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The next factor behind the wild success of incentive competitions is their ability to cast a wide net. Everyone from novices to professionals, from sole proprietors to massive corporations, gets involved. Experts in one field jump to another, bringing with them an influx of nontraditional ideas. Outliers can become central players. At the time of England's Longitude Prize, there was considerable certainty that the purse would go to an astronomer, but the winner, John Harrison, was a self-educated clockmaker.
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Along similar lines, in the first two months of the Wendy Schmidt Oil Cleanup XCHALLENGE, some 350 potential teams from over twenty nations preregistered for the competition, including one that had come together in a Las Vegas tattoo parlor and had never been involved in the oil cleanup business before (more on this in a moment).

The benefits don't stop here. Because of the competitive framework, everyone's appetite for risk increases, which drives further innovation. Moreover, since many of these competitions require significant capital to field a team, crowdfunding can now be used to attract the requisite financial support—unlocking a potentially global field of backers. Finally, competitions inspire hundreds of different technical approaches, which means that they don't just give birth to a single-point solution, but rather to an entire industry.

The American anthropologist Margaret Mead once said, “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”
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As we saw earlier, this same concept was echoed in Kelly Johnson's third rule of skunk: “The number of people having any connection with the project must be restricted in an almost vicious manner.” There are pretty good reasons for these opinions. Large or even medium-sized groups—corporations, movements, whatever—aren't built to be nimble, nor are they willing to take large risks. Such organizations are designed to make steady
progress and have considerably too much to lose to place the big bets that certain breakthroughs require.

Fortunately, this is not the case with small groups. With no bureaucracy, little to lose, and a passion to prove themselves, when it comes to innovation, small teams consistently outperform larger organizations. And incentive prizes are perfectly designed to harness this energy.

There is another powerful psychological principal at work here: the power of constraints. Creativity, we are often told, is a kind of free-flowing, wide-ranging, “anything goes” kind of thinking. There's an entire literature of “think outside the box” business strategies to go along with these notions, but, if innovation is truly the goal, as brothers Dan and Chip Heath, the bestselling authors of
Made to Stick: Why Some Ideas Survive and Others Die
, pointed out in the pages of
Fast Company
, “Don't think outside the box. Go box shopping. Keep trying on one after another until you find the one that catalyzes your thinking. A good box is like a lane marker on the highway. It's a constraint that liberates.”
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In a world without constraints, most people take their time on projects and assume far fewer risks, while spending as much money as you'll give them. They try to reach their goals in comfortable and conservative ways—which, of course, leads nowhere new. But this is another reason why incentive prizes are such effective change agents. When you tell someone that they have only a tenth the budget and a tenth the resources (or put conversely, you have to achieve 10x bigger results with the same resources—aka moonshot thinking), most people give up and say it can't be done. A few venturesome entrepreneurs may decide to give it a shot, but if they are paying attention, they'll understand from the outset that the same old way of solving the challenge will no longer work. The only option left to them is to throw out past experiences and preconditions and start with a clean sheet of paper. And this is exactly where serious innovation begins.

Let's take a quick look at how the XPRIZE capitalized on the power of constraints. For starters, the prize money defines spending
parameters. The Ansari XPRIZE was $10 million. Most teams, perhaps optimistically (and who would pursue a space prize without being an optimist?), told backers they could win for less. In reality, most teams go over budget, spending considerably more than the prize money trying to solve the problem (because by design, there's a back-end business model in place to help them recoup their investment). But this perceived upper limit tends to keep out risk-averse traditional players. In the case of the XPRIZE, my goal was to dissuade the likes of Boeing, Lockheed Martin, and Airbus from entering the competition. Instead, I wanted a new generation of entrepreneurs reinventing space flight for the masses—which is exactly what happened.

The time limit of a prize competition serves as another liberating constraint. In the pressure cooker of a race, with an ever-looming deadline, teams must quickly come to terms with the fact that the same old way won't work. They're forced to try something new, pick a path, right or wrong, and see what happens. Most teams fail, but with dozens or hundreds competing, does it really matter? If one team succeeds within the constraints, they've created a true breakthrough.

