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Phase 1: Understand

Estimated time – six to nine months

The goal of this phase is to understand, identify and define the specific problem that the challenge will seek to address.

Selecting a Policy Priority

Impact Canada challenges are typically based on policy objectives that support existing government or departmental priorities. These policy priorities may be described in the Federal Budget, Speech from the Throne, Ministerial Mandate Letters or other policy setting instruments. The Impact Canada blog titled “Before and Beyond Solutions: How Can Challenge Prizes Help Advance Broader Policy Objectives” provides further details on how challenges can address high priority policy objectives.

The next step is to identify specific problems (including needs, gaps, barriers and bottlenecks) that are preventing the policy priority from being addressed. A discovery research process, including stakeholder and expert engagement, can help surface potential problems where a challenge could be applied.

Where a Challenge might not be the Optimal Instrument Choice

It is important to note from the outset of the Understand phase that research and engagement efforts could reveal that a challenge approach is not the best method to address the problem you have identified and that other funding approaches (e.g. traditional Grants and Contributions solicitation) may be better suited. In these cases, the information gathered in the Understand phase should feed into the design of an alternative approach.

Common examples where a challenge approach is not the appropriate method include:

  • If the solution to the problem is evident, currently in the market, and/or the best choice for the solution provider is clear;
  • If the primary goal is to provide core funding or build the capacity of an organization to help them meet program objectives over a longer term;
  • If the ultimate objective is to procure a solution for the Government of Canada’s own use;
  • If the subject matter is particularly sensitive for stakeholders and an element of competition would detract from solving the problem; or
  • If there are regulatory or legislative barriers to the uptake of solutions

Discovery Research

It is important to methodically document and pursue a structured and applied research process during the Understand phase. This research will help you move from a broad policy objective (e.g. accelerating clean technology) to specific problems (e.g. use of diesel fuel as a power source, high cost of biojet fuel) that could be addressed through a challenge approach. The research should focus on identifying areas where greater innovation could help address a known market or policy gap by helping to unlock new solutions or make progress or improvements in a defined area.

Doing this work up front can save significant time in later phases, and serves as a foundational set of documents and thinking which leads to more effective implementation and program management. For example, tasks might include an analysis of gaps, barriers and opportunities, a stakeholder analysis, and identification of potential beneficiaries. The questions below can help guide your research.

Government Role

  • What are the government (federal, provincial, territorial, municipal, Indigenous) roles and responsibilities related to addressing this issue?
  • Has the federal government traditionally had a role to play, and is the government in a position to deploy or influence the adoption of potential solutions?
  • Do international governments play a role? Is there opportunity for collaboration or can they influence the adoption of potential solutions?

Other Stakeholders

  • What other stakeholders (e.g. not-for-profit, private, academic) are involved in addressing this issue?
  • Who are the proposed end users or beneficiaries of potential solutions?

Current Approaches and Evidence-base

  • What existing approaches have been taken to address this issue (e.g. investments, programs, policies, taxation, legislation, regulation), and why have these approaches been successful or unsuccessful?
  • What is the assessment of the current evidence-base of “what works” in this issue area? Are there baseline metrics available?

Emerging Approaches and Room for Innovation

  • What are the emerging trends or new insights from research in the issue area?
  • What are the barriers to progress and innovation in the issue area (e.g. legislation, regulation, market, cultural, technical or financial barriers)?
  • Is it likely that these barriers can be addressed or innovation incentivised using a financial lever (e.g. Grants and Contributions, procurement)?
  • Could any of these barriers be addressed specifically by using a challenge-based approach?
  • Who are the current and potential innovators (e.g. new market entrants, novel non-governmental organizations)?
  • What is the state of development (e.g. stage of Research & Development, Technology readiness level of current solutions)?
  • What are the characteristics of the economic environment for the potential innovation (size of market/reach to end user, level of competition, maturity level, barriers to entry, target market)?

Stakeholder Identification and Engagement

Engaging with stakeholders is critical for identifying and understanding the issue and selecting and defining a specific problem that will form the basis of the challenge. In addition to ensuring the relevance and significance of the issue, stakeholders can also confirm that it is feasible and appropriate to seek solutions to the problem using a challenge approach.

It is good practice to develop a stakeholder map to ensure a comprehensive view of all key players implicated. This map will also help to organize stakeholder engagement throughout the challenge process.

There is no magic number of stakeholders to consult. In general, try to speak with as many as possible. At a minimum, you should plan to speak with four key groups: subject matter experts, innovators (in particular, those that you anticipate would participate in a challenge), current program and service providers, and the people/groups who would benefit from solutions to the problem.

Other stakeholders to consider:
  • Other government representatives (provincial/territorial, municipal, Indigenous, international)
  • Business/industry representatives
  • Academic organizations
  • Non-governmental organizations
A variety of engagement approaches can be used:
  • Thought leaders and community leaders
  • Key informant interviews
  • In-person workshops, meetings (note: where possible, leverage existing conferences/workshops to access large gatherings of stakeholders in one sitting)
  • Online engagement processes, including through the Impact Canada platform

From Selecting a Priority to Identifying and Defining the Problem

The importance of problem identification and definition cannot be overstated and is one of the most critical elements of designing a successful challenge. The Impact Canada blog titled “Start Your Prize/Challenge Design by Defining the Problem” provides further details identifying and defining the problem the challenge will address.

Once specific problems have been identified within your policy priority, through research and engagement, each one should be analyzed to determine if it is suitable for a challenge. “Stress testing” each problem can help with this step. Impact Canada adapted a set of criteria developed by Nesta, which includes the following questions:

  • Are solutions to the problem not apparent? Or are current solutions not achieving desired results?
  • Can you define a clear goal (in response to your problem) and see a way to measure and judge whether the goal has been met?
  • Do you think that you could generate the best solutions by opening up the problem solving process to a wider pool of innovators?
  • Do you think a challenge would motivate innovators to participate?
  • Do you think a challenge would accelerate progress?
  • Do you think that potential solutions would be adopted or scaled after the challenge is finished (e.g. mainstreamed into government programming, commercialized via the market)?

Once you have identified a problem suitable for a challenge, having a clear and common understanding of the specific problem itself, as early on in the challenge process as possible, helps to increase the likelihood that the challenge will be able to deliver intended outcomes

Organizational Considerations

When making the decision to develop a challenge, federal partners should consider whether their operational context sets the right conditions to support the successful delivery of a challenge.

Running a challenge is not a “do on the side of your desk” exercise and requires an all hands on deck approach in order to be successful. Important considerations include policy/program parameters (e.g. authorities), budget requirements, buy-in from senior leaders and corporate services, organizational capacity, data and measurement needs, and timing.

Example of Problem Identification

Drug Checking Technology Challenge

Health Canada is the lead for opioid response in Canada, and Canada is in the midst of an opioid crisis. Fentanyl has effectively poisoned the supply of opioid drugs in Canada, and is responsible for the majority of overdose deaths in Canada. Drug checking is a harm reduction strategy that allows users to know the composition of a drug in order to take actions to reduce harm from use.

The majority of technology development in this area is for the purpose of drug enforcement, and geared toward first responders and other authorities. While there is some indication that drug checking could be a more effective way to reduce harm and save lives, the current state of technology is not affordable, portable or easy to use – meaning that it cannot meet the need for people who use drugs. Through research and consultations, Health Canada determined drug checking as a problem to be addressed through a challenge approach.