Dump the Prizes

This article was originally published by Stanford Social Innovation Review on August 22nd, 2013 with the headline: Dump The Prizes

I was sitting at my desk the other day, writing a recommendation letter for some prize or another, and I found myself thinking, "Why the hell am I doing this?" It often takes me a couple of hours to write something I feel good about -- and for what? The vast majority of contestants don't win anything, and even when they do, it's often shamefully small amounts of money and/or the dubious assumption that the attendant publicity will lead to bigger things.

After years of watching and participating in this stuff, I've concluded that it does more harm than good -- and by "this stuff" I mean the whole contest/challenge/prize/award industry. Yes, this lumps together way too many disparate things; yes, there are exceptions to everything I say here; and yes, it deserves a more nuanced discussion. That's all true, but on the whole, I think we could dump it all and not miss a thing. Here's why:

1. It wastes huge amounts of time.

The Knight Foundation recently released a thoughtful, well-publicized report on its experience running a dozen or so open contests. These are well-run contests, but the report states that there have been 25,000 entries overall, with only 400 winners. That means there have been 24,600 losers. Let's say that, on average, entrants spent 10 hours working on their entries -- that's 246,000 hours wasted, or 120 people working full-time for a year. Other contests generate worse numbers. I've spoken with capable organization leaders who've spent 40-plus hours on entries for these things, and too often they find out later that the eligibility criteria were misleading anyway. They are the last people whose time we should waste.

And it's exploitive. For social sector organizations, money is the oxygen they need to stay alive, so leaders have to chase prizes just like they do other, more sensible sources of funding. Some in the industry justify this as a useful learning process. It's not. Few competitions (with some notable exceptions) provide even the most rudimentary feedback. Too many of these contests and prizes seem like they are more about the givers than the getters anyway.

2. There is way too much emphasis on innovation and not nearly enough on implementation.

Ideas are easy; implementation is hard. Too many competitions are just about generating ideas and "innovation." Novelty is fun, but there is already an immense limbo-land populated by successful pilots and proven innovations that have gone nowhere. I don't want to fund anything that doesn't have someone capable enough to execute on the idea and committed enough to make it work over the long haul. Great social entrepreneurs are people with high-impact ideas, the chops to execute on them, and the commitment to go the distance. They are rare, and they shouldn't have to enter a contest to get what they need.

The current enthusiasm for crowdsourcing innovation reflects this fallacy that ideas are somehow in short supply. I've watched many capable professionals struggle to find implementation support for doable -- even proven -- real-world ideas, and it is galling to watch all the hoopla around well-intentioned ideas that are doomed to fail. Most crowdsourced ideas prove unworkable, but even if good ones emerge, there is no implementation fairy out there, no army of social entrepreneurs eager to execute on someone else's idea. Much of what captures media attention and public awareness barely rises above the level of entertainment if judged by its potential to drive real impact.

3. It gets too much wrong and too little right.

The Hilton Humanitarian prize is a single winner-take-all award of $1.5 million to one lucky organization each year. With a huge prize like that, everyone feels compelled to apply (that is, get nominated), and I can't tell you how much time I've wasted on fruitless recommendations. Very smart people from the foundation spend a lot of time investigating candidates -- and I don't understand why. The list of winners over the past ten years includes a bunch of very well-known, mostly wonderful organizations: BRAC, PIH, Tostan, PATH, Aravind, Doctors Without Borders. I mean, c'mon -- you could pick these names out of a hat. BRAC, for example, is an organization we should all revere and imitate, but its budget in 2012 was $449 million, and it's already won a zillion prizes. If you gave even a third of the Hilton prize to an up-and-coming organization, it could be transformative.

Too many of these things are winner-or-very-few-take-all, and too many focus on the usual suspects. In any case, the notion that even a smart selection jury can somehow discern which is best from a dozen stellar organizations is kind of silly. Too many juries are composed of unqualified people, and verdicts in this sector can be as capricious as those from an LA celebrity murder trial. There is also an obvious bandwagon effect: The more prizes you get, the more prizes you get. And while juries have their foibles, they are exponentially better than the Internet-based crowd-judging that is currently in vogue. That's like having the passengers on a 747 vote on how to land the plane, and it has led to some remarkably dumb things rising to prominence.

4. It serves as a distraction from the social sector's big problem.

The central problem with the social sector is that it does not function as a real market for impact, a market where smart funders channel the vast majority of resources toward those best able to create change. Contests are a sideshow masquerading as a main-stage event, a smokescreen that obscures the lack of efficient allocation of philanthropic and investment capital. We need real competition for impact among social sector organizations, not this faux version that makes the noise-to-signal ratio that much worse.

A lot of people argue that innovation competitions, challenges, and X Prizes are a vital part of that market and that they drive important advances that wouldn't happen otherwise. I doubt it. There's no real evidence for it, and I suspect that they do little more than speed things up a bit. The innovators I know do so to solve problems, not to win prizes. The only in-depth analysis of social impact contests I've seen was a 2009 McKinsey report, which began with a contests-are-wonderful perspective and carried on for 100 pages in the same vein without even a whiff of skepticism. Like many discussions of prizes, it confused anecdote with evidence and correlation with causation. We need a real study. More to the point, we need a real market for impact. There may be a role for contests in it, but contests didn't drive Silicon Valley -- it was investors and entrepreneurs playing in a functioning market.

There are a couple of exceptions in the prize/competition world that illustrate by contrast what it is wrong most of them. The first is the serious-investment-disguised-as-a-prize, something exemplified by the Skoll Award given to high-impact social entrepreneurs. I like the folks at Skoll because, among other things:

1. They give you $1.25 million.
2. They pick multiple winners annually.
3. The winners have a clear track record, but most are at a place where the grant could vault them to the next level of size and impact.
4. There is no application process; Skoll does its own (high-quality) homework.
5. They give follow-on funding to many awardees.
6. They work hard to connect awardees to each other and other funders.
7. They give you $1.25 million.

Another exception is the garden-variety-business-plan-competition. Everyone needs a business plan anyway, and they need to know how to pitch. In these competitions, teams get up and perform in front of a knowledgeable audience for all-too-rare seed funding. They're judged on the quality of their plans and their pitches, and even for those who don't win, the process is inherently valuable. They get immediate feedback, and everything they do to prepare is useful going forward.

All things considered, I'd like to see most of this industry go away, but people love their contests and they're going to prove hard to kill. That being the case, here are a few draft guidelines to improve both the optics and impact of contests:

1. All prizes must come with a cash award that is at least 20 times the cost of the accompanying award ceremony/dinner, with an additional 30 percent premium if formal wear is involved.
2. Entrants must create first-round proposals during a lunch break and submit them on a napkin.
3. All juries must include a majority of judges who've at least tried to do the kind of thing they are judging.
4. A committed adult with a plausible plan must accompany all ideas.
5. All clever product ideas must come with an equally clever idea for distribution.
6. Mandatory jail time for crowdsourcing or crowd-judging.

OK, so maybe the napkin thing wouldn't work, and I might be willing cut some slack on the tuxedos, perhaps even concede on the jail time. But I'm sticking to the spirit and substance of them, because we at least need to do it better. You can propose your own damn rules; push back if you're moved to do so. There are exceptions to everything I've talked about here and I'm probably not right about it all, but the truth is we haven't taken a hard look at any of it and it's high time we did. In the meantime, we'll accomplish a lot more if we all do our homework, find the best stuff already out there, and fund on the basis of real impact that can go to scale.