Many grants move innovators to build a better mousetrap. But what kinds of incentives inspire a better mouse? Not the short-term, project-focused, risk-averse funding of grantmakers such as the National Institutes of Health (NIH), suggests the tale of Mario Capecchi. Ignoring reviewers, Capecchi sunk his NIH grant into inventing “knockout mice,” which show what different genes do. These revolutionary rodents paved the way for thousands of medical breakthroughs, as well as a Nobel Prize for Capecchi.
Funders who want to catalyze radical innovation should likewise not follow the NIH model, suggests a new study. Instead, they should emulate the Howard Hughes Medical Institute (HHMI) and make long-term grants, invest in people rather than in projects, and offer rich and frequent feedback.
“If you want to encourage radical innovation, it’s not all about resources. It’s about how you spend those resources,” concludes Pierre Azoulay, an assistant professor at MIT’s Sloan School of Management and the study’s lead author. Azoulay and his colleagues followed the careers of 73 HHMI investigators and almost 500 of the nih’s most promising grantees. They found that HHMI’s investigators published more high-impact papers, cited by more of their colleagues, than did NIH grantees.
Azoulay and his team then contrasted NIH and HHMI grantmaking practices. Whereas the NIH usually offers three years of funding, HHMI typically awards five-year grants. While the NIH gives grantees early critiques of varying quality, HHMI offers rich feedback throughout the grant cycle. And whereas the NIH expects grantees to meet their initial goals, HHMI encourages investigators to try new tricks, and then helps them choose the most fruitful avenues.
Some social innovation funders independently discovered the secret ingredients of radical innovation. For instance, like HHMI, New York City-based grantmaker Echoing Green invests in people instead of projects, says president Cheryl Dorsey. “Talent matters; human capital has always been the main engine of great social movements,” observes Dorsey, whose organization has seeded such groundbreaking nonprofits as Freelancers Union and City Year. To nurture talent, Echoing Green “gives people permission to fail, and then helps them learn from their failures,” she says. Echoing Green also channels feedback from hundreds of volunteers.
Not all innovation can or should be radical, Azoulay points out. Drawing on a distinction made by coauthor and MIT colleague Gustavo Manso, he notes that many valuable discoveries come from exploiting existing knowledge, rather than exploring new ideas. The human genome project, for instance, is “exploitation on a giant scale,” he says.
Fostering exploration and radical innovation are also more expensive and time-consuming, he says. “HHMI’s model wouldn’t scale up.”
“Of everything that the federal government spends money on,” Azoulay adds, “I’m happy about it spending money on NIH.” Yet noting how esoteric applying for government funding can be, he says, “we would prefer people to spend more time on science and less on grantsmanship.”
Pierre Azoulay, Joshua S. Graff Zivin, and Gustavo Manso, “Incentives and Creativity: Evidence from the Academic Life Sciences,” NBER working paper #15466, October 2009.
Read more stories by Alana Conner.