The most important prize incentive isn’t what you think

The most important prize incentive isn't what you think

True to its name, open innovation can attract solutions from a diverse array of perspectives and expertise. Our recent survey of challenge prize recipients confirmed that cash awards are major motivators that attract solvers. But the survey also suggested that, in the end, some innovators need — and value — more than money to move from concept to functioning prototype to viable offering.

Across the prize recipients we surveyed — semifinalists, finalists, and winners of 14 multistage challenges we produced over the past eight years — nearly half (47%) told us the learning opportunities they experienced as part of a virtual accelerator stood out as a key benefit of participating. Only 18% named cash awards as a key benefit, even if it was a primary motivation to enter the challenge in the first place.

Most startups fail, and many more ideas — including the ones drafted in a corporate boardroom and supported with investment — never make it past paper. This is precisely why early innovation and entrepreneurship circles place bets on teams with the ability to close the gap between concept and viability. And it’s why startups raising capital carefully select the “smart” money from venture capitalists who understand their problem space and have the right connections to accelerate their trajectory.

This is also true in open innovation. The money is non-dilutive and the sponsoring organization is typically a future partner, investor, customer, or even potential acquirer. (One-third of survey respondents cite connecting with those stakeholders as a key benefit of participating in a challenge.) Whereas many venture capitalists look for innovative ideas in expected places, open innovation looks to unexpected places on the fringes of the ecosystem, which is often where the most novel solutions reside. Leveling the playing field for solvers with different areas of expertise requires a thoughtful combination of capital, insight, connections, education, and opportunities for iteration.

This learning component is a relatively new addition to open innovation challenges. In 2011, when we launched our first challenge, most prize competitions were simply offering money for ideas. Our client, however, was in search of viable solutions. And so our multistage challenge methodology was born. Following an open call for entries, an independent judging panel narrowed the pool to five semifinalists, who received seed money and access to a virtual accelerator to support rapid progress toward turning their ideas into something real. Following a demo day, the jury selected two finalists received additional funds and the opportunity to pilot their solutions. Upon completion of the pilot, the jury selected a grand prize winner. That first challenge unfolded over six months.

Our plan for the virtual accelerator was to offer resources that participants could not attain otherwise. We borrowed the best practices from two rising trends (at that time) in business and adapted them to fit the open innovation challenge format. We looked to design thinking methodologies to firmly assert that the innovations be human-centered and modified them to focus on turning insights into tangible products and services. We also looked to tech accelerators that fostered entrepreneurship and modified the structure so founders wouldn’t be required to move across the country or give up equity. Interestingly, at the time, these two circles did not intersect, and so we combined empathy building, subject matter knowledge, rapid prototyping, and business modeling in our first virtual accelerator. It felt fresh and new, and it worked because it was designed to attract the brightest minds and advance the most compelling solutions. The winning team pivoted mid-challenge after engaging with end users; they have since raised more than $25 million in capital.

That was seven years ago. What does a good virtual accelerator look like today? There is no template for innovation; each challenge must be designed for its desired outcome. But the principles are often the same.


The “virtual” part of a virtual accelerator is what makes the learning experience accessible for teams across the United States (and sometimes, around the world).

For the Hidden Signals Challenge (produced for the U.S. Department of Homeland Security through a contract with the NASA Tournament Lab), we designed an 8-week experience for finalists that was entirely virtual, with learning modules that included targeted webinar sessions, office hours, reading lists and field exercises, as well as ongoing expert mentorship.

In the case of the U.S. Department of Education’s CTE Makeover Challenge, more than 600 high schools from all 50 states and Washington, D.C., were tasked with designing makerspaces to strengthen next-generation career and technical skills. Providing virtual resources in the form of lesson plans, online videos, and exercises distributed the learning and feedback more effectively across time zones.

When timing and budget allows, the virtual accelerator also includes an immersive boot camp workshop in addition to distance learning. This in-person experience unfolds over a few days, with educational modules that address gaps in understanding of product design, user experience, technology, ethics, and business modeling. When challenges include in-person meetings, expenses are paid or the seed money is generous enough to accommodate for travel. During the Alexa Diabetes Challenge, finalists traveled to Amazon’s Seattle headquarters for a boot camp, where they gained an inside look at the latest in voice technology and a better understanding of what newly diagnosed diabetes patients experience.

Participants also gain equitable access to non-monetary resources. Alexa Diabetes Challenge finalists all received the same number of promotional credits from Amazon Web Services to support the building of their solutions. During the EdSim Challenge, which asked teams to design virtual reality games for 21st-century education, finalists received VR headsets and other gear from Samsung and Oculus.


While teams are competing for a top prize, inserting cooperation into the equation can benefit all the finalists by flattening the learning curve and accelerating iteration. This is particularly true for virtual accelerators that include an in-person boot camp, and it’s why we focus on creating welcoming environments.

Some learning modules are best conducted in a group setting — for example, presentations with a subject matter expert or conversations with a patient or end user — where teams can collaborate and learn from each other’s questions. In some cases, we separate team members and form new groups for the empathy exercise portion of the boot camp to foster cross-pollination and enhance learning. But mentorship and coaching are one-on-one sessions, where teams receive confidential feedback on work in progress.

The spirit of “coopetition” extends beyond the challenge; many teams make long-lasting connections and seek each other out at conferences. Some even join forces later on to continue developing their solutions.


