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Why innovation prizes fail? Because past performance isn't indicative of future results. You may want to incentivize discoveries by financing proven talent, bu

Why innovation prizes fail? Because past performance isn't indicative of future results. You may want to incentivize discoveries by financing proven talent, but that approach ignores the fact that being successfull has an important component of luck. There's a recent economic model [1] studying the effects of sheer luck in acquiring wealth; and it shows that the richest people end up being those who accumulate a streak of lucky breaks, independently of their talent (above a minimum). The model predicts that the best strategy for getting talented people to deliver results is giving a small amount of funding to everyone equally. This way, you maximize the chances that someone will start a project with the right approach, AND that are least some of them will have the lucky breaks required for it to flourish. [1] https://www.inc.com/chris-matyszczyk/so-youre-smart-but-youre-not-rich-this-eye-opening-new-scientific-study-tells-you-why.html https://www.inc.com/chris-matyszczyk/so-youre-smart-but-your...

credit_guy 4y ago
"Our simulation clearly shows that such a factor is just pure luck," say the researchers. Yes, but remember, Fortune favors the prepared. I was very lucky many times in my life, but I didn’t follow that with work and grit. Elon Musk and Jeff Bezos did. So they are where they are, and I am where I am.
- fuzzer37 4y ago
  > Elon Musk and Jeff Bezos did Elon Musk was born into an already wealthy family and failed his way upward. Jeff Bezo's wife was already a millionaire when he started Amazon Neither of them had "hard work" or "grit", despite the whitewashing both of them have done of their rags-to-riches story. They are where they are because of generational wealth and familial connections.
  - exolymph 4y ago
    There are a million and one rich kids with generational wealth and familial connections. Yet not all of them turn into Elon Musk or Jeff Bezos. Luck is assuredly a big component of success, always, but saying things like Musk "failed his way upward"... lol no
- TuringTest 4y ago
  Did you have a wealthy family and good connections, as they did? They started the race way ahead of most of us, with most of their required sequence of lucky breaks already behind them. > Fortune favors the prepared. A thing shown by the study is rather that fortune flees from the lazy one. Above a certain threshold of talent (defined in a way that includes effort and know-how), more talent does not imply better results.
kawaiikouhai 4y ago
https://blogs.scientificamerican.com/beautiful-minds/the-role-of-luck-in-life-success-is-far-greater-than-we-realized/ https://blogs.scientificamerican.com/beautiful-minds/the-rol... This is a far superior summary of the aforementioned study. It also explains how the computer-simulated experiment was conducted >All agents began the simulation with the same level of success (10 "units"). Every 6 months, individuals were exposed to a certain number of lucky events (in green) and a certain amount of unlucky events (in red). Whenever a person encountered an unlucky event, their success was reduced in half, and whenever a person encountered a lucky event, their success doubled proportional to their talent (to reflect the real-world interaction between talent and opportunity). The issue with this study I always had was how contrived an unlucky event (halves success) was. Do these parameters actually map to the real-world? If anyone with actual chops in this field could comment on this, it would certainly be very helpful.
Supermancho 4y ago
> Why innovation prizes fail? Modern innovation prizes, like Elon or say Twitter's attempt to figure out how to monetize comes with unsurprisingly draconian IP shackles. You work becomes there and you can't make money off of it. You get a relatively small reward for a huge boon to someone else. Companies spawn out of innovation prizes, not free ideas for the sponsors to profit off of.
tgflynn 4y ago
> Why innovation prizes fail? Because past performance isn't indicative of future results. That's largely true but not very relevant because most innovation prizes are independent of past performance. Your criticism might be applicable to one of the solutions the author proposes (essentially grants to people pursuing ideas, which presumably would be based on past performance) but not to innovation prizes as such.
guhidalg 4y ago
I think the challenge with implementing this approach is overcoming people's bias for rewarding success. At the extreme, some will pull socialism/communism arguments out of their ass to justify why it's not a good idea to equally distribute funding and it's superior to give more funding to the [lucky] proven innovators. I don't have a solution except to run a brainwashing campaign on funding sources to convince them that luck is a thing (maybe put it as "luck needed = 1 - risk") and that multiplying many risky experiments increases the probability that one of them will get lucky.
- TuringTest 4y ago
  > I think the challenge with implementing this approach is overcoming people's bias for rewarding success. Those are not incompatible. You can have your Noble Prices for recognizing and publicising outstanding achievements, without any expectation that they will create any further equivalent outcome. And at the same time, have a general talent program financing anyone who applies, expecting most of it to be non-refundable losses, but with the expectation that a couple of them here and there will pay off and recoup the cost of the entire program. Isn't this what first-round VC is in essence?
gowld 4y ago
> The model predicts that the best strategy for getting talented people to deliver results is giving a small amount of funding to everyone equally. How does that protect against people squandering the funding? They need some incentive to try to achieve something with it. That's what an innovation prize offers -- a reward for performance. "future performance" is the candidate's problem, not the funders. This is how sports and stock markets work, relatively effectively.

