I’ve been interested in the scope for using innovation prizes in development for several years, having carried out an Evidence Review on the topic for DFID in 2011. Prizes are widely used in the private sector to crowdsource ideas and new technologies and stimulate markets but can prize-driven innovation effectively tackle the problems that the poorest communities face?
Through the design and implementation of five innovation prizes, Ideas to Impact will test whether prizes can be designed to achieve significant benefits for marginalised and impoverished communities. It will do so by attracting and focusing innovative capacities on longstanding challenges around climate change adaptation, energy access and water and sanitation. We’ll be documenting and sharing our research and lessons learnt along the way.
What is an innovation prize?
The programme defines an innovation prize as a financial incentive that induces change through competition. The financial incentive is payable with few or no strings attached and the programme is therefore closely aligned with payment by results (PbR). The reward is not given to applicants who win by doing business as usual, but in recompense for actions that otherwise would not have been undertaken without the prize. Some investment and assuming a degree of risk is therefore required of all prize applicants.
Problem vs mechanism
Ideas to Impact has another defining feature. Whereas most development projects start with a problem in response to which a support mechanism is developed (grant, technical assistance, budgetary support, blended or other financial support), this programme starts with a mechanism, an Innovation Prize, and looks to see how such a mechanism could be applied for the benefit of the poor.
There was some debate at the start of the programme – do we look for problems where we think a prize will fit, or do we look for the biggest problems and design a prize in that space? We chose the latter approach. Within these big problem areas we’ve tried to identify specific issues where a prize might make a big difference. Whether this was the right way to go remains to be seen. However, if successful, we will have both clearly demonstrated the value of innovation prizes and achieved significant social impact.
Going the last mile
Building on my research in 2011, we have approached this programme with an understanding that ideas and (hard) technology are unlikely to have any direct benefit on the poor without considerable additional resources to tackle the more intractable problems of service delivery and multiple market barriers experienced in low-income countries. Because of this, we have focused most of our prizes on the attainment of outcomes that actually benefit the poor, such as the uptake and use of technology, rather than the development of technology itself. This approach has been backed up in our early stakeholder engagement: “we don’t need shiny new toys”, “the problem is not the technologies but how we can get them to scale”. The focus on outcomes increases the risk of failing to award a prize but increases the potential for the programme to have a direct impact on low-income communities.
Lessons learnt so far
We have now completed the initial design stage, in which, after extensive stakeholder engagement, we developed a number of prize concepts. This process has already taught us quite a bit:
We are finding that in low-income countries it is difficult to identify a space for market stimulation prizes in particular. The multiple barriers affecting uptake of technologies, and innovation and growth – from poor regulation and governance to lack of finance and distribution infrastructure – leave us questioning whether prizes targeting the market alone can really add anything to an already incentivised but struggling community of private sector actors. I am sure those with experience in M4P approaches will nod wisely to these reflections. Our portfolio of planned prizes will aim to tackle some of these challenges.
In addition, the payment by results approach that an innovation prize follows present difficulties when incentivising already financially constrained innovators who lack access to credit and investment capital. Thanks to DFID’s support and flexibility, we have been able to complement the prize design with additional programmes of support that will help provide initial funding to some solver communities early in the life of the prize programme.
Watch this space…
We are now heading into a phase of detailed design and much is still uncertain as we start discussions with national governments and partners, and critically assess the feasibility of our prize concepts. I hope you will join us in this exciting and challenging journey, we will be blogging, tweeting, sharing our learning, and hopefully launching and awarding our prizes over the next four years - so please do follow us.