How Challenge-Driven Innovation Works

Organizations have no shortage of general ideas and suggestions on how to improve. For example, “how can we improve customer satisfaction?” or “how to help our employees feel more motivated?” are general questions and challenges every company faces and is already aware of. You don’t need to launch an innovation management campaign that poses general questions to obtain general feedback.

What organizations struggle with is a systematic process for identifying specific problems and opportunities, screening and prioritizing them, formulating them into challenges, and having the right diverse targeted group of participants collaborate on finding and developing the most creative and effective solutions.

Challenge-Driven Innovation (CDI) consists of a set of processes, business rules, workflows, tools and principles that offer a diversity-based crowdsourced innovation framework and methodology to identify specifically targeted problem areas and opportunities and to develop actionable solutions for them.

Information systems and Collaboration Tools

Challenge-Driven Innovation

Organizations use a variety of information systems and collaboration tools today:

  • Idea management systems, also known as a suggestion box, are an online system for capturing and evaluating ideas. Yet most organizations have no shortage of ideas, rather, they lack solutions to specific challenges.
  • Social network and collaboration tools provide an easy way for people to discuss and collaborate without the limitation of any imposed structure. But these tools fall short when you want structure and focus on a specific problem or opportunity.
  • Workflow management platforms enforce a process with designated roles, stage gates and checks along the way. Workflow engines are ideal for the automation of prescriptive operational tasks and functions but are, at their very core, designed to engender uniformity and reward procedural work execution – processes that are often not conducive to innovation.

These tools, as standalone applications, are not designed to address the challenges organizations face in their quest to constantly innovate in this hyper competitive world. This is where Challenge-Driven Innovation excels by offering a challenge-driven, crowdsourced, diversity-based, workflow-managed framework and methodology that leads to finding much sought after solutions addressing the distinct and specific obstacle the organization is confronting.

A Challenge-Driven Innovation solution is designed to combine these concepts all into one – a single unified information system. Challenge-Driven Innovation is a workflow tool (configurable idea submission, evaluation and approval workflows and forms). It is also a collaboration tool (information sharing, employee engagement, conversations, and rewards) and an idea management tool (idea voting/rating, merging, and screening). An enterprise Challenge-Driven Innovation solution integrates with best of breed collaboration tools to capture conversations and collaboration where they occur, in any unstructured environment – to build on that valuable source of insight and information by incorporating this information into Challenge-Driven Innovation ’s data management as well as idea development methodology and work processes.

Challenge-Driven Innovation Process

Challenge-Driven Innovation Process

Challenge-driven Innovation (CDI) centers the entire innovation activity around carefully formulated challenge statements designed to target a diverse group of individuals that are a cross section of the organization’s community of employees/staff, customers, suppliers/partner, or even members of the public (target audience). Challenge-driven Innovation also ensures that reward and recognition systems are designed to motivate and engage the individuals that are part of the target audience.

Follow this 7-step process to achieve Challenge-Driven Innovation Management:

  1. Identify Key Focus Areas
  2. Define the Community For Focus Areas
  3. Design a Community-Specific Reward System
  4. Formulate an Effective Challenge Statement
  5. Designate a Challenge Owner
  6. Promote the Challenge
  7. Measure Engagement and Innovation Results

1. Identify Key Focus Areas for Challenge-Driven Innovation

Challenge-Driven Innovation Focus Areas

To identify the best innovation opportunities you have to look at the full spectrum of customer interactions and the entire product or service delivery chain. Many companies see innovation as an investment in product improvements that their end-users need and want. But many valuable opportunities may exist in different parts of the organization, other customer interactions and business functions that are not directly related to the product development, feature set or the company’s core service offering.

The process of identifying key focus areas must be structured and a scheduled activity that is repeated at least once every calendar quarter. Here is a chart that shows how you can identify key focus areas.

Challenge-Driven Innovation Focus Areas

  1. Customer feedback: Customers provide you with feedback in surveys and service reports. This feedback can be an initial source of potential focus areas. For example, a customer states that “The process of upgrading to a new version is error-prone and cumbersome”. You can use that statement as the basis of a challenge: “how to improve the upgrade process” (this challenge statement must be reformulated – see Effective Challenge Statements section).
  2. Partners and suppliers feedback: Your suppliers and partners often have a vested interest in your success. Seeking their feedback may highlight service delivery or business model inefficiencies and hidden costs you were not aware of that can potentially be used as a focus area.
  3. Research by analysts and thought leaders: Learn about any direct and indirect threats and industry trends that can affect your industry/organization. This information can offer prime opportunities for finding new focus areas. Researchers and experts from universities, incubators and accelerators which are more and more connected into a global collaborative network can also bring fresh thinking as it relates to trends, transformative technologies and concepts, and what drives millennials, younger generations, or startups.
  4. Your organization’s internal opinions: Your executives, stakeholders and workers at all levels of the organization can contribute their opinions as to which areas of your business model or value chain require improvements and innovation investments.

Once you have collected and reviewed feedback and content from all sources, you will most likely find that the best focus areas are often based on coincidental information that was obtained from multiple sources. If you are hearing the same or similar recommendations from thought leaders, your customers, suppliers and also from your own team members, you know you have a high potential innovation target.

