I apologize for using the word “innovation” in the title of this post. I know… I work in ICT4D and I’m supposed to be a champion for innovation in all its forms. The truth is, for me, the word has nearly lost all its meaning. Innovation is easily one of the most overused and least-understood words favored by businesses, academia, and yes, international development agencies. So instead of writing a post on how we can “promote innovation,” per se, I prefer to write about how we as development practitioners can use promising models to source, finance, and apply new solutions—be they digital technologies, products, or processes—to development problems based on open competition, collaboration, and evidence.

As development practitioners and ICT4D specialists, we on DAI’s ICT team are versed in user-centered design methods and we know—and endorse—the digital principles for development. While we certainly promote the adoption of digital tools in our work, our capacity to develop new digital products in-house is slim in comparison to the myriad of companies in the global market that specialize in various areas of digital technology development. After all, we are development practitioners first and technologists second, so while those of us in ICT can identify and help our projects take advantage of digital technologies, we often rely on our ability to find the right partners to deliver the tangible solutions that our projects and beneficiaries ultimately use. It should come as no surprise that the development community favors ‘preferred technology partners’ when sourcing solutions—partners with whom many of have worked successfully in the past, and understand not only our processes, but also our clients, and the broader development ecosystem.

The fact is that while it is invaluable to have a network of trusted partners, relying too heavily on these networks can blind us to the potential that companies outside of those networks bring to the table—not to mention the companies neither us nor anyone else in our business has heard of! We tend to wax poetic about all things “open”: Open source software, open data—the idea being to open up information and data for all to use in their own way. Why shouldn’t we extend this evangelism to partners and ideas?

The Challenge Model—Ideas from the Crowd

The challenge fund model is not new. It has been around for a long time in international development, and donors in particular have recognized its potential for sourcing “innovative” solutions to global problems in such a way that is open, inclusive, and not prohibitively prescriptive. The U.S. Agency for International Development, U.K. Department for International Development, Swedish International Development Cooperation Agency, Australian Department of Foreign Affairs and Trade, and other major international donors have all administered global challenges, and recognized the benefits of sourcing ideas from the public. The United Nations High Commissioner for Refugees (UNHCR)’s innovation team has even developed a platform called “Ideas” in which ongoing challenges as defined by UNHCR continuously solicit ideas from their refugees, staff, and the broader public on how to best tackle said challenges. We at DAI have also institutionalized the model in the form of our Innovation into Action Challenge. At its core, the challenge fund model may be similar to but differs from other common financing mechanisms, and is defined by:

• An explicit public or social purpose/goal

• A challenge statement that defines the parameters of the challenge, but also…

• Provides autonomy to competitors in implementing solutions

• Often require evidence of effectiveness

• A prize: usually a grant or a subsidy provided to challenge winners

• Risk sharing: Implementation or partial implementation by competitors is aimed at demonstrating functionality and impact such that funders already have a sense of a solution’s effectiveness and viability when disbursing funds

That Challenge Model—So Hot Right Now

Earlier this year, John DeRiggi and I attended South by Southwest to take stock of major trends in technology and innovation (we even wrote about it here). The South by Good thematic track (focusing on social impact) featured presentations and panels about specific challenge funds and how challenge winners were tackling global development problems. So why is the challenge model for sourcing new approaches to old ideas so attractive to funders? Well, there are a whole host of reasons, but some top ones include:

1. The Crowd is Powerful: Many brains are better than a few when conceiving new ideas. Opening things up to the public without relying heavily on trusted networks of partners and without setting limitations on who can participate broadens the net that we cast in our digital solution searches. Anyone who has ever developed any bit of software will undoubtedly have many stories about opening up specific challenges that they have faced to the global crowd through online forums, widely used by developers to seek and provide solutions. Similarly, an open competition of ideas allows funders to consider ideas and approaches to tackling specific challenges that they may otherwise not be aware of, and engage new actors with promising solutions that might otherwise not receive much needed resources through other international development programs.

2. Focused Resources and Attention: The buzz created by a prize-based competition focuses attention and resources around a specific and clearly defined problem. This focus brings together different actors (donors, implementers, local and international companies, civil society organizations) around a common theme, encouraging collaboration and the exchange of ideas in addition to competition.

3. Smaller Investments for Bigger Returns: Setting up challenge funds allows for funders to make small initial investments that they can iteratively increase in phases, adopting a tech industry strategy to investing in creating minimum viable products, demonstrating value, and then increasing investment based on performance of a product, service, or solution, reducing risk that is shared more equitably between funder and grantee. This stands in contrast to more front-loaded funding mechanisms.

4. Multiplied Value: This point is not to be underestimated. In line with creating a focus on a particular theme or issue, challenge funds tend to get a significant “bang for buck.” Opening up a challenge to the general public to develop and demonstrate a solution might lead to only one or a small handful of winners being awarded a prize, but even those competitors who do not win a given challenge create value through participation, developing alternative solutions that may still be viable and sustainable, offering a more diverse and dynamic solutions market.

Things to Think About When Designing a Challenge

One of the most prominent facilitators of innovation through prize-based competition is XPrize Foundation, which was also present at South by Southwest. Senior Director of Visioneering Jordan Brown offered some good tips for designing a prize challenge for social impact:

1. Be Inclusive and Engaged:

   Not only should a competition be open to as many applicants as is manageable by fund managers, but participation should be actively encouraged – as should be collaboration. Offering a forum (such as an online platform) around a challenge that fosters discussion brings together potential solution creators and encourages collaboration around the challenge that may not take place if the challenge creator does not create the space for conversation.

2. Target Market Failures:

   To really create scaled impact, XPrize focuses heavily on designing prize challenges that aim to create markets where there previously were none. An example of this is oil slick clean-up. After the notorious Deepwater Horizon oil spill in 2010, XPrize issued an Oil Cleanup challenge based on research that showed that surface oil cleanup technology had not advanced in terms of efficiency for some 30 years, resulting in a new skimmer technology four times as efficient as old technologies, unsurprisingly eliciting great interest from oil companies the world over.

3. Clear (Quantitative) Requirements:

   To best demonstrate effectiveness of designed solutions, it is necessary to ensure that results are measurable. This measurability of results should be embedded in the design of a challenge, and also make the job of fund managers easier when it comes to assessing competing solutions. “Develop improved weather forecasting model based on open data sets,” for example could read “Develop a weather forecasting model that predicts daily rainfall rates to within an accuracy of 95 percent in a 5-kilometer radius based on open data sources.”

4. Be Solution-Agnostic:

   By clearly defining a challenge and some key parameters of a solution without being overly prescriptive, providing pages and pages of technical requirements, funders of challenges allow for the organic growth and realization of ideas owned by challenge participants—those that will ultimately take their ideas forward into the marketplace.