What is Challenge Led Innovation?

In an era of unprecedented change and mounting environmental pressures, the UK water sector faces a critical imperative: to innovate boldly and strategically. Challenge-led innovation is a powerful approach—one that aligns with the sector's unique challenges and opportunities.

Understanding Challenge-Led Innovation

The UK water industry operates within a complex ecosystem, balancing regulatory requirements, customer expectations, and environmental stewardship. As the current headlines suggest, this is not easy and innovative solutions can help manage the risks efficiently.

Challenge-led innovation recognizes that solutions must be tailored to specific problems rather than generic improvements. The important point here is that it is a lot easier for innovators to pitch a solution to solve a specific problem than purely try and sell the benefits against ill-defined sector wide issues.

Defining Challenge-Led Innovation:

It involves identifying key challenges faced by the water sector, providing sufficient context, data and examples to allow non-subject matter experts to identify viable innovative solutions and then mobilising innovation efforts to address them.

These challenges can span diverse areas: climate change resilience, affordability, customer service, infrastructure maintenance, and sustainability. The most important part is providing sufficient detail so that new innovators or new to sector organisations can effectively solve the challenge without having to have incumbent knowledge.

The Water2050 Innovation strategy (currently being updated by Spring ) gives high level challenges across seven themes. It does not provide the company level of challenge detail that is necessary for an innovator to know the precise issues that if solved by the innovation will be significant.

Key Principles:

Problem-Centric Approach: Rather than seeking innovation for its own sake, it focuses on solving real-world problems. I use Design Thinking regularly in workshops to help teams work from a problem and people first viewpoint to maximise an opportunity.

Collaboration: Engage stakeholders across the sector—companies, regulators, researchers, and customers—to co-create the challenges and then redefine the teams to develop the solutions.

Long-Term Impact: Prioritize innovations that yield lasting benefits, not just short-term gains.

Examples of Challenge-Led Innovation

1. Network Rail have identified 120+ Challenge statements that give details on specific issues across their business and assets. When submitting an innovation idea to NR you have to include which challenge statement you are contributing towards solving.

2. The Nuclear sector has GameChangers run by FIS360 Ltd which puts out specific challenges (plus an always open challenge) to needs for the nuclear industry. The best entrants are then supported to scale both in the nuclear sector and more widely, if applicable.

3. Transport for London run a series of open challenges - looking at customer experience, efficiency and productivity, and sustainability/decarbonisation. They provide data and materials for each specific challenge.

Collaborative Path Forward

Innovation thrives when companies collaborate, share knowledge on the challenges they face, and learn from each other. Water companies, regulators, and partners have to continue to develop and build an open and trusting ecosystem to drive meaningful change. We need the water companies and the Ofwat fund to improve how they communicate and share their challenges so that the innovators can better solve the problems. Otherwise innovation will continue to be siloed to organisations that already have the access and expertise.

Ofwat Fund Consultation

The consultation is open until the end of April here. If you are an innovator, startup, scale up or new to the water sector you may want to join the Water Innovator Alliance. We are producing an innovators combined response to influence the future of the fund.