June 19, 2014 12:19 am

Innovation fever breaks out as development landscape shifts

A UNICEF employee assigning a tent to a family, Ben Gardane, Tunisia©Alamy

It is results that count: a Unicef employee at work in Tunisia

Global development organisations have been doing a lot of soul searching recently. With multinationals and private foundations moving into their territory, tackling everything from healthcare to food security, the sector is no longer the only game in town.

This has implications not only for the way development dollars are spent. It is also shaping institutions’ approach to human capital.

For some, this involves self reflection. Most prominently, the World Bank is undergoing an internal restructuring, an ambitious project that is not without critics. The idea is to remove regional barriers to knowledge exchange by creating global practices, with pools of specialists in areas such as education and agriculture or finance and markets.

Sean McGrath, the World Bank Group’s vice-president of human resources, admits the process has not been easy, with staff being asked to change roles and locations.

“Having to work in a different environment is challenging,” he says. “But we want the collective whole to be greater than the sum of the parts.”

Breaking down silos across large institutions means placing a greater emphasis on managerial skills than in the past. “Like most public systems, historically we’ve invested in our technical capabilities,” says Mr McGrath. “We haven’t given equal investment to people’s role as managers – and as junior managers.”

Rather than wait until they are promoted to senior levels, he explains, the bank will now foster management skills much earlier in people’s careers.

But if the bank is seeking change internally, others in the sector are looking outwards, using the web and social media to tap into ideas from the outside world in models first seen in the corporate sector.

Innovation fever has broken out across the development world, with job titles that include the word “innovation” and the creation of departments called “labs” designed to work with universities, entrepreneurs, companies and others.

Several factors are behind the changes. First, institutions such as the World Bank have watched their relative influence in global development diminish as newcomers have entered the development sphere.

These include organisations such as the Bill & Melinda Gates Foundation, the Global Fund To Fight Aids, Tuberculosis and Malaria, and the Gavi Alliance, which supports immunisation for children in poor countries. All have significant funds at their disposal.

“The global landscape has shifted pretty radically,” says Scott Morris, a senior associate at the Centre for Global Development and an expert on issues relating to international financial institutions. “On the financial side, it’s simply that the World Bank is becoming a smaller player in relative terms as there are new, larger sources of capital available for investment in poorer countries.”

The global financial crisis has also taken its toll, with fiscal austerity hitting public-sector budgets.

Stretched finances focus attention on efficiency and measuring impact.

Sharad Sapra, principal adviser and director of Unicef’s Innovation Centre in Nairobi, says: “There’s a shift from programme delivery to programme results and a large part of that has evolved out of the financial crisis and looking for value for money.”

Because tighter budgets mean doing more with less, many are looking for ways to harness the power of the private sector and the resources of global capital markets.

The UK’s Department for International Development, for example, has used challenge funds to create incentives for companies to make business investments in developing countries when they might otherwise be too risky. In April, it launched a development impact bond to raise investment funds for the prevention of sleeping sickness in Uganda.

Development impact bonds – through which governments or international donors pay investors returns when a programme’s goals have been achieved – are among a range of financing mechanisms being explored as a means of channelling investment funding into development.

Armed with private capital, organisations can make their development dollars go further. But this also requires them to hire finance-savvy individuals and others with skills not traditionally seen in the development world.

This is not always easy. While more business executives are seeking meaning in their careers and want to work for organisations helping solve big global problems, these days public sector institutions are not the only places they can do this.

From private foundations to the CSR (corporate social responsibility) units of multinationals, executives looking for purpose have plenty of potential employers from which to choose. “There are a lot of places where you can be a development practitioner today,” observes Mr Morris.

One way to build human capital is for organisations to look outside their own four walls.

It’s pretty easy to recruit when you’re asking people to look at some of the coolest ideas on the planet

- Jeff Brown

Unicef, the UN children’s agency, has established a growing network of innovation labs in countries ranging from Armenia to Zambia. At the labs, companies, academics and public sector groups work together on ideas and projects.

In April, the US Agency for International Development (USAID) launched the Global Development Lab to promote use of science, technology and innovation and partnerships with a wide range of individuals and organisations.

Development Innovation Ventures (DIV), part of the Global Development Lab, uses an open competition to solicit ideas for tackling global poverty.

While a small team runs the unit, an investment panel – made up of USAID experts, venture capitalists, social enterprises, impact investors, academics and others – vets the ideas and decides which are worth supporting.

Investing relatively small amounts, DIV continues to support only those that demonstrate that they work.

It is a strategy more often seen among Silicon Valley investors, explains Jeff Brown, DIV’s director. “And it recognises that in-house alone, we don’t have the expertise to know which of these is the best.”

These new approaches to development will be tough for some to adopt. After all, seeking and developing ideas externally means you need to relinquish a certain amount of control. As the World Bank has found, breaking down internal silos can be painful.

However, the changes may help organisations compete for talent. Mr Brown says about half his team took pay cuts to join DIV.

“It’s pretty easy to recruit when you’re asking people to come and look at some of the coolest ideas on the planet,” he says.

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