Each finalist enters a virtual accelerator with different gaps in knowledge and experience, and their concepts may be at different stages of maturity. Some have deep technical expertise but less knowledge about the subject area; some have deep industry knowledge but less experience with technology. Education modules help level the playing field by balancing theory and practical application, addressing gaps that will help each team advance in a short amount of time.

Hidden Signals Challenge finalists learned about user experience design and non-traditional datasets, covering a range of topics — from design thinking practices to semantic analysis modeling. (Some teams said they made fundamental changes to their systems as a result of conversations about end user workflows and algorithmic design, the realities of local and federal collaboration, and potential unintended consequences.) The finalists also got an inside look at how biothreats are investigated today, and how cities are already using data and technology.

During the Mood Challenge, most semifinalists entered the virtual accelerator with strong backgrounds in research, so a Bay Area boot camp experience focused on helping them most effectively apply their expertise to the development of their ResearchKit apps. Hands-on learning gave teams an inside look into ResearchKit capabilities, user experience design best practices, machine learning techniques, and the importance of privacy and security.

Mentorship and connections

The guidance provided by mentors and connections is priceless. Mentorship can take many forms, addressing a variety of topics — from product management to business modeling — and we select mentors who can help finalists make rapid progress in these areas. Because each challenge requires knowledge of a specific industry or topic area, subject matter experts also serve as mentors.

To meet the specific needs of a challenge focused on detecting biothreats, Hidden Signals Challenge mentors were selected for their expertise in quantitative analysis, data science, alarm design, user research, biodefense, and emergency preparedness. For the EdSim Challenge, mentors included experts in software architecture, instructional design, 3D modeling, and learning games.

An in-person boot camp creates the space and time for connections throughout the event, and culminates in a reception that includes other interested parties like investors and industry leaders. Even when the experience is entirely virtual, webinars and phone calls can serve as important introductions to high-level, high-value connections.

These relationships often last well beyond the virtual accelerator, and even beyond the challenge itself. A finalist in the 2012 Data Design Diabetes Challenge told us they still work with some of the challenge mentors, and received early investment from a connection they made during the challenge.

Accepting and responding quickly to feedback helps finalists refine their solutions, and is also useful when learning how best to communicate their ideas. For challenges with a demo day, teams are coached by Luminary Labs to perfect the pitch. We’ve seen blank slides turn into winning presentations — showing us that at every stage of the process, anyone can win.


Nearly all virtual accelerators begin with a focus on the real people who will benefit from or use the solution. Empathy is the most common blind spot for finalists, and understanding the humans who will be impacted makes solutions more sustainable and relevant.

The Hidden Signals Challenge connected finalists with emergency management and technology officials from cities like San Francisco and New Orleans, to provide the perspectives of on-the-ground end users of their proposed systems. Alexa Diabetes Challenge finalists gleaned insights from a panel of people newly diagnosed with Type 2 diabetes, and ongoing conversations with certified diabetes educator (CDE) mentors helped teams connect with local patients. During the EdSim Challenge boot camp, developers visited a maker academy to meet with teachers and students who are integrating new technologies into classrooms.

Online research and social listening are useful starting points for both startups and larger organizations, but are never as revealing as engaging with end users in real life. Empathy exercises that ask finalists to place themselves in scenarios a user would face also help teams apply what they’ve heard to the problem at hand. Incorporating these conversations and experiences into a virtual accelerator can dramatically improve solutions. That’s why developers (or team members working directly on the product or solution) are often the ones who get the most out of attending a boot camp.


All of this learning serves a specific purpose: building knowledge and empathy can help finalists make rapid improvements to prototypes during a short period of time.

Some virtual accelerators include piloting opportunities: during the Merck Heritage Provider Network Innovation Challenge, finalists tested their prototypes in a clinical setting, and one finalist learned that patients couldn’t get past the solution’s terms and conditions. Resolving those issues early on helps make solutions more viable.

The Mood Challenge was designed for iteration. During a two-day boot camp, semifinalists were guided through rapid prototyping exercises, where they received feedback from an interdisciplinary group of experts. After presenting their refined designs to a jury, two finalists were selected for an incubation and testing phase, where they developed prototype apps to pilot through Apple’s TestFlight software. Less than a year after being named winner of the challenge, BiAffect officially launched its ResearchKit study in Apple’s App Store.

During a panel discussion during the Hidden Signals Challenge virtual accelerator, Public Policy Lab’s Chelsea Mauldin told finalists: “The sooner you get something in the hands of a user, the sooner you’ll figure out how broken it is.” The City of Boston’s Kimberly Lucas reinforced that point: “There is probably no such thing as too early for testing, but there is definitely such a thing as too late.”

Journeys, a finalist in the Reach Higher Career App Challenge, told us the virtual accelerator made a notable impact on the development of their solution: “The feedback from the mentors, and continued relationship with many of them, was invaluable. The process helped shaped both our short- and long-term roadmap and has helped bring credibility to our vision.” This team is not an outlier — we consistently hear from prize recipients who say these learning experiences helped make their products what they are today.

While virtual accelerators were developed for our open innovation challenges, these principles are broadly applicable to corporate skunkworks, innovation labs, or any initiative with the goal of making it real.

Mahala PagánElizabeth Bowling, and Janna Gilbert contributed to this article.

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Photo by Mathew Schwartz on Unsplash.


Sara Holoubek
Founding Partner and CEO