Connecting Green Technology Entrepreneurs Implications for Public Program Design The study “Connecting Green Technology Entrepreneurs: Implications Rights and Permissions for Public Program Design” is available at www.infodev.org This work is available under the Creative Commons Attribution 3.0 Copyright Unported license (CC BY 3.0) http://creativecommons.org/licenses/ by/3.0. Under the Creative Commons © 2016 International Bank for Reconstruction and Development / The World Bank Group Attribution license, you are free to copy, distribute, transmit, and adapt Mailing Address: MSN I9-900 1818 H St. NW, Washington this work, including for commercial purposes, under the following D.C., 20433 USA conditions: Telephone: (+1) 202-458-4070 Website: www.infoDev.org Attribution—Please cite the work as follows: infoDev. 2016. Connecting Email: info@infodev.org Green Technology Entrepreneurs: Implications for Public Program Twitter: @infoDev Design. Washington, DC: World Bank Group. 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Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank Group, all of which are specifically reserved. 2 acknowledgments This report was prepared from background research Baria Daye (WEF Global Shapers), Quinn Middleton conducted for the design of the “Market connect” project of (Unreasonable Institute), Mark Grundy (Carbon War Room) the Climate Technology Program of the World Bank Group. and Hilary McMahon (Carbon War Room) for their guidance The report was finalized by a World Bank Group team led by and support in the preparation of the different case studies. Justine White and comprising Hillary Eason, Lawrence Kay, Rosa Lin, Marta Milkowska, Samiksha Nair, Faheem Noor Ali, The team is also grateful to Justin Hill, Al Watkins, Natalia and Jean-Louis Racine. Agapitova, Alex Laure, Ilari Lindy, and Smita Kuriakose for their valuable time and advice in the elaboration of this The team would like to thank Christine Kurihara (Stanford report. Biodesign), Rikin Gandhi (Digital Green), Aishwarya Pillai (DigitalGreen), Vipal Kumar (Ennovent), Nicolas Chevrollier This study was funded by UK aid from the UK government, (BoP Innovation Center), Margaret Meagher (African Australia’s Department of Foreign Affairs and Trade (Australian Leadership Academy), Mike Cherrett (Climate-KIC), Daniel Aid), Denmark’s Ministry of Foreign Affairs (DANIDA), Norway’s Zimmer (Climate-KIC), Ana Garcia (ENoLL), Eliza Rosenbaum Ministry of Foreign Affairs, and the Netherlands’ Ministry of (IDEO), Karolina Sődergren (WBCSD), Karthik Iyer (Ennovent), Foreign Affairs. 1 About infoDev infoDev is a multi-donor program in the World Bank Group For more information visit www.infoDev.org/climate that supports growth-oriented entrepreneurs in developing economies. The program has designed and launched a global Follow infoDev on Twitter @infoDev and on network of business incubators for climate technology, Facebook @infoDevWBG agribusiness, and digital entrepreneurship. Through Climate Innovation Centers, Mobile Application Labs (mLabs), and Agribusiness Innovation Centers, infoDev connects entrepreneurs with the knowledge, funding, and markets they need to grow their businesses. About infoDev’s Climate Technology Program The Climate Technology Program (CTP), housed at infoDev, empowers developing countries to proactively and profitably adapt, develop, and deploy climate-smart technologies and business models. The CTP is creating a global network of Climate Innovation Centers (CICs) that provide a country- driven approach to addressing climate change and fostering green growth. The CICs are designed as locally owned and run institutions that provide a suite of services and venture financing that address the specific needs of local climate technology SMEs and entrepreneurs. At the global level, the CTP is providing linkages between CICs by facilitating market entry, access to information, and financing for the private sector, while also offering important tools for policy makers to measure and improve domestic climate innovation activities. Currently, the program is establishing CICs in eight countries: Kenya, the Caribbean, Ethiopia, Ghana, India, Morocco, South Africa, and Vietnam. Acknowledgments 2 contents 5 Executive Summary 9 Objective and approach of the study 14 Part I: Innovation processes for green technology 44 Part II: Case studies entrepreneurs 1. Digital Green A. Building connections for green technology entrepreneurs 2. Stanford Biodesign Open innovation, technology brokering, and firms networks 3. African Leadership Academy B. Establishing connections between people, ideas, products, 4. Carbon War Room and to facilitate transactions Insights from the case studies 5. Climate-KIC 6. OpenIDEO 1. PEOPLE Empowering entrepreneurs to explore new 7. Ennovent synergies and develop new capabilities 8. Unreasonable Institute 2. IDEAS Fostering knowledge transfers and 9. Quirky incentivizing the emergence of new concepts 10. Villgro 3. PRODUCTS, SERVICES, AND BUSINESS MODELS 11. BoP Innovation Center Facilitating design improvements and 12. ENoLL – network commercialization 13. WBCSD 4. TRANSACTIONS Reducing search costs and 14. WEF Global Shapers broadening access to sources of funding 5. COMMUNITIES Reinforcing networks through motivating participants C. Possible implications for Public Program design 3 tables and figures FIGURES: TABLES: Figure 1. Location of the case studies Table 1. The 14 selected case studies Figure 2. Five different types of connections Table 2. Closed innovation vs. open innovation Figure 3. Stanford University’s outputs Table 3. “People” case studies summary and key takeaways Figure 4. Carbon War Room’s online communities Table 4. “Ideas” case studies summary and key takeaways Figure 5. OpenIDEO’s outputs over the past 5 years Table 5. “Products, Services and Business Models” case Figure 6. A sampling of Quirky’s more popular skills studies summary and key takeaways categories (number of people) Table 6. “Transactions” case studies summary and key Figure 7. Ratio of entrepreneurs, mentors, and investors at takeaways Unreasonable Institute Table 7. “Communities” case studies summary and key Figure 8. Top-down vs. entrepreneur-centered approach takeaways Figure 9. Connective models rapidly expanding reach Table 8. Some possible local and global measures Figure 10. Five possible areas of focus for new connective public programs 4 executive summary Growing innovative green technology firms R&D and the best employees. This has worked in developed nations with the resources and ability to attract the best talent, In face of growing concern related to climate change, green but has proven to be a poor strategy in developing nations. technology entrepreneurs are critically needed to develop the Rather, emerging markets can pursue a more fruitful path by businesses and ideas behind climate mitigation in developing recognizing a key insight: While great innovators are usually countries—but they frequently collide with challenges endemic pictured as great inventors, they are often just great technology to such environments. A common thread of hope exists. brokers. Instead of inventing and developing fundamentally This report, based on a series of public and private sector new ideas, some of the most innovative firms of the last century case studies, argues that innovation by green technology have focused on recombining existing ideas in new ways, and entrepreneurs in developing countries may best be fostered building strong social networks of talent and resources instead by “open innovation” and “technology brokering” strategies. of focusing on individual inventors. Nascent firms can thus grow These strategies emphasize the importance of sourcing and faster, leaner and better by embracing the “open innovation” combining ideas in tune with market needs, through facilitating paradigm, which emphasizes the importance of connections connections among entrepreneurs and with other stakeholders. among stakeholders and the market. In the open innovation By associating firms within networks with multiple connections, paradigm, new products do not have to rely on scant such an innovation model may help lower investment costs, internal resources, but rather are developed via established speed up delivery of new products and services to market, and connections among various stakeholders in the innovation scale up and help adoption of new-to-the-context business process (firms, financiers, potential clients, etc.) and with the models. Thus, it may meaningfully help green technology market. entrepreneurs overcome the market failures that they are particularly likely to face on both the demand and supply sides More precisely, the case studies offer insights into which types in developing countries. of connections may best suited to foster innovation in climate change friendly technologies in developing countries. Out of an Developing countries often lag in green technology innovation original pool of 142 cases, 14 were selected and analyzed for because they pursue an invention-oriented approach. In an being successful at facilitating connections among (i) people, invention-based approach, enterprises invest massively in (ii) ideas, (iii) products, services and business models, and (iv) 5 transactions, as well as for at creating a sense of (v) community, FIVE DIFFERENT TYPES OF CONNECTIONS thus ensuring the sustainability of the different connections. The routine circulation of (ii) ideas within open networks has been found conducive to innovation processes, and the case studies highlight different ways of achieving this outcome. Notably, connective models seek to foster peer- to-peer interactions, making it easier for ideas to spread interpersonally and enticing more actors to join discussions. The continuous process of interactions among firms and other actors within well-functioning networks may vitally boost the combination and commercialization of new (iii) products, services and business models. The participation of entrepreneurs in these networks also provides opportunities for firms to adapt business models observed elsewhere to their own industries or countries. Further to reducing counterparty risk, the establishment of (iv) transactions platforms promotes innovation through reducing information asymmetries among the different stakeholders and through lowering search costs. Connections to external sources of financing are often a precondition to development for nascent SOURCE: AUTHORS firms, especially within countries with limited savings capacities. A cornerstone of well-functioning networks, strong (v) communities are created by the self-reinforcing effects of goal of establishing connections among them, and the best sustained connections over time. In this sense, the buildup guarantee for the self-perpetuation of the network. The case of a community of entrepreneurs striving to open up new studies highlight the role of “promoters” or high-visibility firms activities in a specific economic sector is both the ultimate in building this sense of community. EXECUTIVE SUMMARY 6 Implications for public program design First, technology brokering may be best fostered by public policies that place the entrepreneur at the center of the Connective models aimed at fostering open innovation innovation process. These models seek to put the entrepreneur processes suggest specific forms of public intervention. There’s at the center of a dense network of connections. The little doubt that public support is needed to foster innovation establishment of well-targeted connections can aim at fulfilling processes, given the pervasiveness of market failures and the three joint objectives of accelerating innovation processes the particular uncertainty of green technology prospects in (“speed”) and expanding successful projects (“scope”) while developing countries. However, traditional methods of public keeping public investment minimal (“cost”). To illustrate, the support have seen little success so far: not only are such following graph shows three case studies focused on different programs relatively costly and display long implementation categories of connections: Climate-KIC on ideas, Digital lags due to sizable initial investment needs, they have often Green on people’s capabilities, and Quirky on transactions. led to disappointing results. Instead, this report offers three Each demonstrates the potential for rapid growth that such key findings on best practices for public intervention. connective models can enable. CONNECTIVE MODELS RAPIDLY EXPANDING REACH (percent of growth) SOURCES: CLIMATE-KIC ANNUAL REPORTS; HTTP://DIGITALGREEN.ORG/ANALYTICS; HTTP://QUIRKY.COM EXECUTIVE SUMMARY 7 Regarding (i) people, the case studies point to positive stakeholders may support the development of the green externalities stemming from bringing together stakeholders technology sector in developing countries. This is all the more with diverse backgrounds. They also suggest that mentoring needed in that despite strong positive environmental, social programs, including informal interactions between “seasoned” and economic externalities, climate change technologies are entrepreneurs and new ones, provide a most valuable particularly prone to market failures and bottlenecks, notably contribution to the growth of new firms, and to the creation of relating to the lack of market depth at the domestic level, social networks. Finally, they show that engaging in open forms limited access to cutting-edge knowledge, and the difficulty of of innovation activities requires a versatile workforce that may structuring communities on these issues. crucially rely on external connections to succeed. Second, at the local level, public support can aim at cementing peer-to-peer connections; for example, through setting up mentoring programs, and facilitating catalytic events. Useful programs can include the provision of consultancy services, ranging from the opening of one-shop kiosks for new entrants to the activation of peer-to-peer connections by “go-betweens,” or the setup of mentoring services matching new entrepreneurs with successful, experienced ones. Support may also be directed toward facilitating catalytic events such as “green technology forums.” Favorable policy changes can include strengthening intellectual property rights to ease the licensing of ideas and technologies as well as setting restrictions on noncompete agreements to ensure the mobility of the workforce. Third, at the global level, programs can aim at including entrepreneurs in supra-national networks and technology brokering platforms, complementing local action. From this viewpoint, a centrally managed program geared toward creating a bridge between green ventures, global assets, and EXECUTIVE SUMMARY 8 objective and approach of the study The purpose of this study is to shed light on the role technology innovation in developing countries. This is that connections can play in helping green technology done through drawing insights from a variety of public and entrepreneurs innovate and scale up in developing countries, private programs that seek to promote connections between so as to inform the design of new public sector programs. entrepreneurs in green technology and other sectors. The Green technology entrepreneurs in developing countries report is based on 14 case studies of different programs need connection platforms for people, ideas, business models, spanning more than 80 countries. transactions, as well as membership of expert communities. This study shows how cheaper, quicker and more efficient The general findings are presented in Part I, whereas insights connections can be created among stakeholders of green from the individual case studies can be found in Part II. FIGURE 1. LOCATION OF THE CASE STUDIES 9 The case studies were chosen through qualitative research, Criteria for the mix of case studies: based on the expert knowledge of the report team and guided • Programs addressing different value propositions by selection criteria. The team originally looked at 142 different (people, ideas, products/services, transactions and programs that have been either successfully or unsuccessfully community) promoting different types of connections (included in annex). • Programs using a mix of business models (e.g. platforms, open networks, etc.) These programs were categorized by connection type and ranked by replicability and feasibility. Out of the original pool • Programs involving developing countries to a large extent of 142, the selection was narrowed down to 30 programs for • Programs targeting different audiences (entrepreneurs, institutions, corporations, etc.) which preliminary case studies were developed, out of which 14 were finally selected for full development in this report. The criteria for narrowing down the selection of case studies to the Each of the chosen programs promote different types of con- final headcount included the following. nections in a novel way in different countries and environments, at relatively low cost, with unusual “side- effects”—that is, the Individual case criteria: investment made in one type of connection turned out to have • Programs that would teach something about: positive external spillovers in terms of innovation (e.g., through – the performance of the business model; the adoption of new ideas or business models). – the organization and financing of the business model; The final 14 cases, presented in the table below, were – the partners and external support for the business selected so that as a whole, they illustrate programs that model; and • connect people in a way that promotes learning and – the cultural context of the business model knowledge sharing • Programs with unusual features likely to provide new • help facilitate new idea generation; insights • encourage the adoption of new products, services, and • Programs whose operational model could be leveraged business models; for designing a new World Bank program • enable transactions, thus reducing search costs; and • encourage the building of communities. OBJECTIVE AND APPROACH OF THE STUDY 10 GLOSSARY OF TERMS Green technology (Greentech) Technologies that provide climate mitigation or adaptation benefits or positive environmental benefits Green technology entrepreneur An entrepreneur whose business is based on utilizing green technology in some form. This covers both entrepreneurs wishing to commercialize indigenous local technologies and those deploying technologies invented elsewhere. Example. A person who initially deployed a green technology successfully in Country A and is now looking for new markets in Country B. Green technology company Companies that base their business on green technology, whether existing or new. This includes companies that innovate on their process/business model, whether or not their technological solution is new. Example. Many solar startups (SolarCity, Mosaic) do not offer a new solar technology, but are nevertheless innovating on the delivery and business model aspects. Note. Many ventures that the World Bank considers “greentech firms” do not actually see themselves as such. Business model A company’s method of creating value for the customers and capturing value for the company and its stakeholders OBJECTIVE AND APPROACH OF THE STUDY 11 TABLE 1. THE 14 SELECTED CASE STUDIES Connection Launch Case study programs Location Number of beneficiaries type date United States, Singapore, India, Japan in Stanford Biodesign 2001 1,100 participants per year development African Leadership South Africa; draws applicants from across People 2004 100 students/year; 634 alumni Academy African continent India, Ethiopia, Tanzania, Ghana, Niger, From 2008 till date: 685,228 Digital Green 2008 Afghanistan beneficiaries United States; global projects incl. the Carbon War Room 2009 Unavailable Caribbean islands Ideas United Kingdom (HQ); network member labs Climate-KIC 2010 250 partners, 241 grad students across Europe OpenIDEO United States 2008 80,000 Works with approximately 20,000 Products, Ennovent Austria, India 2008 individuals per year services, Unreasonable Institute United States 2009 116 ventures business models Quirky United States 2009 1,000,000+ Villgro India 2001 1000 people per year Netherlands (HQ), Kenya, Rwanda, Transactions BoP Innovation Center 2010 Unavailable Bangladesh, Tanzania, Ethiopia, Vietnam European Network of Belgium (HQ); labs across Europe and world 2006 370 living labs Living Labs (ENoLL) Communities World Business 70 partners, representing more than Council for Sustainable Switzerland; worldwide network of 64 countries 1995 35,000 businesses Development Switzerland (HQ); hubs in Europe, Asia, Africa, WEF Global Shapers 2011 5,348 Shapers North America, South America, and Oceania OBJECTIVE AND APPROACH OF THE STUDY 12 Solar panel used for lighting village homes in Sri Lanka. Photo: Dominic Sansoni / World Bank 13 part 1. innovation processes for green technology entrepreneurs 14 Building connections for green technology entrepreneurs: Open innovation, technology brokering, and firms networks Toward an “open innovation” KEY FINDINGS: model for green technologies in developing countries • Innovation in green technology sectors can be fostered through open innovation strategies, which rely on Firms face particular challenges with green technology sourcing and combining ideas in tune with market needs innovation in developing countries. The capacity of firms rather than inventing technologies in-house. to engage in innovative activities typically requires several ingredients that may not be readily available in developing • This pleads for organizing innovative green technology firms within networks with multiple connections aimed countries: plentiful savings available for the financing of at lowering costs, speeding up delivery to market and “risky” projects; a highly qualified workforce operating scaling up business models. at the technological frontier; property right enforcement mechanisms; and so on. In the case of green technologies, an added challenge consists of identifying potential local, regional or global opportunities for new products or services, in a context where access to information and the identification people so as to be the first to develop and commercialize of fast-changing market and technology trends may not be new ideas, which they subsequently protect from competitors straightforward. by claiming intellectual property rights. The monopoly profit generated by the commercialization of these ideas Developing countries do not have many of the resources or associated products and services can then be reinvested required for an invention-oriented approach to green to perpetuate the virtuous circle of new discoveries and technology innovation. In an invention-based approach, innovations. The various preconditions needed for this model to enterprises invest massively in R&D and recruit the brightest work—strong savings and capacity to invest, a highly qualified 15 workforce at the technological frontier, well-protected brokering, by difference with investing in the homemade property rights—are typically lacking in developing countries, generation of breakthrough products. Instead of inventing and especially for new activities such as those in the green sector. developing fundamentally new ideas, these firms have focused Moreover, being first to market in many economies does not on “recombining old ideas in new ways,” and “rather than often require invention. Technology absorption, including new nurturing individual geniuses, they developed strong social business models, can be an alternate pathway. networks both within and outside their groups” (Hargadon 2005). For example, to solve new management problems The “open innovation” paradigm offers a promising option for for their clients, Accenture and McKinsey use knowledge nascent firms