4 questions for the master of competition

July 3, 2012, 3:44 PM UTC

By Chip Lebovitz, reporter

FORTUNE — Incentivized competitions have existed since at least the 1700s when Great Britain offered up a prize to whoever could best measure longitude. Starting in 1996, the X-Prize foundation resurrected the idea, offering up the Ansari X-Prize for the creation of a working private spaceflight vehicle. X-Prize founder and chairman, Dr. Peter Diamandis recently talked to Fortune about his new Nokia X Sensing Challenge and reviving the business of incentivized competitions. The following is a lightly edited transcript.

Since the Ansari X Prize, the foundation has offered out over five more awards. How does the foundation keep each individual idea fresh and prevent the concept of incentivized competition from going stale?
It’s really like a movie; it’s all about the story. It’s all about the meaning it has for your life and for humanity. Just like one can say, “Hey, you’ve done one movie, you’ve done them all,” but there’s literally a hundred films every year, and there are good films and bad films. The good films are meaningful, have a great story, and move you emotionally forward. From our standpoint, we’re trying to create X-Prizes that will really move innovation forward in a meaningful fashion.

We are going to have a range of X-Prizes, some that are just ok and some that are fantastic; some that are extraordinary wins and some that are failures. But in the end of the day, our goal is to become an engine that drives forward innovation, encouraging people to take meaningful risk.

What specific field are you looking to drive innovation with the Nokia Sensing X Challenge?
The fact of the matter is if I’m flying in my airplane or driving in my car, my vehicle has hundreds of sensors and 50-100 microprocessors that are constantly measuring all of what’s going on, like engine temperatures, flow rates, and so forth.

That’s great, but in your body, you’ve got none of that. Other than going for an annual physical and getting a few data points on a piece of paper, you don’t have an understanding of the food you’re eating, the air your breathing, what’s going on in your blood chemistry, and your physiology at any one moment. We now have the potential to gather that kind of data and to analyze that kind of data, so that ignorance no longer is an excuse.

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There is evidence to show that there are biomedical markers found very early in the formation of any cancer and there are biomedical markers days and weeks before you have a heart attack. Our goal with the Nokia Sensing X challenge is to incentivize and recognize entrepreneurs worldwide that are able to help create the future sensors that will help us monitor the optimal functioning of our body. Also they will help us sense the environment we’re breathing, living, and working in.

There are a couple of prizes that haven’t been won yet including the Archon prize for research in genetics that has been going on for over ten years. How do you keep teams motivated in these competitions to keep going for it, keep going for the final prize?
In the Archon and Google Lunar X-Prize, both of which have been going on for a number of years, these teams have a passion and a mission. The competition is in some cases, not an excuse, but a rationalization for them. It helps them raise capital. They’re doing this and know that these are going to be five, eight-year endeavors. They’re driven by their own desire to make that vision of the future happen.

And of course, we also design these competitions so that there is a back-end business model. When the competition is won, there really is an industry that has been kicked off.

Does the Foundation have to announce any future competitions besides or in addition to the Nokia X Sensing Challenge?
Yeah, we’re working on a ton of competitions. We’re working on an autonomous auto competition — the first robotic car to drive non-stop from Los Angeles to New York. We’re working on an earthquake prediction X-Prize, and X-Prizes in energy storage and energy production.