credit_guy 4y ago

"Our simulation clearly shows that such a factor is just pure luck," say the researchers. Yes, but remember, Fortune favors the prepared. I was very lucky many times in my life, but I didn’t follow that with work and grit. Elon Musk and Jeff Bezos did. So they are where they are, and I am where I am.

fuzzer37 4y ago
> Elon Musk and Jeff Bezos did Elon Musk was born into an already wealthy family and failed his way upward. Jeff Bezo's wife was already a millionaire when he started Amazon Neither of them had "hard work" or "grit", despite the whitewashing both of them have done of their rags-to-riches story. They are where they are because of generational wealth and familial connections.
- exolymph 4y ago
  There are a million and one rich kids with generational wealth and familial connections. Yet not all of them turn into Elon Musk or Jeff Bezos. Luck is assuredly a big component of success, always, but saying things like Musk "failed his way upward"... lol no
TuringTest 4y ago
Did you have a wealthy family and good connections, as they did? They started the race way ahead of most of us, with most of their required sequence of lucky breaks already behind them. > Fortune favors the prepared. A thing shown by the study is rather that fortune flees from the lazy one. Above a certain threshold of talent (defined in a way that includes effort and know-how), more talent does not imply better results.

kawaiikouhai 4y ago

https://blogs.scientificamerican.com/beautiful-minds/the-role-of-luck-in-life-success-is-far-greater-than-we-realized/ https://blogs.scientificamerican.com/beautiful-minds/the-rol... This is a far superior summary of the aforementioned study. It also explains how the computer-simulated experiment was conducted >All agents began the simulation with the same level of success (10 "units"). Every 6 months, individuals were exposed to a certain number of lucky events (in green) and a certain amount of unlucky events (in red). Whenever a person encountered an unlucky event, their success was reduced in half, and whenever a person encountered a lucky event, their success doubled proportional to their talent (to reflect the real-world interaction between talent and opportunity). The issue with this study I always had was how contrived an unlucky event (halves success) was. Do these parameters actually map to the real-world? If anyone with actual chops in this field could comment on this, it would certainly be very helpful.

Supermancho 4y ago

> Why innovation prizes fail? Modern innovation prizes, like Elon or say Twitter's attempt to figure out how to monetize comes with unsurprisingly draconian IP shackles. You work becomes there and you can't make money off of it. You get a relatively small reward for a huge boon to someone else. Companies spawn out of innovation prizes, not free ideas for the sponsors to profit off of.

tgflynn 4y ago

> Why innovation prizes fail? Because past performance isn't indicative of future results. That's largely true but not very relevant because most innovation prizes are independent of past performance. Your criticism might be applicable to one of the solutions the author proposes (essentially grants to people pursuing ideas, which presumably would be based on past performance) but not to innovation prizes as such.

guhidalg 4y ago

I think the challenge with implementing this approach is overcoming people's bias for rewarding success. At the extreme, some will pull socialism/communism arguments out of their ass to justify why it's not a good idea to equally distribute funding and it's superior to give more funding to the [lucky] proven innovators. I don't have a solution except to run a brainwashing campaign on funding sources to convince them that luck is a thing (maybe put it as "luck needed = 1 - risk") and that multiplying many risky experiments increases the probability that one of them will get lucky.

TuringTest 4y ago
> I think the challenge with implementing this approach is overcoming people's bias for rewarding success. Those are not incompatible. You can have your Noble Prices for recognizing and publicising outstanding achievements, without any expectation that they will create any further equivalent outcome. And at the same time, have a general talent program financing anyone who applies, expecting most of it to be non-refundable losses, but with the expectation that a couple of them here and there will pay off and recoup the cost of the entire program. Isn't this what first-round VC is in essence?

gowld 4y ago

> The model predicts that the best strategy for getting talented people to deliver results is giving a small amount of funding to everyone equally. How does that protect against people squandering the funding? They need some incentive to try to achieve something with it. That's what an innovation prize offers -- a reward for performance. "future performance" is the candidate's problem, not the funders. This is how sports and stock markets work, relatively effectively.