by emphasizing the importance of connections management systems that link consultants from different fields among stakeholders and to the market. Innovative firms so that they can interact in new ways. Rather than just giving in developing countries may find it particularly relevant to consultants a library in which they can search for information, structure their activities based on insights emanating from the these firms have trained staff to understand where knowledge literature on open innovation. The concept of open innovation is kept and “broker” connections between consultants that has been developed to account for the ways in which firms need help with a problem and their colleagues who might have have been able to bring to market innovative products or ideas on how to solve it (Hargadon 2002). services without heavily relying on in-house R&D investment. It has been defined as a paradigm wherein “firms commercialize Open innovation can help green firms latch onto a competitive external (and internal) ideas by deploying outside (as well as edge in fast moving markets and technology sectors. Green in-house) pathways to the market” (Chesbrough 2003). In this sectors are characterized by constantly changing conditions setting, innovation does not primarily rely on those “internal” linked to a rapid pace of innovation, policy factors, changing resources that are in scant supply in developing countries, consumer behaviors, and fluctuations in the price of energy. such as strong R&D capacities and scientific base, but on the In developing countries, green technologies have a special establishment of connections among the various stakeholders role to play in improving the lives of the poor through access in the innovation process (firms, financiers, potential clients, to energy, access to water, and climate-smart agriculture. etc.) and with the market. The world is now booming with experiments—most of them unsuccessful—on how to better deliver green services to the While great innovators are usually pictured as great inventors, poor. The open innovation approach can help green firms take they are often just great technology brokers. Regardless of market demand as a starting point, without locking themselves size, some of the most innovative firms of the past century into any particular technology, by scouring the horizon for the have been the ones that pursued a strategy of technology right technologies and business models. Firms engaging in open Building Connections for Green Technology Entrepreneurs: Open innovation, technology brokering, and firms network 16 innovation also develop an ability to shed out potential projects Open innovation can connect developing country small and me- that are not aligned with their core strategies and to recycle dium enterprises (SMEs) with intimate knowledge of local green ‘false negatives’, namely projects that initially seem to lack technology needs, to the global capabilities required to address potential but turn out to be profitable if redesigned for other these needs. In the case of developing countries, where the pop- uses by external partners. This puts a strong premium on the ulation will suffer the most from climate change, local SMEs are firms’ ability to identify business needs and establish connections likely to have the deepest empathic understanding for potential with potential markets very early on in the innovation process. markets yet at the same time lack the technological or financial connections to seize business opportunities. Given the premi- In contrast, centralized approaches to innovation are um laid on understanding market needs when deploying green better suited for long-term goals with very clear markets. In products or services that require behavior change, this pleads centralized innovation, the objective and end users of the for putting in place open innovation platforms of between local products or services tend to be clearly identified from the firms, global stakeholders and potential clients. onset. This is best exemplified by publicly sponsored research megaprojects where the government may be the only customer (e.g., the Manhattan project to create the atomic bomb during World War II). TABLE 2. CLOSED INNOVATION VS. OPEN INNOVATION Closed innovation Open innovation Corporate ethos Only invented here Best from anywhere Role of customers Passive recipients Active co-innovators Core competency Vertically integrated product and service design Competitive differentiation and collaborative partner management Economies of scale, with products and services Economies of scope, with individualized solutions optimizing end Scope built around core competencies customer value Attitude toward IP Own and protect Trade and commercialize Optimize performance of owned assets through both in-house Role of R&D and Design, develop and market in-house and external development: do enough R&D internally to recognize operations inventions significant external R&D SOURCE: ADAPTED FROM RADJOU 2004 Building Connections for Green Technology Entrepreneurs: Open innovation, technology brokering, and firms network 17 markets can be used to create innovation in new sectors. In The scope of public intervention: strong networks, values and reward structures are aligned to fostering connections through networks support collaboration and knowledge transfer. In some cases, this can lead to joint ventures, licensing agreements or supplier Networks can help foster open innovation. Networks are relationships, or less codified interactions such as ad hoc hybrid forms of organization between firms, seen as closed, research projects or community gatherings. hierarchical structures, and the market, considered a horizontal coordination structure among separate entities (Hennart 1993). Participation in networks can also influence the internal In open innovation, the boundaries of innovative processes organization of firms. Networks are characterized by flexible, are fundamentally porous, enabling innovation to take relational communication methods and commitment place within the firm based on external ideas, or outside the procedures, which can profoundly alter the internal firm based on internal ones. In such an environment, strong organization and business model of participating firms. In this networks become key to innovation by connecting people, sense, “social networks correspond to a specific set of linkages encouraging knowledge transfer, sparking new ideas, and among a defined set of actors, with the additional property that promoting collaboration (Lichtenthaler 2011). The founding the characteristics of these linkages as a whole may be used to of the European Center for Information and Communication interpret the social behavior of the actors involved” (Mitchell Technology, an R&D network, by Deutsche Telekom is a 1969). Such linkages are effective conduits for knowledge good example. The center has research partners from the transfer and exchanges of ideas in open innovation. The automobile, telecommunications and electronics industries, as changes made to the Digital Green business model, described well as from academia. Deutsche Telekom creates consortia in a case study below, reveal some of the innovation effects of and bilateral links with these and other members to develop networks on organizations. In its development as a provider and market new ideas; hence, using an open and connected of informational videos on farming techniques in India and model of innovation to stay competitive (Rohrbeck, Holzle, and elsewhere, Digital Green has gleaned that farmers are much Gemunden 2009). keener to learn from other farmers than they are from experts. It uses social networks in villages to identify who is most likely Networks can accelerate the pairing of complementary ideas, to appear credible, and to understand the supply and demand skills, goals, and technologies that lead to breakthroughs. Firms of good farming ideas. This use of networking by Digital Green can leverage networks to see how existing technologies may helps it to innovate its offering in a new area. be used to create innovation in other sectors, and discover how new combinations of products and services from unexpected Building Connections for Green Technology Entrepreneurs: Open innovation, technology brokering, and firms network 18 More specifically, participation in networks can greatly notably include a higher degree of uncertainty regarding the enhance the implementation of “technology brokering” final demand for new products and services. Thus, in order strategies. Technology brokering requires firms to align to tailor the funding of R&D activities for green innovative their innovation strategy, work practices and people within products or services to market needs in a context of scarce a revamped business model focused on the end clients or resources, incentives are mainly set to empower entrepreneurs, users. From an operational viewpoint, this involves that: (i) by by (i) linking them to the sources of support they need to grow spanning industries and markets, technology brokers develop out of their initial state and (ii) helping them better understand the ability to see how existing technologies may be used their surroundings —hence providing them with a chance to to create innovation in other sectors; (ii) work practices are generate new ideas and test the commercial viability of those geared toward discovering and formulating new combinations new ideas at the same time. In this sense, a connective model of products and services from different markets; (iii) work program aims at directly lowering competitive barriers faced incentives and reward structures are aligned to support the by nascent firms rather than supporting them directly, thus identification of new combinations of old ideas by collectively warding off the risk of accidentally bracing up some businesses pooling knowledge and experience. In this perspective, the that should actually be recognized as nonviable. buildup of, and participation in, overlapping networks provides entrepreneurs with the opportunity to exchange with their Public intervention to support green technology firms in peers current market trends and possible complementarities developing countries should aim at reducing transaction costs between their products and services on a continuous basis— by fostering networks of firms, thus implementing a “connective thus sustaining firms’ ability to nurture innovation. model” approach to innovation. Using a “connective model” approach may represent a particularly efficient way for public Public intervention is warranted to support green technology support to address the specific sources of market failures in developing countries on account of both pervasive market faced by green technology businesses in developing countries. failures and strong positive externalities. Although open In essence, a program employing a “connective model” does innovation-type models seem to represent the best option not try to provide its final audience, namely the innovative to grow green technology firms, the emergence of networks firm, with the resources it needs; rather it connects it to ways or exchange platforms cannot be expected to happen on its to find them on its own, via the structuration of networks and own due to pervasive market failures, especially in developing the establishment of various connections. In this sense, its countries. Indeed, compared to other forms of innovative overarching objective could be seen as reducing across-the- activities, green technology innovation entails additional risks board transaction costs. likely to raise barriers to entry for new entrepreneurs. These Building Connections for Green Technology Entrepreneurs: Open innovation, technology brokering, and firms network 19 A public support program based on a “connective model” it falls short of identifying the few broad categories of approach is likely to offer substantial gains in terms of cost, connections that critically need to be established. Each of speed and scale. First, such a program is likely to be, by these represents a specific component of the entrepreneur’s design, extremely low-cost compared to more traditional journey toward market access and engagement, and forms forms of support. Rather than involving the provision of a a set of interchangeable program components or “building wide variety of resources, not all of which may be within blocks” that practitioners can add or substitute as context the implementing agency’s capacity, the program actually requires. relies on a leaner model that directly links stakeholders to more specialized offerings. Such an advantage is not trivial. In one estimate, developing countries face a bill for adapting to climate change of $70 billion-$100 billion every year from 2010 to 2050, which is about the same amount given in aid annually by developed countries (World Bank 2010). Second, speed of implementation is likely to be much higher, resulting in more visible and reliable short-term results. The fact that no heavy investment is required automatically reduces implementation delays, while the lack of direct support to firms ensures that nonviable projects cannot be artificially maintained afloat. Third, results achieved by the most successful firms in some markets are likely to be replicable either in other markets, or by other participants in the medium term, thus providing for substantial scaling opportunities. The remainder of this section discusses and illustrates the most critical categories of connections aimed at supporting nascent green technology firms. Simply asserting that establishing the appropriate connections for firms—in other words include them into networks—can enhance their innovation potential is, however, not specific enough: Building Connections for Green Technology Entrepreneurs: Open innovation, technology brokering, and firms network 20 Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies This section investigates how various types of connections, specifically dedicated to building a sense of community, as these between people, ideas, products, and to facilitate transactions, can be considered key to ensuring the sustainability of firms’ have been conducive to innovation and growth. Based networks—the benefits of which typically materialize only over on insights derived from the open innovation/technology the course of repeated interactions spanning extended periods brokering model, effective connections are assumed to play a of time (“communities”). critical role in fostering innovation by strengthening the social networks of entrepreneurs, attuning their ideas and products FIGURE 2. FIVE DIFFERENT TYPES OF CONNECTIONS to market needs and developments, and reducing transaction costs—thus removing crucial bottlenecks for nascent enterprises in developing countries. Five categories of connections, inevitably overlapping to some extent, have been particularly scrutinized in this respect: (i) connections aimed at developing the entrepreneurs’ social networks, finding complementary expertise and getting exposure to diversified skillsets and capabilities (“people”); (ii) connections aimed at tapping into a larger base of ideas and encouraging knowledge spillovers (“ideas”); (iii) connections aimed at accessing a broader range of (possibly complementary) products, services and business models (“products, services and business models”); (iv) connections aimed at facilitating transactions, thus reducing search costs and easing access to diversified sources of funding (“transactions”); and finally, (v) connections SOURCE: AUTHORS 21 Connecting people has been found critical to encouraging People open innovation processes for green technology firms, particularly in developing countries. To cite a few examples: Empowering entrepreneurs to explore new Digital Green’s high uptake of new farming practices likely synergies and develop new capabilities relies on the credibility engendered by having farmers local to an area present and discuss its videos; at the African Leadership Academy (ALA), students meet peers from across Africa and KEY FINDINGS: make connections that may help them in the future; in the developed world, Stanford Biodesign widens knowledge of its product development and design methodology by encouraging • Within the firm, enlarging responsibilities and providing a diverse pool of people to take its courses, thereby using its output-oriented incentives are key to getting the highly participants to connect disparate fields. connected, versatile and motivated workforce needed to develop viable innovation projects. Firms that engage in open forms of innovation activities require • Further to the acquisition of complementary skills, a versatile workforce, motivated by appropriate incentives. learning events provide opportunities to enlarge social With regard to the internal organization of firms, the literature relationships and better understand market needs and on open innovation advocates that responsibilities of R&D opportunities. teams be expanded beyond technical aspects to the discovery • Mentoring programs are a tool to ensure the handover of existing market needs and resources, and to the assessment of entrepreneurial knowledge from one generation to of the commercial viability of projects. From an organizational the other, thus contributing to (while also relying on) the viewpoint, this requires establishing some close cooperation buildup of strong communities. procedures with the business, manufacturing, and sales units, as well as to attributing joint rewards for the success of finalized projects (Hargadon 2005). In terms of skills building for all staff more generally, successful innovation rests on the ability of employees to craft their work in accordance with market demand. To this end, the needed acquisition of competencies may typically be fostered by regular changes of positions within the firm or, more broadly, within the industry, with the objective of accumulating experience and getting exposures Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 22 to various types of issues. In terms of incentives and rewards, to manage the dynamics of a design team and make the most recognition should be placed on individuals’ willingness to of the creative and sometimes frustrating process of product disseminate ideas and share knowledge rather than strictly development. focusing on their core tasks. Experience suggests that mentoring programs, when available, Learning events provide opportunities to develop social provide a valuable contribution to the buildup of successful connections among participants—further to strengthening social networks. Mentoring programs offered by experienced ac- human capital. Connective models underscore the importance tors have proven useful to guiding new firms in the first stages of of providing entrepreneurs with not only technical skills but their development, thus transferring knowledge from one gener- also a diversified exposure to the experience of other actors ation of entrepreneurs to the next. Ennovent, an advisory service who can enhance their ability to enter and, importantly, for entrepreneurs in developing countries, does this in several stay in the market. In this respect, the case studies show that ways. There is free access to a network of entrepreneurs and in- learning events may provide such opportunities to initiate and vestors, as well as a paid scheme for more accurate searching of nurture social networks among participants. This is the case mentors and access to people outside of the network. Ennovent even when the stated objective of such events is different. For also runs collaboration groups and acts as a consultancy firm, example, organizations such as Stanford Biodesign and ALA advising entrepreneurs for a fee on how to grow and attract fi- primarily pursue educational goals, but many startups come nancing. In this respect, pioneering research using microeconom- out of the programs they implement—around a third of the ic data to analyze the functioning of a successful entrepreneur former’s students become entrepreneurs after finishing the network, in this case the NYC tech sector, debunks the commonly program. However, the most useful venues, such as thematic held myth that youth would represent the overwhelming major- conferences, are those that explicitly strive to connect ity in a population of entrepreneurs. Rather, research highlights participants with peers in order to facilitate and incentivize the importance of experience to survive in a competitive envi- idea-sharing processes, with leaders from whom they can learn, ronment (Endeavor Insight 2014). The availability of this type of and with agents that provide the kind of endorsement that program obviously relies, however, on the willingness and ability allows participants to progress further. ”People” programs can of experienced entrepreneurs to engage in volunteering activi- also empower individuals by providing them with psychological ties, which typically assumes the existence of a strong sense of and social resources that can help them grow and evolve, community the entrepreneurs contribute to and reinforce. In incentivize their development, or force them to confront this sense, the sense of commitment and dedication displayed new ideas. Stanford Biodesign actually gives its participants by early participants to the network may critically influence its access to a psychologist in order to help them be better able future dynamism. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 23 The case studies highlight further positive externalities FIGURE 3. STANFORD UNIVERSITY’S OUTPUTS stemming from bringing together participants with diverse backgrounds. When it comes to choosing among potentially relevant skills building events, case studies suggest that cross-disciplinary classes may be particularly useful, as they provide users with exposure to both new analytical tools and people from very different backgrounds, thus enlarging their social network. Besides, design thinking-type curricula may be deemed appropriate to prepare the ground for exploring the potentialities of “false negatives” as suggested by the literature on open innovation, and push students to collaborate around human-centered solutions. More generally, a number of programs analyzed in the case studies have in common that they seek to help participants discover business opportunities rather than to support entrepreneurs with already existing ideas. Climate-KIC, the European network for connecting people working on climate change mitigation and adaptation, deliberately fosters a diverse environment in order to encourage development of innovative business opportunities by simultaneously including research centers, startups, SMEs, SOURCE: STANFORD UNIVERSITY large companies, cities and regions, venture funders and state funders. