6.2.6 Other prizes 130 6.3 The prize entrants 130 6.4 Motivations of prize entrants 144 6.5 Prize R&D activities 159 6.5.1 Design criteria and sources 159 6.5.2 Own development vs. use of existing technologies 165 6.5.3 Organization of R&D activities 170 6.5.4 R&D effort 179 6.5.5 Constraints and challenges 186 6.6 Technology outputs 192 7 DISCUSSION 210 7.1 Prize incentives and the motivation of entrants 210 7.2 Prize R&D activities 223 7.3 Prize technology outputs 235 7.4 The overall effect on innovation 251 8 IMPLICATIONS 262 8.1 Theoretical implications 262 8.2 The prize process 270 ix 8.3 Team strategies 273 8.4 R&D program and policy implications 276 8.5 Methodological considerations 289 9 CONCLUSIONS 293 APPENDIX A: Supplementary tables 297 APPENDIX B: Supplementary figures 329 APPENDIX C: Questionnaire applied to GLXP teams 332 APPENDIX D: Guiding questions for interview with GLXP team leaders 339 APPENDIX E: Other outputs of this research project 340 REFERENCES 341 x LIST OF TABLES Page Table 2.1: Prize datasets recently compiled by the literature 7 Table 2.2: Recent prize competitions posted on Challenge.gov (selected examples) 22 Table 3.1: Technology Readiness Levels (TRL levels) 39 Table 4.1: Dimensions, identified topics, literature references, and proposed categories for a model to study prizes 56 Table 4.2: Selected research questions and dimensions in the study of prizes 59 Table 4.3: Summary of information for prizes investigated in this research 63 Table 4.4: Data coding inventory for pilot case studies 65 Table 4.5: Summary of data gathering to investigate the GLXP 67 Table 4.6: Industry experts participating in interviews 71 Table 5.1: Summary of data for embedded cases in the Ansari X Prize 74 Table 5.2: Summary of data for embedded cases in the NGLLC