Innovation challenge - the complete guide

What is an innovation challenge?

Innovation challenge is a time-limited idea-collection campaign that focuses on a specific topic. Depending on the chosen approach challenges can last from a couple of days to several months. The target audience varies from employees to partners and customers including a mixture of them. The topic of the competition is often chosen based on the strategic targets of the organization and the needs of the leaders.

The main steps in the challenge project are:

1. Find the sponsor and topic
2. Decide the audience
3. Plan the challenge
4. Choose a platform
5. Challenge launch
6. Idea collection
7. Idea processing and evaluation
8. Decision making and awarding
9. Post-project communication

We’ll take a look at each step in more detail later in the article.

Why and when should you run an innovation challenge?

Innovation challenges provide an efficient way of generating ideas from your employees or customers while also providing access to fresh sources that would otherwise only be accessible through expensive methods like R&D projects or market research surveys.

Challenges have a significant role in the annual plan of innovation activities. Their purpose is to generate ideas in areas relevant to the organization’s strategy and management needs. It is normal to have fluctuations in participation activity inside an organization. Including contests as a regular part of the annual plan keeps the innovation activity high.

Running a challenge has several advantages:

• It compliments continuous innovation and keeps innovation in people’s minds
• It links innovation to strategy by providing solutions to topics that have strategic importance
• It deepens participants’ understanding of the strategy when they work with the topic
• It increases the commitment of the management when they see proposals being developed to strategic objectives

1. Find the sponsor and topic

The most crucial step in preparation is to find a sponsor with a topic requiring solutions. Running a challenge without funding or real need is dangerous because it increases the risk that the best proposals won’t be implemented. This will decrease the willingness to participate in the future.

Once the sponsor is found, work on the topic with them. Forming a solid challenge question helps in achieving the goals. The basic form of a challenge question is:

How might we [verb] [desired result]?

Here are a few examples

• How might we decrease the fuel consumption of the motor by 50 %?
• How might we increase customer satisfaction by 50 %?

There are several techniques for developing challenge question alternatives. They are described in the article: Why innovation challenge design is important and how to do it.

The Challenge question is accompanied by a brief that describes the expectations. The brief includes

• background about the sponsor and the challenge
• how the topic links to the strategy, objectives, and customers
• what is already known about the topic
• what types of solutions are desired: e.g., products, services, business models, processes
• are some suggestions undesired
• idea contest process: e.g., steps, timeline, feedback, rewarding
• how ideas are evaluated and what the criteria are

Communicating the evaluation criteria in advance helps the contributors in prioritizing and refining their proposals.

While the challenge question and the brief are developed, you should start thinking about the target audience. It is crucial to estimate their capability and motivation to solve the presented topic in advance. Think about your audience. What will motivate them? What will excite them? What are they interested in? If you can combine the interests of the audience with your goal, better results are guaranteed.

When an organization is arranging its first innovation challenges, it’s also essential to consider how the choice of the challenge may impact the cultural transformation of the organization and the relationships with its stakeholders. Often, it’s very tempting to target the first innovation competition at some ambitious problem that has been tried to solve for the last 10 years unsuccessfully. Unfortunately, the problem likely remains unsolved because it is a hard nut to crack.

When the organization is new to innovating, the competition should be such that

• It is relatively easy to participate
• the best ideas are easy and fast to implement
• the company needs the solutions and is therefore committed to implementing the best ones

When the challenge is formed with these specifications in mind, it will drive positive cultural change when many stakeholders or internal employees can participate. The change is emphasized when contributors see the best proposals implemented soon after the challenge ends.

2. Decide the audience

The audience for the first innovation challenge is often the company’s employees. There are several good reasons to do so:

• the communication is simpler and faster
• it is easier to react to possible issues

When the organization has gained experience, it makes sense to start involving external audiences. External audiences are especially good at spotting opportunities outside the organization's experience base.

According to MIT Sloan Management review article, open innovation challenges often attract non-traditional contributors. On average these non-traditional innovators can not beat traditional experts. However, they are more likely to develop high-value solutions due to the creation of more diverse proposals.

Picture source: MIT Sloan Management Review - Spurring Innovation Through Competitions

3. Plan the challenge

Plan the timetable

The next thing you should do is to start planning the challenge and decide the timetable of the competition. How to do that, depends on the participants, their knowledge of the topic, and the communication.