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 24 TABLE 3. “PEOPLE” CASE STUDIES SUMMARY AND KEY TAKEAWAYS Case study Program brief description Some key takeaways program University initiative that facilitates the • By focusing on building the design capabilities of individual participants development of innovative biomedical solutions from diverse fields, the program enables the rapid spread of its by providing training and support to students, innovation methodology. Stanford faculty, and fellows from a variety of disciplines. Biodesign • The interdisciplinary nature of the teams, combined with specialized design training, pushes innovation in medical technology. • While the program’s intent is primarily educational, new technology and startups consistently result from its work. Nonprofit organization that facilitates extension • The use of simple, low-tech equipment suggests that connective model services, knowledge transfer and agricultural programs can succeed with low levels of infrastructure. innovation through user-created educational videos. The aim of the program is to improve • The program capitalizes on the behavioral incentives inherent in peer- to-peer connection to encourage participation. Digital Green agriculture, health and nutrition in rural parts of south Asia and Sub-Saharan Africa. • Rapid adoption rates in new country environments suggest that the model is highly scalable. • Clearly defined, mutually beneficial partnerships are key to the program’s success. Two-year, pre-college boarding program that • The focus on younger students rather than adults increases the aims to accelerate African development by likelihood that the resources it provides will have a longer-term impact. training and connecting students with high African leadership potential. Coursework focuses • By securing service commitments in students’ native countries, the Leadership program ensures the dissemination of its work to environments that Academy heavily on entrepreneurship and leadership, would otherwise be inefficient target audiences. and student attendees are required to develop social ventures or service projects as part of their • Students and graduates consistently start new ventures both during academic work. school and upon their return to their country of origin. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 25 Knowledge transfers within firm networks have strongly Ideas supported green technology innovation. As examples from the case studies: the network maintained by Climate-KIC matches Fostering knowledge transfers and incentivizing entrepreneurs with ideas and skills to the business needs of the emergence of new concepts corporations, thereby making the development of commercial solutions quicker and more productive; OpenIDEO uses its online platform to connect innovators and designers from KEY FINDINGS: a wide number of fields for the purpose of solving product problems; the Carbon War Room helps spread ideas through a network, but does so by relying on that one part of the network • Routine interactions within open networks have been that has been shown to have merit, rather than on untested found conducive to knowledge transfer, hence to the suggestions that might not work. emergence of innovation processes. • Peer-to-peer interactions among entrepreneurs within Routine interactions within open networks have been found networks are also key to helping them anticipate conducive to innovation processes. In essence, innovation can market changes, and realign their strategy and business be deemed a full-fledged networking activity in the sense that model accordingly. it critically relies on knowledge spillovers. These take place at the local and global levels in a complementary way. At the local level, opportunities for ‘face time’ relationships and exchanges of information via routine channels of communications have been found instrumental in transmitting knowledge between firms (Maskell and Malmberg 1999). At the global level, the wider circulation of ideas within open networks is key to transforming them into viable, marketable innovations, putting participating firms at a competitive advantage compared to non-connected competitors, notably in the earlier stages of conception and design. Getting such a competitive advantage in product development from wide, diverse networks has been the aim of Quirky since it was founded in 2009. The firm created a platform for anyone around the world to suggest an idea—which could be Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 26 for, say, a kitchen implement or item of clothing—the potential FIGURE 4. CARBON WAR ROOM’S ONLINE COMMUNITIES of which would then be judged and voted upon by others in the network. Ideas that get through the judging process would be further developed by Quirky. The firm’s business model has changed since its founding, but it still works around the principle of using open innovation and connections to create more competitive products. Connective models seek to foster peer-to-peer interactions, thus reducing search costs and incentivizing more actors to join discussions. For knowledge spillovers to materialize and viable innovative ideas to be brought to market, firms must not only get an adequate understanding of the business environment pertaining to their core activity, but also continuously receive diversified feedback from other actors in order to develop an ability to adapt to new market needs. The participation to networks can assist in this area by substantially reducing SOURCE: CARBON WAR ROOM’S FACEBOOK, TWITTER, AND LINKEDIN PAGES the search costs required for individual agents to learn from others, further to sharing ideas. In other words, the connective model lays special emphasis on the idea that “peer-to-peer” communication among entrepreneurs may be the most effective way to anticipate market trends and changes, and rethink their business model and strategy in a proactive manner. For organizations such as the Carbon War Room, the connective model seeks to incentivize participation from new actors, who— rather than building their own capacity—can share their existing work, hence broadening the collaborative process. Other efforts, such as OpenIDEO, provide a streamlined and efficient way for ideas to “popcorn” off of each other by connecting diverse groups on a centralized platform. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 27 FIGURE 5. OPENIDEO’S OUTPUTS FIGURE 6. A SAMPLING OF QUIRKY’S MORE POPULAR SKILLS OVER THE PAST FIVE YEARS CATEGORIES (NUMBER OF PEOPLE) SOURCE: QUIRKY SOURCE: OPENIDEO Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 28 TABLE 4. “IDEAS” CASE STUDIES SUMMARY AND KEY TAKEAWAYS Case study Program brief description Some key takeaways program European public-private partnership • By matching the market needs of large partners (such as corporations and focused on mitigating and adapting to municipalities) with entrepreneurs within the network, the program is able to meet climate change. The program connects demand as needed and more efficiently allocate resources. governments, businesses, and individuals to create innovative solutions to specific • The rapid growth of its partner network suggests that the model is highly scalable. Climate-KIC climate issues, and also offers education • The program’s ability to experiment has been helped by the fact that it has and support for startups focused on climate significant resources at its disposal. change innovation. • Deliberate selection of influential partners (e.g. government institutions) allows the organization to improve its environment by impacting larger policy decisions. Open, online innovation platform designed • It is unique among innovation incubators/organizations as a primarily online to facilitate communal development of platform. solutions to pressing global issues. The site allows users to suggest ideas, offer • Because the platform is free, Internet based, and open to the public, it has been able to engage a more diverse pool of contributors than would otherwise be feedback, and collaborate on new solutions. OpenIDEO possible. • The program focuses on and promotes innovation in a broad sense, as its projects cover a variety of disciplines. • Some success may be attributed to support by its parent corporation, which provides substantial brand capital in addition to financial and logistical resources. Nonprofit think tank that works with • The organization reduces search costs by focusing on solutions that can be realized businesses and industry leaders to using proven technologies rather than new and emerging ones in key sectors. address the market barriers that prevent Carbon War the adoption of carbon-friendly solutions • The network aspect of the program is key to its high participation levels, as individual stakeholders tend to have strong reputational capital. Room at large scale. The program takes a multi- pronged approach, focusing on research • The organization’s multi-modal approach, which focuses on different pathways and network engagement as well as to promoting green business solutions, encourages cross-pollination of ideas and program implementation. raises the likelihood of impact. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 29 Connections of products, services and business models play Products, services, and a key role in fostering open innovation processes in green business models technologies in developing and advanced countries. To take a few examples from the case studies: Ennovent uses Facilitating design improvements and partnerships to expand the range of services that it offers to commercialization entrepreneurs in developing countries; Villgro focuses the value of its network on rural areas; the Unreasonable Institute supports entrepreneurs in developing countries with a strong KEY FINDINGS: vetting process for the startups it is willing to help, thereby helping to concentrate the value of its mentoring and other services on the most promising enterprises; Quirky uses a • The feedback and iteration processes that continuously take place within well-functioning networks assist different approach by resorting to its network of innovators to firms in the delicate phase of testing and bringing new create product ideas that are vetted and developed by the firm products or services to market. and other people in the network. These examples show that there are a number of ways to encourage open innovation. • Participation to wide and diversified networks can also provide opportunities for firms to adapt business models, products or services observed elsewhere to Interactions between firms and other actors within networks their own industries. have the potential to boost the commercialization of new products and services. Policies based on traditional models that aim to facilitate the transformation of ideas into real products, services, and businesses attempt to do so by directly providing enterprises with the material and logistical resources they need. For example, incubators assist entrepreneurs by offering services such as office space and technical training, while angel investors provide funding for further development. These models do succeed in that they remove very clear and obvious constraints to product development. However, they do not necessarily contribute to the development of innovative products, services, or businesses per se. By contrast, because connective models link enterprises to external players, they Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 30 inherently promote (at least the possibility of) feedback organization such as Ennovent, which assists entrepreneurs and iteration on the potential end uses of these products or in part by piloting and refining their products, services and services, or on the relevance of the envisioned business models. business models, is actually likely to contribute to innovation By extension, these exchanges contribute to the creation of precisely because its connective model greatly expands more innovative value offerings, notably at the critical stages the amount of user information that is available to each of the prototype conception and commercialization. An beneficiary. FIGURE 7. RATIO OF ENTREPRENEURS, MENTORS, AND INVESTORS AT UNREASONABLE INSTITUTE SOURCE: UNREASONABLE INSTITUTE Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 31 TABLE 5. “PRODUCTS, SERVICES AND BUSINESS MODELS” CASE STUDIES SUMMARY AND KEY TAKEAWAYS Case study Program brief description Some key takeaways program Former investment fund that has broadened • The organization is able to expand its reach by offering a suite of connective its scope to include a wide range of services, which allows it to customize the depth of engagement with individual programs that support BoP entrepreneurs. entrepreneurs. Ennovent These include research and advisory services, idea challenge management and • Partnerships with other organizations allow both actors to amplify their impact. connection to a larger network of investors, • Integrated work between offices on multiple continents promotes the inclusion of business enablers and peers. diverse perspectives. Organization that incubates social • While the program is based in the United States, its global focus has enabled it to entrepreneurs serving BoP markets to support startups in 37 countries. scale. Each year, the organization matches Unreasonable a dozen vetted ventures from around the • The organization’s vetting process increases the probability that participating Institute startups will benefit from available connections. world with 50 mentors and 100+ funders at five-week boot camps. • In addition to network of immediate beneficiaries, the institute allows participants to connect with like-minded peers, which creates a support network that encourages later success. Company that promotes product innovation • By creating a community-driven pool of ideas and concepts, the company allows by crowdsourcing design ideas and its engineers and developers to focus their energies on implementation rather concepts and providing substantial than conception. assistance with manufacture, marketing, Quirky and distribution. Community members • While financial rewards are offered for participation, their relative smallness sug- gests that users are attracted as much by the community as by the prospect of profit. can suggest and/or vote on ideas and, depending on level of input provided, • The company lowers barriers to participation by providing manufacture, receive financial returns. marketing, and distribution services. Organization focused on supporting • There is no substitute for being in the market, for knowing what potential innovative social enterprises that have customers value and for understanding what is available in the market. a significant impact on low-income populations. It offers a diverse suite • The ability to effectively engage the skills and the competencies of business partners can greatly leverage the resources available to an incubator. of programs that includes a fellowship Villgro program, a variety of entrepreneur • The program has a laser-sharp focus on the rural space, training entrepreneurs workshops and events, and incubation from the rural environment who design products for their own communities. services for startups. • Its own definition of “innovation” is technology embodied in new goods and services that are adapted to the needs of rural populations and to the limited purchasing power of poor rural households. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 32 Facilitating transactions among firms in the green technology Transactions sector has the potential to generate positive spinoffs in terms of innovation in developing countries. The Netherlands-based Reducing search costs and broadening BoP Innovation Center, for example, tries to connect Dutch access to sources of funding organizations and firms to innovative companies in developing countries. Its approach is to increase knowledge of developing countries among the former, thereby cutting the transaction KEY FINDINGS: costs of doing business in such places and helping to stimulate the creation of new products through its innovation model. • Connections to external sources of financing are often The participation in networks can allow nascent firms to a precondition to development for nascent firms, access sources of funding that would not be available especially in developing countries. domestically. The financial constraint may be particularly • The establishment of transaction platforms may also binding for entrepreneurs in developing countries, due to be conducive to innovation by reducing information conservative lending practices by banks, which generally asymmetries and lowering search costs. have strong collateral requirements as they lack the scoring methodologies needed to lend against cash flows, and to the absence of alternative, non-bank sources of funding—further compounding the market failures inherently affecting green technology businesses. In this context, the mere possibility for firms to communicate upon their business model and get connected to pools of investors in more advanced economies may unlock an innovation potential that would otherwise remain untapped, even in the face of strong (potential) market demands. In the archetypal case of the NYC tech sector, angel investment has been identified as one of the key types of connection linking the participating firms (Endeavor Insight 2014). However, less specific types of funding can be envisaged within connective models, such as the involvement of “serial entrepreneurs” or former employee spinouts. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 33 The facilitation of transactions promotes innovation through more engagement with external actors who may, in turn, be reducing information asymmetries between stakeholders and willing to share more ideas and information. These platforms lowering search costs. Connective platforms and organizations, can also help lower search costs, thus incentivizing further such as BoP Innovation Center, that facilitate informational collaboration. Verification of a person’s skills and background transactions can help reduce counterparty risk by allowing cuts the amount of effort that an employer needs to spend in verification of the credibility of each party, thus encouraging order to assess a candidate, hence also reducing risk. TABLE 6. “TRANSACTIONS” CASE STUDIES SUMMARY AND KEY TAKEAWAYS Case study program Program brief description Some key takeaways Dutch nonprofit focused on supporting business development • By connecting Dutch client companies with local entrepreneurs, BoP Innovation Center reduces search costs and increases clients’ knowledge of local markets. for BoP markets. Services BoP Innovation are targeted toward not only • BoP Innovation Center’s role as a vetting intermediary increases the likelihood of Center immediate client “fit,” thus reducing the need for multiple matches. entrepreneurs and startups, but also investors interested in low- • The organization promotes transactions by reducing information risk for both income market opportunities. foreign investors and local partners. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 34 Developing countries exhibit successful examples of Communities communities of entrepreneurs in the green technology sector. The case studies discuss three ways of creating such Reinforcing networks through motivating communities. ENoLL is a Europe-based network of innovation participants labs that facilitates connections between them, with the requirement that members have to comply with high standards so as to elevate the quality of the discussion and collaboration KEY FINDINGS: in the community. The World Business Council on Sustainable Development (WBCSD) connects business leaders to allow for discussions on environmental issues and market opportunities, • The buildup of a community of entrepreneurs is both the again in the belief that cutting transaction costs and setting ultimate goal of establishing connections among them, high standards for participants is conducive to value creation. and the best guarantee for the self-perpetuation of the network. For young leaders under 30 years of age, WEF Global Shapers has created collaborative hubs around the world; its expansion • The networking role of promoters or high visibility under the World Economic Forum shows how valuable a strong firms appears instrumental to building this sense of brand can be in the development of communities for business community. and innovation. • Communities build stakeholder trust, thus further facilitating the exchange of ideas. A cornerstone of well-functioning networks, strong communities are created by the self-reinforcing effects of sustained connections over time. While communities of entrepreneurs and business enablers have existed for some time, their mobilization potential for the specific purpose of promoting market-based innovation has only been the subject of limited study. This may be partly related to the fact that these communities often emerge on an ad hoc basis, as a positive externality generated by a different type of public interventions (such as the establishment of incubators). Yet communities of entrepreneurs have the power to support the development of new ideas simply by virtue of the fact that Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 35 social ties provide a strong incentive to share ideas and tacit Research on open innovation has identified varied types knowledge. More generally, the existence of a community of of structuration for communities, and highlighted their entrepreneurs offers the best guarantee that the various types differentiated impact in terms of trust building. The role of of connection investigated above will perpetuate beyond the transformational leaders and the networking of champions and initial public involvement. “promoters” across organizational boundaries have notably been emphasized. In this respect, cases studies highlight the The implementation of connective models has the potential to importance of “networks of promoters” for supporting the foster the emergence of communities that promote innovation development of innovation communities. WBCSD and WEF in developing countries. Connective models typically advocate Global Shapers are at the origin of such communities driven by broadening the scope of participants in a network on a a common cause and transformational leaders. ENoLL, on the continuous basis and, rather than providing stakeholders a other hand, is an example of a strong community built around set pool of peers, giving them the tools to link to these peers, a core common purpose. More generally, a key insight of the which in turn can lead to further connections. In some cases, case studies is to identify the existence of a strong “community the attraction power of the community can become strong effect” namely the fact that existing communities can enough for participants to remain active beyond the initial rapidly expand by attracting new members, that the sense of central impulse. WEF Global Shapers is a good example of a community greatly increases trust between members, and that strong community spun off from a high- visibility organization participation in an attractive community can mobilize people (WEF) that has taken on a life of its own to implement projects to work without payment, as giving back to the community is with large independence. seen as its own reward. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 36 TABLE 7. “COMMUNITIES” CASE STUDIES SUMMARY AND KEY TAKEAWAYS Case study program Program brief description Some key takeaways A network of “experimentation environments” • The network design of the program allows individual labs to share and that promotes innovation by allowing users attract more resources than they would by acting individually. and producers to work together on idea ENoLL and product development. The network • By setting network-wide standards, the organization is able to ensure greater consistency and higher-quality output. supports individual labs by providing them with branding, education, connections, and • The partnerships created by this model have proven valuable enough advisory services. that individual labs are willing to pay for connections to other labs. MNC-led initiative to engage global business • The reduction in transaction costs that comes as a result of the network community on relevant environmental issues. model enables sustainability projects by large private sector players. It aims to bring together business leaders to WBCSD generate ideas related to, and advocate for, • In addition to connections, the model helps transfer relevant knowledge on sustainable projects and market opportunities to members. sustainable development. • By limiting participation to members of a certain caliber, the organization creates trust between participants. Network focused on building a more peaceful • By connecting high-potential participants, the organization has created and inclusive world by connecting young a network that has expanded beyond its original scope and purpose. (under 30) leaders through local hubs. WEF Global Shapers Each hub is asked to undertake projects • The WEF brand name allows participants to network and exchange ideas with a wide range of individuals. that will have a direct impact on their local communities. • The local focus of each hub illustrates how a global organization can use the connective model to expand its work and mandate. Establishing connections between people, ideas, products, and to facilitate transactions: Insights from the case studies 37 Implications for public program design Although public support is warranted to foster innovation KEY FINDINGS: processes, traditional methods have shown limited success so far in developing countries. When it comes to hedging the risks inherent in innovative projects, market failures are pervasive, fully justifying some form of policy support—even more • Technology brokering may be best fostered by public policies that place the entrepreneur at the center of the so in a situation of heightened uncertainty such as the one innovation process. surrounding prospects for green technologies in developing countries. In this respect, traditional ways to help nurture • At the local level, public support should aim at cementing peer-to-peer connections (e.g., through innovation ecosystems have typically focused on alleviating setting up mentoring programs) and facilitating catalytic physical capital constraints and easing access to finance for events. entrepreneurs, in practice through the establishment of firms, venture capital funds, or incubators. Recent research suggests, • A global program aimed at fostering green technology innovation in developing countries could complement however, that such programs, further to being relatively costly local action by the inclusion of firms into global and to displaying long implementation lags due to sizable networks and technology brokering platforms. initial investment needs, have often led to disappointing results. Fundamentally, a reason for this is that these initiatives “are not suited to the experiential and collaborative process that characterizes entrepreneurship” (Motoyama and Wiens 2015). Such poor outcomes have been one of the driving factors that spurred policy interest and academic research on the comparative strengths and weaknesses of competing innovation models. 38 Public intervention based on connective models of innovation rates of growth from the years 2012–14 for three case studies: seeks to put the entrepreneur at the center of a dense network Climate-KIC, Digital Green and Quirky. Each of these refers to a of connections. According to the open innovation model, policy different category of connections—with Climate-KIC focusing makers seeking to promote entrepreneurship at a local level on ideas, DigitalGreen on people’s capabilities, and Quirky on should “embrace a new approach that puts entrepreneurs transactions—but each demonstrates the potential for rapid at the center, creating communities characterized by dense growth that such connective models can enable. connections among entrepreneurs and organizations that support them” (ibid.). This is because “companies and At the local level, public intervention can closely focus on founders that connect to other top-performing companies are facilitating peer-to-peer relations. With a view to fostering significantly more likely to be successful than those that tap connections and learning among new entrepreneurs, public into existing support organizations alone” (ibid.). Thus, public programs may include the provision of consultancy services, policies should constantly weigh costs against possible payoffs, ranging from the opening of one-shop kiosks for new with the ideas of leveraging minimal investments into virtuous circles of FIGURE 8. TOP-DOWN VS. ENTREPRENEUR-CENTERED APPROACH connected firms, with the ultimate objective of supporting reinvestment by participants into the network, as illustrated by the diagram below. The establishment of well-targeted connections can aim at fulfilling the three joint objectives of accelerating innovation processes (“speed”) and expanding successful projects (“scope”) while keeping public investment minimal (“cost”). As a matter of fact, connective models often allow organizations to expand their reach far more quickly than would otherwise be possible. The diagram below shows the SOURCE: KAUFFMAN FOUNDATION 2015 Implications for public program design 39 entrants to the activation of peer-to-peer connections by “go- recreate the dynamic of reinvestment ... may be much smaller betweens,” or the setup of mentoring services matching for than many policymakers think ... By connecting startups, new entrepreneurs with successful, experienced ones. Support scale-ups, and top-performing companies to one another, may also be directed toward facilitating catalytic events such [policymakers] can catalyze the growth of an entrepreneurship as “green technology forums.” In this respect, experience in ecosystem on top of existing local companies, capital, talent, advanced countries suggest that these tend to work best when and industries” (Endeavor Insight 2014). constructively organized around a theme of common interest— even with the ultimate objective of enabling networking At the national level, policies should be geared toward among peers. Likewise, hosting award ceremonies to celebrate removing barriers to the various connections identified successful local entrepreneurs may contribute to building a above. As a precondition for open innovation and technology sense of community and possibly inspire new entrants. In the brokerage processes, efforts may focus on strengthening case of nascent green technology firms in developing countries, intellectual property rights to ease the licensing of ideas the implementation of such small-scale measures may help and technologies. Also in terms of regulation, restrictions identify and connect new entrepreneurs and potential entrants should be set on noncompete agreements, inasmuch as these at relatively low cost. Indeed, “the public effort necessary to may excessively hinder the mobility of the entrepreneurial FIGURE 9. CONNECTIVE MODELS RAPIDLY EXPANDING REACH (PERCENT OF GROWTH) SOURCES: CLIMATE-KIC ANNUAL REPORTS; HTTP://DIGITALGREEN.ORG/ANALYTICS; HTTP://QUIRKY.COM Implications for public program design 40 workforce. Public intervention may also consist in opening developing countries, notably relating to the lack of market up access to the national public research and innovation depth at the domestic level and the difficulty of access to infrastructure through cost sharing and reciprocity agreements, knowledge, ideas and existing communities structured on these or joint developments and public-private partnership (PPP). issues. As the different case studies point out, a program that would focus on complementing local capacity building with In the case of green technology firms in developing countries, the creation of global connections to (a) foster learning; (b) local action can be complemented by global programs through exchange ideas; (c) access and develop new products, services the establishment of open networks and technology brokerage and business models; (d) facilitate transactions; and (e) build platforms. A global, centrally managed program creating a a sense of community at the transnational level could greatly bridge between green ventures in developing countries and facilitate the growth and scaling up of green technology firms global assets and stakeholders may overcome the market in developing countries. failures characteristic of the green technology sector in TABLE 8. SOME POSSIBLE LOCAL AND GLOBAL MEASURES Local Global Foster local peer-to-peer green technology entrepreneur Build connections between green technology entrepreneurs to facilitate idea connections generation, adoption of new products, services and business models, and learning Celebrate successful local green technology Connect international financiers to the network entrepreneurs (ceremonies and events) Organize mentoring services Foster a sense of global community Implications for public program design 41 SOURCE: AUTHORS Implications for public program design 42 FIGURE 10. FIVE POSSIBLE AREAS OF FOCUS FOR NEW CONNECTIVE PUBLIC PROGRAMS Indicator Value Greenhouse tomatoes at the ITC landfill and recycling center in Ankara, Turkey. Photo: Simone D. McCourtie / World Bank Implications for public program design 43 part 2. case studies 44 DIGITAL GREEN at a glance Typology People Special Features of the Program Number of From 2008 to date: 685,228 beneficiaries beneficiaries • Digital Green partners with existing local organizations to augment their services. Number of staff 87 • The program is chiefly community led, offering strong, and Financial Does not charge beneficiaries, unexpected, incentives for participation, namely that people arrangement with but partners may have a financial like being on film. beneficiaries arrangement with beneficiaries • Much more than other programs, Digital Green extensively Typical program Typically 3-4 years documents its activities and has a treasure trove of data stored duration online. Countries of India, Ethiopia, Ghana, Tanzania, Niger, • The program relies on very low-tech environments, allowing it operation Afghanistan to successfully scale to multiple countries. Program annual 2014: $5,654,576 budget Lessons Learned Program start year 2008 • Though Digital Green works with NGOs and private sector agribusinesses, most of their scale has been achieved by partnering with large government extension programs. • It takes advantage of existing extension systems and community groups (like farmer clubs and women-led self-help groups) developed and mobilized by partners. • Over time, Digital Green has learned more about how to engage beneficiaries based on documented experiences; for example, having an in-person mediator at video screenings leads to more retention of viewers. 45 1. Business Model Unique Value Proposition Digital Green seeks to address the issue of poverty in rural The unique, compelling value proposition of this program is communities across South Asia and Sub-Saharan Africa that it uses the power of human relationships and social capital by facilitating knowledge transfer between community to help local market participants (e.g., farmers) acquire industry members via a combination of classic face-to-face interaction best practices and share their own personal knowledge with and a digital platform. It does this by partnering with local their community. Forgoing a top-down model, the program nongovernmental organizations (NGOs) (mostly agricultural) facilitates peer-to-peer sharing of information, which is more to implement programs that train people to document readily accepted by the farmers and also allows them a chance best practices—particularly through video—in the realms to strengthen their bonds and position in the community when of improved agricultural and livelihood practices, and they contribute their knowledge. disseminate that information to their peers in person. While the vast majority of its initiatives focus on farming, Digital Green is The program stands apart from similar schemes for several considering expanding into other sectors as well. reasons: • It’s heavily community driven; participants are trained in basic videography, but they shape their narratives themselves. • It’s contextually sensitive, relying on very low-tech approaches that are designed to withstand harsh environmental conditions. • It relies on peer-to-peer learning. • It’s very successful, having grown substantially in a very short period of time. Uptake of new practices varies by region, but is overall fairly high. Furthermore, the program is unique in the breadth of data it captures on its participants and program impact, allowing it to make informed and targeted decisions. case study: Digital Green 46 Structure/Solution Internet conditions—and an Analytics dashboard suite that collects and analyzes near real-time data on dissemination, The program, along with partner organizations, trains select adoption, and community interest. members of rural villages to produce videos on topics in agriculture, livelihood, nutrition and health Workflow of the Program practices, as well as provides them with the equipment to First, a suitable village is identified and profiled by a program produce and disseminate the work. Teams of four to six partner or agent. Topics of need or interest are then chosen individuals in each district are assembled to produce videos 8 in conjunction with villagers, with training on how to shoot to 10 minutes long on topics helpful to the local participants. and show the videos then taking place. All videos are in For example, in India the program concentrates on increasing local languages. Once a video has been shot it is sent for agricultural yields through videos on how to store seeds, make postproduction before being uploaded to the program’s fertilizer and similar topics. The videos feature farmers rather database or mailed. Viewings are run by local mediators who, than experts as the program found that farmer-viewers were in India, transport viewing equipment, conduct around three more receptive to the views of their peers. This is despite showings a week, and gauge responses with information the fact that the program’s agents tend to hold the expert collected in an analytics system. Audiences normally consist of knowledge. 15-20 people and participation and questioning is encouraged. Farmers are encouraged to adopt the practices being shown. Local mediators host screenings and discussion twice a week where small community groups watch the videos via battery- 2. Financial Model operated pico projectors and give their feedback. The mediators are key for the viewings, for without them farmers were found Digital Green partners with existing public, private and civil to be bored and left viewings early—further underscoring society organizations that are already involved in providing the human element necessary to successfully propagate best agricultural extension and health delivery services. Private practices. Digital Green also periodically schedules visits to the sector partners cover all of the costs communities to gauge the actual adoption of practices. (i.e., both operational as well as Digital Green’s), while cost- The program tracks its metrics through an online open-source sharing relationships are negotiated with government agencies. data management framework called Connect Online Connect For instance, a government department of agriculture invests Offline (COCO)—named for its ability to accept data in limited in the operational costs of the approach (e.g., compensation case study: Digital Green 47 to extension agents, procurement of video production Vodafone Foundation, the International Finance Corporation equipment) and external donors support Digital Green’s (IFC) and the World Bank. technology development and technical assistance. Digital Green does not directly charge beneficiaries themselves, but Despite these sources of income, the program has problems its partners subsidize these costs and, at times, recover their with financial sustainability. As the videos are financed and investments through margins that they may realize through produced by partners and the communities, and released on their microfinance- or agribusiness-types of interventions. a Creative Commons Attribution- NonCommercial-ShareAlike license, it is difficult to monetize them. Instead, Digital Green In 2014–15, the program expensed $3.9 million in costs. These is exploring market-driven models for extension. It has begun costs have increased as the organization has grown; in 2013, to partner with several commercial organizations looking to the program cost $3.1 million per year to run. In 2012, the use the platform as part of their private extension systems to program cost $2.2 million to run. In 2014, Digital Green had source particular commodities for their agricultural supply U.S. expenses of $820,006, India expenses of $2.9 million and chains. These private sector partners are providing operational Ethiopia expenses of $178,297. Together, this was primarily and technology development financing for the efforts. The accounted for by staff costs (36.2 percent), sub-grants (14.9 program is also testing a service where Digital Green helps to percent), travel (14.1 percent), consultants (10.9 percent) and aggregate and transport farmers’ vegetable produce to local administrative cost recovery (15.4 percent). markets, using the data on what sells to inform what videos should be produced and screened among farmer groups. The program’s revenue was $9.6 million in 2014–15, though its profit is $0 as a nonprofit. Partnerships are with aid, 3. Beneficiaries government, academic, commercial and local organizations such as Oxfam, India’s Ministry of Rural Development, Cornell The main beneficiaries of the program are local farmers from University, USAID, and others. Digital Green also has “investors” rural communities located in India and Africa with limited that make grants and likely state performance criteria. In 2009, market access or technological infrastructure. These farmers the Bill and Melinda Gates Foundation granted the program are typically at a seed to mature stage of their business nearly $3 million, and nearly $10 million in 2012. In 2010, the development; the business itself generally exists, but it is often Ford Foundation made a grant of nearly $200,000. The group improved by the information gained through Digital Green’s of investors includes these organizations, plus Alliance for work. The farmers also receive informational and social a Green Revolution in Africa (AGRA), the United Kingdom’s support from other local agriculture-focused NGOs. Digital Department for International Development (DFID), Google, Green partners with existing agricultural projects—many, but case study: Digital Green 48 not all, of which focus on the development of local cooperative than 7,000 villages in nine states in India and parts of Ethiopia, organizations. Niger, Tanzania, Afghanistan and Ghana. Recruitment and Selection of Participants India takes up the bulk of these numbers: a total of 3,631 videos have been created in India, which have been shown in 7,118 Local intermediaries, including four to six people for the video villages. By the program’s count, there have been over a million production team, one per village dissemination mediator instances of adoption of new practices in India. and one per district data manager, are selected from the community based on certain criteria, and trained in classroom In contrast, the outreach in Africa is less extensive. For example, and on-site settings. Video producers learn how to handle the Ethiopia has produced 158 videos, which have been shown in camera, generate and storyboard content ideas, and edit video. 885 villages. Ghana has produced 19 videos, mostly on cocoa Mediators learn how to handle the pico projector and capture production; Tanzania nine videos; and Niger three videos. data. Data managers learn how to document data on the COCO system and use the Analytics dashboard. Farmers to act in the One of the lessons the program has learned is that localization video are selected by the video production team after the topic is key. The first questions that community members typically of the video is determined, and sign a consent form stating their ask when they watch a video are often: “What is the name of willingness to participate. the individual featured in the video?” and “Which village is he or she from?” An analysis of program data showed that the Program Impact rate of uptake of agricultural practices tended to decrease the further away that a video is shown from where it was produced. In 2015, more than 410,000 farmers viewed the videos. In 2014, over 460,000 farmers viewed the videos. The number of viewers As a result, the program has established a decentralized, hub- has risen substantially over the last four years. In 2013, over and-spoke process for content production and dissemination in 300,000 farmers viewed the videos, a jump from 2012, when the which 80 percent of the videos screened in a particular village program’s participants increased from approximately 60,000 are produced in the same district. This decentralized process the year before to approximately 100,000. has allowed Digital Green to assemble a large library of over 4,000 videos quickly and cheaply; however, there is also a need Digital Green’s network of partners and communities has to ensure quality. Digital Green has engaged external experts, produced more than 4,000 videos in 28 languages. These videos like those from the CGIAR, and its own experts to provide have reached 685,228 rural community members across more backstopping support to the local filmmaking teams. case study: Digital Green 49 An apparent control study authored by the Digital Green CEO Besides NGOs, Digital Green also works with private sector and a University of California-Berkeley researcher found that agribusinesses (i.e., those who have their own extension service Digital Green had lower costs, higher knowledge adoption to ensure particular quality/quantity grade standards for and an overall cost-per-knowledge adoption rate of $3.70 commodities that they may be involved in buying). compared to a classic training-and-visit approach. The program has a competitive edge that may be difficult to replicate by However, the program’s reliance on partnering with existing similar programs—the founder of Digital Green was familiar organizations could pose a bottleneck: the scale of Digital with the lives of farmers in India, and had connections with Green’s operations depends on the scale of its partners’ resource-heavy organizations such as MIT. Culturally, it is operations and their ability to integrate Digital Green’s also run by an Indian-American CEO, which may enhance approach to support their existing development programs. the organization’s ability to work with organizations in both Notably, most of its scale to date has been achieved by countries. partnering with large government extension programs (e.g., the National Rural Livelihood Mission in India, Ministry of 4. Human Resources Agriculture in Ethiopia, the National Horticulture and Livestock Project in Afghanistan). The program is small, but it has teams in multiple countries. Staff work with partners on program development and 5. Organizational Model implementation, as well as monitoring and evaluation. Digital Green sees itself as a trainer of trainers—ensuring The program has partnerships with a variety of local nonprofit quality in operations among field partners—and works with organizations, such as Oxfam, India’s Ministry of Rural small implementing organizations that are shown how to adopt Development and AGRA. These partners provide access to the program’s methods. Staff from hub-and-spoke Digital Green target beneficiaries and services that can be augmented and offices support the implementers. As of 2012–13 the program enhanced by Digital Green’s services. The nature of these was working with 25 such organizations in India alone, across partnerships is motivated by a shared understanding that eight regions. such partnerships allow both organizations to work more effectively. It also has alliances with research and technology The program started as a project in software giant Microsoft’s partners such as the University of California-Berkeley, Microsoft research program on technology for emerging markets in Research and Google. India. Digital Green is the nonprofit spinoff of that research and currently exists as an independent NGO based in Delhi. case study: Digital Green 50 Though the program is a stand-alone organization, it does have staff; and an administration team of seven staff. Across the a partnership with the Indian government. Bangalore, Bhopal, Bhubaneswar, Hyderabad, Lucknow and Patna offices are spread 37 staff with program management The program was started by Rikin Gandhi, a member of the orig- responsibilities. There is also a growing team in Addis, inal Microsoft team. He is an American-born Indian trained as an Ethiopia. Staff and other human resources are selected by an aeronautical engineer, and is currently the founder and CEO. application, interview, and relevant skills. The program is structured with two boards of directors, one At the executive level, staff spends about 30 percent on in India and one in the United States. The first is a four-person planning/design, 30 percent on organizational development, 30 executive management team and the second a ten-person percent program implementation, and 10 percent on advocacy. board of Indians and Americans. The board has committees focused on legal, finance, fundraising, ethics, and leadership- The program itself does not have any legal relationship with its related issues. The leadership function of the board is involved beneficiaries. However, it is possible that some of its partners in the Executive Leadership Team’s assessment, mentoring, may. and succession planning. The board members do not have a financial stake in the organization. 