We know we have to do things differently to achieve the Sustainable Development Goals. We need new ways of seeing old problems, new skills and methods to direct the technological whirlwind disrupting societies and new ways to muster political will to make hard decisions that challenge old orthodoxies.
There is a paradox here: At a time when innovation is creating destabilizing change, the key to future stability lies in our ability to effectively harness innovation. But what does that look like?
Most innovations are spread through traditional commercial channels where one company either develops or purchases the intellectual property or product of another. Commercializing and scaling new products, particularly in the tech sector, has been the driving force in 21st century economic growth. It has improved living standards in many parts of the world, but simultaneously produced growing — and potentially destabilizing — inequality.
At the same time, digital tools and free market policies have opened the doors for millions of enterprising individuals to turn their ideas into prototypes that have the potential to offer novel, life-changing solutions and in the process, create new business models and disrupt established industries. How do development organizations and foundations find and partner with this rising class of innovators so that together we can deliver greater impact?
Global development actors have learned a lot from the commercial tech sector about how to engage communities of innovators. Startup weekends, grand challenges, pitch days, hackathons, and unconferences are now commonplace. Locales, such as Beirut, Nairobi, Bangalore and Bangkok, have earned a reputation as innovation hubs and many other cities are trying to follow suit, giving rise to a vibrant and growing innovation culture and ecosystem.There is a paradox here: At a time when innovation is creating destabilizing change, the key to future stability lies in our ability to effectively harness innovation. But what does that look like? Click To Tweet
Development organizations need to keep pace
Are development efforts creating the incentives and guardrails that direct innovation towards solving the pressing challenges confronting humanity? Are we accelerating positive change or just getting in the way? And are we investing enough resources to harness innovation for social good?
As a starting point, it may be helpful to think of innovators as falling into two categories. There is the formal sector of well-funded, highly qualified scientists and researchers, based in universities and industry research institutes. They have the resources, status and networks to experiment, iterate and scale their products. Then there is the informal sector of individuals with ambition and ideas but without the qualifications, status or resources to translate their ideas into products.
This reminds me of the divide between the formal and informal business sectors in many developing countries. In Kenya the informal sector is called jua kali, meaning “fierce sun” in Kiswahili, because entrepreneurs often work on the roadside in the hot sun. These imaginative and resourceful entrepreneurs can improvise solutions to everyday problems because they have intimate knowledge of the daily challenges and conditions in their communities — the same challenges and conditions targeted by the Sustainable Development Goals. Yet because they are in the informal sector they lack the knowledge, access to capital and business networks to grow their businesses and realize their ambitions.
How can development organizations find and partner with these jua kali innovators? Eric Reis’ book, Lean Startup, and Ann Mei Chang’s forthcoming book, Lean Impact, which applies the methods of the lean startup movement to development, provide some good operational principles:
Focus on the problem to solve and not the product. The great thing about the spirit of innovation is the tendency of innovators to build a prototype and learn by doing. The result may not look much like the original idea. Development organizations can make partnerships in this phase easier by writing agreements that focus on outcomes (the problems to be solved) rather than outputs (the products that will be developed).
Look at the product testing phase as research. Testing the solution with real customers to get more information over and over again can be expensive and defining which hypotheses to test is usually not obvious. Here the development community can offer experience and expertise in research design, methods and interpretation.
Build iteration and failure into planning and budgeting. This is where traditional development funders get nervous. What happens if the project fails to find a solution that works in a reasonable period of time? While entrepreneurs may accept failure as natural, even many enlightened funders consider it an irresponsible use of resources and unacceptable reputational risk. This is where we need philanthropists and policymakers to take a cue from the world of venture capital and change their whole way of assessing return on investment and managing risk.
Support a successful introduction and launch. Helping innovators bring well-tested products to market can produce results and learning very quickly. Paying for in-kind services like advertising and marketing campaigns is not something donors like to include in budgets, but if we want new products to become sustainable then we must move them into the commercial realm. That means adopting commercial strategies for dissemination.
Recognize that scaling-up is not the only way to have impact. Taking a cue from tech companies, development organizations have become obsessed with the notion that impact only happens if a product or service scales to reach millions of people. But jua kali innovations may deliver valuable local impact not intended to scale. There is nothing wrong with that. Let’s realize that small can be beautiful even if big is necessary.
The Atlas of Innovation for Economic Stability, published by FHI 360 with support from The Rockefeller Foundation, provides examples from around the world of how entrepreneurs, governments and development organizations are partnering to bring vital new products and services to life. These examples show that when policy encourages innovation and donors adopt methods that are flexible and less risk-averse, there is a new generation of innovators stepping up to meet the next generation of challenges facing the poorest, most vulnerable people.