In a government bureaucracy, any innovation can take years to come to fruition. But that can change, says Tom Kalil, deputy director for policy for the Office of Science and Technology Policy at the White House. Kalil recently participated in a two-day conference at Wharton titled, “For the Win: Serious Gamification,” which looked at the application of gaming techniques in business, education, government and other scenarios. Before the conference, Kalil spoke with Kevin Werbach, a conference organizer and a professor of legal studies and business ethics at Wharton, about why gamification has become a hot topic at the White House.

Kevin Werbach: Tell us a little bit about what the Office of Science and Technology Policy is, because our audience might not be familiar with it, and a little bit about what you do there.

Tom Kalil: The Office of Science and Technology Policy (OSTP) is part of the White House. It’s headed by John Holdren, who is the President’s science advisor. It has two basic missions. One is to worry about science and technology for policy — that is, when the President is struggling with an issue [such as the] Fukushima [nuclear power disaster] in Japan, how do we make sure that he gets the best scientific and technical advice? And the second is policy for science and technology — that is, how does public policy on things like research, education and innovation affect long-term economic growth and job creation? [Or how does] the ability to harness science, technology and innovation address major societal challenges?

Werbach: Can you give some examples of how things like R&D and more long-term scientific endeavors actually connect with the immediate concerns about jobs?

Kalil: A lot of times there is a long lag between when we start making an investment in research and development and when it starts to show up in the GDP. A classic example is when the government started to invest in the APRANET (Advanced Research Projects Agency Network, an Internet precursor) back in 1969, and it took a long time before that started to be a driver of economic growth and job creation and productivity. So one of OSTP’s mandates is to look out for the long term and to try to figure out what investments we need to be making today that are going to lead to economic growth and job creation in the long term.

But there are things that we can do that will have a more immediate impact. For example, if we’re successful in working with the Congress to pass legislation that will make more spectrum available for new wireless services, that will certainly help drive economic growth and job creation.

Werbach: The Obama administration came in with a real commitment to renewing the emphasis on science and technology, and I had the good fortune of being part of the team in setting up the administration. Can you talk a little bit about some of the new initiatives that this administration has brought in and some of the progress that has been made?

Kalil: One area of real focus has been improving math and science education. And there has been a real focus on trying to move the United States from the middle to the top of the pack in terms of our performance in what’s called STEM education — science, technology, engineering and math. A second has been to try to increase our investments in research and development, particularly in the physical sciences and engineering. Those are two examples of where we’ve been able to make some progress.

Werbach: And from your perspective, how do we match up with the rest of the world, and what do we need to do to achieve better in those kinds of comparisons?

Kalil: I think the United States is still an innovation super power. We have a lot going for us. We have 17 of the top 20 research universities. We have an entrepreneurial culture. We have capital markets that are willing to invest in high growth entrepreneurs. But we certainly can’t afford to take our lead for granted. And we certainly have to continue to make progress by investing in things like research, education and a 21st century infrastructure.

Werbach: What role can the government play in entrepreneurship and start-up activity?

Kalil: Well, there’s a number of things that we’re doing. We launched something called the Start Up America Initiative. It has two components. One is things that the government is doing to create the right environment for private sector entrepreneurship. And the second is a private sector-led activity that is being spearheaded by Steve Case, who is the former cofounder of AOL. So, the government is doing things like making it easier for foreign born entrepreneurs to emigrate to the United States. We’re trying to improve access to capital for small- and medium-sized enterprises. And we’re trying to improve the commercialization of federally funded research, so that ideas move from the lab to the marketplace.

Werbach: Are there things that businesses or start ups can do to get involved or to help contribute to some of these programs?

Kalil: If you go to the Start Up America partnership website, you’ll see that a large number of companies are already getting involved, whether it’s Amex or Intel or Google or Microsoft. A number of large companies are getting involved and trying to encourage entrepreneurship. Also, a number of regions are beginning to organize around this issue. So, not only do you have this nationwide activity called the Start Up America partnership, you also have … Start Up Illinois and Start Up Tennessee — and a number of other cities and states are not far behind.