6. Innovation Ecosystem Digital Green has technical advisory boards and steering committees in both India and Ethiopia. The former includes Digital Green falls into two major categories: information representatives of the implementing partners (see below), and communication technology (ICT) and agriculture. Of along with domestic and international research organizations. these, ICT tends to be viewed as more innovative, as new Board members review content as well as community feedback technological developments naturally facilitate the growth of and usage data to provide recommendations on practices to be new applications. However, a number of organizations have promoted; the boards also serve as a platform for knowledge emerged over the past two decades that focus on supporting sharing. Steering committees, on the other hand, are composed best practices among smallholder farmers, and the agriculture of the implementation partners and serve as a backstopping space is not devoid of innovation. Compared to other programs, function for coordinating projects in a particular geography. however, Digital Green can be characterized as more innovative, both for its partnership model and its application of The program has eight offices, seven in India and one in the context-appropriate technology. It has also revealed new ways United States. In the New Delhi office, there is a program to incentivize better performance among small farmers. management team of 14 staff; a technology team of eight case study: Digital Green 51 STANFORD BIODESIGN at a glance Indicator Value Special Features of the Program Typology People • The program leverages the expertise of interdisciplinary teams Number of 160 fellows; 1100+ participants in of postgraduate engineers, business professionals, bioscientists beneficiaries classes and physicians from Stanford’s student body, combined with Number of staff 8 full-time, more part-time; access to specialized design training, to innovate in medical technology more than 500 university faculty and (medtech). staff • The design methodology taught at the program, termed Financial None “biodesign,” pools knowledge from the fields of biology, arrangement with engineering and business. beneficiaries • Faculty hail from fields of biology, engineering, physics, Typical program One year, with possible extension computational science and the biomedical sciences. duration Countries of United States, India, Singapore, Japan Lessons Learned operation in development Program annual $2 million-$2.5 million • The program’s success is owed to highly motivated individuals budget with a real desire to do medtech, who are further along in their career than students or even postdocs, paired with specialized Program start year 2001 biodesign training and the rich resources of Silicon Valley. • While the program is primarily educational, it ends up consistently producing new technology and startup businesses. • The program has shown that multidisciplinary research leads to more innovation than traditional, departmentalized biomedical research at Stanford University. 52 1. Business Model Unique Value Proposition The objective of Stanford Biodesign is to improve medical Stanford Biodesign is unique in that it offers to overcome care by training interdisciplinary teams to innovate in historic blockages in the development of new, innovative medical technology. The teams are selected to include devices and techniques in the medical field through one a mix of engineers, business professionals, bioscientists primary pathway: exposing multidisciplinary teams to new and physicians. The program subjects that diverse mix of biomedical problems while providing them with specialized expertise to specialized training—including the teaching of a biodesign innovation training and the rich resources of Silicon methodology, termed “biodesign,” for the design, development Valley. Team members are Stanford postgraduates from a cross and commercialization of medical innovations—in hopes that section of relevant disciplines—engineering, medicine, biology the teams use their combined skills to create new medical and business—who undergo in-depth training in discovering technologies. The products then have the opportunity to be unmet clinical needs and possible solutions. They are schooled commercialized, though that is not guaranteed. by faculty from different disciplines institutionally mixed at a large institute, Stanford Bio-X, which helps to overcome historic turf wars that hinder progress. This pathway has proven more fruitful than traditional, departmentalized biomedical research at Stanford University in exposing unaddressed clinical issues and generating original products and solutions, offering a compelling innovation model for possible replication elsewhere. The program is also unique in that it supports talent in generating ideas rather than following the usual startup accelerator model of supporting entrepreneurs who already have an idea. In this case, a primarily educational program ends up consistently generating startup businesses. case study: Stanford Biodesign 53 Structure of the Program pre-business plan stage of their development and do not start with investment financing, if their business idea gains traction The Stanford Biodesign program, founded in 2001 by its current they have the opportunity to establish a firm and receive director Paul Yock, is housed within and draws its resources investments. from Stanford Bio-X, a biosciences institute at Stanford University, a large private university in Palo Alto, California. Fellows also take coursework. There are five courses offered Stanford Bio-X, founded in 1998, operates on the belief that by the center, and these cover innovation, the principles of interdisciplinary research could allow for more innovative biodesign, and executive education. The textbook and website breakthroughs in biomedical systems than research walled on the in-house biodesign process accompany the fellowships off in one discipline, and combines more than 500 faculty and and courses. The biodesign methodology has six stages: staff from the departments of biology, biomedical sciences, needs finding, needs screening, concept generation, concept engineering, physics and computational science. The institute screening, strategy development, and business planning. has an organizational structure that includes managerial staff, an advisory committee, an executive committee, faculty, and 2. Financial Model various types of fellows. The program has a unique and enviable position in the arms Stanford Biodesign fellowships are typically granted over one or of a large, well-endowed university. The program, which costs two years to students from various departments. Eight fellows $2 million-$2.5 million per year, does not have to pay for its are selected per year to take courses in biodesign as well as offices, which are provided free by Stanford University’s Clark work in two teams of four to innovate in a specific clinical Center. Its affiliation with Stanford University doubtlessly area. The main Biodesign Innovation Fellowship is ten months also has an impact on the substantial number of partners and long, with the option of a yearlong extension. There are also donors it draws. opportunities abroad in India and Singapore, with fellowships of similar length and with the option of yearlong extensions. Revenue comes from several sources with an interest in Another option, the surgical fellowship, takes two years. medical technology. These include 12 corporate partners; eight community partners that are firms drawn from the Fellows are shown methods for observing and understanding medical, technology, law and business fields; 15 venture medical needs. They meet professionals in the field of partners, or investors in early-stage technology; 12 science biodesign and learn from engineers and others how to iterate and social foundations; donors; and firms that provide in-kind on the development of a device. While fellows are at the contributions. case study: Stanford Biodesign 54 The revenue from the medtech corporate partners is given in applicants who are not already students at Stanford University, the form of unrestricted gifts. The corporate donors can meet and free for current students. The Stanford-India Biodesign fellows and keep abreast of developments in the program. Fellowship, launched in 2007, is open to Indian citizens, while However, the donors do not sign agreements giving them the the Singapore-Stanford Biodesign Fellowship, launched in 2010, first right of refusal on ideas that come out of the program, is open to anyone with an interest in contributing to Singapore and face the same conditions as anyone else when wanting to post-fellowship. purchase or license technology that comes from the program. All fellows are fully funded when they come to the program, Fellowship teams are sorted to include a full complement with individual donors funding some fellows. of skills in medicine, engineering and business. There should also be an extra layer of skills on prototyping and project Of the Biodesign program’s expenses, 52 percent go to salaries management. and benefits, 23 percent to fellows and students, 13 percent to materials and supplies, and 12 percent to indirect expenses. Program Impact 3. Beneficiaries Stanford Biodesign set out with the belief that the combined expertise of an interdisciplinary team, along with guided design Recruitment and Selection of Participants training, could lead to an increased rate of innovation—and so far, it’s been on target. Since its founding in 2001 with one The eight fellowship recipients of the Biodesign Innovation fellowship team and a graduate level course, the program Fellowship include a mix of postgraduate engineers, business has graduated 160 fellows who have created 37 companies, professionals, bioscientists and physicians from Stanford served 275,000 patients, and raised $325 million, according to University’s student body. They are chosen according to Stanford Biodesign. Overseas, the India program launched its their potential for becoming “leaders” in the development of first product in its fifth year. After the program, around a third biomedical technology. They must have a history of “creativity, of fellows become entrepreneurs, whereas the rest work for invention and implementation.” medtech corporations. The program is marketed through its website and word of A small sampling of noteworthy fellow accomplishments in mouth. Applicants must provide basic personal information, a 2014: resume, an essay on a predetermined topic, a short video, and • The Jaipur Knee, a project funded through Biodesign three letters of recommendation. The application fee is $75 for to provide a low-cost prosthetic knee for India, was case study: Stanford Biodesign 55 reported to have been deployed in more than 6000 The alumni network includes 160 fellows and 900 students. patients. A separate executive education program has trained 150 • Manu Prakash, bioengineering professor and recipient of executives. It is separate from the fellowship or courses, and is C-IDEA and Coulter grants from Biodesign, was featured held once a year with around 50 executives attending each time. on TED talks describing his $0.50 microscope made from paper. In November, Dr. Prakash presented his $5 chemistry set to the White House and the National Besides the network at Stanford University, five global Institutes of Health (NIH). He has been named one of programs have supported 39 global fellows, with six global 35 Innovators Under 35 in MIT Technology Review and faculty. The faculty for the global program are people who Popular Science’s Brilliant 10. are previously connected with Stanford and have a particular expertise in a country. For example, two are also Stanford grads 4. Human Resources and one is an alumni fellow. The program has substantial human resources, but a small Stanford Biodesign also recently announced a partnership managerial staff of eight full-time and more part-time. with Japan to start a Japan Biodesign program that will be Faculty staff run the courses and organize the center and its a cooperative arrangement between Biodesign and Tohoku, fellowships. The director and another senior member of staff Tokyo and Osaka Universities. There are others in the pipeline, make regular visits to teams in order to guide them. though not officially announced. Stanford Biodesign draws on useful bodies at Stanford 5. Organizational Model University, such as the Office of Technology Licensing. The teams also benefit from the services of a psychologist, who Stanford Biodesign does not have an advisory committee assists with team dynamics and helps team members overcome or board of directors, but it does have partnerships from problems with each other. which it receives advice. The partnerships are with firms and foundations with interests in the biomedical field. These Stanford Biodesign benefits from resources provided by sponsor research, make donations, mentor students and Stanford University. These include the Stanford Product fellows, speak at events, offer externships, and provide space Realization Lab, a workshop open to all students at the for post-fellowship projects. The nature of these partnerships— university who want to design and create products; a range of whether official or informal, based on a financial transaction or science laboratories; the Stanford technology licensing office; not—depends on the partners and the support being provided. and alumni. case study: Stanford Biodesign 56 The program is known at Stanford University as a multi- disciplinary research program. The program sits in the School of Medicine and reports to the dean of the school. The program is also part of Bio-X, a multi-disciplinary program at the university level that supports and manages the James H. Clark Center where Biodesign is housed. The staff and affiliates at Stanford Biodesign serve a number of roles in providing financial, organizational, and technical inputs and management. There is a team of directors, a large group of faculty with members from the biomedical field, program administrators, and students and fellows. The staffing has a number of levels. There is a founder and director, a co-director, an executive management level, and then a number of staff in charge of core program functions. 6. Innovation Ecosystem The program has the special advantage of being located in the heart of a particularly innovative region—Silicon Valley, home to technology companies and startups in various fields. Compared to many other regions around the world, Silicon Valley boasts a higher R&D base and level of entrepreneurship. The KPMG 2012 Technology Innovation Survey called Silicon Valley the “world’s technology innovation center.” Stanford University itself also has a long history in helping to develop technology and stimulate innovation in the region. case study: Stanford Biodesign 57 CLIMATE-KIC at a glance Indicator Value Special Features of the Program Typology Ideas, Community • Climate-KIC is highly scalable; it built out its partner network Number of 250 partners including businesses, from 95 partners in 2012 to currently 250. beneficiaries universities and nonprofits; 241 grad students • The program is demand driven, asking large partners (corps, municipalities) their market needs and then matching them Number of staff About 150 full-time with entrepreneurs in their network. Financial Varies; partners are expected to provide • It has huge resources at its disposal: parent organization EIT arrangement with co-funding, but Climate-KIC is able has a proposed budget of €2.7 billion from 2014-2020 to fund beneficiaries to fund up to 100% of project costs if the Knowledge and Innovation Community (KIC) networks that required Climate-KIC is part of. Typical program Ranges from short-duration education • The program has strong links to government allowing it to duration programs (2-3 weeks), to innovation influence policy. projects and flagships (3-4 years) Countries of United Kingdom (HQ), France, Germany, Lessons Learned operation Netherlands, Switzerland, Denmark, Spain, Hungary, Italy, Poland, Ireland, Portugal, Finland, Romania, Slovenia; • There are challenges in shifting to a role co-creating products with partners, away from being just a source of grant money work outside of Europe is expected to from donor/funders. grow Program annual European Institute of Innovation and • Association with the EU is both a boon and a hindrance: government bureaucracy slows down action. budget Technology (EIT) funding for 2015: €92 million • The program’s rapid growth required a reworking of the Partner co-funding: 3-4x EIT funding governance structure and a major strategy refresh focusing on fewer themes. Program start year 2010 • Some products and services are inherently hard to scale because they are very community-specific. 58 1. Business Model Unique Value Proposition Climate-KIC seeks to link research, technology and business to Climate-KIC is the premier climate innovation program backed mitigate or adapt to climate change and accelerate solutions by the European Union, giving it significant clout and a strong to market. The program is one of several Knowledge and position for impact—in fact, its government backing has been Innovation Communities (KICs) developed by the European instrumental in its impressive ability to scale up operations and Institute of Innovation and Technology (EIT), an independent partnerships in a relatively short time. Climate-KIC has become body of the European Union set up in 2008 to spur innovation the largest climate-focused open innovation network of its and entrepreneurship across Europe. The other KIC programs type, connecting the public, business and knowledge sectors. focus on themes such as digital innovation, energy, and more. The network is active in 19 out of 26 countries in Europe and As its name indicates, Climate-KIC targets technology and includes relationships with city and regional bodies to bring an business solutions to tackle the issue of climate change. end user perspective to its activities across the continent. The program also holds value in its ability to be a “neutral broker” among partners, particularly since it is publicly funded. If this public-private partnership model results in creating new tools and evaluation methods that are proven in Europe, it can then be replicated in other parts of the world. Structure/Solution Climate-KIC, launched in 2010, seeks to drive innovation in climate change through creative partnerships focused on eight sectors in climate change: sustainable cities, land and water, greenhouse gas emissions, the built environment, adaptation services, making transitions happen, industrial symbiosis and developing the bio-economy. case study: Climate-KIC 59 The organization has a three-pronged strategy to achieve its 2. Financial Model goals: • Innovation: Identifying and developing the market Resources come from the European Commission through EIT’s potential of emerging technologies, creating new budget and from the 250 academic and private sector partners products, services and jobs in Europe with a global that are a part of the network. In 2015, EIT provided €92 million in impact on climate change. Linking opportunities and actors through projects with partners and events. funding, and partner contribution toward climate innovation activ- ities is expected to be three to four times this amount. Funding has • Education: Recruit and support entrepreneurs through educational and training programs with universities; increased every year. In 2014, partners contributed €7.6 million of develop curriculums geared toward entrepreneurs. in-kind or financial funding for Climate-KIC, while EIT allocated • Entrepreneurship: Network of incubators and €71.1 million, for a total of €78.7 million in funding. Separately, accelerators focused on SMEs working in climate partners contributed €284.3 million toward climate innovation ac- innovation. tivities. In 2012, total funding was €30.7 million (€28.5 million from EIT), and in 2013, €49.4 million (€42.4 million from EIT). Climate-KIC is focused on developing a demand-driven ecosystem where it can play a third-party matchmaker role EIT regulation stipulates that EIT funding on average may not among its partners, who come from academia and the private, exceed 25 percent of a KIC’s overall funding, which means that the nonprofit and public sectors. remaining minimum 75 percent must come from non-EIT sources. EIT also expects KICs to eventually wean themselves off of EIT There are two types of partners: core and affiliate. Core partners funding. CIimate-KIC must compete against other KICs for the total shape the business development of Climate-KIC and help govern amount of funding from EIT (60 percent of total funding is distrib- the program. They contribute their general industry expertise uted evenly among KICs while the remaining 40 percent is com- and also make financial or in-kind contributions. Affiliate part- petitive). EIT evaluates KICs based on their past performance, and ners are brought on for involvement on the innovation, educa- progress compared with other KICs of similar maturity. Factors EIT, tion and entrepreneurial side and bring specific knowledge to and external independent evaluators, particularly note include: the table. They can also make financial or in-kind contributions. • Clarity of process documentation The Climate-KIC operates through six national centers— the • How well the organization is structured U.K., France, Netherlands, Germany, Switzerland and Nordic— • The program impact (evaluation on key performance and six regional centers—Lower Silesia, Central Hungary, indicators) Valencia, Hessen, Emilia-Romagna and West Midlands. • The KIC’s progress toward sustainability goals case study: Climate-KIC 60 Climate-KIC is aiming to become financially self-sufficient market reports; or implement ideas that have been beyond 2020 by looking at ways to convert grant investments validated, in Innovation Projects that can result in bringing ideas to market. There have been 34 Pathfinder to convertible debt instruments, exploring how to get a return Projects so far and 28 Innovation Projects. in grant investment and investigating how proven services in their network can be replicated in non-European contexts. • Public bodies get the same opportunity as businesses to partner on Pathfinder Projects and Innovation Projects. 