Challenge upon challenge: Three things to avoid when running a challenge fund

4 May 2021

The Cardiff Capital Region has recently launched a Challenge Fund to ‘harness the power of innovation in procurement’. Emyr Williams took a supporting role in this process and did rapid background research exploring some of the critical success factors behind challenge funds.

A Challenge Fund seeks to address a specific problem or challenge and invites new ideas to the table.

Being new to the world of Challenge Funds I found it fascinating to see the different types of models that had been developed to encourage innovation, the plethora of topics that challenges had tried to address and the fantastic results that different funds had achieved. 

However, I was not just focussing on the successful challenge funds but also wanted to find out some of the key things to avoid when implementing or taking part in challenge led innovation. Our report gives an overview of the research and outlines that learning.

Here, I discuss what I see as the three most important things to consider when setting up a challenge, to assist anyone thinking of developing a challenge for the CCR fund.

1. Solutionising! 

It is vital to avoid the trap of thinking you know what the solution is before you have run the challenge. This is a common problem and can lead to bias, limited innovation and a poorly run fund. The whole point of challenges is to provide new and innovative solutions to problems that don’t currently have an answer. If you already know what the solution is then the challenge fund approach is probably not the right one to be using. Always focus on the problem and try to test if you have identified the right challenge. Engage as many people as you can to test the challenge and think about the wider system the challenge operates in, the barriers preventing innovation and why has a solution not yet been found. The important thing as the challenge owner is getting the challenge right, leave the solutions to the innovators who will be addressing your challenge.

2. Ensuring the eventual solution has a route to market.

Ensuring the solution has a route to market is one of the biggest issues for any Challenge owner. No matter how good a solution is, if it does not have a route to market, then it is unlikely to come to fruition. It is therefore vital to consider how any potential innovation will either be procured by your own organisation or funded by a partner to become a successful product. It is therefore vital to engage your own procurement teams in the process of designing the challenge and keep them engaged throughout the process to ensure you can procure the eventual solution from the challenge. 

If you are not able to procure the solution internally it is vital to connect with other organisations or businesses who have an interest in the issue, and could be potential procurers of the solution. Considering this early will help you plan for a more effective challenge and importantly ensuring any solution can be adopted and taken to market.

3. Getting the right incentive.

Challenge funds have run as cash prizes, or with a promise of procurement or simply to address a societal issue. Understanding what the barriers are to innovation will help identify the best way to incentivise innovators to address that issue. 

It may be that access to data or key stakeholders has been the main issue. Awareness of the challenge itself could also be a barrier so knowing what has prevented innovation in this space will have a big impact on how you design the incentive to encourage innovation.

Financial support through a research and development process will undoubtedly act as an incentive to innovators. However, having a clear route to market with consideration of how an innovation can be scaled up and procured will be a massive incentive for innovators who know there will be a market for their eventual solution. This is why the framing, messaging and communication of the challenge is crucial to its success. 

There are of course a number of other issues to consider when designing and implementing a successful challenge, and these are outlined in the report. However, if you are thinking of developing a challenge taking these as early considerations will be invaluable.

The key to addressing these common pitfalls is engaging as many people as you can, as early as you can, to ensure you get the challenge right, identify the best incentive and are able to take any solution to market. Although this doesn’t guarantee success, it will certainly help avoid some challenges that have prevented previous challenge-owners from procuring innovative solutions.