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Case example: Orteig Prize

Case example: Orteig Prize

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Published by vjgoel07
Case example describing the Orteig Prize in understanding the incentive prize model of open innovation. Author: Vijay Goel, MD

For more information visit www.innovationinthecrowd.com
Case example describing the Orteig Prize in understanding the incentive prize model of open innovation. Author: Vijay Goel, MD

For more information visit www.innovationinthecrowd.com

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Published by: vjgoel07 on Oct 15, 2011
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10/16/2011

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©2011 Goel Insights, LLC. All rights reserved
Orteig Prize
Incentive Prize Competition
CASE STUDY
Version 1.0 | October 7, 2011
Vijay Goel, MD
Principal, Goel Insights 
 
www.innovationinthecrowd.com
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an initiative of
CASE EXAMPLE—INCENTIVE PRIZE COMPETITION
CHARLES LINDBERGH AND THE ORTEIG PRIZE
©2011 Goel Insights, LLC. All rights reserved
ORTEIG PRIZEREQUIREMENTS
 
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Nonstop flight between New Yorkand Paris
 
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Allied nationality
 
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Complete within 5 years of offer(extended 5 years in 1924)
 
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Award of $25,000 to go to thefirst to accomplish the feat
 
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Terms and conditions set by theAero Club of America
OVERVIEW
On May 21, 1927, Charles Lindbergh completed the first nonstop flight betwenNew York and Paris to win the Orteig Prize and worldwide acclaim. The 25 yearold Lindbergh was an underdog who successfully completed a 33 hour solo flightthat had killed 6 others who had attempted it prior. He braved uncertain weatherto leave ahead of two teams of seasoned competitors housed in the airports ofNew York at the time of his flight.The Orteig Prize offered a $25,000 prize for the first allied aviator to fly nonstopbetween New York and Paris. Raymond Orteig was a hotelier in New York whohad housed a number of French airmen during World War I, and sought to improveFrench-American connection. Announced in 1919 and extended for 5 additionalyears in 1924, it was won in 1927. 6 men died in the attempt and 2 teams provedtheir abilities at transatlantic flight within months following Lindbergh’s captureof the prize. Following Lindbergh’s win, 30 million Americans came to see himand the Spirit of St Louis; and became captivated with the potential of the air.This marked the dawn of commercial air travel.Over 9 teams formally entered the competition and over $400,000 in capitalwas spent in pursuit of the prize. Charles Lindbergh was an unknown consideredunlikely to win and raised $15,000 in pursuit of the Orteig Prize.
IMPACT
 
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Increase in U.S. airline passengers from 5,782 to 173,405 in three years(1926-1929)
 
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300% increase in applications for pilot’s licenses, 400% increase of licensedaircraft in the United States in one year (1927)
 
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The Spirit of St. Louis was personally viewed by 30 million Americans withinone year of Lindbergh’s historic flight
 
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CASE EXAMPLE—INCENTIVE PRIZE COMPETITION
CHARLES LINDBERGH AND THE ORTEIG PRIZE
©2011 Goel Insights, LLC. All rights reserved
Flying over endless golden fields on a routine mail run to Chicago, 25 year old CharlesLindbergh set the course that would lead him to international acclaim. It was 1926and aviation was seen as the realm of barnstorming pilots and daredevil wing walkers.Lindbergh was still unknown, cobbling together a living as a mail pilot, flight instructor,and barnstormer. Aviation speed and endurance records were falling regularly asplane technology and pilot skills leapt forward. Lindbergh dreamed of participatingin these famous firsts and helping to drive the mastery of the air and the businessopportunities that would follow close behind. What Lindbergh was missing was amodern plane that would let him join the ranks of the captains of the air—he realizedhow different a cutting edge Wright-Bellanca was from his old biplane. With it, hecould change the world! As he wrestled with how he would be able to raise the moneyto get one, he kept coming back to the $25,000 prize offered by Raymond Orteig.While businesses of the air were still risky ventures at best, the prize provided Lindbergh a simpler platform with which toapproach local aviation enthusiasts in the business community as investors. On that day in September 1926, Lindberghdecided he would enter the Orteig Prize and make the first nonstop flight between New York and Paris.The Orteig Prize had been announced in 1919 by Raymond Orteig, a New York hotelier. Orteig was looking to honorthe close relationship he had developed with the French aviators who stayed in his hotels and helped America buildits initial Air Force. His $25,000 purse—a large sum worth substantially more than the $300,000 in today’s inflation-adjusted dollars—placed a spotlight in the aviation community on his challenge to fly nonstop between Paris and NewYork. Offered initially for a 5 year term that expired in 1924, it had been extended for 5 more years to 1929 under theauspices of the Aero Club of America.Lindbergh approached the Saint Louis business community, where he had a number of relationships with aviationenthusiasts, to gain funding for his venture. The initial response was lukewarm—conventional wisdom argued for anumber of safeguards that Lindbergh’s plan eliminated, like multiple engines and crewmen. Lindbergh, instead arguedfor minimalism as a means of keeping weight down on takeoff and providing extra fuel for range. With eloquence andpersistence Lindbergh was able to bring on board quality supporters who believed in his disruptive approach and achieveenough financial backing to acquire a plane and fund his venture.With financial backing secure, Lindbergh needed to select a plane. His initial choice, the Bellanca aircraft he hadinitially wanted for the mission, was owned by a person whose terms for sale proved unacceptable. Other prominentmanufacturers, like Fokker, were unwilling to provide a single-engined plane for risk to their reputation. With thenewspapers announcing a number of prominent aviators making attempts on the Orteig Prize scheduled for the springof 1927, Lindbergh found his dream hanging by a thread. He reached out to a small, but promising, manufacturer in SanDiego named Ryan Aircraft. They offered to build him an aircraft based on one of their new models, but modified for
HOW THE ORTEIG PRIZE WAS WON

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