When the target audience

1. has strong motivation to participate,
2. is familiar with the concept of the innovation challenge, and
3. receives the related communication effectively,

the idea-collection may be as short as a few days. An example of this could be running a challenge with an R&D department that has participated in tens of challenges before.

However, when

1. the communication channels to the target audience are more unreliable
2. participation is based on more personal decisions, and
3. audience members are unfamiliar with the concept,

The typical timetable and phases of a challenge with a 3-weeks long idea collection are presented in the picture below.

Plan the communication

What you should plan next, is communication. Regular communication includes activities both during the active phase and in the post-challenge phase. The communication should take place in channels like Teams, Slack, email, social media, or other platform of your choice.

During challenge

• Launch event or video
• Bi-weekly communication in appropriate channels, e.g. email, Teams, Slack and intranet
• Prize ceremony/pitching event/shark tank where winners are chosen/published
• Give more information and coaching to the competing teams if necessary.

Post-challenge

• Monthly communication following implementation or experimentation of the winning ideas
• Wrapping up the results when most of the winning ideas are implemented
• Reminding about the origins of the new solutions that are launched based on the challenge

Having regular bi-weekly communication during the idea-collection plays a significant role in maximizing the number of ideas. It also encourages people to participate during the entire collection phase. An example of the daily visitors -profile of a challenge, where two emails were sent each week, is presented below. Without weekly communication, a challenging profile would be more comparable to a U-shape.

Set a goal

One of the main things to plan is the goal. What are you hoping to achieve? Is it the quantity or quality of your ideas, or the number of implemented ones at the end of the competition?

The goal that has been set in advance and published in the launch may be utilized in the challenge’s communication. Another key thing to specify is when the challenge has achieved its goals.

4. Choose the platform and tools

You should also think about the tools and the platform you will use in order to run the challenge. There are many different ways to do that. Without an innovation management tool, you might need multiple tools and channels to keep the communication working.

You should choose whether you’re hosting your competition via email, intranet, dedicated innovation management software, or another platform of your choice. However, using an eligible tool can save you a lot of time and effort, which you could put into running the innovation itself.

First set up a company-wide communication tool like Teams, Slack, Intranet, or multi-channel solution e.g. email and announcements in the canteen, to get in touch with the participants.

Then, create a process for collecting and developing ideas. You can collect the ideas for example via email or Slack or by setting up a submission form on your website. Then you can publish the ideas and let the participants develop them further by sending enhanced ideas via email or other chosen tool.

The last step is to set up a system for evaluation and voting. You can do that in a number of different ways. You can, for example, make a Google Form and ask your employees to vote on which ideas they think should be implemented. After that, you can go through the forms and evaluate them by using Excel, or Google Sheets.

If you’re looking for a simple solution for all these steps, you can also use a tool like our innovation software Orchidea, where you can share, vote, develop, and evaluate the ideas openly, all in one place.

5. Launch the challenge

The challenge is often launched in an event or with a video. The launch of the event should be scheduled to coincide with a highly attended event like a quarterly meeting or similar. Launch presentation should focus on

• Motivating the contributors
• Briefing the topic and its link to objectives and strategy
• Communicating the incentives
• Presenting the idea assessment criteria

You should keep the communication open and remind the teams of the challenge throughout the idea collection. That way, you ensure that the topic is still on people's minds and that enthusiasm lasts after the launch.

6. Idea collection

After the launch, it’s time to start gathering ideas. To do this, you need to start by telling the audience via multiple channels that you are interested in hearing their thoughts. You can do this by sending out an email to the target audience and publishing a note on the intranet.

Use the chosen tools to collect ideas and make sure everyone has the access to them.

It’s a good practice to communicate about the progress to the whole target group weekly. Using multiple channels that are working on your organization, like Teams, email and Slack,  ensures that people get the information.

Use activating phrases in your communication, such as "Most discussed ideas," "most viewed ideas," and so on. Also, urge individuals to share information about the challenge and their thoughts with others so that it stays in people's thoughts.

Give a chance to comment and vote for others’ ideas. The participants get more engaged with the process when they can influence. The evaluators also learn valuable information on what the crowd considers vital, and the concepts are further developed.

Once the idea-collection phase is about to end, send a reminder. That way you ensure that all generated proposals are collected.