3. Beneficiaries Other stakeholders include non-partners, which include larger Beneficiaries include the 250 partners in the Climate-KIC government organizations. There are a few large network. The partners are split into three segments: businesses customers (some of which are partners) that participate in (50 percent), academia (30 percent) and public/nonprofit programs that come out of Climate-KIC. For example, Climate- bodies (20 percent). KIC partnered with KLM to use bio-kerosene in planes, and then convinced big corporate clients to pay a premium for these On a more granular level, the beneficiaries include the flights when employees travel. following, who are associated with and/or benefit from the resources of the partners: Non-European climate agencies are also beneficiaries in that they can learn best practices from the applied case studies of • Entrepreneurs/SMEs who can gain access to Climate-KIC. Qatar and China, for example, have approached the competitions, investor partners, customers, technical assistance learning. KIC for engagement. However, the mandate is strictly European. • Students who pursue master and PhD programs with partner schools. There are 31 programs across seven Recruitment and Selection of Participants universities in three countries that received the EIT Climate-KIC label, recruiting a combined 174 students at There are multiple projects and programs within Climate- the master level and 67 students at the PhD level. Master and PhD students attend a five-week summer school KIC, so the recruitment and selection process can differ. (offered to outside students as well), enroll in certain Competitions play a significant role in the selection of projects coursework and attend seminars, along with other or entrepreneurs for grant funding. For project funding, the activities. Students gain access to alumni. Climate-KIC KIC can fund up to 100 percent of project costs, but it actively also offers a pre-incubation program for entrepreneurs encourages co-funding from the partners. starting out. • Established businesses get access to talent and resources Students in master and PhD programs, who would receive a to explore new ideas, in Pathfinder Projects that produce Climate-KIC certificate along with their degree upon successful case study: Climate-KIC 61 completion, undergo an application process, where they are 4. Human Resources evaluated on their motivation and interest in climate change, grades, extra-curricular activities, and other factors. The Climate- Because Climate-KIC is funded through the EU, the partner KIC program is free of charge to master and PhD students. pool is large, particularly as it is a grant making organization. There are 30 core partners listed on its website. There are many Program Impact more affiliate partners, for a total of 250 partners. Partners run the gamut of the innovation ecosystem, including universities, Climate-KIC touts a number of accomplishments since its public bodies, governmental organizations and enterprises. launch in 2010. The program has built up its partner network to more than 250 partners in the last few years. They have The Climate-KIC operates through six national centers—in the provided business support and coaching to 45 startups that U.K., France, Netherlands, Germany, Switzerland and Nordic— have together raised over €59 million. According to Climate- which are active in the communities of their respective locales KIC, 133 business ideas have been incubated and 32 startups by hosting incubation services, startup office space, meetings have been created from its program. In 2013, Climate-KIC and workshops. startups won top honors at the Silicon Valley Cleantech Open, with breakthrough ideas in solar simulation technology, hybrid Furthermore, Climate-KIC’s six regional innovation centers— solar and aquaponic farming winning awards. in Lower Silesia, Central Hungary, Valencia, Hessen, Emilia- Romagna and the West Midlands—have initiated partnerships Some metrics of its achievements in the last few years: with additional EU regions, including regions in Ireland, Finland, • In 2012: 27 projects resulting in products and services to Portugal, Romania and Slovenia. address climate change; 10 services or products launched into the marketplace; 14 instances of knowledge 5. Organizational Model transfer within the community; 3 business startups; 11 policies or standards co-developed; 58 publications; 300 entrepreneurs in the network; 10 matchmaking events for The Climate-KIC is one of five KICs that are supported by entrepreneurs; and 4 climate market accelerator pilots. the European Institute of Technology and Innovation. The • Over 2013-14, Climate-KIC has been involved in more Climate-KIC was established in 2010 to support their mission on than 50 projects creating innovative products and furthering innovation in climate change. As this is the fifth year services to tackle climate change, and 20 new products of the KIC, they are being re-evaluated for funding from EIT. or services have been launched. case study: Climate-KIC 62 Climate-KIC has six national centers and six regional centers London and calls with other hubs, the organization is still across Europe and a headquarters based in London. National developing/refining its strategy and value proposition. There centers are managed by a director and regional centers are are attribution versus contribution questions regarding the managed by a director and a steering group. As a nonprofit, the results listed in the metrics above. Climate-KIC has tremendous organization’s decisions are made at three levels: through an resources at its disposal, but association with the EU also Assembly, governing board and executive team. appears to bring a bureaucratic and slow process. The program is looking to develop more partnerships with the United States The program’s ultimate decision-making party is the Assembly, and developing markets. which draws together one representative from each of their core partners, and two elected affiliate partner representatives. In strategic decisions, the program is led by a governing board with representatives of their co-location centers and regional centers. In operations, decisions are made by a chief executive officer, Bertrand van Ee, and an executive team. During this year the program has undertaken significant changes in their organizational structure in order to address shortcomings in the launch model. The governance structure has been shifted to separate the operational management of the KIC, by the CEO and executive team, from strategic prioritization of activities, where the Assembly, including core partners, has an input. Furthermore, the program has overhauled their strategy to focus on fewer themes and better integration of activities. 6. Innovation Ecosystem The program has strong support from the EU as the only pan- European network focused on climate change and green growth. Strong links to government allow the program to influence policy. However, based on in-person meetings in case study: Climate-KIC 63 AFRICAN LEADERSHIP ACADEMY at a glance Indicator Value Special Features of the Program Typology People • Ability to attract top talent across the continent; enthusiasm of Number of 100 students/year, 634 alumni in alumni to stay involved and give back to the organization beneficiaries flagship program; 200-300 annually in complementary programs • Curriculum is designed in-house. Has strong funding relationship with several African institutions; strong staff and management; Number of staff 100 employees relationships with top global universities in Africa, United States, Financial Students pay tuition; financial aid EU, Middle East, Asia. arrangement with available • Focuses on pre-university students ages 15-19 beneficiaries • Students and graduates have founded 52 ventures, which have Typical program 2 years for flagship program; attracted $1.5 million in global investment. duration complementary programs from 3 weeks up to one year Lessons Learned Countries of South Africa campus; draws applicants operation from all over Africa and internationally • Leadership and entrepreneurship training can—and perhaps Program annual $7.3 million ought to—start at a young age. budget • While the program has high success in sending its graduates Program start year 2008 to college, there are questions as to how many pursue entrepreneurship after attaining their degree. • Opportunity-based entrepreneurship can produce more innovative products and contribute more to economic development than necessity-based entrepreneurship • Businesses must be designed especially for African countries, not foreign countries, to be effective. 64 1. Business Model Unique Value Proposition The African Leadership Academy (ALA) seeks to accelerate ALA is unique in its value proposition: that of immersing Africa’s growth trajectory through a suite of targeted and students from a young age—the youngest cohort of any of complementary entrepreneurial-leadership education and the case studies covered in this report—in an entrepreneurial training programs. The program is based in based in Honeydew, environment and placing them within a deep network of a suburb of Johannesburg, South Africa, and targets the top resources, in order to spur future entrepreneurship in a 1-2 percent of high-achieving young Africans, ages 15-19, with region that poses significant obstacles to wealth creation tremendous leadership potential, entrepreneurial spirit and and grassroots business development. These students, hailing commitment to social betterment. Its flagship program enrolls from African countries with large base of the pyramid (BoP) these students in a two-year, pre-university program with populations that traditionally have little support and training rigorous academics and entrepreneurial training. for entrepreneurship, are taken into a two-year boarding school experience that prepares them for and encourages student-run enterprises, with a curriculum tailored for entrepreneurship training. The school is based on the supposition that youth ought to be exposed to and provided resources for business at an early age—like in music or technology—to excel at it later on in life. Furthermore, ALA provides students with a wealth of connections and opportunities to support enterprise development, as the school has access to an extensive human network in business, government and academia through its leadership boards. This network and targeted curriculum sets ALA apart from other innovation programs serving the BoP population. Structure/Solution The ALA model has three main components: • Identifying young Africans with the potential for entrepreneurial leadership from across the continent case study: African Leadership Academy 65 • Embedding them in the practice of leadership through Through its Life-Long Engagement program, ALA continues to applied learning cultivate these leaders throughout their lives, in university and • Enabling access to mentorship and networks of beyond, by providing ongoing leadership training, supporting opportunities and resources their growth through access to internships and careers, and connecting them to high-impact networks of people and capital The program aims to achieve these components through a suite that will empower them to create transformative change. of programs, the main one of which is a two-year secondary school program, where students receive entrepreneurial leader- The program also offers a Catalyst Term, a study-abroad ship training in addition to a traditional curriculum. Each student experience that “develops catalysts of positive social change.” also builds and runs a business or social venture within Africa, During the term, 10-15 students from other international categorized as either a Student Enterprise, an Original Idea for secondary schools study at ALA, mingle with ALA students, and Development or a Community Service Project. Student Enter- engage in its Entrepreneurial Leadership program. During the prise Programs (SEPs), which only run on campus, include stu- summer, ALA runs the Global Scholars Program, which selects dent-run enterprises that focus on affordable housing, merchan- a group of secondary school students from across the world dising, shops, technology, media and more. Community Service to participate in a three-week summer program in global Projects occur in the local community, and mostly involve tutor- leadership. ing, environmental clean-up, and farming-related projects. 2. Financial Model Original Ideas for Development are projects with a wider scope, and often occur outside of a student’s time at school. A The annual operating budget in 2013–14 of ALA was $7.1 million. few examples include: ALA receives 30 percent of its operating budget via tuition • GSIE (Global Strategy on Inclusive Education) helping revenue from programs (up from baseline of 4 percent in 2009). children with disabilities gain access to education The remaining balance of 70 percent of the operating budget, • Oyama, a crowd-sourcing platform for young African including scholarships for young leaders from disadvantaged entrepreneurs backgrounds, is funded by a pan-African and global collection of • Almas (formerly Nique), using a beauty cream to fund the individuals and institutions. ALA’s partner in the U.S. is the African creation and distribution of an anti-malarial cream Leadership Foundation, a 501(c)(3) nonprofit organization that helps support ALA. ALA pursues a need-blind admissions process Students also run a blog that covers student life, cultural events for its flagship two-year boarding program; it applies a sliding and entrepreneurship: http://alaianlife.org/ fee schedule based on family resources, but it insists that all case study: African Leadership Academy 66 students must pay at least a minimum fee to ensure each student Program Impact is personally vested in their studies. The MasterCard Foundation and other sponsors pay for certain prize awards and training. This model is still relatively early in its development, so the Organizations interested in employing ALA’s Entrepreneurial impacts have yet to be proven. However, ALA has already Leadership curriculum can negotiate fee-based arrangements to developed partnerships with respected platforms (including do so as well. the World Economic Forum and the UN) and universities. The target market is similar to the CTP 3. Beneficiaries entrepreneur profile—looking to identify and support The primary beneficiaries of ALA are the students, who hail individuals at an early stage and with high growth potential. from diverse socioeconomic and cultural backgrounds in 46 Through discussions, there is also interest to focus more on African countries. Secondarily, the community benefits from climate and clean tech entrepreneurship training for students. the students’ community service and future contributions to the Since enrolling its first class in 2008, ALA has received economy. more than 18,000 applications from a network of over 3,000 secondary schools and partner organizations from 50 Recruitment and Selection of Participants countries across Africa. The approximately 100 new students it enrolls each year represent 46 African countries. The alumni Students are selected through an annual application process. network now spans 634 people. Students and graduates have Admittance is extremely competitive, with thousands of founded 52 ventures, which have attracted $1,500,000 in applicants every year. The application consists of short global investment. Those ventures have created 209 jobs. questions and essays, along with the student’s academic transcript. Applicants come from a wide range of socioeconomic The program has shown that education opportunity gaps can backgrounds and countries within Africa. From the applicant be redressed: regardless of socioeconomic (and linguistic) pool, a group of 400 finalists is initially determined. The finalists, background, ALA students are advancing to university at rates who must provide teacher recommendations, then participate matching or exceeding secondary-to-university transition in one-on-one interviews, written exams and group activities at rates from the best schools in the world, and are completing events held across Africa. Finally, 100 students are selected to university within five years at rates meeting or exceeding be admitted to the school—a 0.5 percent admittance rate. ALA those of the most prestigious universities globally. selects students based on a need-blind process. Of its student pool, 92 percent of students require financial assistance. case study: African Leadership Academy 67 The vast majority of the graduates advance to university study, 4. Human Resources with 98 percent of graduates doing so. A majority, 70 percent, do so on scholarship at universities in the United States, and Through ALA’s three boards—the Board of Trustees, Global graduates collectively have accepted more than $62 million in Advisory Council and Board of the African Leadership scholarships/aid to date. Of those entering college in the U.S., Foundation—there is an extensive human network in the areas 91 percent of graduate within four years, and 28 percent pursue of business, government and academia. Board members have graduate study. This is remarkable, as 80 percent will be the backgrounds as chief executives and heads of Hewlett-Packard, first in their family with a university degree. The universities the Coca-Cola Africa Foundation, Barloworld, Winchester with the highest ALA graduate enrollment by continent include: College, Bain Capital and more. Rochester, Notre Dame, Trinity, Duke and Yale (all in the U.S.) in North America; Sciences Po, Jacobs, UCL and Oxford in Europe; The academy embeds the students in a network of faculty, Cape Town, Witswatersrand, Ashesi and USIU in Africa; and speakers, experts-in-residence and mentors. A sampling of NYU-Abu Dhabi, NYU-Shanghai and Yale-NUS in Asia. speakers who have visited the campus include Desmond Tutu, Graca Machel, Thabo Mbeki, Carly Fiorina and more from After college, 68 percent of ALA graduates who completed government, corporations, nonprofits and academia. Experts-in- university degrees in the U.S. in 2014 returned to Africa to residence stay for a week or more on campus and hail from the pursue a professional job or entrepreneurial opportunity. It fields of science, filmmaking and social activism. Mentors include is not clear, however, how many go into entrepreneurship business professionals, NGO leaders and African civil servants. versus a professional job. It may be the case that most go into professional jobs. ALA notes that graduates may opt for Some of the guests have more than one role in these three formal employment alongside or in preparation for pursuit of buckets. Many of the guests have meals with the students entrepreneurial ventures. during their stay, providing personal interaction with the students. The guests form part of an extended network for ALA is working to direct the focus of its students and graduates the students to draw upon during their academic and future to opportunity-focused entrepreneurship, where a business is careers. pursued to introduce a novel solution or forge an entirely new sector, rather than necessity-based entrepreneurship, where 5. Organizational Model a person is forced by circumstances to open a business, and where there is significantly less strive for innovation. ALA, founded in 2008, is a nonprofit organization in South Africa that is also supported by the African Leadership case study: African Leadership Academy 68 Foundation in the U.S.. ALA is governed by a Board of Trustees, chaired by founder Fred Swaniker and including 10 members. It receives further guidance from a Global Advisory Council that includes 15 members with high- profile business and academic backgrounds, and the board of the African Leadership Foundation. There are 23 faculty members who teach African studies, English, mathematics, science, entrepreneurship and other topics. 6. Innovation Ecosystem The students come from African countries with large BoP populations that traditionally have little support and training for entrepreneurship. Oftentimes the infrastructure and policy environment is lacking for the creation and abetment of new business and innovation initiatives. Even though the students go through two years of entrepreneurship training, it is questioned whether a significant portion of them pursue the entrepreneurship route after university, given the risks involved and the prestige and security of a professional job. Many of these students are first in their family to obtain a college degree, and there is social pressure not to “waste” that achievement. case study: African Leadership Academy 69 CARBON WAR ROOM at a glance Indicator Value Special Features of the Program Typology Ideas Number of Not available • The program pursues a market-based approach to climate beneficiaries change and seeks to make sustainability profitable as part of the carbon economy. Number of staff 10, plus 4 on the executive team; merged with the Rocky Mountain Institute (RMI), • To ensure profitability, the Carbon War Room (CWR) favors a 120-person think tank in September projects with proven technology, rather than unproven, 2014 cutting-edge technology. Financial Varies; does not directly fund companies • The program has significant sources of funding, mostly through arrangement with its billionaire founder Sir Richard Branson. beneficiaries Typical program Varies Lessons Learned duration Countries of United States, United Kingdom, South • There are often incentive barriers to adoption of more operation Africa, Netherlands, Singapore, Germany, efficient technologies, such that people who would pay for Belize and multiple Caribbean islands technologies (e.g., a truck fleet owner) are different from the (Aruba, Bahamas, British Virgin Islands, ones who would benefit (e.g., the truck driver). the Colombian islands of San Andrés and Providencia, Dominica, Grenada, Saint • More information (e.g., publicly available data on the fuel efficiency of ships) can help the beneficiaries (charterers) push Kitts and Nevis, Saint Lucia, and Turks for adoption of new technologies. and Caicos) Program annual 2013: $6.5 million revenue, $6.5 million • New financing options can help the owners pay for the budget expenses technologies. 