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Our takeaways from the ‘Innovating in Development’ event

March 31, 2017 | Ecosystem Accelerator | Global | Global | Rosie Afia & Caroline Sheldon

This blog was co-authored by Rosie Afia and Caroline Sheldon. The two-day ‘Innovating in Development’ workshop run by IMC Worldwide (Ideas to Impact), hosted by representatives from DFID, USAID, Rockefeller Foundation convened players such as: Shell Foundation, Global Innovation Fund, Humanitarian Innovation Fund, Human Development Innovation Fund, Unilever, Oxfam, Making all Voices Count and Vodafone amongst many other well established organisations and practitioners working in development. Here is what we learnt.

1. “Scaling is hard and complex” – There is no single model, roadmap or pathway for start-ups to scale.

While some start-ups reach scale relatively quickly, others need to apply entirely new business models to adapt to different contexts and respond to the complexity of the problem and social dynamic they’re trying to address.

‘Adaptability’ was central to the two-day discussion. Innovation typically needs to be adapted and the right model discovered through an iterative process. Discussion focused on the challenge that this process takes longer than the funding timeframe of donors (typically three to four years). Additionally, innovative business models will need to be adapted and trialled in the context of different institutions and understand different needs and social dynamics. For instance, a start-up working to scale a product or service in sanitation or health might be dependent on other parts of the system working as well as addressing deeply entrenched social norms. Scaling innovation, therefore requires large-scale ‘failure and iteration’ through support from investors and partners as well as adaptive support techniques from Innovation Fund donors.

2. Innovation is nothing without implementation: Engaging local innovation ecosystems is critical for innovation funders (such as GSMA’s Ecosystem Accelerator and Mobile for Development (M4D) Utilities)

While we know innovation ecosystems are important, defining and understanding their complex nature is much harder to achieve. Consider, for example, the GSMA’s research to assess tech hubs in Africa and Asia which found 314 hubs in Africa. In all likelihood, ‘Innovation Ecosystems’ are practically impossible to accurately measure or understand due to their complexity and rapidly changing compositions.

Models for accelerating the ecosystem vary and, based on the discussions held during the forum, no one organisation has the same interpretation of what we should or can achieve as a sector. The GSMA’s Ecosystem Accelerator, for example, promotes synergies between start-ups and mobile operators and uses demonstration cases to further promote these partnerships across emerging ecosystems (see latest report on building synergies). The GSMA’s M4D Utilities programme takes a wider and yet more focused approach by fostering strong connections between innovators and utility providers, governments and investors (see the latest report on Lessons from utility pay-as-you-go models). Other models are also emerging and being applied, such as using challenge prizes like those run by Ideas to Impact or Sanitation Challenge for Ghana which aim to drive early collaboration between local government and external partners.

3. It is critical to plan for the risk and uncertainty inherent in innovation within development

It’s widely accepted that up to 50 per cent of start-ups ‘fail’ within their first four years of operations. Maxime Bayen (Ecosystem Accelerator) gave examples of recent start-ups who did not achieve the immediate success that was anticipated by investment communities. These include: Mobile Money platform m-Pesa when launching in South Africa (2016), Instant Messaging platform mXit (2016), and Ride-hailing platform Antar.id in Indonesia (2016).

While all investment comes with uncertainty and risk, lessons can be taken and learnt from start-ups who fail. Accepting and taking realistic risks (strategic, financial, operational, reputational etc.) is critical for innovation to have a positive impact in reality.

One way in which investors or funders minimise risks (which was discussed during the sessions) is to release payments based on milestone achievements. However, key challenges remain – specifically, how can we frame milestones to minimise risk yet allow flexibility for innovation to occur?

Conclusion

What is certain is that there remains significant opportunities to share lessons and learnings from major donors such as DFID, Rockefeller Foundation and USAID as well as implementing partners. We look forward to future engagements with the other workshop participants which will occur as a result of the event. In particular, we invite partners facing similar challenges in stimulating and supporting innovation in emerging markets to collaborate, share ideas, approaches, failures and successes and we will ensure we continue to iterate, refine and innovate in our own processes as Innovation Funders.

For related reading

‘Innovation Ecosystem’ can mean a variety of complex circumstances, although it typically refers to the loosely-bounded system of ‘people, enterprises, institutions, policies and resources that support the translation of new ideas into products, processes and services’ (Ramalingam et al 2015, p. 10). An innovation ecosystem is therefore interlinked with the broader business ecosystem, involving similar business organisations, customers and market intermediaries (Bergek et al 2008):

  • Bergek A., S. Jacobsson and B. Sandén (2008). ‘Legitimation’ and ‘development of positive externalities’: Two key processes in the formation phase of technological innovation systems”, Technology Analysis & Strategic Management, (20), 5, 575-592.
  • Ideas to Impact, Research Reports, (2015-16). http://www. ideastoimpact.net/publication/ research-papers
  • McClure, D. and Gray, I. (2015). Innovations Missing Middle’, White Paper for Innovation Theme, World Humanitarian Summit 2015, ThoughtWorks, https://www. thoughtworks.com/insights/blog/
  • Ramalingam, B., Howard Rush, John Bessant, Nick Marshall, Bill Gray, Kurt Hoffman, Simon Bayley, Ian Gray and Kim Warren (2015). Humanitarian Innovation Ecosystem Research Project, Final Report”, University of Brighton, May 2015
  • Walji, A. (2016), Why innovation seldom scales and what to do about it’, in Ramalingam B. and K. Bound (eds), “Innovation for International Development. Navigating the paths and pitfalls”, NESTA, April 2016.

 

The GSMA Ecosystem Accelerator Programme & Mobile for Development Utilities Programme is currently funded by the UK Department for International Development (DFID), and supported by the GSMA and its members.

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