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The CGD Podcast
How to Scale Innovation – Podcast with the Global Development Lab’s Ann Mei Chang
00:18:05
Ann Mei Chang wants to “turn development upside down.” That’s how she describes the aim of the Global Development Lab, the arm of USAID that she runs. The Global Development Lab is tasked with finding new, innovative development solutions,...
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- [00:06]
A
Hello, I'm Rajesh Merchandani. Thanks for joining me for this edition of the CGD podcast. Now, development, as we know, depends on innovation, new ideas, new funding mechanisms, and new technologies that save and improve lives, from vaccines to solar lamps to development impact bonds. But even if innovations reach a million people, many still fall short of the billionaire who live in poverty. Why are we not getting to scale, and how do we change that? That was the topic of a talk given at CGD recently by Ann Mei Chang, Chief Innovation Officer and the Executive Director of the US Global Development Lab, who is my guest on the podcast, Anne Mei. Lovely to see you. Thanks for joining us.
- [00:44]
B
Thank you.
- [00:45]
A
So let's start by this idea of reaching scale, what do you mean exactly when you're talking about reaching scale, what is scale? How do you know when you got there?
- [00:54]
B
Well, I really define scale as the scale of the problem you're trying to solve. And so when we're talking about development and ending extreme poverty, the scale of the problem is on the order of a billion people. And so when we talk about reaching scale, I mean reaching a significant percentage of that population to be able to impact them and improve their lives.
- [01:14]
A
I mean, with a particular innovation or a particular program, particularly intervention, how do you know if you reach a scale? 100,000, a million, what?
- [01:23]
B
I don't think there's a particular number, and I think it often doesn't. Scale is not necessarily confined to an individual enterprise or an individual innovation. Sometimes it can be a cluster of innovations, and sometimes it can be replication of a particular model. But reaching scale to me means some level of adoption through governments, through replication, through individual enterprises to really reach a substantive portion of the population that could use it and could benefit from it.
- [01:48]
A
So. So in the introduction, I was talking about the billion who still live in poverty. So something is not happening in terms of reaching scale. What is that something? What are those things? What are those obstacles that you perceive?
- [01:59]
B
I think there are a lot of obstacles. I mean, it's tough to reach that kind of scale. It's tough even in the developed world. It's hard for us to find businesses that can reach that many people. It's even harder in developing countries where we're working in unstable environments, trying to serve people with places with poor infrastructure and so forth. But from an innovation standpoint, I think one of the challenges is that in the development community, whether it's donors or NGOs or otherwise, we tend to focus very much on those new ideas and what we think of as innovation is coming up with those new gadgets or services that are quote, unquote, innovative, and we don't invest enough in really what I call the 99%, the long hard sleep of taking those new ideas and really refining them, improving them, figuring out the business models, building the infrastructure, and really taking them to scale. It's not as sexy because that, you know, squeezing out the last cents in your supply chain is not as interesting. Doesn't make as great a story as coming up with the initial gadget in the first place. But it's necessary if we want to have the impact that we want to have.
- [03:06]
A
But why are we lagging behind so much as the development sector? Why are we not doing that? I mean, the private sector's been doing it for a long time. It's not exactly rocket science.
- [03:16]
B
Well, I think it is legitimately tougher in development, like I say, because we're working in, you know, with poor people who don't have a lot of resources, in places with poor infrastructure, and in countries often that don't have, you know, a lot that are unstable. And so it's a much more challenging environment to start with. But I think that's not the only reason. I think that from an innovator's perspective, there are three barriers that I think of that are predominant in why we're not reaching scale when I look at the innovations that are out there. One is really understanding customer demand. We often focus too much on coming up with something that is really interesting, that seems to solve a problem that we think people might have. But we're not focused enough on whether the customers think they have that problem, the users that we're trying to reach, and whether they understand the solution, whether it's something that they would prioritize for themselves. Sometimes that involves education, sometimes it involves outreach and distribution. Sometimes it involves tweaking our products, tweaking our services to better match their actual needs. The second is financial sustainability. That too often we come up with innovations, but they end when the grant funding ends, and grant funding always ends. It's sort of a law of physics almost. And so what we think is really important is to look at how can we be financially sustainable. And that means perhaps a private sector business model where there is some revenue stream coming in that is able to help pay for the costs and provide some margin to continue growth. Or it could be government adoption, where local governments are able to adopt and integrate in the programs and services that they provide their citizens. Or it could be some hybrid. But either way, it's important that we have some way to continue to fuel growth of a particular innovation to bring it to new markets, new customers. Otherwise we'll taper off after reaching a few hundred thousand people, perhaps. And the third is operational maturity. That I believe that both in the private sector in the United States as well as in development, the people who are often the most innovative at coming up with the new ideas, who are the sort of out of the box thinkers, are not always the people and often aren't the people with the operational experience to know how to build the infrastructure, build the organization, build the business models to really achieve that massive scale. And so what that means often is being humble enough to ask for help. And that could be hiring experienced staff. It could mean actually bringing in an experienced CEO and taking a founder's role. Or it could mean working, partnering with or selling to a larger organization that has that infrastructure and capacity already built in.