2015: ~$22 million with merger with RMI Program start year 2009 70 1. Business model Unique Value Proposition The Carbon War Room (CWR), based in New York, is a global CWR is unique in its view of corporate social responsibility as nonprofit that seeks to accelerate the adoption of business a profitable business model, rather than as a philanthropy. As solutions that reduce carbon emissions at the gigaton scale a market-based nonprofit, it fills a gap between traditional, and advance the low-carbon economy. It does this through high-profile public relations–led “calls to action” and think several pathways, including partnerships with stakeholders in tank–led “best practice” white papers and lobbying in the improving capital availability for projects, providing research climate action arena. Back when CWR was established in 2009, and advisory services, facilitating connections through its the conversation around climate change focused on threats network and assembling entrepreneurial teams to tackle and associated costs for addressing these threats. CWR was one sustainability-related issues. It also recently merged with the of the first organizations to shift the conversation to economic Colorado-based Rocky Mountain Institute (RMI), with the goal opportunities available through green growth. To this end, of bringing RMI’s research and analytical strengths to the the organization focuses on market-based solutions that alliance. can be realized using proven rather than new and emerging technologies in key sectors. CWR takes a hands-on approach to intervening in markets to provide better market information for efficiency technologies, actively work with companies to promote demand for technologies and solutions, and innovate with financing solutions to commission technologies. CWR also has a second defining factor: high-profile founders with social cache. The Founders Board comprises influential individuals with both powerful networks directly related to the sectors on which the CWR focuses and significant personal wealth. Funding constraints facing most NGOs, particularly during early stages, are not a key concern for CWR. Structure/Solution CWR, founded in 2009, is structured in three parts: research and intelligence, network engagement and active operations. case study: Carbon War Room 71 The research and intelligence group identifies opportunities Ten Island Challenge that have cost-negative, billion-ton-scale carbon reduction potential over the next ten years. Research partnerships and CWR merged with Rocky Mountain Institute (RMI), a research collaborative projects include several leading universities, nonprofit based in Colorado, in December 2014, to bring including John Hopkins University and the Massachusetts on the analytical and research strengths of the latter to Institute of Technology. The network engagement group complement the networking and entrepreneurial strengths of provides a bridge between identified opportunities and active CWR. The two, which will remain separate in name and brand operations through events and matchmaking services with but merge in other respects, launched a first joint program, key stakeholders in specific sectors. It also hosts discussions in the Ten Island Challenge, to encourage renewable energy social media groups, particularly on LinkedIn. It has LinkedIn sources in the Caribbean islands. The alliance hopes to make groups for different areas of focus: the two largest groups tangible changes to the islands’ energy infrastructure in the include Energy Efficiency (994 LinkedIn members) and Island next three to five years, though the timeline could be longer Economies (498 members). depending on the challenges they meet in the field. The first area of implementation will be energy efficiency, especially The active operations group gathers entrepreneurs and with large buildings such as hospitals, schools and hotels, with executes multi-phase projects to address specific market the installation of LED street lighting and possibly integrated barriers and accelerate capital. There are five buckets: shipping solar to follow. The alliance then plans to make a request for efficiency, renewable jet fuels, building efficiency, trucking proposal for 20 MW of solar to be installed across the islands efficiency and smart island economies. A sample of solutions in over the course of a year. these different categories include: the creation of a first-of-its- kind carbon specific eco-label for shipping fleets; development 2. Financial Model of new finance models to facilitate efficiency retrofits to maritime vessels; increasing funding for building efficiency The founders of the nonprofit, including Sir Richard Branson, projects; and developing new finance models for renewable finance all of the organization’s overhead costs and jet fuel industry. As apparent, several of these solutions involve contributed significant financing during the early years of the opening up availability to capital, working with organizations organization. and government entities on spurring projects, as well as website-based initiatives and connection of stakeholders. Corporate partners are often central stakeholders in each sector with key understandings of market barriers and opportunities. case study: Carbon War Room 72 In 2012–13, CWR had nearly $6.5 million in total revenues including fuel purchasers, producers, insurers and policy and about the same amount in total expenses. Its total assets makers; and the trucking industry, including fleet and truck increased from $3.2 million to $5.7 million during that year—in owners. line with its mission to turn a profit from the carbon economy. The salary for the Executive Board’s staff ranges from $120,000 CWR’s research arm provides reports and analysis to to $200,000. The largest expenses are staff time, followed by stakeholders in agriculture, energy, forestry, industry, buildings, fees for consulting services and travel expenses. transportation and waste management. Furthermore, students and faculty at partner academic institutions benefit from Operations are financed through donations and by partners. collaborative workshops and projects. Most active operations are financed by the partner companies themselves within the various sectors due to the strong It is key to note who are not beneficiaries of CWR. CWR does economic incentives and publicity opportunities. Events hosted not provide or directly facilitate funding for businesses, and by CWR are often associated with fees for participation. actively discourages technology startups from connecting with them, rather directing the startups toward more 3. Beneficiaries appropriate organizations. CWR is mainly interested in established technology firms with a track record of CWR’s participants and beneficiaries include a wide range of profitability and success. entities. The Ten Island Challenge will benefit ten islands in the Caribbean, including Aruba, the Bahamas, the British Virgin Recruitment and Selection of Participants Islands, the Colombian islands of San Andrés and Providencia, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Turks and Participants are determined based on the project involved Caicos, and as well as mainland Belize. because CWR has a range of operations, from collaborations with academic institutions, to research and intelligence, to The overall operations arm of CWR targets five sectors: work in specific sectors and locales. For the most part, CWR shipping efficiency, renewable jet fuels, building efficiency, seems to work with its own network to suss out possible trucking efficiency and smart island economies. Beneficiaries projects and partners. As such, there is not a defined include the shipping industry, including charterers, shippers, application process. Rather, interested parties, including shipowners and ports; stakeholders in the built environment, entrepreneurs, scientists and institutions, are encouraged including building asset owners, municipal leaders, engineers to connect on LinkedIn groups and attend CWR events. and technology and materials suppliers; the airline industry, Furthermore, CWR is primarily interested in projects with case study: Carbon War Room 73 proven technologies, so filters out technologies that are too Other examples of projects by the operations unit: new and/or do not have a track record of success. • In the building efficiency sector, CWR assisted in launching the commercial Property Assessed Clean Program Impact Energy (PACE) program, which helps finance renewable energy and energy efficiency upgrades to buildings. The program has nearly $15 million worth of funded projects CWR’s sectors of focus are agriculture, energy supply, in California and Florida, and is active in 14 states. transportation, waste management, buildings, industry, • In the renewable jet fuels sector, CWR listed and forestry. CWR was voted NGO of the Year in 2014 by the launching of an informational website, BusinessGreen Leaders, the largest sustainability award in RenewableJetFuels.org, for fuel purchasers, investors Europe. CWR has been recognized in particular for its work in and other stakeholders. However, as of the writing of this report the website is not yet launched—its web address maritime shipping and island economies. leads to a holding page. One of its most impactful projects is the creation of an energy CWR has found that across sectors, some of the key barriers efficiency rating system for maritime vessels. CWR noted that to technology adoption lie in daunting upfront costs and the there was a plethora of fuel efficiency technologies available in principal agent problem. The latter is illustrated by the fact the shipping industry, but very few were used to retrofit ships. that in many industries, the owner of the structure or vehicle, The reason was due to an incentive barrier: ship owners, who who would pay for upgrades, often does not pay for fuel or would be the ones to implement the technologies, do not pay for power, so does not have an incentive to upgrade. fuel. Rather, charterers of the ships do—but the charterers were often unaware of the outdated fuel efficiency of the ships. To 4. Human Resources spur adoption of the efficiency technologies, CWR created an A to G rating system for energy-efficient maritime vessels, posted The founders and the board include influential individuals on a public website, ShippingEfficiency.org. Now, charterers with both extensive networks directly related to CWR’s focus could reference the ratings to pressure ship owners to adopt areas and significant personal wealth. Founder and billionaire efficiency technologies. According to CWR, 23 percent of the Sir Richard Branson is the chairman of the Virgin Group, non-container charter market—including major charterers which operates in travel and telecommunications. Co-founder such as Cargill, Huntsman, and UNIPEC U.K.—uses the A to G Boudewijn Poelmann is chief executive of United Postcode rating system, making it the top carbon index in the industry. Lotteries, which raises funds for charity organizations. The Furthermore, CWR works with shipowners in devising novel CWR chief executive was former Costa Rica president Jose financing strategies to help them afford the new technologies. Maria Figueres Olsen, though this has changed with the RMI case study: Carbon War Room 74 merger in December 2014. RMI is headed by energy scientist CWR, which has 10 people on staff, not including the four Amory Lovins, who has been working in energy policy for a few members on the executive team. The two plan to closely decades. collaborate according to a board-approved strategy. In May 2015, the new CWR-RMI alliance partnered with The The merged organization has a partnership model, much like Clinton Climate Initiative (CCI), an initiative of the Clinton a law firm or financial services firm. There are 12 managing Foundation, to jointly work on shifting the Caribbean islands to directors, each responsible for a practice in areas such as solar renewable energy and better energy efficiency. power, transportation, and the built environment. The Ten Island Challenge, meanwhile, has also merged with the Clinton The research and intelligence division of CWR has a number Climate Initiative, absorbing its staff. of partnerships with U.S. and European universities, from which they enlist graduate students and academic experts The new alliance will work across four offices: in New York, for their reports. Its research partners include Johns Hopkins Washington D.C., Boulder and Snowmass (the last two in University and the Amsterdam School of Creative Leadership, Colorado). and it collaborates on workshops and student projects with Massachusetts Institute of Technology, and the business Founding partners of CWR include the Virgin Group, Dutch schools of Harvard, University of Pennsylvania, University of Postcode Lottery, Villum Fonden, Econet Wireless and Low Maryland, and several other schools. Carbon. CWR has collaborated with a number of operations and research partners, including the International Renewable 5. Organizational Model Energy Agency, the U.S. National Renewable Energy Laboratory, Danish wind turbine company Vestas, the Amsterdam School of CWR is a U.S. registered 501(c)(3) nonprofit organization Creative Leadership, and more. founded in 2009, with global operations. Its recent merger with RMI, which was founded in 1982, has led to a reorganization. 6. Innovation Ecosystem With the merger, RMI chief executive Jules Kortenhorst took over the CWR chief executive position, previously held by Except for the Ten Island Challenge, CWR primarily works former Costa Rica president Jose Maria Figueres Olsen. Olsen in developed markets, such as the U.S., which has a strong now chairs the combined Board of Trustees. While the two infrastructure for supporting innovation. In the Caribbean organizations will share a CEO and board, RMI, with staff of islands, there are more policy and structural gaps to consider approximately 120, will work as a distinct business unit from when implementing projects. There is a lack of trust between case study: Carbon War Room 75 the government and companies, leading to a fair amount of red tape. Also, there is increasing competition from NGOs and other actors working in the same space as CWR and offering a similar value proposition. While this means that the ecosystem is ripe for supporting innovation, there are questions around how the CWR will retain its market share. Though, given its new merger with RMI, the CWR is well positioned to maintain its work in the near term. case study: Carbon War Room 76 OPENIDEO at a glance Indicator Value Special Features of the Program Typology Ideas • OpenIDEO leverages the vast, international reach of the Number of More than 100,000 members Internet for crowdsourcing solutions to design problems. beneficiaries • It is unique among innovation organizations as a primarily Number of staff 8 online platform. Financial Partner sponsorship • OpenIDEO focuses on innovation in a broad sense, as it is very arrangement with inclusive of different disciplines. beneficiaries • The program has a very strong following and substantial brand Typical program 3-4 month online open innovation capital. duration challenges Countries of United States (HQ); worldwide reach Lessons Learned operation through Internet Program annual Not available • People are motivated to spend time doing real work without a budget cash reward, in return for the “designer” identity. Program start year 2010 • Some success may be attributed to support by its parent corporation, which provides substantial brand capital in addition to financial and logistical resources. • A strong online network can translate into offline impact, as OpenIDEO hosts community meetups in various cities. 77 1. Business Model Unique Value Proposition OpenIDEO allows companies, NGOs, and prospective social Most technology or innovation incubators have an application innovators to connect and collaborate on various challenges process to screen out a few select ideal candidates—but they identified by the company or NGO. OpenIDEO was created as are missing out on the talents of those who are not selected an online platform in 2010 by the Palo Alto, California, design simply due to the limited slots available, or who are not able to firm IDEO to bring together designers worldwide to collaborate participate in person. OpenIDEO’s unique value proposition is its on solutions to design problems in various fields. IDEO open-source, Internet-based platform for spurring and support- designers built it on the hunch that leveraging the far-flung ing innovative projects and solutions. OpenIDEO operates on the reaches of the Internet to crowdsource solutions could spur conviction that the aggregated contributions of many self-select- greater innovation than traditional ways. ed designers can be more valuable and on target than the contri- butions of a few, selected candidates. It follows in the tradition of online pioneers in crowdsourcing, such as Wikipedia, for crowd- sourced encyclopedic knowledge, or GitHub, for open-source code. It is uniquely modern in its primary use of the Internet to solve problems, compared with other innovation organizations. OpenIDEO also holds a strength in its lack of financial obligations toward contributors, enabling it to operate on a relatively shoestring budget compared to its reach, like many online platforms. Since it is open source, people contribute their ideas and time for free. When top ideas are selected, anyone is allowed to pursue execution of the idea. Some sponsors may offer funding for doing so, but it is not required and OpenIDEO itself has no financial obligations to fund projects. Structure/Solution OpenIDEO posts “challenges”—design problems in a variety of fields—on their online platform. Companies, nonprofits and case study: OpenIDEO 78 governmental entities often partner with OpenIDEO to sponsor Recent examples of challenges: the challenges, which span a wide range of topics (e.g., refugee • “How might communities lead the rapid transition to aid, environmental cleanup, aging populations). Over a three renewable energy?” sponsored by the 11th Hour Project, to five-month period, the OpenIDEO community collaborates an initiative of the Schmidt Family Foundation online toward solutions to the challenges. This involves a multi- • “How might urban slum communities become more step process modeled on IDEO’s design thinking methodology: resilient to the effects of climate change?” sponsored by the Global Resilience Partnership (The Rockefeller • RESEARCH: The online community shares inspirations, Foundation, USAID and Sida) stories, tools and successful examples on the challenge topic. Participants can form teams to tackle the challenges. • IDEAS: Based on learnings from the research phase, new or existing ideas are posted, and the community Participants also receive a rating called the Design Quotient collaboratively refines them. (DQ), which measures the individual’s contributions to • REFINEMENT: Ideas are tested with end users. OpenIDEO across various phases of the challenges. The rating can help others identify participants’ expertise more quickly. • FEEDBACK: The community shares comments and suggestions for next steps. ACCELERATE • TOP IDEAS: A set of top ideas is selected by the OpenIDEO team along with the challenge sponsor (if there is one). Ideas are chosen for their potential impact, Currently, OpenIDEO is building Accelerate, a global effort to level of engagement and relevance to the challenge support innovators, spark action, and use design thinking to topic and evaluation criteria. tackle our biggest environmental challenges. Accelerate will • IMPACT: After the top ideas have been selected, include open innovation challenges, design support and boot anyone can pursue implementation or production of camps, events and educational content, and access to funding the idea. Here the community can share learnings, find collaborators and share updates on how ideas for climate innovators. are evolving. OpenIDEO launched Accelerate with its Climate Innovator Both quality and quantity are valued during the idea Stories Challenge in fall 2015, where the community shared generation process, and OpenIDEO encourages participants to stories of people and organizations bringing innovative solutions withhold judgment and share all of their ideas, feasible or not. to climate change. From this challenge, OpenIDEO selected their All concepts are generated under a Creative Commons license first round of Climate Fellows, environmental entrepreneurs and are thus shareable, remix-able, and reusable. building organizations that OpenIDEO and its partners will support with design and storytelling resources. The next case study: OpenIDEO 79 Accelerate challenge will focus on surfacing and developing Challenges are often backed by big sponsors who have a solutions related to zero waste food systems. strategic interest in the topic they choose, and can provide funding for the top ideas selected. For example, in the challenge AMPLIFY “How might we use the power of communities to financially empower those who need it most?”—directed at connecting The Amplify program is a five-year joint initiative of OpenIDEO poor and/or isolated communities with financial services and and IDEO’s nonprofit arm, IDEO.org, which aims to find design support—sponsors CO-OP Financial Services and MasterCard solutions to development problems. The Amplify program, offered the OpenIDEO community’s top ideas with a grant in the funded by the U.K. Department for International Development form of the THINK Prize, an annual financial award of variable (DFID), poses 10 challenges related to international aid and amount for winners to use toward executing their idea. In turn, poverty alleviation, and the top ideas in each challenge receive sponsoring the challenge is beneficial for the sponsors in that a combined $500,000 in funding to pursue the idea. Other than they obtain free brainstorming and refining of ideas to help them the usual selection criteria, the top ideas must also be pertinent reach more potential customers of their financial services. to the DFID’s 28 priority countries. 