Transforming Ideas into Solutions: The Role of Innovation in Social Impact

Transforming Ideas into Solutions: The Role of Innovation in Social Impact

If you want to have good ideas you must have many ideas Linus Pauling Introduction The innovation and startup revolution has come to the social sector with dizzying speed and determination. For over two decades now, technology innovations have been transforming and disrupting mainstream industries and companies. But in 2017, a new trend emerged - nearly 30% of startups surveyed said that they were focused on problems facing the base of the pyramid and environmental sustainability. Increasingly, technologists, entrepreneurs and innovators are looking at new social enterprises and startups as the means to bring transformative change to sectors like education, skilling, rural development and environmental protection. The source of capital for their early growth has been philanthropy and charitable donors. This trend reflects a growing realization that the scope of humanity s challenges are too big to be solved by just NGOs or government agencies. Our problems cannot be solved by following the status quo alone new approaches are needed. A prominent example of this are the United Nations Sustainable Development Goals, which can only be achieved using current programs and models if another $2.5 trillion is committed. At a time when governments throughout the world are reducing their international development programs, this is unlikely. Only innovative solutions that drastically reduce the cost of intervention and the speed with which they are adopted can bridge this gap. Many innovations are not even new technologies simply the scale-up of proven solutions that are new to the regions and sectors in which they are being applied. But many innovations are also truly scientific and technological breakthroughs that could solve problems that have flummoxed humanity for generations. Consider the enormous size of the following statistics related to the Sustainable Development Goals and ask yourself does India have promising programs that could solve these problems? 360 Million Indians still live Below the Poverty Line (BPL) of `123 per day i 4.7% Increase in Greenhouse Gas Emissions in India in 2017 the highest in the world vi 175 Million Indians still suffer from malnutrition ii 4000 schools closed in Delhi in 2017 because of air pollution vii 32 Million children in India between ages 6-13 have never attended school iii 480 Million Indian millennials require more advanced skills training than they received viii 63 Million Indians do not have access to clean water iv #MeToo movement gaining steam across Indian society 360 Million Indian women have suffered domestic abuse / 8.5% suffering sexual abuse v Communal tensions on the rise across India 2

Indians are used to seeing these large numbers, and often correctly, shrugging their shoulders at their personal ability to make a dent in any of these problems. They are willing to pay higher taxes or even donate to NGOs addressing these problems, but they don t think it will make a difference. But there is evidence to the contrary. Through a combination of innovation, philanthropy, NGO programs, government policy and private investment, we are seeing transformational strides in many areas of development occurring in less than one generation, or 25 years. The United Kingdom has dropped its greenhouse gas emissions by 6.4% in 2017 and continues to invest in sustainability to reduce that number further. The United States has dropped 2% during the same time frame with a much larger economy. In India, at least one daily nutritious meal will be available to all school children in the next decade through the replication of midday meal programs mandated by the government and pioneered by groups like Akshaya Patra. Worldwide, microfinance has made capital readily available to women and rural small businesses. Created by Grameen Bank in the 1970 s, this form of debt is now available through major banks around the world to 3 billion people previously considered unbankable. There are other examples of innovations in agriculture, education, financing, business model and advocacy that are transforming India from the adoption of drip irrigation and high-yield seeds to the use of artificial intelligence for education. The biggest obstacle facing the 30% of startups and innovations addressing societal challenges is securing the patient capital required to pilot their technologies, grow themselves into fully-functional organizations and build the partnerships required for scale. Philanthropic and CSR funds are the capital for this sector but those funds have only been available in limited quantities. Instead, the scarcity of philanthropic grants for social innovation and poverty alleviation is pushing innovators and startups to seek traditional private investment capital that is driven by returns rather than impact. CSR and philanthropy can drive the rapid transformation of India by nurturing, financing and growing innovative solutions, social enterprises and startups from idea to impact. But in order to be effective, CSR and foundations will need to build their own skill sets to practice venture philanthropy rather than hands-off grantmaking. They must learn to support unproven ideas and new entrepreneurs, and to develop big visions while testing them one village and community at a time. This will take time, but it s the only way that the emerging class of development entrepreneurs will make a transformative impact on India in rapid fashion. Innovators are Tackling Problems Across Sectors and Geographies From the Centre for Entrepreneurship at IIM-Ahmedabad to the startups in Villgro s Bangalore accelerator, solutions for challenges traditionally addressed by NGOs and government agencies are increasingly being championed by entrepreneurs. Armed with a belief in the potential for technology to be transformative, they are attacking staid notions about development and stagnant community development efforts. In a departure from traditional thinking, these leaders look at the 63 million Indians who lack access to clean water as a potential market, rather than solely as a problem. Over the last year, Equal Innovation has interacted with the following startups (see next page) all dedicated to positive change through entrepreneurship. 3