7. Idea processing and evaluation

Once the idea collection is over, it’s time to process and evaluate the ideas that were submitted. Processing and evaluation should be systematic. The innovation management software can help you in systematizing the evaluation and management.

Many companies worry about getting overwhelmed handling the ideas. It can be burdensome to process all the ideas in the same way. A better method is to use the innovation funnel. It helps you to screen and prioritize ideas by their potential impact on your business or organization. It also allows you to assess how feasible an idea is and how much effort it will take to bring it from the early stage to implementation.

This is how to use innovation funnel:

• In the early stage, a fast analysis by experts or voting by the crowd is used to decide which ideas should continue. 50% of the proposals advance to the next phase.
• In the next phase, a more in-depth evaluation takes place. 5-10% of the ideas get to further developing.
• Lastly, for the small number of ideas, more resources are used in their development and evaluation. This is where to choose the semi-finalists ultimately the winners.

When defining the evaluation process, it is important to decide:

• how many assessment phases there will be and who will conduct them
• whether the ideas that pass the evaluation will be further developed before the finalist are chosen; we strongly recommend this because it increases the quality of the results
• how the finalists will ultimately be decided.

The management and experts make the final decision on which ideas to implement, as they have the best overall picture of both the benefits and investments required. However, when selecting the finalists, it is good to include the votes received for consideration.

Examples of expert evaluation:

• 3 experts evaluate all ideas by answering the question: would you implement this idea? (With the response options: yes / maybe / no).
• 3 experts evaluate each idea in one or more aspects on a scale of 1-5 (needs improvement - excellent).
• 3 experts evaluate the ideas in 4 criteria by choosing the most accurate description.

Between 3 to 5 times more ideas are taken into further development than the aim to be selected at the end. (Usually around 10 - 30 best ideas).

The main objective of the evaluation is to understand if proposals are feasible and how much they'll require investments to implement.

• Evaluate ideas based on innovation criteria and financial metrics.
• Implement innovations that have a positive ROI.
  
  

The evaluators should meet and discuss the best 10-20 best ideas after the evaluation. They should evaluate whether there are any surprises in what ideas are and what aren't chosen. Any necessary changes will then be made. This ensures that the decisions made in the evaluation are validated and that the best ideas are taken forward.

Note that even though you’d have chosen to award only a certain number of ideas, you should implement all worthy ideas. It will increase the motivation of all stakeholders to participate and organize innovation challenges again.

8. Decision making and awarding

Decision making

After the ideas are evaluated, it’s time to make the final decisions about the ideas to be awarded and implemented.

Options for decision making: 

• Decision-makers e.g., the management team reviews further developed ideas before the meeting. At the meeting, the topic is discussed and the ideas to be rewarded and implemented are decided.
• An expert involved in the evaluation process presents the ideas that have reached the final round to the business manager. Based on the presentation, the business manager decides on the ideas to be rewarded, and implemented
• The ideas that have reached the final round are presented/pitched to the management team in a lion's den-type session. The idea implementers have prepared, if necessary, for this session the investments needed for the next stage of the idea implementation. Based on the presentations, the management team decides on which ideas they will invest their money.

Note: further developing ideas before deciding on a winner is worthy since ideas are rarely completely ready at first.

Awarding

The key thing to successful innovation activities is the intrinsic motivation to participate. Still, the external motivators matter.

The innovation challenge ends with a prize ceremony where the winning ideas are chosen. How to plan the best reward for those who win? In general, there is not just one solution that would work well under all circumstances: it always depends on the innovation competition and the target audience.

It is important to remember that the rewards are not just the prize money - they represent the value of participating in the innovation process which will be recognized more and more often by the business world.

Examples of the rewards:

• Winners will become members of the idea implementation project
• Winners will receive an affordable cash prize at the closing ceremony and will be featured in the intranet and the customer magazine
• Winners will be invited to a training course or seminar trip according to their own development plan

9. Post-project communication

You shouldn’t stop when the actual competition has finished. Post-project communication is an essential element of the process.

In this step, you need to tell the that the innovation challenge is over and how to get in touch with your organization in case of questions. You should thank the teams for participating and let them know what they will get out of it.

Also, include any other important information like how to view the results. It is a good idea to post the winners on your blog so that everyone can know who they are!

Share information on the implementation and the status of the ideas. Also, let them know about the gained benefits and new courses of action adopted based on the challenge.

A good practice is to inform 2-3 times in the 6 months after the challenge about the benefits and the state of implementation.

