The federal government is hosting challenge competitions on a regular basis, geared toward emerging tech companies that may possess solutions to their problems. For example, there are currently challenges running for DoD in search of a specific technology for the Army, and DARPA is currently running a launch challenge.
These challenges bring plenty of value and opportunity to both government agencies and private tech companies that are looking to enter the government marketplace. However, there are some definite drawbacks that don’t incentivize the right stakeholders for the type of outcome needed.
In some cases, the award prizes are insignificant in regards to the area of work. The ones mentioned above seem like big awards, but in the case of the launch challenge when it costs tens of millions to launch a rocket a total payout for first prize is less than $15M the opportunity cost is misaligned. This issue, in turn, doesn’t always attract the best talent. When these challenges don’t attract the right people they fail to deliver the most optimal outcome, which continues the cycle of government being unable to find real solutions to their technological problems. Additionally, it creates the perception that challenges are for individual tinkerers or inventors working out of their garage with no actual foundation or business behind them. In some cases, this may be what is needed but challenges with small prize where significant capital is involved for the applicants sets up a poor incentive structure.
The major hurdles
One of the most common problems these challenges encounter is poor design. If challenges and competitions are poorly designed, it can lead to the waste of taxpayer money and negative market consequences, in addition to the immediate problem of the federal agency not finding the solution they need. Unfortunately, poor institutional design is not a rarity, and there are plenty of examples where things went badly.
More often than not, the primary issue is that the people behind the design and concept of the project underestimated the complexity of designing an effective challenge, and are too far gone by the time they realize things have gone off the rails.
Here at Dcode, we exist to be a connector and cheerleader for both sides. In our experience, there are some clear improvements and changes we believe would have a major positive impact on these government challenges – because improvement means the government gets more of the solutions they need.
Here are our recommendations to federal agencies that we believe will improve the results of these challenges, and attract top talent:
- Most challenges have defined the problem up-front, but many fail to determine the maturity of the domain that the challenge sits in. Asking the question of whether private capital is investing in the domain, are there established companies in the space, or, on the other side, is there basic research in place can help answer the question of whether a challenge is even needed.
- While smaller-scale and test pilot projects are sometimes essential and easier for young companies to manage, it’s important to always consider the long-term potential for the company. Will this deal help them get to something that scales? Work to tie a larger procurement to the end of the challenge and provide the finalists an opportunity to bid and win recurring revenue not just a single prize. .
- Always be clear and transparent about the reality of the outcome and the path moving forward. You can’t expect companies to take risks they don’t understand or get excited about things that may never transpire.
- It takes a considerable amount of research to properly identify the appropriate innovation target focus. If the right end goal isn’t set at the very beginning, the entire challenge can be doomed before it even starts.
- Strive to find a balance between flexibility and firmness during the design process to allow for unexpected occurrences. The challenges should be flexible and adaptable enough that when problems arise, it’s possible to pivot before it’s too late.
- Whenever possible, adopt a design process that actively seeks feedback from all entrants from the onset of the challenge, and adapt guidelines as appropriate based on this feedback. Use the feedback to improve and to produce better results for your agency, and the companies involved.
When it comes to government challenges, the devil most certainly lives in the details and more often than not, it’s those fine details that are to blame when a challenge fails. The importance of the design process can not be overstated, as it’s crucial in order to achieve success for both sides.