News – Blog
Five things we’ve learned about running city-based open innovation challenges
11 March 2022
Cities and open innovation challenges
Cities are increasingly using open innovation challenges to solve problems, grow local industries, open up new avenues of collaboration, and unlock broader systems change. In this blog, we share what we’ve learnt from running challenge prizes with cities.
Cities will be home to two out of every three people on the planet by 2050, and nearly 9 out of every 10 people by the start of the next century. Cities are particularly vulnerable to climate change, facing risks from extreme weather events and natural disasters, and are contending with significant social and economic inequalities, a shortage of affordable housing and the pressure to deliver services and infrastructure to support burgeoning populations while meeting net zero ambitions.
A new innovative approach to problems
To create better outcomes for the communities they serve, city leaders are increasingly exploring mission-oriented innovation methods. More and more, we are hearing from cities seeking support to align activities around a mission and guidance in applying new methods to solve problems.
For example, how can the city of Curitiba create zero carbon neighbourhoods that build on historic urban infrastructure and character and create green jobs?
How can Lambeth council in south London visualise air quality levels and test the efficacy of planned interventions to improve the health of vulnerable residents?
The city of Bristol aims to develop 24,000 new affordable homes by 2050, yet the built environment contributes around 40% of the UK’s total carbon footprint. How can they work with developers, financiers and the construction industry to provide affordable, carbon neutral homes to meet this need?
Harnessing innovation potential
City-based open innovation challenges are an increasingly popular way to help local communities solve problems. They draw on the philosophy that “good ideas can come from anywhere” and open up avenues of collaboration that aren’t typically found in local government procurement processes.
Open innovation challenges, as we run them, use an outcomes-based funding model to drive mission-oriented innovation, through an open and competitive process. Run in partnership with cities, challenges harness innovation potential around a particular mission of importance to the city.
Attracting innovation
They typically start with an open call to innovators (which can be startups, established businesses, charities, social enterprises and so on). The most promising entrants are then invited to develop, test and scale solutions, usually in collaboration or with input from local officials, civil servants, the third-sector, representatives from the public, regulators, investors and other relevant stakeholders, and usually with a bit of funding to support this work. Those that are most successful win the most funding and benefit from public recognition, and tend to go on to build their business and customer base. Depending on their business model, the customer may be the city government itself.
Using our experience to deliver successful challenges
At Challenge Works we have helped to deliver a series of city-based challenges in the past decade. Last year, we ran the London Mayor’s Resilience Fund, a collaboration with local authorities and agencies in London to create local challenge prizes, addressing things like renewable energy production, mental health support and regeneration on the high street. Integral to each challenge was a co-creation process wherein the top innovators worked with the problem owners and people who would benefit from the solution (eg, people with lived experience or high street business owners) to ensure that the solutions developed would genuinely improve their situations. The challenge topics and criteria for choosing the winners were designed to reward teams that could demonstrate that their solutions had potential to scale.
In the Climate Smart Cities Challenge, an open innovation competition to accelerate the shift to climate neutral cities, we’ve worked with UN-Habitat and Viable Cities (and a host of other impressive colleagues) to design four challenges in partnership with cities. The challenges aims to reduce the climate impact of the freight industry in Bogotá, Colombia; scale affordable, carbon-neutral home development in Bristol, United Kingdom; integrate waste, mobility and energy solutions to create zero-carbon neighbourhoods in Curitiba, Brazil; and create green, affordable homes in Makindye Ssabagabo, Uganda.
A tailored approach
We worked with each city to define the challenges, and then invited innovators to work with these cities to create solutions that can ultimately bring about the systemic change needed to get to net zero. This kind of approach is helping cities reinvent the way they innovate, giving them experience of open innovation processes with a range of different local and international innovators that may not otherwise participate in city processes.
In partnership with the Greater London Authority, we’ve also interviewed cities around the world who have delivered similar open innovation competitions, and we’re currently advising a set of city-regions in Northern Ireland looking to do the same.
Five lessons we have learned so far
-
1. Challenges offer new ways for cities to work with the private sector
Cities tend to develop challenge funds not only to solve problems or advance progress in a particular mission, but also to develop local innovation ecosystems and boost local and regional productivity.