Sukriti, a global award-winning startup out of IIT-Roorkee that is building eco-friendly, low-water usage toilets for public spaces and rural areas. They are partnering with the Indian Oil Foundation to roll out pay-forservice toilets that compost,self-clean and maximize water efficiency. In addition to public spaces, Sukriti will work with sanitation entrepreneurs to franchise the toilets. The/NUDGE Foundation, an NGO growing a new model for technical and life skills development for rural youth. Through their residential model, promising rural youth go through an intensive program to develop technical skills in areas like sales and driving, while also developing the professional life skills required of the work place. They have been supported by such leading philanthropies as Rockefeller Foundation and Mphasis. Kimetrica, a startup that is using facial recognition to identify children suffering from malnutrition under the age of 5. Launched by the UNICEF Innovation Fund, Kimetrica works in disaster and humanitarian relief sites and refugee camps to quickly identify children in need. Greenway Appliances, an IIM-Ahmedabad spawned startup providing environmentally-friendly and healthy cookstoves. In a short time, it has become India s leading seller of biomass stoves, which reduce greenhouse gas emissions and the indoor pollution leading to health problems. Zipline, a startup using drones to deliver medical supplies, medication and non-ict information to remote villages in Rwanda a nation known for its jungles, hills and lack of infrastructure. They have support from impact investors, the Clinton Foundation and others. Mann Deshi Champions, a startup social enterprise in Mhaswad, Maharashtra providing sports opportunities to rural youth to play, coach and manage sports leagues. The organization was spun off from Mann Deshi Mahila Bank, India s largest women-focused microfinance bank, with backing from HSBC, Citi, HDFC and others. To date, these startups have proven the value of their interventions and technology platforms but have lacked the capital to quickly scale up their organizations or programs. Unlike the private sector, CSR and philanthropy has been less willing to invest in the organizational growth of these startups through multi-year funding and venture philanthropy. Without the capital to hire talented leaders, build strong technology platforms, conduct evaluation and invest in field staff, their solutions will take much longer to scale and achieve impact than they could otherwise. 4

Innovation Takes Several Steps to Impact Society Foundations, CSR departments and philanthropies that make grants to new, unproven technologies or entrepreneurs must take the long-view. While technology and innovation can have a transformative impact on society, it often takes a long time for culture and policy change to occur. Equal Innovation believes that successful innovation passes through a series of four transitional steps to be undertaken in partnership with government, NGOs and institutions. It is through these steps that societies can best manage the impact of innovation and technology in order to make it helpful and positive, rather than negative and harmful. Every nation in the world is facing these same steps and challenges in order to manage the disruption of technology. The Four Stages of Innovation Adoption 1 2 3 4 Understand the nature of frontier technologies and innovations Improve capacities to utilize new technologies and innovations Organize society around new innovations to manage their impact Improve the infrastructure, policies, and frameworks to maximize technology s impact on society The first step is to develop greater 1 knowledge and understanding of frontier technologies and innovations in order to stay ahead of them from a societal and policy perspective. We are in the middle of a period of great innovation driven by the expanding capabilities of computing technology impacting the growth of the Internet, mobile communication, Big Data and even sectors like health care, life sciences and agriculture. Philanthropy is a great source of funding for research. In India, grants for applied research in areas of new technology are scarce, as is research and evaluation of existing social programs. By developing expertise in new technologies, funders can ensure that these technologies grow into useful, responsible new industries. The recent price fluctuations of bitcoin, based on blockchain technology, provide a stark example of the challenges facing investors, governments and philanthropy most of whom do not understand the technology or its impact and are standing by while the market races ahead. The second step is to support training 2 programs for society to utilize new innovations and technologies. For example, we know that a greater proportion of jobs require technical and computer skills. The education sector must transform itself into a provider of much more technical education than it currently does. While call centre training and basic computer skilling programs are common, only the most elite Indian private schools currently offer significant coding programs or have modern scientific lab facilities. In addition to youth, there must be retraining opportunities provided to the adult workforce. As the New York Times columnist, Thomas Friedman, has said in his latest book, Thank You for Being Late, even adults must be prepared to retrain themselves every few years, so they can continue careers in industries as they are being disrupted. In India, one of the driving factors for emigration to the Gulf or North America are the limited opportunities available to skilled adults. The third step is to fund and lead efforts to 3 organize society around innovation to manage their impact more positively. This is probably the hardest step in the process. While we have the ability to scout and understand technology and to input new curriculum and trainings into the education system, we have a much harder time changing societal behaviour. We must address issues of institutional process and norms, as well as the regulatory and policy systems that exist to manage technology and its 5

