CFO Innovation Conference, Keeping Creativity from Becoming Chaos, Prize Foundation

David Donell,

Chief Financial Officer

CFO Innovation Conference

Keeping Creativity from

Becoming Chaos

Raymond Orteig offered $25K

prize (~$5M today) for first

flight from New York to Paris

Impact:

Launched the international

airline industry

Grew airline passenger traffic

30x

Increased # of aircraft 4x

Why Did He Do It?

In 1996, the $10 Million Ansari X PRIZE Opened Up a New Era…

26 privately funded teams

Generated more than $100 million in

R&D investment

2 flights in 2 weeks

Impact:

Launched the billion dollar private

space flight industry

SpaceShipOne now hangs

among history with the Apollo

11 Capsule and the Spirit of St.

Louis in the Smithsonian

National Air & Space Museum,

the largest air and space

collection in the world.

And History Was Made…

X PRIZE Design Attributes

Target area that is „stuck‟;

market failure

Define a problem, not a solution

Assure there is a “back end

business”

Drive new inventions and

innovations

Open to teams worldwide

Attract maverick thinkers

Open new areas of

research/action

Launch businesses &

industries

Encourage taking intelligent

risk

Not just ideas or talk;

implementable

X PRIZE Results

Our Model

$2.5 million

seed money

$10 million

prize money

$100 million

by teams

$1 billon+

private space

industry

Education

Energy &

Environment

Life Sciences Exploration

Global

Development

Presented By

Presented By

Prize Groups

XPF Track Record

More than $70 million in

incentivized prize money

combined.

More than $500 million in

R&D investment.

AWARDED

• $10M Ansari X PRIZE

• $2M Northrop Grumman Lunar Lander X CHALLENGE

• $10M Progressive Insurance Automotive X PRIZE

• $1.4M Wendy Schmidt Oil Cleanup X CHALLENGE

LAUNCHED

• $30M Google Lunar X PRIZE

• $10M Archon Genomics X PRIZE presented by Express Scripts

• $10M Qualcomm Tricorder X PRIZE

• The Heritage Provider Network Prize

• XPF is a donor/sponsor funded (non-endowed)

501(c)(3) education nonprofit

• Funding comes from four primary sources:

– Donors

– Other Grant Making Foundations (e.g. Gates Foundation)

– Government

– Corporations

• Work is divided among four areas:

– Prize Development (R&D): sources, selects, designs competitions

– Prize Operations: operates & awards prizes

– Foundation Operations

– Fundraising

• Staff of 45 employees

Organizational Structure & Funding

Prize

Development

VISIONEERING

Process for defining the

Grand Challenges and

designing competitions to

solve them.

Includes a methodical

prize development

process with thought

leaders, innovators and

stakeholders.

Prize Design Platforms

Prize Development

Anchored in Open

Collaboration

Allows many external

constituencies to contribute

to the process.

Not a grant or RFP for

prizes; but designed in an

organic way.

Prize

Ideas

XPF

Website

General

Public

XPF Staff

Thought

Leaders

X PRIZE

Labs

Advisory

Board

Donors

Board of

Trustees

Prizes In

Development

Autonomous Auto

X PRIZE

Purse: $10 million

Grand Challenge:

There are 1.2 million

automotive-related deaths

each year worldwide.

Goal:

Increase automotive

safety, reduce commuting

time, and greatly reduce

fuel consumption.

Tri-State Carbon

X PRIZE

Purse: $10 million

Grand Challenge:

No company has

successfully commercialized

a carbon utilization

technology.

Goal:

Create useful and valuable

products from the coal plant

effluent.

Ocean Exploration

X PRIZE

Purse: $10 million

Grand Challenge:

95% of the ocean is

currently unexplored.

Goal:

Push the frontiers of ocean

exploration for conservation

and resources.

Education Game

X PRIZE

Purse: $10 million

Grand Challenge:

There is a global shortage

of great teachers.

Goal:

Create a new generation

of online/mobile

educational games that

prove to teach.

Cryopreservation X PRIZE

Astroid Deflection X PRIZE

Solar Pavement X PRIZE

Bionics X PRIZE

Cookstoves X PRIZE

So How Does

X PRIZE Plan

For This?

• Staff & Executive Visioneering

• Operational Planning & Budgeting

• Balancing the Audacious with the Achievable

Annual Planning

Process

• Part of a 360 management initiative

• Staff is lead by the same professionals that

help create future X PRIZEs

• Two days, staff is broken into randomly

created teams

• Goal is to “innovate from within” using a team

approach

• Outputs include both process improvements

and new strategic initiatives

Staff Visioneering

• Designed to provide the annual „roadmap‟ for

the Foundation

• Build on opportunities identified in staff

visioneering

• We define the desired objectives but not the

solutions, including

– Desired Outcomes to further mission “why are we

here?”

– Vision of organizational health

– Cultural and people objectives

• Strategic focus areas for potential future

X PRIZEs

Executive Visioneering

Operational Planning

and Budgeting

Organizational Attributes:

- Divisional, not franchise

structure

- Utilize shared services

concept

- No single competition

more important than the

Foundation

• Toolkit includes:

– Dashboards

– Project Plans

Operational Planning

and Budgeting

Single most critical

component to success:

Communication

Communication

Interdisciplinary

communication is the key to

a successful operational

plan and budget.

Budget Sponsorship

Marketing

Fundraising

Prize

Operations

Finance

Prize

Development

Public

Relations

Executive

Team

Operational Planning

and Budgeting

Dashboards play an

important part ensuring

everyone is working toward

the same objective.

Program Objectives

Operating Objectives

Culture Objectives

Expenses Revenues Personnel

Current Prizes New Prizes Education

Workplace Teamwork Lifestyle

Operational Planning

and Budgeting

Project plans are more

important than the numbers

in them.

Project Plan

Scope/Quality Resources Budget

Complexity

Deliverables

Metrics

Exec. Team Timeline

Depts.

Time Needed

Schedule

Size

• Capacity Planning

– Total capacity set by Executive team

– Forces operational discipline

– Utilize “Speed Dating” to ensure each department

head plans appropriately

• Budgeting

– Used as a guidepost rather than an operating bible

– Have moved to a rolling forecast methodology to

account for new opportunities as they arise

• Proper Competition Planning

– Audacious vs. Achievable

Operational Planning

and Budgeting

How do we prevent so

many great ideas from

creating chaos?

Competition Planning

Risks:

– Could cause more harm

than the real spills

– Cannot test in the „real‟

ocean

We Made it Achievable:

– Limited solutions to

mechanical means

– Use the only oil spill test

facility in the world!

– Only the ten best

Results

All ten finalists exceeded

both the minimum Gov‟t

standards and the minimum

competition standards

Winning team beat current

standards by 3x

Competition conceived and

won in less than 18 months

Completed under budget

Thank You