How can development agencies help strengthen innovation ecosystems?
The general recommendations below have emerged from IDIA ecosystem convenings in Nairobi, Kenya on 'Strengthening the Agricultural Innovation Ecosystem in Kenya' in May 2018, and in Hanoi, Vietnam on ‘Science, Technology and Innovation as a Pillar of Socioeconomic Development’ in May 2019, as well as from desk research and discussion by the IDIA membership. More specific recommendations for development agencies targeting particular challenges within innovation ecosystems can be found within the Kenya and Vietnam sections.
Strategy
Development agencies should focus their strategies to provide stronger support for consolidating the demand side of innovation and avoid saturating ecosystems with supply-boosting Challenge Prizes and competitions.
Development agency strategies should be aligned to the true needs of the sector at the local level. Most development agency investment is concentrated very narrowly across the early stages of the innovation pathway, leaving insufficient support for the long and difficult process of taking those innovations to scale for sustainable impact.
Development agencies should be more transparent around the rationale and decision-making behind the different investments they make within an ecosystem, and make every effort to openly share the (disaggregated) data they collect while encouraging / providing mechanisms for other ecosystem actors to do the same.
Development agencies should support the development of more sustainable and broadly beneficial public good innovations (e.g. new policies and partnership structures) instead of continuously searching for the latest technological products.
Development agencies should work within their own community to better coordinate referral, graduation and hand-off mechanisms for the different innovations they support in order to provide a more seamless value chain for entrepreneurs moving through the various stages of the scaling pathway.
Development agencies should work to understand government priorities and encourage alignment of available social innovations with local needs and capacities.
Funding
Development agencies should be aware that providing access to capital alone is not enough, particularly if that capital is not useful, relevant, patient and risk-tolerant. Innovation ecosystems require a different kind of financing that would see development agencies move from grant-making to more serious, longer-term investment.
If development agencies are serious about supporting a new generation of innovators to emerge, they should honestly review and redress the biases that inform who they choose to fund and why, given that the great majority of funding still continues to be won by a very small proportion of the innovation community.
More of the funding provided by development agencies should be directed to growing local talent and building connectivity and capacity within the innovation ecosystem, rather than on new products (which actors within the ecosystem can then develop and test themselves).
Development agencies should be aware of domestic financing structures and processes within country governments to understand where support may be needed to scale up innovations, e.g. through blended finance agreements and public/private partnerships.
Ecosystem Building
Development agencies should be more intentional in funding the ecosystem (“funding to facilitate vs. execute’), and focus on establishing collaboration infrastructure and partnership-creating/sustaining mechanisms across siloed actors (e.g. connecting research institutions and entrepreneurs with domestic and foreign industry partners).
Before deciding to fund or support a particular subset of actors within the ecosystem, development agencies should take the time to properly understand the current dynamics of the ecosystem to avoid unintentionally weakening or disrupting collaboration structures.
Development agencies should recognise the potential distortion their activities can have collectively at the local level, and use their comparative advantages in a more strategic way to ensure more complementary, less duplicative support.
Development agencies could play a very useful role by leveraging their multi-country partnerships to help the innovators they are supporting connect and expand to other markets.
Development agencies can be an important advocate among ecosystem actors to ensure that the needs of the most vulnerable are not forgotten.
Due to their international brand and presence, development agencies can play an important role in documenting and promoting good practices and partnerships within innovation ecosystems, rather than only communicating stories around particular innovative products they have helped to develop.