provide grants to NGOs normally in the same city or region as the funder. The grants are made based on a broad-based issue of importance to the funder, such as the skills of the workforce or health of the community, or upon the recommendations of corporate employees who may have volunteered with NGOs in the past. While there is nothing wrong with these approaches from a grantmaking perspective, they often do little to transform the trajectory of the NGO or move the needle on a pressing issue. 4 There are four pathways in which funders and CSR departments can directly work with innovators, entrepreneurs and startups. These pathways reflect the operational focus of a funder whether they make grants or conduct programs themselves, as well as their sophistication as a funder and knowledge of the sector. 1. Innovating Internally: A funder may want to leverage its own team or, if it s a CSR department, its corporate employees, to launch new ideas and initiatives. Often times, this will involve the creation of a fund to launch or financially support social initiatives by employees, or to launch new approaches to grant making. Internal innovation programs often resemble corporate innovation programs with hackathons, startup weekends and a team dedicated to getting the project off the ground. The challenge with these efforts is that, without financing and long-term commitment, the innovation or new approach often dies in a short time. One organization that has done this well is the Ambuja Cement Foundation, which often uses its large CSR staff to share innovative approaches on the ground. 2. Innovating with Partners: As many grant makers will tell you, their NGO and grantee partners are their greatest sources of innovation. On the ground, NGOs are often innovating and experimenting in search of ways to better reach their targeted beneficiaries or more efficiently use resources. NGOs often partner with their peers and have a deep understanding of the pain points where innovation and new approaches can be helpful. 6

But for this sort of innovation to truly take flight, funders and NGOs must agree to a multiyear strategic plan related just to the startup or technology. The idea/innovation must be accepted by all sides, while planning and funding for pilot, proof of concept, growth and scale up must all be factored into the decision to move forward with an innovation. The partners must also consider whether to end the program if the technology fails or is not adopted. Aditya Birla s CSR department often taps in to its grantee networks to assess trends and opportunities to change course or introduce new interventions. 3. Sourcing External Innovation: For the small group of funders with the capability to do so, there are hundreds of research innovations, startups and social enterprises that are looking for partnerships, funding and assistance with proof of concept and organizational development. These technologies are often developed by technologists, researchers or idealistic visionaries with little field, policy or organizing experience. Under these conditions, the funder must become venture philanthropist a term that deliberately implies the role of venture capitalist, but for social innovation. The funder must assist with site selection, pilot, team building, evidence gathering, governance and fundraising. For many CSR and foundations, this type of engagement would require an entirely new staff and higher risk tolerance. 4. Proof of Concept Centers: All organizations, whether corporate or NGO, strive to create an organization similar to Google or Apple s where constant innovation occurs, and where there are processes in place to find the next iphone, ipad, or...the next microloan or midday meal program. Creating proof of concept centres where new ideas can be constantly introduced, tested, evaluated and grown requires being good at many different skills, as well as having the scale to source and manage so many ideas. To date, no funders in India have created robust proof of concept centers with Indian universities, although IIT-Gandhinagar, IIT-Mumbai and others have launched promising efforts. 7

1 Assess 2 Accelerate 3 Activate 4 Analyze 5 Associate Identify where Innovation is required Ideate and research potential solutions Build organization skills to innovate... Prove validity of new ideas through proof of concept process Run all new ideas through Lean Startup process Gain insights about idea... Move ideas & prototype to market or community Project mgmt. and oversight Provide Governance...... Create case studies and events to share with Industry Seek new technologies or partners to scale Connect to other cause-driven funders Access to global data & research Facilitate global idea transfer technologies, for which there is no business case or evaluation data. At the end of the accelerate period, organizations will have a good understanding about the market opportunity that their innovation possesses, and what the field is telling them about it. Activate: For many organizations, this stage is a critical pivoting point when the innovation gets real. If the pilot has been successful, and there is evidence that the startup or technology can have a strong impact at scale, the organization be it funder or NGO, must invest the time, leadership and financial resources to move from idea/project into a full-fledged, independent startup or program. It must invest in leadership, governance, fundraising and strategic planning. Analyze: For civil society, this stage is a return to their comfort zone. In the private sector, very few startups analyze their results for fear of losing competitive advantage or property protection. But for NGOs and philanthropy, this is quite common. The ability to share learnings about promising new innovations with other NGOs, funders and government officials is important for social innovations to scale. In addition, it becomes easier to source other new technologies and startups that may be providing complementary solutions and match them up with your team or those of other funds. Associate: For those funders that have taken innovation to a certain level of scale and shared practices, the last stage of the innovation cycle is to search the world far and wide, to find similar technologies or opportunities to create even further impact in their core issues. The world s largest NGOs and funders are in constant communication about new technologies and trends and searching for opportunities to pilot those technologies. How are Funders Currently Managing Innovation? Some of India s leading corporations, CSR departments and funders have started experimenting with technology and program innovations and the early results are promising. Equal Innovation has worked with several of India s leading companies, including Godrej, Aditya Birla, Mphasis, Ambuja Cement and Wockhardt to understand how they support social innovation and technologies to alleviate poverty. All of these companies are open to working with more innovators and startups, usually in one of two ways: Grants to startups or university-based innovators to pilot their products/services in the region of India where the CSR department works. Direct implementation of new technologies or approaches through their own field-based CSR staff. 8

