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Strengthening innovation ecosystems

Thomas Feeny, Jane Haycock   |   July 18, 2019   |   Comments

Part 2 of 4

The emerging concept of innovation ecosystems

[Editor’s Note: This is part of a series of blogs sharing insights from the results of a review conducted by Results for Development of the first three years of the innovationXchange (iXc) unit within the Australian Government Department of Foreign Affairs & Trade (DFAT). This blog explores the emerging concept of innovation ecosystems, while others in this series look at the themes of scaling innovation, partnerships, and building a culture of innovation.]

Since early 2015, the innovationXchange (iXc) team within the Australian Government Department of Foreign Affairs (DFAT), Results for Development (R4D) and other members of the International Development Innovation Alliance (IDIA) have been working together to explore and promote the importance of innovation ecosystems at global, regional and local levels. This blog presents some of the key learnings from that (ongoing) journey, which have led to significant changes in the way IDIA members and other development agency innovation units leverage innovation to accelerate progress toward the SDGs.

Over the last few years, the concept of an “innovation ecosystem” has gained significant traction within the international development community. While its origins are somewhat difficult to pin down, its emergence is likely to be at least in part influenced by the more formalized school of systems thinking that Donella Meadows and others have promoted and that holds increasing influence over the design and delivery of development more broadly, including our own mission and vision here at Results for Development.

Its relevance to the development innovation community is particularly strong when you consider how it can help the persistent challenges innovators and their supporters have had in bridging the “missing middle” or “valley of death” and taking their ideas to scale. For an innovation to produce large-scale, sustainable impact it typically takes many years (e.g., 10–15 years to develop and trial a new vaccine) and many different kinds of support (e.g., funding, technical assistance, mentorship, technological infrastructure) from many different actors (e.g., angel investors, donor agencies, governments and private equity firms). Put simply, if it takes a village to raise a child, it takes an ecosystem to scale an innovation.

Raising awareness of innovation ecosystems

In early 2015, DFAT and 11 other development agencies (including R4D) came together to establish IDIA — a platform for shared learning and collaboration among the senior leadership of their respective innovation units and teams. At that time, the concept of an “ecosystem” was still largely entrenched within biology and nature, with a focus on how living and non-living components interact within a specific, limited space (e.g., a forest, an ocean, a desert). Some conceptual cross-over had occurred through Silicon Valley — a widely celebrated example of an ecosystem model convening different innovation actors and resources within a defined physical area. But, beyond that technology-oriented example, there was still widespread confusion around what an effective innovation ecosystem actually looked like.

In this context, to a great extent it was pioneering for the founding IDIA members to give innovation ecosystems such prominence in the development of both its inaugural mission and purpose paper, which tasked the group to “develop greater knowledge on, and reinforce, country-level innovation ecosystems,” and IDIA’s 2015 Call for Innovation, in which the group articulated its shared belief that “Innovation thrives best when facilitated by a strong ecosystem of favourable enabling conditions”.Putting innovation ecosystems at the heart of their approach was an important expression of IDIA members’ commitment to addressing the following shared goals:

  • Impact at scale. For any innovation to meaningfully impact the complex nature of contemporary development problems, the contribution and coordination of multiple local and international actors over long periods of time is essential. An ecosystem model forces a shift in focus from the innovation itself to the interconnected pathway(s), actors, resources and other social, cultural, political and economic factors that will be influential in taking that innovation to scale, thereby increasing the chances of successful, sustainable impact.
  • Diversifying partnerships. No single actor can take an innovation to scale but knowing who to work with or how to find them can be daunting without careful analysis of local players and existing patterns of influence and power. Mapping the current roles and relationships of different actors within the ecosystem — as organizations such as ANDE and Endeavor do — has proven extremely useful both in identifying key stakeholder groups requiring targeted support, and in mitigating the risk of selecting partners who may end up perpetuating rather than reducing inequality within the ecosystem.
  • Local ownership. International agreements among the aid community such as those made in Paris (2005), Accra (2008) and Busan (2011) require development agencies to prioritize alignment and ownership of interventions at the local level. Yet as some observers of development innovation have noted, as Global North actors rush towards exporting high-tech innovations, there has not been nearly enough emphasis on the engagement of Global South stakeholders: communities, civil society, private sector and government. An ecosystem lens seeks to strengthen the ways actors interact to catalyze, test and scale innovation within their local contexts, rather than create parallel structures and processes.

How DFAT has adopted an ecosystems model

Innovation ecosystems have been a consistent area of interest for DFAT since the establishment of its innovationXchange (iXc) unit in 2015. In fact, one of the first activities that R4D and the iXc worked on together in 2016 was a landscape analysis of opportunities for DFAT to strengthen ecosystems for early-stage social enterprises in the Asia-Pacific region. A key finding from this research was the need for more donor agencies to support the ecosystem rather than individual enterprises, i.e. by bringing relevant actors together to share knowledge, understand needs and collaborate to address bottlenecks or weaknesses hindering their ability to locally produce and scale innovations.

This research helped inform the inclusion of ecosystem-strengthening elements within a range of innovation investments made by the iXc throughout its first three years of operation. These included:

  • The GSMA Ecosystem Accelerator, which provides selected local start-ups in developing countries in Africa and the Asia Pacific with grant funding, technical assistance, and the opportunity to partner with mobile operators in their markets to help scale their products and services into sustainable businesses to drive socioeconomic impact;
  • The Scaling Frontier Innovation program which includes a package of four initiatives designed to help connect innovators with different partners in the region, including mentors, angel investors and additional forms of scaling capital;
  • Hamutuk, which brings together a broad range of partners across sectors, including government and non-government organisations, in an effort to combat stunting in Timor-Leste.

Drawing on the learning from these and other initiatives within their portfolio, the iXc (under the leadership of its founder Lisa Rauter) led the process within IDIA to develop a shared definition of an innovation ecosystem that would be the basis for further research and collaboration among the members:

How Does IDIA Define An Innovation Ecosystem? An innovation ecosystem is made up of enabling policies and regulations, accessibility of finance, informed human capital, supportive markets, energy, transport and communications infrastructure, a culture supportive of innovation and entrepreneurship, and networking assets, which together support productive relationships between different actors and other parts of the ecosystem.

Bolstered by this shared definition, IDIA members were able to look across their own agency innovation strategies and portfolios to identify elements that were strengthening local ecosystems, or opportunities where there was greater potential to do so. This led to:

In May 2019, the annual meeting of IDIA Principals took place in Hanoi, Vietnam. Throughout the week, participants engaged with actors across the ecosystem, from start-ups to policymakers, and continued to consider how development innovation might be benefit from a renewed focus on strengthening innovation ecosystems. Discussions focused on how this strategy might be actioned at the international level among development agencies, as well as at the national level through government ministries.

These are promising steps forward in adopting a more holistic ecosystem model for supporting change agents in challenging contexts, but it is recognized that there is much that can still be done to further this agenda. The iXc has demonstrated commitment to indirectly support more innovators to reach scale, making innovation ecosystem-strengthening and market- and policy-level interventions a clearer component of its Innovation Strategy for 2018-2021.

DISCLAIMER: This 4-part blog series is based on a report funded by the iXc. The report is one activity under a broader strategic partnership between R4D and iXc. As a learning partner, R4D aimed to help the iXc reflect on their work and adapt their approach moving forward to achieve their intended impact. It was never intended, designed nor positioned as an evaluation. These findings and recommendations were intended for an iXc audience, but made public in the interest of full transparency — and in the spirit of supporting other innovation labs working on similar issues.

Photo © innovationXchange

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