Monday, September 21, 2015

Business as Unusual

I heard repeatedly of two "operational innovations" which the Lab inspired at USAID. The Lab was proud of who it funded and how it funded innovators.

In the past, the U.S. Agency for International Development (USAID) awarded large grants to a small number of international implementing partners. For instance, an implementing partner might be awarded a $5 million contract over 5 years to implement water sanitation in a community. However, the organization would not assess the effectiveness of the program until halfway through the $5 million grant. The "mid-point" evaluation would actually have no effect on the amount of funding the organization received to complete the project. Even if the mid-point analysis found that diarrhea and mortality in the community increased after the project was implemented, the funding would continue to flow and the implementing partner would continue its program. This ineffective funding model was symptomatic of a poorly designed M&E framework and bureaucratic challenges at USAID. As a federal agency that receives its money directly from Congress, USAID has many reporting and funding requirements.

However, the U.S. Global Development Lab's (Lab) open innovation programs are using a more effective funding model that decentralizes innovation in international development. The Lab has given awards to a wide range of actors such as dressmaker in the case of the Ebola suit, a car mechanic in the case of the mother-and-child-saving Odon device, or a university professor in the case of Duke's pre-dosed packets of HIV drug treatment. Because the calls for applications are open to innovators anywhere (not just U.S. citizens), this is a major innovation in international development project funding and who USAID provides grants to. In fact, Development Innovation Ventures accepts applications from any innovation which has the potential to scale and could help end extreme poverty.

In addition, the Lab has challenged how USAID provides grants. Grants from the Lab can be smaller with the expectation that funding will grow with the scale of the innovation. Also, the funding is tied to "milestones," in other words the innovator reaching key strategic goals such as reaching a certain number of new users or gaining a certain dollar value in private investment. In fact, I witnessed an innovator who did not reach their goals in the Securing Water for Food Grand Challenge for Development. The grant was discontinued. 

The Lab also provides technical assistance with its grants. Assumed that innovators may not have the same capacity as larger international implementing partners, many programs provide acceleration services to innovators. Here are a some examples of key strategic needs that early-stage innovators may have.
  • product, model, or service refinement 
  • business strategy/model
  • staffing, management, and operations 
  • legal
  • clients/sales/customer acquisition/local market acceptance 
  • government relations, policy & advocacy (i.e. must acquire export or import permits or overcome regulation) 
  • negotiations and partnerships 
  • communications/public relations (PR)/branding/marketing 
  • market, customer, user, or beneficiary research 
  • market surveys 
  • production, manufacturing, and supply chain development 
  • IT specialists 
  • customer education/behavior change/technology adoption (i.e. the innovation has been proven effective, however local target market do not understand how the technology might benefit them) 
  • funding 
  • internal financial management, such as developing annual budgets, good accounting practices, profitability analysis 
  • business plan development
  • grant writing skills 
  • pitching to potential investors 
  • investor due diligence 
  • monitoring and evaluation
  • milestone restructuring for existing award agreements\M&E assistance including baseline survey development, evaluation methodology, selection of investor-centric environment & social indicators, etc. 

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