- [06:10]
A
Let's go back to the first obstacle that you identified. Understanding customer demand is the problem, even identifying the customer. Is the customer the person on the ground in the developing country who we used to regard as a beneficiary? Or is the customer the person who's paying for it? Is the customer the donor agency?
- [06:32]
B
Yeah, I think it's complicated for development and I think it's one of the reasons that development has been challenged to scale and different than private sector. Because the private sector as we know it in the US it's very clear who your customer is. They're the ones that buy things in the development space. Often sometimes it's the customer that buys things, but sometimes there is an end user that maybe receives something, but it may be provided for by government or by a donor. And so you have more of a triangulation of different customers with different incentives and sort of navigating that creates a much more complex environment to be able to optimize for providing the best product for your customer.
- [07:13]
A
Yeah, I mean, the problem there is that the donors are paying for outputs, building a school rather than the outcome of learning. So how would that kind of shift, I mean, how could we incorporate that kind of a shift in thinking into the way you approach innovating?
- [07:32]
B
Well, I do think that the holy grail of development would be if we could pay directly for outcomes rather than output. It's hard, it's very hard to measure these things, measure them in a reliable way, be it agree on those kind of metrics, sort of finance the bridging of that to achieving the outcomes. So it's tough, but I think it would be Ideal for us to pay for the outcomes. And we're trying to take steps towards that. For example, one of the things we've done is run prizes where it's not sort of an outcomes based thing like learning, but we might run a prize to take a step forward in innovating for a solution that we need from what existed before. So, for example, as part of our Securing Water for Food grand challenge, we ran something called the Desal prize to look for a desalination system that could produce more potable water from brackish water than the traditional reverse osmosis technique and using only renewable electricity. And so we ran this as a prize competition, put it out for anybody in the world to be able to submit their innovation. And then the finalists went to New Mexico in the desert to actually do a bake off, if you will, a desaloff, if you will. And what they did is they had to set up their systems, run it for 24 hours, hands off, and see who could produce more water that was desalinated. And the winning contestant was from mit. She was a student from mit and they came up with a system that was able to produce almost twice as much potable water from brackish water as your traditional reverse osmosis technique using entirely solar power.
- [09:17]
A
Do you think that, I mean, that kind of grand challenge or kind of a challenge or a prize is that seems to be used increasingly now. Is that the answer?
- [09:28]
B
I think it's one answer. I think what we're trying, it's a piece of how we're trying to restructure development. One of the things that we're trying to do at the Global Development Lab is to turn development upside down, to really look at how do we bring modern tools and approaches that have worked in Silicon Valley and elsewhere and bring them to the practice of development. And so we see the aim as becoming more open, more agile, more data driven and more scalable in our solutions. And so the grand challenges and prizes and our other open innovation competitions sort of address that first stage of being more open. And we believe that we'll come up with better solutions by tapping into the ingenuity of people from around the world, from all walks of life, whether they be local entrepreneurs, whether they be students, whether they be in the private sector or otherwise. Because it is the best ideas often come from unexpected places and often from bringing people with different perspectives together through our traditional processes of procuring development solutions. You know, put out an RFA or rfp. It's usually only the usual suspects that are large multinational organizations that are able to compete for those. And so we're trying to lower that barrier to entry so that more people can apply their ingenuity to the biggest and toughest challenges of the world. World.
- [10:46]
A
I have a feeling that kind of attitude probably sends shivers down a few people's spines around Washington. I mean, how. What success do you think you've had at the Global Development Lab in actually getting, say, you know, a behemoth like USAID to change its ways?
- [11:02]
B
Well, we're starting to make good progress. So we at the lab run a number of different open innovation mechanisms, including grand challenges that both we run at the lab in conjunction with our colleagues in different bureaus as well as Development Innovation Ventures and now the Global Innovation Fund, that's been spun out. But what I'm even more excited about is these are, you know, these are a drop in the bucket. They're tiny compared to the spend of usaid.
- [11:26]
A
That's the problem though, isn't it?
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B
Well, but you have to start somewhere.
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A
And so they're always only ever going to be tiny, aren't they?
- [11:33]
B
I don't think so.
- [11:33]
A
USAID's procurement is not going to be done on the basis of grand challenges in the majority.
