The ‘scale’ elephant in the room at IDIA
26th and 27th September 2016 marked the gathering, in New York, of the International Development Innovation Alliance. This group includes the heads of innovation from USAID, Gates Foundation, Rockefeller Foundation, Sida, DFAT Australia, Global Affairs Canada, World Bank, UNICEF, Grand Challenges Canada, R4D and of course DFID.
The ‘scale’ elephant in the room: we [in development] are not setup to manage the innovation funds we invest in and help venture solutions get to scale
We kicked off the conversation with our innovation peers at the IDIA gathering on the key challenges to getting the return on development investment we should be expecting in our funding. Ann Mei Chang, Chief Innovation Officer at USAID, summarise three clusters of challenges our organisations face:
1) Understanding user demand
We don’t spend enough time or investment to understand the user context, problem and needs, prior to building a business case and throughout the cycles of innovations on a programme once it’s underway. We are seeing change here, as development agencies, embrace design thinking and user-centred design methods to get to deep rooted user insights and inherent behaviours. DFID’s Amplify programme is piloting effective ways of doing this.
2) Sustainable business models
Alongside design innovation capability working in collaboration with policy makers, technical leads and research advisors, we also need business model competency. International Rescue Committee (IRC) ‘ innovation team has recruited ex management consultants into their teams from Bain and McKinsey to address this issue head-on. This gives us in EPIC @InnovateDFID and also wider programmes across DFID something to think about. We do need some business brains on our solutions to development.
3) Donors to not have the institutional capacity and operating model to achieve scale from innovative ventures:
Donors have created venture and challenge style funds a plenty (the Grand Challenges format and variation on the format is prevalent) but unlike private venture capital we do not get to influence the CEO and his/her team and we cannot take a board advisory model. Added to this, we do not have the institutional capacity to be highly effective investment managers. Our organisations are resourced with policy, economic and programme capability.
The dominant operating model for managing development challenge style funds is to outsource the programme to a partner and to engage a ‘Senior Responsible Officer’ (or equivalent) to manage the effectiveness of the programme, but we could do more to actively manage and support the growth and return of the ventures we invest in. I’m dreaming of a ‘Senior Investment Officer’.