A challenge fund, particularly focused around a cross-sectoral mission like climate, stimulates local governments to find new ways of working internally and rely on more agile working techniques, but also prompts local authorities to engage with the private sector and innovation community differently.
For example, the co-creation phase of the Mayor’s Resilience Fund enabled the finalist teams to work closely with local agencies to solve problems in a short-time frame. In Cardiff, the Capital Region Challenge Fund focused particularly on supporting local wealth creation and providing support to local innovators. City-based challenges also provide opportunities for innovators to test or demonstrate new products or services in a real world setting.
-
2. Challenges enable cities to engage diverse cohorts of actors
A central tenet of successful challenges is engaging a broad spectrum of actors: from city departments and bodies, entrepreneurs and start-ups, to more established industry players, to the third sector, government, regulators and especially, residents of the city. Early and frequent engagement of end users and beneficiaries, particularly people with lived experience or those experiencing the “impacts” of the current problem is crucial to achieving transformational change.
In the Mayor’s Resilience Fund, the council-based problem holders supported the finalists by providing links to stakeholders and end users to help shape the services or products being developed. The NYCx Challenges team created Co-Lab challenges to enable local communities to articulate challenges locally and then work with innovators to solve them, with a heavy emphasis on community input. Co-creation among the finalists, the City of Helsinki, and energy companies was also an important part of the solution development in the Helsinki Energy Challenge.
-
3. Challenges offer an opportunity for cities to unlock broader systems change
Every city has its own unique set of complex issues, and a single challenge fund or competition will not be able to solve all of them. One strength of the method is that it can spark a new or increased focus on a certain problem area, and thus can crowdsource actors and stakeholders into the space to pull other levers and ultimately shape policy development and emerging industries.
While a challenge or mission focuses on one problem (or a fund made up of challenges each focusing on one problem), these fit into a bigger picture and can often help to unlock broader activity. Picking that mission/focus/topic is therefore important and needs to be done carefully, in consultation with all the right actors.
For example, in Flying High, we fostered collaboration among cities, technologists, government, the CAA, the NHS, fire and emergency services, TfL and many others, to answer the question of if and how drones could be used in cities to transport urgent medical products or respond to emergency events. The outcome was an alignment among a broad group of organisations that might ordinarily never have a reason to cross paths.
Challenges that cut across sectors and government agencies offer a platform for actors within and outside government to develop system demonstrators, a way to bring together a portfolio of innovations to achieve multiple, large-scale and transformative outcomes. The Climate Smart Cities Challenge will be doing just this with the four cities participating in the challenge in 2023.
-
4. Both financial incentives and other types of support will interest innovators
At their most basic form, challenges are about giving money as rewards to people or organisations that meet a clear goal. For example, $100 million for pulling carbon out of the atmosphere, or £8 million for developing an affordable, accurate, fast and easy-to-use test for bacterial infections. Helsinki offered €1 million for decarbonising the heating of Helsinki. Barcelona’s BCN | Open Challenge approached the funding a bit differently: rather than award no-strings-attached prize money, winning applicants then had the opportunity to negotiate with relevant city agencies to procure their solutions in contracts of up to €250,000.
Financial rewards attract attention and motivate entrants. But we’ve also found that particularly in city-based challenges, direct access to city decision-makers, the chance to meet with stakeholders and end users, permission to test or demonstrate a product or solution in the public realm are equally compelling to prospective entrants. In the Mayor’s Resilience Fund, finalists received modest grants, but the collaboration with problem holders, and support with product development, ended up being higher value.
Pathways to procurement present longer-term benefits, but can be a difficult nut to crack.In the cases of Barcelona or CivTech in Scotland, procurement by government agencies was an important objective. For others, such as Melbourne’s Open Innovation Competition, generating private sector investment for the winners was a higher priority.
-
5. There’s still a lot to learn
Each city we’ve worked with or spoken to has approached open innovation competitions slightly differently: it’s still an emerging field with lots of different approaches. Some have worked better than others, but all provide lessons for what to do better next time.
Short-term impacts of innovations on a city population or environment or policy landscape are difficult to track, an inherent frustration of the field. But building evaluation and impact analysis into the design of challenges to capture opportunities to evolve policy approaches and foster investment opportunities for future actions are crucial. And upskilling to support people and teams working in local governments to deliver mission-oriented innovation, via challenge funds as well as other methods, is needed.