- [11:39]
B
I hope that that will change, actually. So our role of the lab is to experiment with these new approaches and show that they can work. So I think we've shown some good successes with the grand challenges in DIV and gif. And now what we're doing is working with the rest of the agency through our missions, through our major initiatives in the agency, and building in open innovation as part of those procurements. So for example, we have something called the broad agency announcement that's been used by at least a dozen missions now with where through their normal mission programs, they're creating a window where they're bringing in new innovations and new ideas and co creating with stakeholders to come up with the solutions that might be applied in their programs. So it's a step along the way. And I feel like my hope is that over time this will become a standard practice, standard way of doing business at usaid, where all of our programs will actually have an open innovation window as part of them that brings in the fresh ideas and, and experiments with them so that we do apply the best solutions to the problem.
- [12:44]
A
In terms of the kind of bureaucracy of usaid, the structure of the bureaucracy. I mean, you sit sort of, you know, kind of on your own a little bit as the Global Development Lab. How well integrated, sufficiently well integrated, do you think? You are to actually make an impact on how USAID operates, how it thinks, the culture of that organization. Because if you start there, then others are going to follow suit.
- [13:08]
B
Yeah, so it's a great question. So the Global Development Lab is the newest bureau at usaid. So we're considered a pillar bureau in the same way our health bureau or our agriculture bureau are. And so we work alongside our bureau colleagues, either on the pillar bureau side or the regional bureau side, and provide a service to help provide these tools and approaches and innovations that we believe could be helpful to them to reach their goals more effectively. And so our position is really, we're going to experiment with a bunch of these tools, innovations and approaches, figure out which ones look like they might work, and then work with our bureau colleagues and our missions to see which of them might apply and be helpful to them in reaching their goals. And part of our job is to build the evidence base to show where they can really make a difference, where they can be a cheaper way or a faster way of doing things or a more effective way of doing things, and then work with them to integrate it. So we are working with many different missions. I just came from a conference we held in South Africa last month where we had over 20 missions. Leadership teams come in to work with us to look at how they can integrate science, technology, innovation and partnerships in the programming that they do. And we're also working with three of the agency, the priority initiatives, in this case the Ebola Recovery, Feed the Future, Empower Africa, and taking an all of lab approach, working with them to look at what are the best tools and approaches of the lab that we can bring to their work to help them meet their objectives.
- [14:44]
A
Now, my colleague Charles Kenny recently wrote a paper that's on our website called technology and 10 recommendations for donors. He makes the point that if you're trying to innovate for development, that country conditions, local conditions are so different that no two countries are the same. And so context becomes incredibly important. But I wonder, applying that idea to innovation and scaling innovation, do you end up with an obstacle that you can't get over because no two countries are the same, can you actually achieve scale across more than one country across the region, across the world?
- [15:21]
B
Yeah. So as Charles said, some innovations are more context agnostic than others. So there's a spectrum. So some are much more sensitive to the context than others. But I think what's really important as part of that kind of business fundamentals to get right is to really understand your metrics for success and understand how you're going to measure them on an ongoing basis and build that into the basics of your business. So if you have that, when you're in a new context, you will get data right away if something's not working, because there's often a dozen different factors that may cause something to work or not. And if you have ways to be able to keep your fingers on the pulse of all of those different factors and you can tell when something's not working and you can adapt, but if you don't have that, it may take years before you realize that something's not working. You've wasted a lot of time and money.
- [16:13]
A
So, okay, but that's sort of what's going on now. A lot of time money is being wasted, I think. So what would you like to see as a solution?
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B
So I think really building in the understanding of what those key factors are that will enable your innovation. What are the key metrics to see whether your innovation is working or not, whether you're making progress and then being able to build the data systems that measure those on a continual real time basis to give you that feedback as quickly as possible so you know exactly when something stops working and can adjust and experiment with different approaches at that point.
- [16:49]
A
So routine evaluation?
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B
Yeah, I wouldn't even call it evaluation because evaluation seems very heavyweight. It's more like real time data feedback system. So if you look at a Google, for example, where I used to work, Google runs hundreds of experiments on its homepage every day. They're constantly testing to see whether distributed tweak of the algorithm or this tweak of the user interface will make their customers happier and give them results that answer their question more quickly. And so that kind of data feedback loop allows tech companies to be able to make the rapid progress that they do because they are constantly seeing what's working for users and not and adjusting their algorithms and their user interfaces based on what's working for customers.
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A
Okay. Ann Mei Chang, really interesting to talk with you. Thanks for joining me on the podcast.
- [17:36]
B
Thanks. My pleasure.
- [17:37]
A
You can find out about that paper from Charles Kenny technology and 10 recommendations for donors. It's on our website, cgdev.org as is everything else, of course, that CGD is working on at the moment. I'm Rajesh Merchandani and please do join me again for the next podcast from the center for Global.