Most corporate innovation programs don’t fail at execution; they fail at the question.
A corporate launches a startup challenge, scouts hundreds of companies, and runs a glossy demo day. Twelve months later: no pilot, no business impact, and an innovation team struggling to justify next year’s budget. The startups were good. The technology was real. The problem? The challenge itself was never properly defined.
Below is my honest attempt to make the process smoother and more effective, and what we have seen in the last few years works best.
Why Defining a Challenge Is Harder Than It Looks
Defining an innovation challenge may sound simple, but it’s widely recognized within innovation teams as one of the hardest parts of the process. Corporates typically fall into one of three traps:
- Too broad. “We’re looking for AI solutions” attracts everyone and fits no one. You drown in irrelevant applications, and your business units disengage.
- Too narrow. “We need a sensor with exactly these 14 specifications” isn’t a challenge; it’s a procurement order. You’ve already prescribed the solution and closed the door on approaches you haven’t imagined.
- Nobody owns it. The innovation team wrote the challenge, but no business unit has committed budget, people, or a pathway to pilot. Even a perfect startup match dies in the handover.
Underneath all three sits the same root cause: corporates start from their technology gaps instead of their business problems.
Four Frameworks That Actually Help
The good news: you don’t need to invent a methodology. Decades of innovation literature converge on a handful of frameworks, and they work best in sequence: diagnose the real problem, frame it around the customer, write the question, then balance the portfolio.
1. Root Cause Analysis (the 5 Whys), to find the real problem. Most corporate challenges describe symptoms, not problems. “Our maintenance costs are too high” is a symptom. Ask why five times and you might land on “we only detect equipment failure after it happens.” That’s a problem a startup can solve. Made famous by Toyota, the 5 Whys is the cheapest insurance against launching a challenge around the wrong question. Do this with the business unit before writing anything.
2. Jobs-to-be-Done, to frame around the customer. Clayton Christensen’s framework flips the starting point: don’t ask “what technology do we need?”, ask “what job is our customer struggling to get done?” As marketing professor Theodore Levitt put it, people don’t want a quarter-inch drill, they want a quarter-inch hole. A logistics company doesn’t need “route optimization software”, it needs to cut the delivery failures that cost margin and customers. Framing challenges around the job opens the field to solutions you’d never have specified.
3. How Might We, to write the question. Popularized by IDEO and design thinking, this is more than a phrasing trick. The full formula carries three parts: How might we [solve a human-centered problem] by [direction] so that [measurable outcome]? “How might we” signals that multiple solutions are welcome. The “by” gives startups direction without prescribing the answer. The “so that” tells them what success means. Then apply the Goldilocks test: if ten radically different startups could credibly respond and you’d be curious about each, your scope is right. If only one type of company qualifies, you’ve written a tender. If any company on earth qualifies, you’ve written a wish. And beware the classic trap: never use HMW to thinly veil a solution you’ve already decided on.
4. Three Horizons, to balance the portfolio. McKinsey’s framework maps your challenges across three horizons: optimizing today’s core business (H1), extending into adjacent markets and models (H2), and building tomorrow’s business units (H3). Most corporates over-index on H1 because it’s easiest to justify internally, then wonder why their innovation program never produces anything transformational. A healthy challenge portfolio deliberately mixes all three. The growth lives in H2 and H3.
What a Great Challenge Brief Always Contains
Before any challenge goes out the door, it needs five things:
- A named problem owner in a business unit, not just an innovation manager
- Committed pilot budget and a defined path from proof-of-concept to deployment
- Measurable success criteria: what does “this worked” look like in numbers?
- Context, constraints, and what you’ve already tried: your systems, regulations, and past attempts, so startups can self-select and skip dead ends
- A realistic timeline that respects startup runway. Six months of corporate decision-making kills deals.
If you can’t fill in all five, the challenge isn’t ready. Fix that first.
Why This Matters More Than Ever for European Corporates
Getting challenge definition right isn’t an innovation-theater exercise. It’s the entry ticket to an open innovation strategy that actually compounds.
European corporates face a squeeze from both sides: US and Asian competitors moving faster, and disruption cycles getting shorter in energy, mobility, manufacturing, and health. No internal R&D department, however good, can cover every front alone.
Corporates that run sharp, well-defined challenges consistently unlock what internal R&D can’t deliver on its own:
- Speed. Piloting with a startup compresses years of internal development into months.
- New business units. Today’s H3 challenge is tomorrow’s revenue line. Some of the best corporate ventures started as a well-framed challenge.
- Access to high-growth markets. Startups are already operating where growth is, from climate tech to AI infrastructure. Challenges are your bridge in.
- Competitive resilience. A steady pipeline of startup collaborations means you see disruption coming, because you’re partnering with it.
The corporates winning at open innovation aren’t the ones running the most challenges. They’re the ones asking the best questions.
Ready to Define Yours?
None of this is rocket science, but it does take discipline, and often an outside perspective. The hardest part is rarely the framework itself. It’s asking business units the uncomfortable questions, building enough internal momentum, and holding the line on scope until the challenge is genuinely ready.
That’s the work we do alongside corporate innovation teams every day. And when a challenge is ready, we publish it on our matchmaking platform at no cost, where Europe’s most innovative startups can find it and respond.
If you’re working on defining your next innovation challenge and want a sparring partner, get in touch with me at [email protected]. I would be glad to share what we have learned.
