What is a great innovation challenge? Building Great Innovation Challenges answers this question along with: - What makes innovation programs fail? - Who is mission critical to innovation challenge program success? - What are the steps to delivering a challenge and engaging the crowd? - How can innovation challenges create value for my organization? - Where can I go to participate in an innovation challenge and try this out?

1. Building Great
Innovation Challenges
John-Michael Scott
Nextinit, LLC
1st Edition

2. Building Great Innovation
Challenges
How to create compelling and engaging
challenges that people want to solve…
!
John-Michael Scott — NextInit, LLC
1st Edition

3. Introduction to Innovation Challenges 4..............
What is an Innovation Challenge 4.......................................................
But - Why Do Innovation Programs Fail 6............................................
Disruptive Innovation: Big Change vs. Small Change 7....................
Where Do We Go From Here? 9...........................................................
The Faces of Innovation 10.....................................
Defining the Core Team 10....................................................................
Innovation Champion 10.......................................................................
Challenge Architect 11...........................................................................
The Best of The Rest 12..........................................................................
The Practice of Innovation 14.................................
The Innovation Journey 14....................................................................
Business Model Canvas 14....................................................................
Lean Canvas 15.......................................................................................
The Main Process 15...............................................................................
Just One More Thing... 19......................................
Wrapping It Up & Putting a Bow on It 19.............................................

4. Introduction to Innovation
Challenges
The Challenge of Innovation Challenges
!
What is an Innovation Challenge
A quick review of Google search results reveals that there are more than 10 pages of news
articles about Innovation Challenges. In fact, a total of 3.5 million results are identified
responding to this search term in the News category. Countless companies, governments,
and non-governmental organizations are launching innovation challenges to solve big

5. problems, to solve little problems, and even to solve problems that no one even knew
needed to be solved.
But - what is an innovation challenge?
Definition
If you look to wikipedia - the encyclopedic definition is actually identified by the terms
“Innovation Competition.” This may actually be more illustrative of what happens during
an Innovation Challenge than the latter term actually implies.
According to the entry, Terwiesch and Ulrich, (Terwiesch, C. and Ulrich, K.T. (2009)
Innovation Tournaments – Creating and Selecting Exceptional Opportunities. Boston:
Harvard Business Press), show how to design and run innovation tournaments: pitting
competing opportunities against one another, and then consistently filtering out the
weakest ones until only those with the highest profit potential remain.
Key Characteristics
Key characteristics come to the foreground in this set of references and definitions as well
as through numerous past experiences across the NextInit team. Based on these
combined learnings, Innovation Challenges (Competitions, Tournaments) include the
following ( broken down by organization need vs. individual motivation)
Organization Need:
• Open presentation of the challenge or problem (the what)
Individual Motivation
• Identification of who the problem or challenge is important to (the who) - motivation
created: I want to impact the stakeholder to benefit my career
An innovation competition [or challenge] … is a form of social engineering,
which focuses [on] the creation and elaboration of the best and sustainable
ideas, coming from the best innovators.
~ Wikipedia, https://en.wikipedia.org/wiki/
Innovation_competition

6. • Identification of the value created by solving the problem or challenge (the why) -
motivation created: I want to impact the organization to benefit my career
• Identification of the value created for the contributor who solves the problem (the
tangible return or reward) - motivation created: I want to receive the stated reward
• Definition of the time constraints during which the challenge is to remain open (the
when) - motivation created: I need to do this now in order to have the opportunity to
receive any reward
Process
• Articulation of the process by which the competition to solve the challenge/problem
takes place (the how)
• Articulation of the means and location by which participants may take part in the
competition to overcome the challenge/problem (the where)
But - Why Do Innovation Programs Fail
Much has been made of efforts to create and sustain innovation programs in recent times.
In program after program, a demonstrable ebb and flow occurs. Participants become
highly involved during significant events, and yet, they fade away from these efforts after
those significant events have occurred. This behavior has in turn led to the
decommissioning of innovation efforts in a number of businesses.
Following a decommissioning of focused innovation efforts, companies fall back into old
patterns of hierarchy and silo. They leave behind the collaborative networked innovation
collectives that they have worked hard and invested significantly to create. Teams return to
the wall, the whiteboard, the brainstorm around the table, the research and development
team and the skunkworks project. Everyone returns to a reliance on the relentless burning
desire of the passionate few to drive ideas forward.
The question is - does the fall down of structured innovation programs reflect a lack of
capacity, a lack of interest, and a lack of value? Or - as seems more likely when cultural
adoption efforts are examined across multiple industries - is the fall down of the
innovation program a reflection of failures of approach? Worse yet, could it be that only
the very few companies have the necessary DNA to make innovation work? Perhaps - or
perhaps not.

