Open Innovation Webinar · Recap · June 25, 2026
How to define the right innovation challenge
Most startup-corporate collaborations fail long before the first pilot, because the company asked for a solution instead of defining the problem. In our June Open Innovation Webinar, Yaron Flint showed how to turn a vague wish into a challenge that external innovation can actually solve.
Yaron Flint
Former VP Global Technology Validation and Sourcing at Stanley Black & Decker, previously head of Israel and Singapore operations at Continental. Author of Innovative Business Development: Implementing Transformation from Within.
The short version
- Don't ask for solutions. Define the outcome you need, then let startups show how they would get you there.
- External innovation works in three phases: define the challenge, look outside, then onboard what works. Most failures start in phase one.
- Watch for want-vs-need traps, like asking for a familiar solution or letting one stakeholder define the need.
- A five-step framework helps: identify stakeholders and workflows, analyze operations, frame the problem, prioritize by impact and align ownership.
Why external innovation is no longer optional
Yaron started with how products are changing. Hardware is turning into software-driven products that are smarter, more personalized, more complex and more data-driven. No single company has all the know-how that takes. As Sun Microsystems co-founder Bill Joy put it, most of the smartest people work for someone else.
Companies can innovate in two ways. Internally, through design thinking, experiments, rapid prototyping and better operations. Or externally, through market research, partnerships, technology scouting, knowledge transfer and the venture client model. Yaron's view: as products fragment, the external route stops being a nice extra and becomes a requirement.
The gap between priority and readiness
Yaron pointed to BCG's 2024 Global Innovation Survey. 83% of companies rank innovation among their top three priorities, yet the share that says it's ready to deliver on it has dropped sharply since 2022, to 3%.
The same gap shows up in startup collaborations. By Yaron's count, more than 80% of startup-corporate collaborations fail. The reasons he listed are mostly internal:
- "Not invented here" thinking and a fear of working with outsiders
- Little trust or open communication between the corporate team and the startup
- Different ideas of timing and availability, and a gap in maturity
- Treating a startup like a regular vendor
- Short-term thinking focused on ROI, frequent restructuring and losing the internal champion
- Putting the wrong person in charge, and a lack of leadership commitment
Three phases of external innovation
Yaron described a structured path with three phases:
1Internal assessment: define the right challenges
Before anyone scouts a startup, the company needs to know which problem it wants to solve and why it matters. This is where most programs go wrong, so the rest of this recap focuses on it.
2Look outside: from startup scouting to technology scouting
Yaron's point is to scout for technologies that solve the problem, not just for startups. Useful inputs are the competitive landscape, emerging trends, know-how from other industries, customer requests, innovation hubs and VCs, and colleagues across a global group.
3Onboarding: bring what works into the organization
The path from need to integration runs through several stages:
A few rules keep it moving. Focus the needs assessment on the most urgent needs. Treat the PoC as a go/no-go decision and a first filter, and judge potential rather than an exact fit. Plan an adaptation phase, because startups rarely fit corporate requirements out of the box. And only onboard a startup as a regular vendor once its technology has shown real potential.
Why defining a challenge is harder than it looks
Yaron quoted Peter Drucker: "The customer rarely buys what the business thinks it sells him." Teams tend to get the challenge wrong in six ways:
- Taking the current state as a given
- Not looking at the big picture
- Not understanding what customers actually need
- Confusing customer requests with your own assumptions
- Ignoring market trends
- Focusing on the solution you can see instead of the problem you face
Want vs. need: nine traps to avoid
Don't ask for solutions. Define the outcome.
That was Yaron's main message. A team that asks a startup for a specific tool has already narrowed the answer. A team that describes the outcome leaves room for something better. The traps he sees most often:
- Over-optimizing the product
- Solving only part of the problem
- Confusing a solution category with the real requirement
- Treating symptoms instead of root causes
- Designing for internal convenience, not user value
- Chasing speed over sustainability
- Equating control with outcomes
- Defaulting to familiar solutions
- Letting one stakeholder define the need
A five-step framework for defining the challenge
Start with the people and the workflows the problem touches. Look at how operations actually run and where the patterns break. Then frame the problem as an outcome, not as a tool. Rank the problems by their impact on the business, and make sure each one has an owner in the business who will act on the result.
That last step is where the June and October sessions connect. In our October webinar, Peter Borchers built on it: a challenge with a named owner should also come with a kill criterion that the owner agrees to before the work starts.
From strategy to execution
Yaron closed with how to get going. Know your core business. Focus on real pain points. Start with small projects, small budgets and small wins. Then keep it moving with persistence, a willingness to disrupt yourself and success stories you can show internally. The loop in the middle stays the same: test, learn, improve.
Questions about defining innovation challenges
What is an innovation challenge?
A clearly framed business problem that a company wants to solve with outside help, such as startups or new technology. A good one describes the outcome the business needs, not the solution it has in mind, and has an owner in the business.
How do you define the right innovation challenge?
Yaron Flint suggests five steps: identify the stakeholders and workflows involved, analyze how operations run today, frame the problem as an outcome, prioritize problems by impact and align ownership in the business.
Why do startup-corporate collaborations fail?
Most reasons are internal: "not invented here" thinking, a poorly defined challenge, treating startups like regular vendors, short-term ROI pressure, losing the internal champion and a lack of leadership commitment.
What is the difference between internal and external innovation?
Internal innovation builds on the company's own process, like design thinking, experiments and prototyping. External innovation brings in outside know-how through partnerships, technology scouting, knowledge transfer and the venture client model.
What is a want-vs-need trap?
Asking for the solution you want instead of the outcome you need. Examples are defaulting to familiar solutions, treating symptoms instead of root causes or letting a single stakeholder define the need.
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