Today’s and next week’s Fixes columns will focus on prizes and challenges as catalysts for innovation. This week, David Bornstein is taking a look at examples from the federal government’s open innovation strategies. Next week, Tina Rosenberg will explore how prizes have been used throughout history to accelerate innovation and will highlight examples of how they are being rediscovered today.

“A good government implies two things,” wrote James Madison in 1788. The first is “fidelity to the object of government, which is the happiness of the people.” The second is “a knowledge of the means by which that object can be best attained.”

Over the past 224 years, those means have changed. Today, federal and local government agencies undertake challenges that Madison could scarcely have imagined – from space exploration to promoting mass access to higher education to addressing epidemics of obesity and diabetes, to protecting citizens and soldiers from terrorists. In a vast country like the United States in a world of lightning-fast change, it no longer makes sense to presume that governments possess, or even understand, the best ways to address pressing needs and promote “the happiness of the people.”

Today’s problems are complex and unpredictable. Similarly, the problem solving knowledge is not concentrated in any one agency, faculty, company or country. It’s scattered far and wide. How can governments unearth this knowledge and bring it together in a way that is useful for society?

That’s a question that the Obama administration has been working to address in its innovation strategy. Last year the president signed legislation granting all agencies broad authority to conduct prize competitions in an effort to engage large numbers of people outside government in problem solving aligned with governing objectives, and to identify and spread solutions already on the ground.

To date, there have been 159 competitions from 40 agencies (see: for examples). At a time when government departments and agencies are facing serious budget shortfalls, it makes sense for them to think beyond what they can accomplish themselves – to what they can elicit, encourage and amplify from others.

Consider the Vehicle Stopper Challenge that the Air Force Research Laboratory launched last year in conjunction with InnoCentive, a company that specializes in crowd-sourcing solutions. The Air Force Research Laboratory is seeking to address a problem faced by soldiers at checkpoints in conflict zones: how to stop an uncooperative fleeing vehicle without causing permanent damage to the vehicle or harming any of its occupants.

More than 1,000 people expressed interest in the challenge and, within the two month deadline, 150 submitted proposals, vying for a $25,000 prize. The winner was a 66-year-old engineer from Peru who came up with an affordable remote-controlled electric-powered vehicle that can accelerate up to 130 miles per hour within three seconds, position itself under a fleeing car and automatically release an airbag to lift it and slide it to a stop. The idea is now being evaluated by various branches of the military.

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