A lot of people didn’t quite know what to think last week when Senator McCain proposed a $300 million taxpayer-funded cash prize to whomever could develop a battery that would leapfrog the efficiency of currently available technology, providing the same amount of power at 30% of the cost. Reactions from both Republicans and Democrats were mixed, and presidential rival Barack Obama dismissed the idea as a ‘gimmick’.

Just about everyone must admit that the same thought had crossed their mind – how serious is the cash prize plan, and does it have a chance of success? The short answer – yes, there’s a very good chance that Senator McCain’s proposal could result in the development of a new generation of efficient and cost effective battery technology.

I was tempted to just leave it at that, but there is indeed a very good reason for why the aforementioned plan will succeed. By shedding the chains of bureaucracy and special interests that generally accompany funding of this nature, it exits the grey area of the government subsidy and provides a true incentive for innovation — produce results, get the prize. In adopting this mindset, the McCain plan takes aim in the same direction that technological innovators already have in the recent past, valuing efficiency and demanding results.

Senator Obama, in responding to the cash prize proposal, was quoted last week as saying that "When John F. Kennedy decided that we were going to put a man on the moon, he didn’t put a bounty out for some rocket scientist to win — he put the full resources of the United States government behind the project". With all due respect to President Kennedy and what he managed to accomplish, it’s that type of outdated, government-as-our-savior political philosophy that now stifles innovation in the first place. It’s not 1960 anymore, and I doubt that many could argue with a straight face that the government throwing money at a problem is a surefire way to find a solution.

There’s no guarantee that Senator McCain’s plan would succeed in its intended result of producing a more efficient generation of battery technology, but regardless, the plan itself would produce successes if implemented in one way or another. Putting ‘a bounty out for some rocket scientist to win’ would encourage the participation of both industrial titans and individual innovators, working towards the same goal — even if neither were to fully succeed, the work produced in the area would likely provide a significant leap forward over current technology, and the implementation of a prize rather than a subsidy would encourage participation from both individuals and companies throughout the world, rather than just a select few to whom the money was invested in. It’s also worth noting that, in the end, it’s a very low-risk proposal – the $300mil prize would not be awarded unless someone were to meet its requirements, at which point it would obviously be money well spent.

One need not look any further than the technology industry itself to see examples of how such incentives can succeed. The non-profit X-Prize Foundation, whose modus operandi has been to offer similar results-oriented cash prizes, was the driving force behind a new wave of private aerospace innovation with the success of the Ansari X-Prize in 2004. The foundation has already offered its own $10 million prize for the development of a more fuel-efficient automobile – so far, 76 teams from across the globe have already agreed to participate. Imagine the drive towards innovation that would result from a prize thirty times larger.

Regardless of how anyone feels about Senator McCain’s politics, this proposal, despite being a bit unorthodox, provides a great pathway towards innovation in the near future. If we are truly serious about reducing our country’s dependancy on foreign oil and producing more efficient technology, we must be willing to join Senator McCain in thinking outside of the box.