America is grappling now more than ever with the weight of its social issues; be it an aging infrastructure (+$3.0 trillion needed by 2020), environmental contamination (Flint, MI and Porter Ranch, CA, for example), higher healthcare costs ($3.2 trillion this year or ~$10,000 per capita), rising and unsustainable student debt ($1.3 trillion) or millennial college graduate underemployment (~15%). Political actors work tirelessly with NGO’s and their corporate partners to address these challenges in mostly traditional charitable ways.
Yet on the sidelines, a handful of bold entrepreneurs, academics and “practical thought leaders” are successfully merging the principles of capitalist profit-taking with social innovation and entrepreneurship. They are leveraging the passion and ‘change the world’ drive of millennials and using for profit enterprises that draw upon business techniques to find solutions to social problems. Unlike NGOs, these companies seek to solve human problems while generating profitable market returns. Often, they aim to empower the bottom of the pyramid directly.
An important component of this impact ecosystem consists of ‘competitions’ and ‘prizes’ as drivers of innovation, entrepreneurship, and global market-driven solutions. A social problem is defined, an award proposed, and competing teams design and build businesses around its solution. Unfortunately, many groups underestimate the amount of planning required to successfully execute such challenges and ensure they actually have impact.
The Hult Prize, an early adopter of this technique, was founded by Ahmad Ashkar in 2009. Since then, it has launched dozens of impact enterprises ranging in focus from food to education to health diagnostics. Companies have registered successful patents, generated revenue, and raised venture capital rounds. In six short years, a student-led startup has blossomed into a global movement (and brand) with more than 25,000 applicants per year, led by millennials dissatisfied with the status quo.
Five key factors contributed to the meteoric growth and success of the Hult Prize in building a global pipeline of high-quality impact enterprises (8 of last year’s Forbes Top 30 Entrepreneurs Under 30 Changing the World came out of the Hult Prize pipeline):
1- Change the Game
Successful movements start with a bold high stakes incentive that engages as broad a segment as possible. The incentive here must be meaningful, as the aim is to attract the attention of scientists, researchers and multi-disciplinary entrepreneurs to cross-functionally collaborate and think deeply about the issue at hand. The Hult prize offers $1m in cash to the winning team; the largest prize in the world. Now this is negligible relative to the potential rewards to society. How would you put a price on fixing San Francisco’s rising cost of living? Or, more ambitiously, alleviating poverty? President Bill Clinton famously put it in the tens of billions. Size matters; consulting firm McKinsey & Company, via its UK Venture Lab, offers £10k and ongoing free consulting; MIT’s annual competition offers $100k — these are interesting prizes but they’re unlikely to change the game.
- Focus on Impact
Successful impact entrepreneurship awards define and frame the issues and outcomes they target up front. Much like Harvard Business School’s famed case method approach, the aim here is to contain the issue at hand. This, from day one, confines those teams competing to an intellectually level playing field, sets the key metrics and performance indicators that require tackling, and defines the market opportunity in the form of a global human challenge. Even more importantly though, this ensures that the products and services being developed are directly relevant to the target community and actually improve their outcomes (not just creating jobs, for example, but also preventing disease or shortening commuting time).
- Build Trust
A bold reward creates the incentive and justification for delving into a problem, having a recognized “Challenger” announce and kick-start the process brings in the media, far extends reach, and adds legitimacy. Rock stars aside, impact challengers need to be relevant and respected. Complementing tangible monetary awards with opportunities for recognition by engaging a trusted public figure who personally stands behind the organization and its objectives is a critical piece of accelerating growth.
- Leverage the Crowd
While a bold reward and charismatic challenger aim to attract as many teams as possible, the process of screening, filtering and selecting the best teams across various stages is critical. Social issues are, by definition, social. Community and even crowd-based involvement in screening and selection of the teams moving from one stage of the award to another helps ensure buy-in and keeps impact entrepreneurs focused on what works (a role played by venture capital in Silicon Valley). If a social issue is tackled in a vacuum with little involvement of the different stakeholders associated, the solution can backfire; Facebook’s Mark Zuckerberg discovered this the hard way with his internet troubles in India. Whether to mentor and coach startups at the incubation stage, or in selecting the $1m winner, the Hult Prize ecosystem includes more than 500 volunteers per year without whom the program would not be possible.
- Find the Best Entrepreneurs (not companies)
Novel solutions to technically challenging social issues require cross-functional collaboration and involvement of diverse capabilities; teams can include scientists, technologists, brilliant PhD’s or hungry first-year undergrads. There should be no restriction on where to find entrepreneurial grit or the next big breakthrough. The Hult Prize is one of the first external (non-University) platforms in the world to directly invest millions of dollars every year to help students develop businesses. The Hult Prize doesn’t look for great startups, it creates them. Many of the rule breakers, misfits, and introverts in our growing family don’t realize they’re entrepreneurs until we meet them. Teaming support, incubation, mentorship, training, and pilot funding are critical inputs of this strategy. Harvard Business School professor Karim Lakhani and his team are working on a report entitled ‘The Hult Prize Effect’, a term they coined to describe the unique approach.
As global challenges continue to place pressure on our economic and social systems, innovative solutions will become increasingly important elements of a more secure future for all. Where we choose to look for the solutions and how we nurture them will define the lives of many generations to come. Prizes and competitions, though effective means of finding answers when properly run, are often underestimated or simply put together as side projects, greatly undermining their potential.
Credit: Tarek Nassar was a co-author of this article.