Having a clear, bold target for the competition is the final important restriction. This massively transformative purpose (MTP) galvanizes passion, attracting the best talent and inspiring them to give it their all. In the case of the $30 million Google Lunar XPRIZE, when it was launched in 2007, only two nations had ever landed on the Moon, and no one had been there in more than thirty years. The MTP of the Google Lunar XPRIZE was to enable a new generation of exponential entrepreneurs to build spaceships at one hundred times lower costs to open the space frontier. Over twenty-five teams, comprised of the best and brightest from around the world, entered the competition.
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Taken together, as three centuries' worth of history shows, because of the harnessing of passion, the freedom from bureaucracy, and the power of constraints, incentive competitions are one of the most potent innovation turboboosts available.

In April 2010, British Petroleum's Deepwater Horizon oil rig exploded and sank off the Gulf Coast of the United States, causing the largest accidental ocean oil spill in the history of the petroleum industry. Before it was capped, the leaking Macondo Prospect well spewed more than 200 million gallons of oil into the sea, exceeding the infamous 1989
Exxon Valdez
spill some eighteen times over. The resulting slick covered 2,500 to 4,000 square miles of the Gulf of Mexico, approximately the size of Hawaii's Big Island.
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Using a combination of traditional methods, cleanup teams managed to remove less than half the oil, approximately 69 million gallons. Natural dispersal and evaporation removed an additional 84 million gallons. But that left a whopping 53 million gallons, about 26 percent of the spill, to pollute the ocean and adjacent shoreline.

A month later, in May 2010, oil was still gushing into the gulf. The news covered the spill day after day with no end in sight. That was when newly elected XPRIZE trustee, ocean explorer, and Academy Award–winning film producer and director James Cameron emailed me to suggest a rapid-response “flash prize” to address the disaster. Francis Beland, then my vice president of prize development, also an ocean explorer, studied the problem. The idea of a prize to cap the gusher was off the table—BP would never give us (or anyone) access to their data. Next we turned to the idea of impacting the cleanup. We quickly realized that the technology to clean up oil spills had not significantly improved in the twenty-one years since the
Exxon Valdez
spill. In fact, a lot of the equipment being used in the gulf was the very same equipment used decades earlier in Alaska. Why? It turned out to be a multilevel problem, with a number of perverse incentives. Cleanup teams (typically disenfranchised fishermen) often were paid by the hour, giving them no financial reason to be faster or more efficient. Oil companies, meanwhile, had no desire to spend money on better technologies because existing methods fulfilled the minimum
requirements set by insurers and regulatory bodies. Finally, there was a lack of pressure from governments and other regulatory bodies to improve oil cleanup technologies. In other words, a long-standing tradition of industry-wide apathy had created the perfect conditions for innovation via competition—a prize to increase the rate of oil spill cleanup on the ocean surface, to try and capture BP's oil before it destroyed the coastline.

I emailed the idea to our entire board of trustees and our biggest benefactors. It read something like: “We are looking to reinvent how we are cleaning up oil spills so the tragedy in the Gulf doesn't happen again. I'm looking for a benefactor to underwrite the purse and the operations for this critical and timely prize.” Moments later, I heard from philanthropist Wendy Schmidt, president of the Schmidt Family Foundation and wife of Eric Schmidt, chairman (and CEO at the time) of Google. She offered to underwrite the prize. Less than a day later, we had signed a two-page agreement and were racing toward announcing the $1.4 million Wendy Schmidt Oil Cleanup XCHALLENGE.
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To measure success, we decided to lean on two established industry metrics: oil recovery rate (ORR), the amount of oil that can be recovered per minute, and oil recovery efficiency (ORE), the amount of oil recovered per volume of water. For decades, the best ORR had been about 1,100 gallons per minute. To make ours a compelling challenge we wanted teams to—at least—double it. We set the minimum recovery rate at 2,500 gallons per minute, with an ORE of at least 70 percent.