7. At NextInit, we posit the idea that the failure of innovation programs is a reflection of
inadequate planning, a silver bullet mentality, a quick fix approach and a challenge in
making long term commitment to the establishment of a new culture. This is in no small
part based on the combined experiences of the NextInit team, but is also born out in the
quoted experiences of companies like Whirlpool which are well documented.
Disruptive Innovation: Big Change vs. Small Change
At NextInit, we believe that there are tactics that any company can employ which directly
contribute to the realization of innovative ideas across a broad spectrum of impact areas
in the organization.
Many innovation programs are taken on as a result of an executive mandate to find new
opportunities for major industry disrupting innovation. At the same time, a substantial
majority of innovation value can be unlocked with smaller yet far reaching impacts.
At a well known national retailer, an innovation challenge was issued by
leadership to identify potential ways to save money in the break room - as
a result of a simple idea submitted by a member of the janitorial staff, the
retailer realized over $4 million dollars in electricity savings.

8. A closer look at the impact of small changes can be expressed in examining the impact of
the App Store when it was introduced by Apple for it’s iPhone devices. Small things were
identified that Apple felt were critical to the success and critical to the user experience
that consumers would have with their iPhones:
• All apps would be easy to install - just pick an app and click install
• All apps would be tested for security and safety by Apple
• All apps would meet certain human factors design criteria
Small ideas at the time, but the impact has proven to be revolutionary and enduring. In
2008, when consumers really began to imagine what a keyboard-less smartphone might
look like - Apple showed the world that small single purpose applications could unlock
great value.
Because Apple committed to evaluating every App, consumers felt reassured that these
Apps were not going to cause harm to their data and to their experience with their device.
Much has been made about Apple’s walled garden approach, but just like AOL many

9. years before, Apple’s walled garden introduced Main Street to the idea that an application
from an unknown company or an unknown developer could create amazing experiences
and still be trusted not to introduce viruses onto the consumer’s device. This was, at the
time, nothing short of game changing. Millions of developers have found the opportunity
to bring their unique creative vision to market as a result.
Where Do We Go From Here?
The question to be asked in defining a corporate innovation program is not “Can my
organization succeed and create value through an innovation program?” but rather “How
can my organization create an innovation program that is successful and creates value?”
This book attempts to answer the second question, relying on the following potential
areas of exploration that any organization may find value through:
!
• Industry disruptions
• Business Model
Disruptions
• Incremental productivity
increases
• Voice of the Employee
• New technologies
• Productivity disruptions
• Incremental revenue
increases
• Incremental culture
improvements
• Voice of the Partner
• Cross-pollination of
Innovation
• Learning disruptions
• Incremental savings
• Voice of the Customer
• Planned cannibalization
!
By looking closely at these potential areas, it becomes much more feasible to conduct
value creating and productive innovation challenges that are a) sustainable, b)
consumable, and c) financially feasible for the organization. So, let’s dive more deeply into
how, now that we have some ideas about what is necessary for creating effective
innovation in the organization.

10. Chapter 1
The Faces of Innovation
Innovation, Inc - The Founder Team
!
Defining the Core Team
Changing the culture of an organization is hard! Leaving a world in which the select few
are regarded as “the innovators” may seem unnecessary or possibly even undesirable.
Recognizing that the most valuable ideas may come from a random employee, a business
partner, a customer or even from an unknown but interested party requires a conscious
act of humility. That said, there are a host of archetypical participants who can have an
enormous impact on the success of the journey to becoming an innovation powerhouse.
Innovation Champion
It seems counterintuitive, but, one of the most critical roles that a program should seek
within their organization is the Innovation Champion archetype. The characteristics that a
great innovation champion has are diverse:
!
• A Beginner’s Mind
• Problem Identification
Skills
• Problem Analysis
Capability
• Creative Synthesis Skills
• Collaboration and
Communication Ability
• Networking Skill
• Articulate
• Visionary
• Passionate
• Motivational
• Coach/Mentor Ability
• Effective Writer
!
The critical advantage that an innovation champion brings to any innovation program is
the a ability to transform nascent ideas into articulate clear and focused concept that
participants, managers and leaders can buy into. The innovation champion holds the
special responsibility to engage idea submitters directly to organize thoughts, build the
pitch and shepherd the work of idea submitters toward potential realization. In any

