Due to rapidly changing customer needs, enterprises seek to innovate continuously. Incumbent firms need to improve their capabilities to develop, evaluate, and implement digital innovations. Recently, many enterprises established digital innovation units (DIUs) for accelerating their digital innovation endeavors. Although numerous units exist in practice, the number of negative press headlines that address failure or dissolution of DIUs is increasing. Based on a literature review and a qualitative cross-industry study with eleven enterprises, we discuss the relation of DIUs to organizational concepts like ambidexterity, bimodal, and trimodal IT. Furthermore, we substantiated seven multifaceted challenges of DIUs, which span across stages of innovation development, organizational units, and hierarchical levels. Based on these findings, we developed three recommendations for responses to these challenges: (1) DIU-Business-IT collaboration across stages, (2) network of executive responsibilities, and (3) general digital awareness of the organization as a whole.