What a good city-based challenge looks like

Can you articulate what it is you’re asking people to create – and can you set out clearly-defined outcomes that you want?

The ideal challenge is open for lots of innovators to solve, ideally in quite different ways, so you don’t want to be prescriptive about the method. But if you can set out unambiguous success criteria, so that people know what they are aiming for, then the expectations will be much clearer. For example, the Helsinki Energy Challenge asks for solutions to decarbonize the heating of Helsinki, using as little biomass as possible. The Dynamic Demand Challenge asked innovators to use data to shift energy demand to off peak times or through excess renewable generation.

Sometimes it’s really clear who is best placed so solve a problem – where there’s a market leader, or well-established incumbents who do a good job. If that’s the case – don’t bother with a challenge prize, go straight to the experts instead. But some problems, particularly those that are open to being solved in multiple different ways, benefit from fresh thinking from a wider set of people than are currently working on them. This is where challenge prizes make sense. Examples in past Nesta challenge prizes have included bringing in AI expertise into assistive tech for people with paralysis, or high-end commercial law software firms to work on low-cost legal advice services for people on low incomes.

It’s no good just wanting new innovators to work on your problem – you also need to be sure they’ll actually respond to your challenge. Typically we run prizes that provide both financial incentives and capacity-building support for innovators, coupled with the profile-raising benefits of being a finalist or winner of a major prize. In the Climate Smart Cities Challenge, we and the partners behind the prize will work with cities to develop that offering. Can you offer things like access to data or city-owned assets for testing? Is it a chance for innovators to try something new? If the opportunity is attractive, and there aren’t insurmountable barriers to taking part (like strict regulation or procurement rules) then a challenge prize could be a good approach.

In a challenge prize, innovators will get funding if they win – but that funding is an incentive, not a grant, and the money will eventually run out. To make sure the challenge prize creates long-term change, then you need to ensure your challenge lends itself to solutions with a business model. Will the innovator be able to make money from selling the product or service? How likely is it that city governments will procure a solution? Will the solution be something that can be patented or copyrighted? Challenge prizes work best when they create innovations that are sustainable, regardless of the prize money itself.

It’s the easiest thing in the world to fund work that’s already happening – and often that’s a sensible thing to do. But if you can define a clear goal, if you think new innovators would help, if you think you can motivate them and if you think there’s a path to economic sustainability for your solutions – then you can turbocharge your impact by ensuring it’s focused on accelerating progress rather than funding work that would already be happening. And that’s where challenge prizes are most valuable.