When the basic components of a new technology exist, how long does it take for someone to put them together?
The researcher Brian Potter recently measured the gap between when an invention becomes possible and when it appears. He used Claude Opus 4.7 to simulate 190 historical inventions. Potter gave the AI a specific prompt, asking it to imagine a team of highly skilled engineers working in a well-equipped workshop with a clear goal. He then asked how quickly this hypothetical team could build a working prototype.
The AI speculated that the wait is remarkably short. For more than half of the inventions, the gap between the earliest date of possibility and the actual invention was ten years or less. Potter notes that this gap has narrowed over time and he concludes from this that society mostly doesn’t wait very long for new inventions.
Real markets rarely build perfect teams
Using AI for expert assessment at scale makes for an interesting exercise, with some provocations for how technological progress happens, though the comments section on the article presents a range of critiques of the approach. Nevertheless, one of the most interesting parts of the exercise is perhaps the prompt itself - the method relies on a scenario of a fully resourced team having already formed and deciding to tackle a specific problem.
Obviously, the global economy doesn’t work like this. Capital is scarce and finding investors for unproven ideas is difficult. Private investors routinely underfund new ideas because knowledge is easy to copy. Academic disciplines remain isolated from one another. Even when the technical precursors for a new innovation exist, the market frequently fails to provide a financial incentive to assemble them. Hence, we wait for innovations precisely because the perfectly resourced teams in the scenario don’t exist for real.
If you set a goal too low, the sponsor or funders pays for projects that private markets might have supported anyway. If you set a goal too high, you risk nobody entering the competition.
Creating the conditions for innovation
Innovation inducement prizes help to solve this exact problem. When an organisation launches a challenge prize, they define an objective technological goal.
Setting this goal involves difficult choices. Challenge designers spend months researching the problem. They map the problem landscape and consult experts to set a target that is technically possible but genuinely new. A prize target should sit on the boundary of current capabilities. If you set a goal too low, the sponsor or funders pays for projects that private markets might have supported anyway. If you set a goal too high, you risk nobody entering the competition.
Replicating the simulation in the real world
Once designers have set the target, prizes are structured that frequently offer seed funding and testing infrastructure. The prize sponsor creates the conditions required to close the gap between technical possibility and physical reality.
Potter noted that the limiting factor for new inventions is rarely a lack of basic science. Instead, innovations are usually delayed by engineering bottlenecks. Challenge prizes are specifically designed to solve these integration problems. Because a prize rewards a working physical prototype, it forces competitors to push past the theory and actually build the product or service.
Accelerating the search for solutions
New ideas arise from combining existing ideas. Searching this space of possibilities requires a lot of cognitive effort. Even when a team has resources, finding the right way to combine existing technologies is difficult.
A prize solves this combinatorial search problem by running experiments in parallel. The funder broadcasts a problem to the public and attracts dozens of independent teams. Each team tests a different technological combination at the same time. Evidence from innovation contests shows that for uncertain problems, this parallel path approach accelerates the search process. Increasing the number of competitors increases the probability that someone will find the optimal combination much faster than a single team working in isolation.
Challenge prizes aren’t a replacement for grants or the patent system, they should be seen as a complementary tool that is needed for a different job - to overcome some of the frictions that delay progress.
Injecting missing market demand
Innovators direct their efforts in response to economic incentives. A technology might be physically possible to build, but innovators will not develop it if the market doesn’t demand it or if it is too expensive to operate. Potter's data shows that medical inventions experience some of the longest delays. The market frequently fails to provide sufficient rewards for things like vaccines for diseases affecting the poorest countries. Delays in innovation often happen, therefore, because addressing a certain problem isn’t economically viable or feasible.
Funders can use challenge prizes and tools like advance market commitments to correct this market failure; the funder promises a large cash reward or a guaranteed purchase contract for whoever solves the problem first or best. By acting as the missing customer, the funder provides innovators with the economic incentive to develop their solution.
Getting different people to solve the problem
Funding from research grants typically goes to established players. Prizes, though, are an open process that invites anyone to submit a solution idea, and aims to lower the barriers to entry. These ‘unusual suspects’ often produce solutions that experts overlook because they approach the problem from a completely different angle. The spotlight and prestige from a public competition sends signals to private investors, helping new businesses to attract investment and demonstrate the viability of their prototype in the real world.
Challenge prizes aren’t a replacement for grants or the patent system. They should be seen as a complementary tool that is needed for a different job - to overcome some of the frictions that delay progress. Prizes provide the necessary incentives to put the pieces together when the components of a solution exist, but the market isn't working well to assemble them.
