Finding inspiration in the X PRIZE® Award

Posted by Rezwan on Aug 04, 2006 at 03:53 PM
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First, what is the X PRIZE? 

From the “X” PRIZE Foundation website we read:

On October 4, 2004, SpaceShipOne rocketed into history, becoming the first private manned spacecraft to exceed an altitude of 100 km twice in as many weeks, thus claiming the $10 million dollar Ansari X PRIZE. This historic event has opened the doorway to the stars for all of us. Friends, we have started a private spaceflight revolution, the end of which will result in nothing less than routine human spaceflights to the cosmos. Space is no longer a restricted area. People from all over the world witnessed this historic flight and are now witnessing the beginning what has been dubbed The Private Spaceflight Revolution.

This bold feat demonstrates that prizes stimulate innovation

The X PRIZE operates under some excellent assumptions:  that innovation can be stimulated by something as simple as a prize, and that the principal barriers to innovation are often not technological so much as psychological.  As we read in their website’s History of Prizes:

An aviation prize in 1927 became the basis for today’s $250 billion aviation industry.

Between 1905 and 1935, hundreds of aviation prizes stimulated the advancement of aircraft technology. One of the best known prizes was The Orteig Prize, $25,000 offered by hotel magnate Raymond Orteig to the first person to fly non-stop between New York and Paris. In 1927, with the whole world watching, Charles Lindbergh won the prize, becoming the most famous person on Earth.
Where no government filled the need and no immediate profit could pay the bill, the Orteig Prize stimulated not one, but nine different attempts to cross the Atlantic. These nine teams cumulatively spent $400,000 to win the $25,000 purse.
Some suggest that Charles Lindbergh’s 1927 flight was one of the most successful technological demonstrations in history. Using the best ‘off the shelf’ commercial technology of his day, Lindbergh proved that long distance air travel was feasible. By taking a smaller, faster approach to aviation, Lindbergh and the Spirit of St. Louis Organization showed that a small professional team could outperform large, government-style efforts.

Prior to his flight, the press of the day characterized him as a daredevil, an amateur, ‘the flying fool,’ and a ‘lanky demon of the air,’ he was actually a skilled professional and military aviator. Many of the other Orteig Prize attempts utilized heavy, multi-engine planes with large crews. Lindbergh’s meticulously planned single-engine/single-pilot strategy was a radical departure from the conventional thinking of the day, but his innovative thinking and careful preparation won the full support of the Spirit of St. Louis Organization.

The Spirit of St. Louis proved that the principal barrier to commercial air travel was not a technological wall as much as a psychological one. Once Lindbergh’s flight had shown the way, that barrier was broken forever. Almost overnight, his feat was replicated and the golden age of aviation came into full bloom, starting a chain of events which directly triggered the multi-billion dollar commercial aviation industry of today.

Innovation has an element of chance that can be leveraged

Another important lesson from the X PRIZE is the way it is structured to leverage the element of chance.  First of all, a prize encourages many competitors with divergent approaches to take a shot at something.  It opens the playing field. 

The second way in which chance was leveraged is in the manner in which the $10 million prize was financed.  As this MSNBC article points out:

The $10 million will be paid, not by the “X” PRIZE Foundation, but by the insurance company the group dealt with in what’s known as a “hole-in-one” insurance policy, similar to those taken out by golf courses for tournaments. Had the prize not been won by the end of this year, the insurers would have kept the premiums even as the $10 million policy expired. In recent years, the premiums have been paid from more than $1 million in contributions made by two Iranian-born telecom entrepreneurs: Anousheh Ansari and her brother-in-law, Amir Ansari.

This story shows human resourcefulness on so many levels.  Leveraging $1 million to pay for a $10 million prize, leveraging a $10 million prize to stimulate $100 million in investments (the prize ended up being less that what each of the teams invested in the development of their space craft.), and finally, leveraging all that for a major step in human achievement and the opening up the stars to all of us folk. 

This insurance story also underscores the element of uncertainty and risk involved in combining innovation with games.  While in theory we think “yeah, sure, space flight will one day be cheap, someone could win this prize”, the specifics of when it will happen, or which approach in particular will make it first are less clear.  The path to success is littered with many failures, false starts and also-rans. 

The insurance companies certainly didn’t think the chances were good.  But when you want innovation, the best thing to do, as demonstrated here, is to create a climate that allows - and actually stimulates - many experiments and approaches.  Create a race, let anyone enter, and take your bets.  Of course, now that the X PRIZE was successful so quickly, you can bet that the premiums have gone up.  It’s not a matter of “if”, but “when”.  Pity the actuaries trying to calculate “when” and adjusting their premiums accordingly.

We feel that the fusion industry would take off if there were a similar prize for fusion.

What would the premiums be on the hole-in-one insurance policy against the harnessing of fusion power?  And will we ever know?  We are currently lobbying the “X” PRIZE Foundation to put up such a prize.  And we are promoting the idea of such prizes in general for fusion from any other organization that might want to follow this excellent prize strategy.  As for the “X” PRIZE Foundation, fusion is not yet a priority.  This report came out last year:

The success of the Ansari X PRIZE was just the beginning. In the coming months and years, we are planning the announcement of a series of prizes of an equally ambitious and exciting nature as that of the Ansari X PRIZE.

We’ve checked back, but so far, no Fusion prize.  Instead, they have decided to expand beyond the space flight with a Lunar Lander Challenge.  As for energy, they want to develop fabulous environmental cars with an Automotive X PRIZE and are developing a Genome X PRIZE. 

I have called the foundation and suggested a fusion prize several times, but as we see, no prize yet.  But the earth is young and we will continue building the case for fusion.

In the event that the “X” PRIZE Foundation, or any other organization, does mount such a prize, it will be a great day for fusion.  We would be just one of many competitors for such a prize.  Such a prize-giving organization wouldn’t fund the contestants, rather, the publicity created by a prize draws more attention and funding to all the alternative fusion approaches out there.  This would be a great step towards bringing about the golden age of fusion and we hope someone takes the initiative soon!

Team Focus Fusion is standing by, a formidable contender, ready to compete for the fusion technology prize any organization would consider offering.