Governments of India priorities like Swachh Bharat. And yet, Indian Oil did not want to only fund hand-washing programs or the construction of toilets. Instead, it looked at the environment around its petrol pumps, the customers and business ecosystem they serve, and sought a technology partner to maximize impact. Sukriti s low-water usage toilets that also compost and use energy efficiently, serves multiple purposes for Indian Oil and its CSR. Interesting Innovation Projects: Opportunities & Challenges Several of India s leading companies are looking at research insights and startups that align with their mission as a means of providing solutions that are more likely to succeed than the status quo. These solutions range from really basic implementation of best practices to leveraging for-profit startups to deliver a community service. In partnership with teams at these corporations, the Equal Innovation team observed a desire to find solutions outside the status quo ideas that could be transformative. While early in their implementation, each CSR is looking at the new interventions with the long-term commitment required for innovation to succeed. Aditya Birla is considering gamification as a means of better educating young people, particularly in areas like children s safety. The gamification may occur through mobile apps or traditional board games redone for a social purpose. Aditya Birla is also looking at composting technologies that can be integrated more widely by its agricultural partners and the farmers they serve. Mphasis F1 Foundation launched partnerships with Uber called UberAccess and UberAssist to provide transportation solutions to the differently-abled of Bangalore. The service makes it easier for those in need to attend medical appointments, work professionally and interact with society. The Ambuja Cement Foundation has launched experimental projects to connect its agricultural programs and farmers to the Fair-Trade movement, and to provide better medical care through low-cost technologies to farmers and their animals. 9

innovators. CSR is ingrained in orporations that have long histories of commercialization and M&A, and therefore, experience with new ideas and technologies. And private philanthropy is often born of successful entrepreneurs who have built companies into well-known brands. Over the next five years, Equal Innovation expects many of India s leading CSR departments, private philanthropists and large NGOs to experiment more and more with external innovations, and create robust innovative cultures in an effort to increase the speed of change and improve the lives of millions of Indians. It will be an exciting time. END NOTES i Economic Survey of India, 2018 ii Economic Survey of India, 2018 iii 2011 India Census iv WaterAid 2017 Annual Report v The Lancet, 2017 Report on Domestic Violence in India vi PBL Netherlands Environmental Assessment Agency 2018 Report vii Delhi, Office of the Chief Minister 10

About Equal Innovation Equal Innovation is a consulting firm based in Bangalore that is focused on increasing social impact through strategic CSR, accelerator programs and public policy advisory. Equal Innovation works with companies, start-ups, foundations, governments and non-profits to build their capacity to innovate solutions, develop leaders and bring their products, services and programs to the markets and communities they serve. Equal Innovation is currently advising multinational companies and foundations to more effectively use their CSR and philanthropy to increase the impact of NGO s, social entrepreneurs, or regional development efforts. It also devices strategies for funders to deploy base-of-the-pyramid innovation effectively with the right partners in the nations they work in. Equal Innovation helps companies formulate policy with law-makers and provide thought leadership on topics of local and global importance. Our Portfolio of Services Proof of Concept & Acceleration Innovation Accelerators Research Commercialization Measurement & Evaluation The Social Performance Management System Analysis on Impact, Innovation & Scalability Strategy & Advisory Development Strategy CSR Advisory Research Insights Equal Innovation has 20+ years of experience in Development and Philanthropy, and has worked across multiple sectors and partnered with a diverse variety of organizations. We have worked with clients in multiple geographies, including The United States, India, Spain, Kuwait, Canada, Haiti, Africa, etc.... We look forward to working with you.... Contact Us Phone Email Website Twitter 97894 59384 Vishwanath Krishnan, General Manager moreinfo@equalinnovation.com www.equalinnovation.com www.twitter.com/equalinnovation 11