For future innovation competitions, collect and provide feedback to improve activities. One feedback method to use is the NPS. Remember to keep the survey short to get a good response rate.

Ideas and tips for innovation challenge

• Consider the IPR perspective and define the terms and conditions for the challenge in advance
• Scale – more participants. To succeed, an innovation program needs lots of contestants. It’s the wisdom of the crowd: a large mass will always out-ideate a small team of smart people. On average, companies generate one idea for every four participants.
• Diversity – more kinds of people contributing. You might think the most productive innovation system would be full of engineers or other problem-solvers. You’d be wrong. A successful system needs contributions from all over the organization, especially staff who are close to the front lines: sales staff, support workers, or people in close touch with the company’s manufacturing processes, for instance.
• Show a good and badly formulated idea so staff knows what 'good' looks like
• Offer a skill-building event to equip staff with brainstorming techniques
• Run workshops in team meetings
• Make sure that the first ideas are already submitted to avoid blank page syndrome
• Disclosure Risk: In describing the challenge you seek to address, you are sharing important information with the world
• The challenge teams show an example 

Popular innovation challenges

Numerous innovation competitions are held all around the world, both in startups and larger businesses. There is a constant stream of innovation-related contests that take place in cities worldwide, and which reward inventors with prize money, recognition, and publicity for their work.

Innovation challenges have become one of the most essential tools for promoting start-up companies and bringing innovative ideas to life. The topics may range from technology to services, as well as engineering and the creation of new business models, depending on the industry.

Netflix

Netflix is a great illustration of the open innovation competition. They challenged the crowd to develop its movie recommendation algorithm. They promised a 1 million USD grand prize to the solution that would improve it by 10 %. Between 2006 and 2009, they received over 44 000 entries. The diversity of submissions was visible in the results of entries submitted during the first 33 weeks:

• 2/3 of entries performed worse than Netflix's own algorithm
• The top 90 entries were better by 5 % and the best by 7 %

In 2009, almost 3 years after the launch of the competition, the winning solution was submitted.

NASA

In 2005, NASA began adopting open innovation as a mechanism for fostering creativity and innovation. Prize competitions and crowdsourcing are utilized by their operations.

For instance, Green Flight Challenge called for teams to design a super-fuel-efficient full-scale aircraft capable of flying 200 miles in less than two hours. The winning team was awarded $1.3 million for their design.

The project showed that new ways to use green flight technologies could be found. It was a proof of concept for NASA to demonstrate that innovative uses for green flight technology can be discovered.

Lego

Lego has a site called Lego ideas where more than 20 000 ideas are generated from the fanbase. Besides the written description, an image or a prototype must be submitted. The idea must get 10 000 supporters to get evaluated.

In Lego, they evaluate the idea by the profile of the supporters. By combining that with market research, they evaluate the potential of the idea.

If the idea is decided to be implemented, Lego pays 1 % of its revenue to the inventor. In addition, the inventor will receive 10 copies of the product and will be featured on the product packaging as the designer.

L’Oréal Brandstorm

L'Oréal uses innovation challenges to develop innovation projects with young entrepreneurs, students, and recent graduates. The Brandstorm challenge is an annual innovation competition open to students and young professionals from around the world to find creative solutions to business challenges with the help of coaching and mentoring.

In 2021, the winning team got to put their plan into action for a three-month internship at the World’s Largest Startup Campus, Station F, in Paris.

💡For more innovation challenge examples, read our blog post: 6 Innovation Challenge Examples to Drive Creativity

Conclusion

An innovation challenge is a great way to foster creativity and an environment of innovation in your company. It can help you address specific challenges that you are facing.

They help create a space for innovation in your company and provide ideas in relevant areas to the needs of strategy and management. They provide a fresh perspective on what could be done better. They also bring people together from different departments to create a common idea pool that can be used by everyone afterward.

To run the most successful innovation challenge, you need to do some preparation. You’ll need to take care of the details and put together a plan, and delegate tasks and responsibilities. Once you’ve made it through the preparation phase, you’ll be ready to run an innovation challenge. Here is some final advice for getting the most out of it:

• Make sure you have a clear goal - what you want to achieve and what you want participants to take away.
• Include various people and motivate them to participate
• Find the right tools to make your process seamless
• Make sure that everyone has enough time to get creative and participate
• Take the competitions as a part of your annual plan