Working paper 03

Carrots, Sticks, and Challenges

How Governments Propel Society Into the Future Through Regulation, Incentives, and Mission-Driven Innovation

Beyond carrots and sticks lies a third, underused policy instrument: the challenge. A carrot scales a known solution; a challenge discovers which solutions are viable. This paper proposes an innovation maturity model that matches instruments to market conditions, a five-step Challenge-to-Market Program for municipalities, and an implementation roadmap for officials at every level of government.