Identifying the best focus areas can itself be a question you ask your community. Let the target audience, the people who will actually participate, determine what the focus area should be – see the section on Challenge Examples for some actual examples Planbox customers used in idea contest that may be helpful and inspirational.

2. Define the Community For Focus Areas

Challenge-Driven Community For Focus Areas

Selecting a diverse group of employees, customers and suppliers (referred to as a Community – also known as your Target Audience or Participant Channel) to tackle the focus areas where innovation is needed, is central to Challenge-driven Innovation. A diverse group that consists of people from different backgrounds, life experiences, areas of expertise and interests working on a challenge that is relevant to them and they care about is more likely to result in sparks of creativity and finding new solutions.

3. Design a Community-Specific Reward System

Challenge-Driven Innovation Community-Specific Reward System

Every challenge is a different mission and may require a different set of participants. Therefore, how you reward participants and contributors has to align with what motivates them, what you expect in terms of their involvement, the urgency and importance of finding a solution, as well as the required level of creativity or complexity. Since the target audience you select should also vary by challenge, the diversity elements that were used to select the audience, should factor into the reward system design.

For information on how to design a reward system, please refer to the Planbox guide How to Gamify Innovation. that can be downloaded from http://planbox.com/resources.

4. Formulate an Effective Challenge Statement

Effective Challenge Statement

Peter Drucker’s SMART problem definition can serve as an effective method for good challenge formulation. Here is a variation of the method we refer to as SMARTIE we have employed in the context of innovation management. A challenge must be:

  • Specific: a challenge must have a clearly-defined goal that cannot be misunderstood. “Improve Customer Satisfaction” is a general challenge that may be misinterpreted but “Improve Customer Satisfaction by Reducing Wait Times When Requesting Support” is a clear and specific goal.
  • Measurable: a challenge must have measurable concrete goals (units, percents, etc.). It should be easy to determine whether the goal was achieved when the challenge ends. For example, “Improve Customer Satisfaction” is not a measurable challenge. “Reduce Average Customer Support Response Times by 25%” is a measurable goal.
  • Achievable: A challenge must be solvable. Impractical goals de-motivate participants. For example: “Develop a new offering that helps us win over all of the customers of all of our competitors” is not a practical or plausible goal.
  • Relevant or Result-Oriented: Participants must understand why they should contribute to find a solution to this challenge. For example: “Reduce Average Customer Support Response Times by 25%” does not explain why longer response times can be a problem. The statement “Reduce Average Customer Support Response Times by 25% because it will increase customer renewal rates” better explains the expected result.
  • Time-bound: There must be a deadline to find solutions for the challenge.
  • Intriguing or Interesting: provide an opportunity for participants to learn, discover experiment with new concepts or technologies. Showing people that they can explore the unchartered, “where no man has gone before”, inspires and excites them into action. For example: “Reduce Customer Support Response Times” sounds boring and ordinary. You could instead state “Reduce Customer Support Response Times by Finding a New Method or Applying New Technologies”
  • Emotional: for a good challenge statement you should have an emotional appeal. For example: “Reduce Customer Support Response Times” has no emotional appeal. The revised statement “Reduce Customer Support Response Times so We Have a Larger Budget to Contribute to the Charitable Causes You Care About” makes an emotional appeal to the participant to engage and take action.

5. Designate a Challenge Owner

Challenge Owner

The challenge owner should be the person or persons who have the most vested interest in seeing that the Challenge is solved. The challenge owner(s) should have a budget to find solutions, define the evaluation criteria, select evaluators, and make whatever changes are needed to encourage participation and collaboration, and most importantly results.

Having a designated challenge owner for every challenge, allocating resources for this person to manage, and attempting to create some form of competition between past and present challenge owners creates the positive competitive energy you need to increase the chance of having more successful challenge-driven innovation outcomes.

6. Promote the Challenge

Promote the Challenge

For innovation to occur on a regular basis, creativity, outside the box thinking and taking chances on new ideas has to be part of everyday deliverables, and a part of how performance is measured for everyone in the organization. If you have to do a lot of work to promote your new challenge but it feels like you are fighting an uphill unwinnable battle then you know the organization’s culture is not ready to adopt innovation as a business as usual activity. However, there are best practices and guideline to follow to maximize user engagement.  For more information please see: Guide to Communicating Your Innovation Program.

7. Measure Engagement and Innovation Results

Measure Engagement and Innovation Results

When it comes to investing in innovation, you get what you measure. To assess results both success and failure should be viewed as wins and celebrated – failure is a necessary condition to any eventual progress. Only inaction and lack of engagement should be challenged and questioned. You should measure user engagement (such as number views and comments), innovation activity (such as voting, evaluation and idea development) and innovation outcome results (such as concepts that were transformed into projects, new inventions, cost savings, or other measurable results).


To learn how to formulate a challenge statement, target the right community, offer optimal rewards to encourage participation, the best way to promote the challenge, which innovation metrics to measure, and for more in-depth examples please download the Guide to Challenge-Driven Innovation.

2018-01-08T15:58:05+00:00May 8th, 2017|Blog|