Technical organizations increasingly rely on innovation contests to find novel ideas for designing complex systems. These activities involve outsiders in the early stages of the design process, leading to ground-breaking designs that often surpass expectations. Here, the contest’s rules document plays a crucial role: this design artifact communicates the organization’s problem and the desired system performance to the participants—significantly impacting the resulting solutions. However, the contest’s nature amplifies the challenges of communicating complex design problems across boundaries. Existing strategies for formulating—i.e., requirement and objective allocation—might not suit this context. We developed an inductive model of their formulation process based on a multiyear field study of five complex innovation contests. We found that a formulation team (or “seeker”) balanced the need to communicate their problem in detail with the risk of excluding valuable participants. Here, they chose among three approaches—incentivize, impose, or subsume—depending on their knowledge of potential solutions and the participants’ capabilities. Notably, the seeker formulated more granularly than the literature describes, employing multiple approaches within each rules document. These findings shed light on a poorly understood aspect of innovation contests, shed new light on a longstanding debate in the engineering design literature, and guide practitioners’ formulation processes.