Werbach: You’re here at Wharton for a conference on gamificiation. Can you talk a little bit about some of the things that are going on in the federal government in terms of using prizes and other kinds of game mechanics on public policy challenges?

Kalil: Yeah, well so the president in his national innovation strategy asked agencies to increase their use of prizes and challenges as a tool for stimulating innovation. And the reason that we’re doing that is that prizes and challenges have a number of advantages, relative traditional grants and contracts.

It allows the government to pay only if someone is successful. It allows the government to establish a goal without picking in advance the right approach or the best team that is in the best position to achieve that goal. And it allows the government to tap into a lot of non-traditional performers. NASA has done this, and they have reported that they’re getting a five- to 10-fold return on the investment that they’re making in prizes when they compare that to more traditional funding mechanisms.

Werbach: Can you give some specific examples of the prizes that have been given?

Kalil: Sure. One was the DARPA (Defense Advanced Research Projects Agency) Grand Challenge, which has really succeeded in advancing the state of the art in robotic cars. That was really successful. NASA has been doing a lot of this to improve the state of the art in space technology. So right now, a lot of it has been the technical agencies. Another example is that the Department of Energy had something called the L Prize to advance the state of the art in efficient lighting technology. So as I said, a lot of it so far has been limited to the science and technology agencies, but we’re also trying to encourage those agencies that have more of a social mission to start experimenting with prizes as well.

Werbach: Do you have any sense of where this could go in prizes and beyond? What’s the potential for the government to employ some of these techniques?

Kalil: Well, I think there’s a whole suite of technologies and approaches that are going to allow us to stimulate innovation. One that I’m really excited about is called an advance market commitment, which you can think of as a purchase order for a product that doesn’t exist yet. And this has been tried out in the area of vaccines for diseases of the poor. Left to their own devices, pharmaceutical companies may under invest in vaccines for diseases of the poor because they don’t have money. They would rather work on male pattern baldness or something like that.   

So, some economists came up with the idea of an advanced market commitment, and five countries plus the Gates Foundation got behind this idea and said to the pharma industry, “If you develop a vaccine which is safe and effective, we promise that we will purchase it.” And this intervention is going to save the lives of seven million kids in developing countries over the next 20 years. So, even the way we change is changing. And I think experimentation with some of these new tools for encouraging and promoting innovation is really important.

Werbach: On that point about experimentation, you’re based in the White House, which I think most people don’t realize is actually a very tiny operation relative to the scope of the federal government. How do you push out these kinds of changes across a very large bureaucracy?

Kalil: Well, first of all, we tried to understand why agencies aren’t using some of these things. It turned out that there was a fair amount of legal uncertainty about whether those agencies that haven’t been given specific authority to use prizes could actually do it. Someone might say, “Well, I’d like to [offer] a prize.” And they would talk to their general council. And the general council would say, “Well, we’re not sure that you have the authority to do this.” So, we worked with the Congress to pass legislation that now gives every agency the authority to support prizes and challenges of up to $50 million.

That’s one of the things we’re trying to do — to reduce the transaction costs to remove the legal and regulatory barriers. And then, to build a community of practice within the federal government of those people within the agencies that are interested in experimenting this. And also highlighting some of the prizes and challenges that are successful. So, if we can demonstrate that many agencies are seeing a five- to ten-fold return on their investment in prizes, relative to grants and contracts, we think that’s going to encourage more agencies to start experimenting with us.      

Werbach: One more before we wrap up. Obviously we’re in a very challenging economic time and challenging political time, so how does all of that play into the things that you’re working on? Is it more important or less important, and are there any opportunities in terms of some of these innovative techniques and the broad area that you’re in to help us get out of this mess that we’re in?

Kalil: Absolutely. I think if you look at the 1990s, the last time I was in government, we had 4% unemployment. Not only had we eliminated the debt, we were on track to pay down the deficit. We had double-digit increases in private sector investment and in capital, and rising wages. And the creation of new industries was an important part of the story. So it was really, in a large part, about this boom in the information and communications technologies, which not only drove economic growth and job creation, but also increased productivity. So that really reminds us that if the United States wants to maintain a long term healthy economy, we need to make investments in areas like research and development.