11. organization, this one role has the potential to change the quality and quantity of ideas in
a way that no other role might. The innovation champion is the relentless instigator and
driver who nudges ideas and those who create them just enough to enable them to have
impact.
In the competition to find the most valuable ideas, nothing can be worse than to
underestimate the potential impact of an idea because that idea has not had the benefit
of clear articulation.
Challenge Architect
Right behind the innovation champion stands the Challenge Architect. The challenge
architect provides the same support to challenge creators that the innovation champion
provides to idea creators. Leading and mentoring challenge creators with their
experience, expertise, communication skills and conscious understanding of what
engages and motivates idea creators to bring their best thoughts to the table.
To Build or To Buy
Across countless innovation challenges, the effectiveness of and outcomes from each
challenge stands and falls at the feet of the challenge architect. Every organization should
ask seriously whether or not the appropriate skill set exists already within or whether an
outside expert should be sought out. Today, years after the first innovation challenges
have taken place, the availability of consulting expertise in this area has grown. Having
said this, it’s important not to underestimate where expertise may lie. On the one hand, it
seems like seeking companies that conduct innovation challenges would be the most
intuitive place to seek the right candidate. This is by no means the only option. You might
find your potential architect in a variety of places, including but not limited to:
!
• Marketing - Internal
• Marketing Agency - External
• Product Management - Internal
• Corporate Communications - Internal
• Innovation Challenge Consulting -
External
• Advertising Agency - External
• PR Agency - External
• Funded Startup CEO - External

12. • Speaker Bureau - External • Innovation System - Internal
!
You may have noticed that the final item in the list is the Innovation System itself. Well, how
would you go about finding a Challenge Architect using the innovation program itself?
What about a challenge to find the most effective challenge architects in the organization?
This isn’t a small ask of our colleagues - we are effectively asking them to tell us what
would motivate them best to stay with us as an organization — to invest themselves and
commit themselves to making the organization more successful. In the process, those
participants who participate and provide the most creative and engaging challenges are
also self-selecting as potential challenge architects themselves.
The Best of The Rest
There are a number of other roles that play a significant part in making innovation
programs effective:
!
• Executive Sponsor
• Innovation Officer
• Innovation Steering
Team
• Challenge Creator
• Idea Creator
• Concept Developer
• Concept Investor
• Entrepreneur/
Intrapreneur
• Startup Team
• Transition Team
• Implementation Team
!
Each of these roles has the potential to create additional value and to give the program
measurable advantages. A few stand out more than others though. The executive sponsor
provides the air cover and organizational commitment to support realization of innovative
ideas. The concept investor provides the actual dollars necessary to launch the new
The Architect Challenge
Tell us your best ideas for challenge questions that will get your
colleagues, managers and leaders excited and motivated to solve
important problems as an organization - in example: how do we create the
world’s best company culture and retain you, our most important resource,
our employees?

13. initiative. The entrepreneur/intrapreneur brings a relentlessness, a visionary attitude and
the get things done capability necessary to overcome obstacles and pivot when necessary
to bring ideas to realization.
!

14. Chapter 2
The Practice of Innovation
Innovation, Inc - The Business Model
!
The Innovation Journey
It all begins - at the beginning. Whether starting a new company or creating a new
opportunity within a company - there is a journey that takes place. Ideas don’t launch fully
formed as world beating companies, products, services and processes. So, what does it
take to get there? There are some great tools available to us today from the
entrepreneurial world.
Business Model Canvas
The business model canvas seeks to examine a new idea in a single slide to show how the
idea can support itself and become a viable moneymaker. Some modification would be
required to align the canvas to fit the “world as organization” ecosystem rather than the
world at large ecosystem. The approach does efficiently convey the main concepts of an
idea and how it should be achieved.

15. !
Lean Canvas
The lean canvas has some overlaps with the business model canvas but with more of an
emphasis on hypothesis testing based on asking questions of the audience for whom the
idea is intended. This approach focuses on validating that the product-consumer fit is well
defined and that there is indeed a reason to solve the problem which the consumer of the
idea finds valuable.
!
The Main Process
The principal lifecycle that is leveraged in the conduct of crowd-based innovation
challenges resembles roughly the following:
Define
Challenges
Plan Event
Launch
Event
Develop Top
Ideas
Deliver MVP
Celebrate &
Award

