This paper assesses the evidence underlying the effectiveness and value
for money of innovation prizes, and seeks to address two fundamental
a. Do prizes work ‐ are they effective in stimulating innovation?
b. Are prizes better than other methods to achieve the same purpose
(value for money)?
An independent perspective on the strength of evidence surrounding the
impact of 16 key innovation prizes has been combined to learn lessons,
which can help shape potential future investments in this area. By
gathering evidence from a broad range of prizes, grouped into four main
prize types (innovation awards, open innovation, social prizes and
market stimulation prizes), this research has found that:
a. Prizes do work ‐ they can be effective in stimulating innovation in
appropriate circumstances if undertaken within the right environment and
b. While it is possible to illustrate returns on investment (RoI) in
hard numbers (e.g. benefit cost ratios spanning 2:1 to 33:1 for
innovation awards; 50‐80% cost reductions and RoI up to 182% from open
innovation prizes; benefit costs ratios around 8:1 to 16:1 for market
stimulation (grand) prizes) the approaches used to estimate longer term
benefits, beyond just leveraged investment, are highly dependent on the
nature of the prize. Whether or not the prize approach represents better
value for money than alternatives, is more difficult to assess due to a
lack of data in the prize market and because few have measured the RoI
of other traditional methods. However, while the optimal level of
investment in prizes is not clear, it is likely to be much larger than
at present and the potential payoffs of adding these new mechanisms to a
toolkit for encouraging innovation are considerable.
Everett, B.; Barnett, C.; Verma, R. Evidence review &#8211; environmental innovation prizes for development. DEW Point Enquiry No. A0405. DEW Point, the DFID Resource Centre for Environment, Water and Sanitation, UK (2011) 119 pp.