Wendy and I announced Oil Cleanup XCHALLENGE onstage at the National Press Club on July 26, 2010. Very quickly, 350 teams from all over the world preregistered for the competition. Of these, twenty-seven submitted designs by the April 2011 deadline, and ten finalists were selected by our judges, based on five design parameters:

1. Technical approach and commercialization plan

2. No negative impact on the environment

3. Scalability of the technology and ease of deployment

4. Cost and human labor required for implementation

5. Improvement over existing technologies for collecting and removing oil

The finalists were an eclectic group. Six teams were comprised of oil industry veterans with established or developing cleanup technologies, while the remaining four were start-ups with little or no oil background whatsoever. Field tests were conducted in the Oil and Hazardous Materials Simulated Environmental Test Tank (OHMSETT) at the National Oil Spill Response & Renewable Energy Test Facility.
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One of the largest tanks of its kind—measuring 667 feet long by 65 feet wide by 11 feet deep and filled with 2.6 million gallons of salt water—this behemoth simulates real ocean conditions and oil spills in a safe, contained environment, while state-of-the-art data collection and video systems record and test the results. Using OHMSETT, each team made six qualifying test runs, three in calm water and three in wave conditions. The test field was a patch of oil approximately 400 feet long, 60 feet wide, and 1 inch deep, with a volume of 27,000 gallons.

The results were dazzling. Seven teams doubled the industry's previous best ORE. One of the teams, Elastec/American Marine, won first prize by achieving an ORE of 89.5 percent and an ORR of 4,670 gallons per minute, or a 400 percent improvement over the industry's all-time best. (Since the end of the competition, Team Elastec/American Marine has actually improved their ORR, exceeding 6,000 gallons per minute.)

But the most memorable outcome came from one of the finalists who didn't win. Vor-Tek was one of the teams that doubled the oil spill cleanup rate, but didn't place in the top three. They were a team of complete novices from far outside the oil cleanup business. They had met at a Las Vegas tattoo parlor. The technology designer was a tattoo artist, his customer funded the work, and to test out their ideas, they built a scale model in a Jacuzzi. The first time their technology saw full-scale oil and water was at OHMSETT, and they still doubled the
preexisting cleanup rate. When asked about their experience, Vor-Tek member and tattoo artist Fred Giovannitti said, “We get asked all the time, ‘How long have you been in the oil industry?' and I ask back, ‘Counting today?' ”

The lesson here is that in incentive competitions, results can come from the most unusual of places, from players you would never expect, and from technologies you might never suspect. Lee Stein, an XPRIZE benefactor, says, “When you are looking for a needle in the haystack, incentive competitions help the needle come to you.”

The best incentive prizes are those that solve important puzzles that people want solved and people want to solve—and there's a difference. The Wendy Schmidt Oil Cleanup XCHALLENGE falls directly into the former category. It took me over ten years to raise the money for the Ansari XPRIZE, but Wendy Schmidt stepped forward to fund the Oil Cleanup Challenge in less than forty-eight hours. Certainly one reason I raised money for the Oil Cleanup Challenge so quickly was the fact that by then I had a track record of success and a considerably thicker Rolodex, but a more important factor was the 800,000 gallons of crude gushing into the Gulf Coast each day. Disaster is a motivator because empathy is a motivator, and empathy is never higher than when the same disaster movie has been playing on TV for over a month. But my point here isn't about capitalizing on misfortune, it's about capturing momentum.

Every good prize needs this kind of momentum. The Qualcomm Tricorder XPRIZE—a $10 million prize for the first team that can build a handheld device that diagnoses illness better than a team of board-certified doctors—saw 330 preregistered teams from thirty-three countries enter the competition in its first twelve months.
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Why? Because faster and more accurate diagnosis is a bold common good. It's billions and billions of dollars in health care savings and, in parts of the world where there aren't enough doctors, a matter of life and death.
This means you don't have to capitalize on misfortune to achieve this kind of momentum; capitalizing on a bold vision works just the same.