The Future of Problem Solving

Check paid to Charles Lindbergh by Raymond Orteig

In a recent interview with Thomas Friedman on the future of work, he mentioned an open competition that GE and GrabCAD held in 2013 to design a lighter weight fastener for airplanes. Anyone could submit a design, and the winning designs could win up to $8,000. In total, 638 entries were submitted and an Indonesian engineer M Arie Kurniawan was awarded the first place prize. He went on to state that the future of R&D will be conducted in the gig-economy, and I agree. I hope to give a little background to the idea of incentivizing innovation via competitions in this article.

Traditionally, research and development has been an internal operation in a company. In fiscal year 2016, GE employed 36,000 engineers across their five research and development specific facilities and spent a total of $4.8 billion in research and development. While GE employs a large number of engineers specifically for R&D, the set of engineers in the world who are not employed by GE is much larger.

Organizations create bounds on the amount of people who are actively thinking about and trying to solve a problem when the question is only posed and incentivized to the people that the organization has hired. When a company tries to solve problems via open competitions, orders of magnitude more people can think about theses problem, and a true meritocracy is developed. It doesn’t matter where the submitter is from or the connections they have, it is only their ideas that matter. This idea of creating competitions to spur innovation has been around for a long time.

In 1919, a hotelier named Raymond Orteig announced a $25,000 reward to the person who could fly non-stop from New York City to Paris. In 1925, Charles Lindbergh won this prize and being the first person to conduct a Trans-Atlantic flight.

More recently, SpaceX hosted an open competition in August for Hyperloop development. Over 20 teams showed up to test the max speed of their of pod, including one team rLoop whom is fully decentralized and met over Reddit. The first time the team met in person was before an initial design competition at Texas A&M in the winter of 2016

The legendary Peter Diamandis has been harnessing the power of open competitions for over 20 years. To spur innovation in areas that have either been overlooked or viewed as too speculative by traditional companies, Peter Diamandis developed the X Prize Foundation to incentive moon shot innovation.

“We believe that you get what you incentivize. And that without a target, you will miss it every time. Rather than throw money at a problem, we incentivize the solution and challenge the world to solve it.” — The X Prize Foundation

Even large tech companies such as Facebook, Google, and Amazon have crowd sourced code development via bug bounty programs.

Not only do competitions increase the amount of people that could work on a problem, they allow organizations to become antifragile to employee turnover and hiring. It is rare that every person an organization has hired is the next best possible person to work at the company and many of these qualified candidates may never even be known about. To solve some of the most important problems that we face, I believe they will need to be made open to the public and properly incentivized.