As Innovation Competitions Grow, Prize Money Shrinks

7 Big Data Solutions Try To Reshape Healthcare

Is the market price dropping for crowdsourced, industry-shaking ideas, even as demand for them grows? Where companies once thought they needed to dangle million-dollar prizes to get people interested in crowdsourced big-data challenges, lately we're seeing more-modest sums.

The latest innovation challenge was announced on Tuesday, setting the ambitious goal of solving the most daunting data problems in U.S. healthcare. Called the Care Transformation Prize, the competition will award at least three quarterly sums of $100,000 each, with the prospect of more after that.

A hundred grand isn't couch change, but it's far from the $3 million on offer for the Heritage Health Prize. That two-year-long competition -- sponsored by the Heritage Provider Network and its founder, Dr. Richard Merkin -- challenged people to examine a set of data and predict which patients will end up in the hospital in the next year. The thought is that HPN could use such predictions to prevent hospitalizations. The winner will be announced in June. Dr. Merkin and Heritage are leading the Care Transformation contest as well, in collaboration with the Advisory Board and the Bipartisan Policy Center.

In today's innovation contest market, $100,000 is looking like the high end. At Kaggle, an online platform used to run many company-backed crowdsourcing initiatives, many prizes are in the $5,000 to $10,000 range. Passionate contestants often are as interested in the glory and the competition as the cash prize. It's like "fantasy football for data scientists," says HPN senior executive Jonathan Gluck.

[Read more about crowdsourcing platform provider Kaggle.]

Netflix, another believer in open innovation, also has deflated its prizes. Back in 2006, Netflix made a splash with its $1 million prize for the team that devised the best predictive algorithm for recommending movies people would like. But Netflix never fully implemented that recommendation engine, deciding that the gains weren't worth the engineering effort, and just as importantly because it had moved from a DVD-centric model (order a movie to watch later) to a streaming model (pick a move to watch now) that required subtly different recommendations.

Netflix still has faith in the open innovation model, though, and it's back most recently with a contest for improving the open-source tools it uses to manage application development on Amazon's cloud infrastructure. The prize: $100,000.

GE is another big proponent of open-innovation challenges. Its healthcare group ran a challenge for people to suggest apps to improve hospital operations. The winners pitched an app that makes the hospital discharge process more useful. Total prize pool: $100,000.

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Another GE quest put up a $100,000 top prize to the team that could take a mound of flight data and write the best algorithm for predicting flight arrivals. The winner improved industry standard predictions by 40% -- in part by ignoring about three-fourths of the available data to focus on what's most relevant to arrival times. A second round of that challenge is underway.

Big data isn't your thing? There's two weeks left to write a mobile healthcare app using data on the Open mHealth platform, a development architecture designed to make data-sharing and code reuse easier. The prize: Yep, $100,000 (and Heritage Provider Network is again among the sponsors).

Why have the million-dollar prizes given way to $100,000 or less? I suspect one reason is that it's really hard to set the right mega goals, as any manager can relate to. There just aren't that many clearly-stated, burning questions (like the historic Longitudinal challenge) that merit a company awarding a mega-prize. Which data-based business problem would you pay $1 million to understand better or predict more precisely?

For the Care Transformation challenge, the organizers are even crowdsourcing the questions, asking the public, particularly those in healthcare, what the industry's biggest problems are. A group of experts will look at those questions, and pick one to be the first $100,000 challenge problem. They'll do the same thing for the next two challenges -- and more beyond that if the organizers see intriguing problems to solve and a community stays active around the problems.

A second reason for smaller prizes might be a reality check: Crowdsourcing gets us only so far. Americans like to think there's some genius out there with the answer to our problems. Yes, companies are often well served searching for answers and new ideas the way GE, Heritage Provider Network and Netflix are, and more should try. But whether it's $3 million or $5,000 spent on the idea, it's still up to each company to put it to valuable use.