Challenge Funds have been used to prompt innovation in both the private and the public sector. What makes this an innovative use of the Challenge Fund model is the focus on developing innovations that will be procured by the challenge holder and will stimulate place-based economic activity and bring local wealth benefits. The expectation that the innovation be adopted, procured and scaled up by the challenge holder adds to the motivation to develop a truly useful and innovative product. Furthermore, the anticipation that the innovation will be of economic benefit to the region prompts reflection on how private sector providers might stimulate economic activity in the region. This combination of public (social value) and economic value is comparatively rare in the design of challenge funds and is further made distinctive through the nurturing of a community of practice that has brought in participants from across sectors in the region.

The Cardiff Capital Region Challenge Fund is currently being implemented. The initiative provides funding opportunities for the public sector to resolve problems by developing a challenge that can only be solved by an innovation. These challenges are either responded to reactively as public sector organizations develop proposals and bring them to the team, or are developed in partnership with potential challenge holders. In delivering this project, the Challenge Fund team is managing challenge projects at various stages of development.

The Fund is continuously seeking to identify problems that may be resolved by way of an innovation through communicating with people across the public service, and by building challenge-oriented innovation capabilities. The partnership with the Cardiff University includes a full-time researcher who is actively gathering data in ‘real-time’ to inform the further development of the Fund. Alongside these developments, a midway review of the Fund is underway and discussions about how to extend this ‘mission approach’ across the wider activities of the CCR are taking place.

This Challenge Fund is itself a collaboration between Cardiff University and the Cardiff Capital Region. It brings together the capabilities and networks of public sector leaders and officers with the vision, communication, and network building capacities of the University. Each challenge involves partnering with public sector organisations wanting to find an innovative solution to a problem. Significant collaboration with delivery partners includes the Innovate UK KTN and SBRI CoE.

The fund benefits public services by reducing pressures and supporting public sector employees to develop their innovation skills. The Fund is connected with wider Wales, UK and devolved administration Challenge initiatives to share best practices. It also benefits businesses by supporting the co-production of solutions by public sector procurers working with businesses and developing commercially scaleable innovative products. Citizens benefit from innovations, as they address societal problems.

One challenge has come to a successful completion and the Fund is currently supporting six challenges that are at various stages of progression. The Fund is currently looking at the longer term strategic direction for Mission-driven innovation while simultaneously scoping challenges to target resource towards urgent issues facing local authorities, with major areas of focus being the urgent need for social care innovation and innovation that supports businesses and citizens through the cost of living crisis. Ultimately, the Fund will assess impacts based on regional economic and social benefits and the successful scaling of innovations and will seek details on the economic impact in respect of jobs created or sustained by bringing innovations to the market.

Two cases showcase the collaborative nature of the programme and exemplifies the specifics of the challenges and their delivery. The first addressed the challenge of training for clinical procedures during the pandemic through the application of simulation technologies to develop new training products for medical staff. This was undertaken in conjunction with the Welsh Government and their SBRI Centre of Excellence, and led by Cardiff and Vale University Health Board. Two small businesses were successful with their initial proposals and gained two rounds of funding to develop, prototype and market test innovative products. These are currently undergoing further testing in hospitals in both Wales and England. The second case is a challenge addressing Net Zero issues that was developed in partnership with the UK Government’s Innovate-UK Knowledge Transfer Network. This activity has led to the development of four regionally significant challenges, each led by a local authority with support from the KTN and the CCR/CU Challenge Fund team. These are in process, as are a second challenge with Cardiff & Vale Health Board looking at how innovation can help address waiting times for endoscopy and a major £2.6m investment in a food innovation challenge looking at issues of localising food supply and resilience that is being led by Cardiff and Monmouthshire Councils.

The Challenge Fund has encountered difficulties in developing and progressing challenges. In setting out a challenge and inviting responses from stakeholders in the public sector, the Challenge Fund has encountered issues framing calls for challenge proposals in a way that it could engage interest. There is a significant amount of education and cultural barriers still to overcome. Among the recurring challenges is overcoming the risk aversity of government officers. Despite offering extensive support to managers and organisations, the Fund has found it more difficult to fund projects than anticipated. Converting a Challenge 'idea’ into an investable Challenge ‘Proposition’ which can be taken to the open market is difficult, labour intensive and time consuming. For this reason, the Fund has expanded the number of platforms it uses to support the development of challenge ideas, and challenge based projects, thereby increasing the opportunities for people across the public sector to find ways of accessing the fund.

• The use of a good communication strategy that keeps people across the public sector engaged with the idea of challenge led innovation
• Willingness to support potentially risky project proposals
• The commitment of staff at the Fund to maintain the enthusiasm of people whose proposals have not been successful and to work closely with people whose ideas show potential

This innovation has not yet been replicated elsewhere.

Importance of:

• Simple messaging so stakeholders understand the Challenge proposition, objectives and priorities
• What’s out of scope is as important as what’s in scope
• Don’t underestimate the amount of time and work involved in good challenge design
• Challenge delivery requires a well resourced team effort across multiple organisations
• Funding is an important component of the Challenge jigsaw, but must also have committed forward-looking and open-minded people, an innovation culture with acceptance of risk and an inclusive leadership
• Gather people from different backgrounds to improve challenge design and keep them engaged through peer-to-peer learning during challenge delivery and reflection within a Community of Practitioners.