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Getting challenge prizes right

9 July 2021

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UK Government Innovation Strategy

Turning problems into impactful innovation.

The greatest problems we face will be solved by breakthrough innovations in new and emerging sectors. Done right, challenge prizes engage problem-owners, innovators and investors in a rigorous process to foster breakthrough solutions to challenges and act as a spark for new and emerging sectors.

The UK Government has indicated that challenge prizes could be a key feature of its Innovation Strategy to promote growth and productivity throughout the UK.

Challenge Works, then called Nesta Challenges, was established by the government as a world-leading centre of expertise in challenge prizes. Thanks to a decade of design and delivery of world-class challenge prizes for governments, NGOs and foundations we have learnt what it takes to get them right.

How to get challenge prizes right

Design right

Challenge prizes have a clearly defined mission and award significant funding based on meeting unambiguous milestones. Defining the problem and setting the right target is key to a prize’s success. We research challenge prizes hand-in-hand with problem-owners and beneficiaries. We ensure they drive innovation where it is needed most. Beyond the financial reward, we foster and grow the best ideas with test and lab environments, stand-out communications campaigns, and building and feeding pipelines for investors and procurement. We do all this so that the solutions have a sustainable and long-lasting impact, and the innovators establish equally successful businesses as a result.
Put innovators first

Understanding innovators is essential – who they are, what they need to prosper, and how to level the playing field to advance the best ideas. Challenge prizes understand the art of the possible – that solutions to the same problem can come from multiple and different pathways. Challenge Works operates in partnership with innovators across diverse sectors with an eye on future market opportunities, building networks and communities of problem-solvers. It supports them through carefully structured financial and non-financial support to help them advance their solutions and bring them to market.
Get more eyes on the prize

Challenge prizes get noticed. Publicity isn’t a frivolous extra, it’s key to why challenge prizes succeed. We use the power of communications to shine a light on a problem, demonstrate why it matters and highlight – to consumers and investors alike – that the prize participants are creating credible new products and services that solve that problem. The high-profile nature of prizes develops downstream customer demand, creating a sustainable pipeline to attract investment greater than the prize value itself (with a ratio of 1:62 of prize funding to secured investment).
Constantly evaluate and improve

A rigorous prize needs rigorous evaluation that yields actionable learnings that progress the method without creating bureaucracy. The government’s new prizes will of course be tax-payer funded. As with all public funding, the impact of prizes needs to be properly and consistently evaluated: the prospect of government using a wider range of innovation methods creates the unique opportunity to compare challenge prizes and other methods to generate more refined evidence for future innovation policy decisions.

Our recommendations to the UK Government

Flagship prizes for UK firsts
A series of flagship, high-profile, challenge prizes would fly the flag for the Government’s Innovation Strategy and UK plc’s R&D prowess as we charge forth to achieve net zero before 2050, level up the economy for the entire nation and secure the UK’s position at the vanguard of the global economy.
Harness existing expertise
UK government established Challenge Works as a world leading centre of expertise in challenge prizes and this should be harnessed.
Ringfence funding for challenge prizes
To be effective challenge prizes require expertise in problem definition and delivery that is very distinct from the expertise required for other funding instruments, so funding should be ringfenced.
Engage the innovation community
Engaging with agencies, investors and innovation community that are closest to the problem is essential to set the right goals and incentives.
International prizes for Global Britain
There are opportunities with other governments internationally to collaborate on challenge prizes in a global context.

Why are we making these recommendations?

Up until the mid-20th Century, the United Kingdom had a long and notable record of using challenge prizes. Thanks to the work of Challenge Works in the last decade, the knowledge and capacity to use challenge prizes to solve the big problems we face in the 21st Century has been re-established in the UK. That prizes could be set to become a consistent feature of the government’s innovation strategy is hugely exciting. It is an extraordinary opportunity for innovators in this country to contribute to the future success and prosperity of the nation.

To incentivise the groundbreaking innovations that will solve the biggest problems we face and deliver long-lasting economic prosperity for the whole of the UK, we are calling on the UK Government to ring-fence a globally-ambitious fund for challenge prizes and harness the world-class expertise that now exists in the UK – thanks to Challenge Works – to deliver it. Challenge prizes are a distinct method of driving innovation that require entirely different expertise to other funding instruments. Challenge Works knows how to get challenge prizes right.