16. Essentially all challenge efforts go through a similar process of defining, launching,
capturing, developing, implementing and celebrating. This is a common “good practice”
that focuses on creating a closed loop between the originators of innovative ideas and the
recognition of the contribution that they have made.
Define Challenges
The definition activity focuses on creating challenges that meet the following 5 criteria:
1. Open ended question/challenge
2. Question does not result in a yes/no answer
3. No leading questions that imply an answer
4. Focused so that the audience is clear on the key problem area that the challenge is
intended to address
5. Contextualized so that the audience understands the environment in which the
problem occurs
Plan Event
Although systems for innovation management like that provided by us at NextInit allow for
rapid creation and publishing of challenges, in the early experiences of new participants -
the cycle involved in responding to challenges including proposing, evolving, supporting
and investing in ideas is not immediately clear. Additionally, new participants may jump in
to later challenges while not necessarily having participated previously. It becomes critical
that a well articulated and communicated plan for the challenge event be developed and
executed. Planning should include the following major activities:
• Define Launch Date
• Set Challenge Duration
• Identify Challenge Target Audience
• Develop Challenge Long Description
• Develop Communications Plan
• Select Images Relevant to Challenge
• Identify Extrinsic and Intrinsic Rewards
for Participation
• Initiate Teaser Communications
Campaign to Warm & Prepare Audience
for Challenge Launch
!
!

17. Launch Event
Event launch doesn’t finish with the actual arrival and activation of the challenge. Launch
continues with a series of activities designed to support creating the highest challenge
engagement and delivering the most valuable results. Launch should include a series of
semi-formal rounds to help participants to understand what is expected of them
throughout the lifecycle of the challenge:
• Round 1: Idea Brainstorm
• Round 2: Idea Collaboration & Polish
• Round 3: Champion Review
• Round 4: Idea Pitch & Seed Investment
Each round focuses on a specific goal during the launch to enable substantial
participation and to support allowing sufficient time for idea development before the
investment action takes place.
Develop Ideas
After having received initial investment, the top ideas should be re-communicated and
participant should be invited to participate in the development process. This portion of
the innovation lifecycle allows participants to roll up their sleeves and contribute to the
further evolution and growth of the ideas that they feel are most valuable. Activities in this
phase typically include:
• Round 1: Business Model Canvas development
• Round 2: Lean Canvas development
• Round 3: Hypothesis testing & validation
• Round 4: Product-Consumer Fit definition
• Round 5: Business case development
!

18. Deliver MVP
Finally, the tail end of the lifecycle is the delivery or implementation phase. This activity
focuses on attempting to realize the value of the idea. Activities in this phase include:
• Round 1: Build minimum viable product
• Round 2: Early adopter pilot and implementation
• Round 3: Pilot evaluation and product iteration
• Round N: Pilot, evaluate and iterate
Celebrate & Award
Periodically, celebrations and awards should be conducted to motivate continued
engagement in the innovation program. Celebrations should recognize participation,
achievements and outcomes. Awards should include extrinsic and intrinsic reward
categories that demonstrate appreciation for all aspects of participation and achievement.
Don’t limit rewards to the contributor of the best idea - also reward high participation,
best in class efforts, leading impact and other attributable areas where participants have
made a difference to the program.

19. Chapter 3
Just One More Thing...
Wrapping It Up & Putting a Bow on It
So - we've gone through quite a journey in our efforts to build better challenges - but
what's next? Well, let's look back at where we've been.
What is an innovation challenge?
An innovation competition [or challenge] ... is a form of social
engineering, which focuses [on] the creation and elaboration of the
best and sustainable ideas, coming from the best innovators.
Why do innovation programs fail?
Innovation programs fail as a result of inadequate planning, a silver
bullet mentality, a quick fix approach and a challenge in making long
term commitment to the establishment of a new culture.
What different innovation challenges can provide value?
• Industry, Business, Productivity & Learning disruptions
• Cross-pollination of Innovations from other disciplines
• Incremental productivity, revenue, culture and cost-savings
improvements
• Voice of the Customer, Partner and Employee
• Planned cannibalization
• New technology
• and so much more...
Who Makes Innovation Happen?
Key to the establishment of successful innovation programs are the
Innovation Champion, the Challenge Architect and the Executive
Sponsor. Without these roles, the best challenges peter out quickly.
How does it come together?

20. Ideas have their own lifecycle living through concept, seedling,
model, and minimum viable product or service. It is crucial that ideas
have a safe garden in which to grow and flourish before being put into
the crucible of the big picture of profit and loss.
All of this leads to the question - what will your next innovation challenge look like? If
you'd like to see how instituting a formal innovation challenge process into your culture
might help your organization survive & thrive during down business cycles and up
business cycles, contact me at john-michael@nextinit.com and/or create your own
innovation challenge demo to try out at nextinit.com. You have business challenges that
you want to meet, your people know how to meet those challenges - Nextinit gives you
the tools to tap into the wisdom of your crowd.
Define
Challenges
Plan Event
Launch
Event
Develop Top
Ideas
Deliver
MVP
Celebrate &
Award