3. Beneficiaries 2. Financial Model Beneficiaries of the program include: challenge participants, OpenIDEO does not itself seem to generate profit. However, who are able to contribute ideas and skills, while gaining experi- it provides important social and brand capital for IDEO, the ence and access to funding in a topic of interest to them; chal- for-profit arm of the firm, which in turn is able to support lenge sponsors, who are able to tap into a wide talent pool for OpenIDEO financially. Past OpenIDEO sponsors include USAID, innovative ideas and solutions; IDEO, which gains brand capital the Clinton Global Initiative, Unilever, the AARP Foundation, and connections; and the community that the challenges serve. and the Mayo Clinic. OpenIDEO is considered a breakeven social enterprise investment from IDEO. Recruitment and Selection of Participants IDEO also has a nonprofit arm, IDEO.org, which runs the OpenIDEO’s global community of collaborators is composed Amplify program on OpenIDEO. As of 2013, IDEO.org had of more than 100,000 individuals from more than 200 countries revenue of $5,006,229 and expenses of $3,448,231. IDEO.org and territories, including designers, social entrepreneurs, also received $900,000 in philanthropic contributions. students, educators, and business professionals. OpenIDEO is an open-source online platform, meaning that anyone can join case study: OpenIDEO 80 and contribute in the idea generation, collaboration and design OpenIDEO Meetups—self-organized groups of community process. Top ideas are selected by the OpenIDEO team and the members who come together to engage with challenge and sponsor(s) for their potential for impact, level of engagement design thinking content in more than 60 cities around the world and relevance to the challenge topic and evaluation criteria. —which allows for more diverse participation and ideas. There have been 500 community meetups so far. Many OpenIDEO users participate regularly in multiple challenges, but each challenge also attracts new users and 4. Human Resources represents a distinct collection of community members who work together to collectively design solutions. Participants join OpenIDEO is proactive in gathering the appropriate human OpenIDEO for a range of reasons, including learning about resources to make each challenge effective, apart from the specific social and environmental issues, gaining exposure to resources and networks afforded by its sponsors. In order design thinking, finding collaborators, or to pursue funding to assemble a wide range of perspectives and skill sets to opportunities. build the strongest pool of solvers and ideas, the OpenIDEO team performs targeted outreach to relevant individuals, Program Impact organizations and networks in advance of each challenge, and continues this activity throughout the process. OpenIDEO has more than 100,000 registered community members, who have contributed 9,000-plus ideas to 35 For example, in support of the Fighting Ebola Challenge, the challenges since 2010. The community members hail from 212 OpenIDEO team reached out to scientists, health professionals, countries and territories. Currently there are 300 projects under researchers, social entrepreneurs, designers, tech industry development with 900 global teams having participated. representatives, materials experts, and the organizations they represent. Thus, the community expanded with new The impact of OpenIDEO’s challenges has taken different contributors, many of whom had special interest or expertise forms—raising awareness around an issue, empowering in the issue of empowering and equipping health workers to individuals to take action in their local communities, providing fight Ebola. These new community members also benefit from a platform for skill and idea exchange, transforming the way the experience and collaboration of seasoned OpenIDEO that sponsors approach innovation, giving ideas a space to participants who return to the platform after participation in grow and evolve and connecting ideas with the resources they previous challenges, and become part of the global OpenIDEO need to thrive. OpenIDEO is also working on creating impact community that can participate on the platform and receives beyond online challenges and has invested in the growth of communications from OpenIDEO going forward. case study: OpenIDEO 81 In addition to ongoing outreach to engage relevant OpenIDEO works jointly with the nonprofit arm of IDEO, IDEO.org. participants, OpenIDEO has a communications staff that As of 2013, there were 29 staff employed at IDEO.org, and seven promotes challenge activity and shares helpful tools and voting members of its governing body. content to OpenIDEO and IDEO networks, raising awareness for the challenge topic and attracting new users to the platform. IDEO itself has more than 600 staff in various disciplines, and OpenIDEO uses a variety of communications channels, 10 fellows. Although the firm obviously has an organizational including OpenIDEO and IDEO Twitter accounts (65,500 and structure, it is careful to highlight the its flat hierarchy, as is 242,000 followers, respectively), Facebook accounts (18,000 common in the design and startup communities. According to and 126,000 followers, respectively), emails and blog posts. a review by Harvard University, IDEO’s organizational culture consists of project teams, flat hierarchy, individual autonomy, The human network also comprises the OpenIDEO Meetups, creativity, socialization of recruits and engineer buy-in. groups of OpenIDEO community members who meet offline to discuss, brainstorm, and prototype ideas from the current IDEO has offices in Boston, Chicago, London, Munich, New York challenge—and then add their insights, feedback and ideas City, Palo Alto, San Francisco, Shanghai, Singapore and Tokyo. back to the platform. The OpenIDEO Meetup community comprises groups currently active in 60 cities and a number 6. Innovation Ecosystem of universities across the world, and helps the platform reach more people and integrate more diverse perspectives by With a leading international design firm as its parent, bridging offline and online communities. OpenIDEO has been raised near the heart of the design community and ecosystem, allowing it to grow in a rich 5. Organizational Model media of design information and connections. Furthermore, its primary existence is on the Internet, which is the hotbed OpenIDEO draws its staff from parent IDEO, a Palo Alto, of innovation and idea sharing in the present age, more so California, design firm that uses design thinking in various than other mediums. However, the risk of an Internet-based situations, from product design to the built environment, to existence is the ratio of signal to noise; one must wade through digital experiences. IDEO’s chief executive is Tim Brown, and its a lot of chaff to get to the wheat. general manager is Tom Kelley, brother to the founder David Kelley, who is now chairman and managing partner. case study: OpenIDEO 82 ENNOVENT at a glance Indicator Value Special Features of the Program Typology Products, services and business models • Ennovent combines both incubator and crowdsourcing models Number of 30+ Circle members; 200+ Pool for spurring innovation in low-income populations. beneficiaries members; 1000+ Network members • Offering a suite of services allows entrepreneurs and clients to Number of staff 24 customize their engagement. Financial Beneficiaries pay for different levels of • The program is willing to partner with competitors, such as arrangement with service, or short and long term pro bono Villgro. beneficiaries arrangements Typical program No time limit Lessons Learned duration Countries of Austria (global HQ), India (regional • While online crowdsourced solutions open up the field for operation hub—Asia), has worked in Asia: India, possible inputs, there is an issue of quantity vs. quality. Nepal, Bhutan, Bangladesh, Australia; Africa: South Africa, Zimbabwe, Kenya, • Incorporating feedback by end users (typically from BoP populations) can help entrepreneurs (from developed world) Morocco, Uganda; Americas: United pinpoint the best products for acceleration. States, Canada, Mexico, Panama, Ecuador, Peru; Europe: Austria, • Investors in startups can have unrealistic expectations on the Switzerland, Italy, Netherlands and time it takes to reap returns and little understanding of the United Kingdom entrepreneurial process. Program annual Not available • Non-financial resources and services (e.g., better distribution budget channels, less regulations) are key for overcoming barriers to scale. Program start year 2008 83 1. Business Model Unique Value Proposition Ennovent promotes the development of innovative products Ennovent is unique in the breadth of its offerings for and services geared toward low-income markets through stakeholders in the BoP innovation economy. It provides a variety of programs that connect entrepreneurs, mentors both incubator and crowdsourcing services directed at low- and funders. With offices in Austria and India, it serves as income populations. These services are provided as part of a a middleman of sorts to help clients mitigate the risks of full suite of services for all sides of the innovation equation, investing in BoP markets. Ennovent also helps surface worthy from entrepreneurs to investors, to development stakeholders. startups and business ideas through managing business plan With the flexibility of Ennovent’s array of options, clients can competitions hosted by other organizations, and occasionally customize the depth of their engagement with the organization. invests in businesses directly through its own investment fund, Ennovent shows the advantage of a model with varying levels Ennovent Impact Investment Holding. of affordability: the ability to support low-resource consumers (entrepreneurs) while retaining them as likely paying customers in the future. This offers one potential model for sustainability. Structure/Solution Participants can utilize any or all of the four services provided by Ennovent: 1. The Network, a free online community of entrepreneurs and funders 2. The Pool, a paid service that allows a more structured search (relative to the Network) and provides access to experts outside of the Network; by application only 3. The Circle, a paid group focused more on joint in-group collaboration; by application only 4. Solutions, paid consulting from Ennovent; services include advising entrepreneurs on market entry, assisting startups with business model development, and helping clients create their own innovation-focused competitions and challenges. case study: Ennovent 84 The different levels of services are targeted toward 2. Financial Model entrepreneurs with various levels of available capital, although all are presented as relevant to entrepreneurs and Entrepreneurs seek funding, but mostly from partners located small businesses. The Network, the biggest group, allows using the site. The cost associated with becoming a member of members to crowdsource business solutions by posting the Circle is available only to prospective members based on business requests on the LinkedIn page. Members can then the services they opt for. For access to the Pool, entrepreneurs respond and collaborate with each other— though as in other are charged Rs 5500 for connections with three current online commenting scenarios, crowdsourced responses can members of the Pool. Other search and connection options, vary in quality. Members can also find and connect with each including but not limited to the Ennovent Pool are available at other and share community updates. varied levels of pricing. The paid Pool service allows members to search for The affiliated Ennovent Impact Investment Holding, run by entrepreneurs, connect with experienced mentors globally for Ennovent head Peter Scheuch, invests up to €300,000 in equity short- or long-term engagements, book experts and collaborate and quasi-equity for five to seven years in early- stage startups. with service providers. It has five companies in its portfolio listed online. A key investor is the Scheuch Family Trust, which derives its resources from The most selective level is the Circle, which includes both Austria-based clean air technology company Scheuch, founded individuals and organizations. Circle members work as a group by a relative of Peter Scheuch. to accelerate products for the BoP market. Services provided to the Circle include deal sourcing, mentorship, investment Other financial information was not available, but the support and access to experts and consultants for free or membership fees of Ennovent’s Pool and Circle programs preferred terms. presumably offset the costs of operation. Ennovent Impact Investment Holding, a member of the Circle, 3. Beneficiaries is an active investor in BoP-targeted early-stage startups in India. The average size of a first seed investment is €50,000, Beneficiaries include entrepreneurs at various stages of which can be followed by a €250,000 follow-up round. business development and available capital; large entities such as development agencies, government agencies and NGOs; and investors, from development banks, family funds, and angel investors. case study: Ennovent 85 So far, there are over 2,800 members registered on the participants through its network and manage the competition. Ennovent Network, more than 200 Pool members, and more Nominations were crowdsourced through the Ennovent than 20 Circle members. Network, and 74 of 306 nominees from Latin America, Africa and Southeast Asia applied for the challenge, which produced Recruitment and Selection of Participants winners and finalists in different categories. The Network is hosted on LinkedIn, and is open to everyone. Ennovent manages the Artha Venture Challenge, a business Participants will need to log in with a LinkedIn account in order plan competition in India that awards up to to join. The Pool and Circle programs require an application. $50,000 if matched by a similar co-investment. Ennovent and The process starts by contacting the programs online and India-based nonprofit Villgro provide support to finalists. More requesting to join. than 115 applications were received for the 2013 challenge and 8 finalists received tailored startup support from Ennovent. Members are selected via the following criteria: • Entrepreneurs: Managers of startup or growth-stage In the selection of business plan competitions, Ennovent enterprise focused on low-income markets in India; for- is aware of the often gaping chasm between the ideas of profit company with the potential to generate profits competition winners and the actual implementation with the from sales of products or services BoP end user. To better select competition winners, with an eye • Investors: Sufficient financial resources to make at least toward how it could be realistically applied to an end user in a one investment of $25,000 per year; meet the applicable low-income environment, Ennovent tries to conduct thorough criteria of “accredited” (or similar) investors depending on the jurisdictions interviews with the BoP consumers. However, this solution is not always economically feasible, depending on the level of • Mentors: Demonstrated commitment and capacity to mentor companies; time and resources to mentor and funding available. support enterprises over an extended period of time • Service Providers: Proven commitment to support Program Impact entrepreneurs with expertise or services Ennovent has provided investment and financial advice, as well Ennovent also helps with a number of challenges and as other services to more than 60 clients. Its combination of competitions to surface worthy startups. For example, when facilitating network connections and managing business plan World Wildlife Fund (WWF)–Switzerland launched its Tropical competitions has assisted 250 innovations in more than 15 Forest Challenge in 2012, it enlisted Ennovent to scout for countries. Examples of its projects include the following: case study: Ennovent 86 • Global Alliance for Clean Cookstoves. Spark Fund II. to expect in developed markets. Spotty infrastructure and Ennovent partnered with I-Dev to conduct due diligence challenges with disseminating information and practices for four of the Spark Fund II applicants in Africa and with the end user stymie project schedules. Thus the flow of India, providing investment advice. investments is weaker than the capital available warrants. • Village Capital and Investment. Ennovent provided financial advice to 15 companies in the Village Capital “Edupreneurs” cohort during a one day workshop in 4. Human Resources Delhi, India. Ennovent is a social organization as a result of its willingness • Ennovent helped the National Skills Development Corporation in India with their 2013 Power to to partner with, and help market, what could be viewed as Empower competition, which received more than 1,000 competing organizations. For example, it often helps India- applications and awarded winners with cash prizes of Rs based Villgro broadcast its announcements on social media 5 lakh. The event was widely covered in the press. and its blog, and it partnered with Villgro in the Artha Venture Challenge and the India Employment Challenge in 2012. While Ennovent is very active in the BoP innovation space, it is no surprise that the BoP market is a very challenging market Ennovent has partnered with at least 37 organizations in to conquer. For example, while Ennovent has a hand in several India and other parts of the world on an array of business business plan competitions, it admits that the winners of the plan competitions, advisory services and outreach campaigns. competitions are often removed from the end user population Some of its partners include: Austrian Development Agency, and devise solutions that are at odds with the practices and ARTHA, Center for Innovation Incubation and Entrepreneurship habits of the end user. For example, a health care clinic Ahmedabad, Dasra, Impact Investment Exchange Asia, Ketto, is not useful if the end user is not aware of the benefits of Mahindra, Unreasonable Institute, Toniic and Villgro. preventative healthcare. Ennovent attempts to address this by conducting more thorough consumer evaluations as part of its Several of these partners are outreach partners, and they mutu- contestant selection process, as described above, but this is not ally provide media support for each other. The others provide a always economically feasible. plethora of help, including mentorship services, workspaces for Ennovent’s clients, referral of potential applicants, deal flow sup- Furthermore, while Ennovent helps advance the move of port and partnership with Ennovent on authoring publications. In mainstream investors into the BoP market, the expectations Austria, Ennovent has connections through the founder’s family of these investors is often far removed from the reality of the relatives, who run the Scheuch Family Trust, one of the key inves- BoP environment. The timescale of piloting new innovations, tors in Ennovent Impact Investment Holding’s portfolio. around one to three years, is longer than investors have come case study: Ennovent 87 5. Organizational Model Ennovent started out as an investment fund in 2008 for BoP- directed innovations and has since then expanded to become a business accelerator that also provides research and advisory services. Ennovent has 24 staff working in India, Austria and Canada, led by the founder and managing director (Scheuch). Underneath him are three directors: of investment, clients and operations. The next rung includes the managers, followed by junior managers and associates. Staff members are selected with experience in finance, development and environment in developing countries within Asia and Africa. 6. Innovation Ecosystem Ennovent’s offices on two continents broaden the potential online community and increase its socioeconomic diversity. But, there are challenges with acclimating and attracting investors accustomed to developed markets to the slower, riskier BoP environment. BoP markets in India are seeing a sizable amount of innovations, but uptick in scale is rarely seen—most products fizzle due to weak distribution channels, regulatory barriers and the lack of a skilled workforce. It is often difficult for individual enterprises to overcome these systemic roadblocks, although partnerships and formation of creditable networks can help the enterprises succeed. case study: Ennovent 88 UNREASONABLE INSTITUTE at a glance Indicator Value Special Features of the Program Typology Products, services and business models Number of 116 ventures • Organization that incubates social entrepreneurs serving BoP markets to scale. beneficiaries Number of staff 28 • Each year, the organization matches a dozen vetted ventures from around the world with 50 mentors and 100+ funders at Financial arrangement Ventures pay $10,000-$12,000 in tuition that five-week boot camps. with beneficiaries is typically crowdfunded; Revenue-share agreement: 4% of gross revenues for 4-8 • U.S.-based program that supports startups in 37 years, negotiable countries. Typical program 5 days; 5 weeks duration Lessons Learned Countries of operation Institutes in United States, Mexico, Uganda; labs in Ghana, France, Ecuador, India, Japan, Morocco and New Zealand • The organization’s vetting process increases the probability that participating startups will benefit from available Program annual 2015: $997,000 (only U.S.-based operations) connections. budget • Focused training for startups on business-building rather than Program start year 2009 business-pitching has led to more success in startups gaining investor interest. • Allowing mentors and ventures to “date” before committing to working together, as well as arranging meetings with groups of mentors at once, decreases contradictory advice from different mentors and relationship conflicts. 89 1. Business Model Unique Value Proposition Unreasonable Institute (UI) incubates social entrepreneurs UI’s unorthodox live-in acceleration model is also one of its top serving BoP markets via a model that brings several selling points: by bringing the teams together to live under one entrepreneurial teams to live together in the same house for roof for a period of time, UI aims to pressurize the exchange five weeks, while receiving mentorship and training from high- of information, motivation and bond creation. The close daily profile mentors, including people who have led large Fortune physical proximity of teams and mentors increases the chance 500 companies. Its main objective is to build social ventures to of serendipitous interactions and idea exchange, mimicking reach a customer base of one million people each. the historically fruitful environment of a college dormitory for creating successful startups. Beyond this live-in model, which requires participants to leave their homes and families for five weeks, the program also offers a uniquely recognizable roster of mentors, including Archbishop Tutu; Neal Baer, former executive producer of Law & Order: SVU; John Elstrott, Chairman of the Board at Whole Foods; and Hunter Lovins, a Time magazine Hero of the Planet, among others. Structure/Solution UI operates three flagship institutes: a Global Institute (in Colorado), an East Africa Institute (in Uganda) and a Mexico Institute, each run by independent teams. The latter two were launched in 2014. Additionally, the “Sea Institute” took place in 2013. The main objective of the program is to accelerate social ventures to each reach a one million customer base. In return, the participants take part in a revenue share agreement with negotiable terms and a “money-back guarantee”—no payment is made until after the program ends, and if a participant feels unsatisfied with the experience, they do not have to agree to the revenue share. case study: Unreasonable Institute 90 Each institute receives 10-20 entrepreneurs at a time for fundraising process. Participants attend classroom workshops, the acceleration program. The entrepreneurs gain access as well as work with advisors and mentors to craft a funding to 50 mentors, 100 investors, facilitated networking and plan and practice their pitch. Labs take place in workspaces in accommodation in the house. UI has developed a system to different cities. Currently there are 12 labs scheduled across help each startup funnel from 50 mentors down to a dedicated, the globe, run by local teams.UI hosts Investor Days for alumni long-lasting team of 2 to 3 mentors. Basically, entrepreneurs to connect with possible investors. The Investor Days occur “date” the mentors: they’re exposed to all of the mentors, throughout the year, with one each in the U.S., Europe, East encouraged to build deeper relationships with a smaller Africa and Mexico. number, and choose themselves whom they want on their mentor teams. UI continues making mentor connections for the Virtual Networking Platform entrepreneurs after they leave the program. UI also organizes mixers such as Unreasonable Investor Days and Funders Boot Additionally, UI partnered with Enable Impact, itself a Camps (for impact investors). beneficiary of UI, to create a digital platform for connecting social ventures, support programs and impact investors. The Over the course of the years the program has shifted to support platform, found at EnableImpact.com, includes a searchable later stages of venture development. When it incubated its first database of more than 2,100 ventures, 700 programs and cohort in 2010, the Global Institute supported ventures from hundreds of investors. In addition to the search functionality, idea stage to growth stage. In 2011 and 2012, it sought prototype users, who create their own profile, are recommended to growth stage ventures; and in 2013, the field was narrowed “matches” based on their information and can message and to growth only. UI made the shift due to the observation that “follow” others. there were many options for entrepreneurs to gain idea-stage support, but very few incubators focused on the crucial growth 2. Financial Model phase (where startups must scale their operations and customer base while raising money. UI sought to fill that support gap. As UI, a nonprofit, relies on sponsors including the Blue Haven of 2015, only field offices (East African and Mexican Institutes) Initiative, Rockefeller Foundation, Halloran Philanthropies, allow ventures in the prototype stage. UI seeks both for-profits Hewlett Packard, Small Foundation, Vodafone Americas and revenue-generating nonprofits. Foundation, Shell Gamechanger, and the personal contributions of Unreasonable mentors Neal Baer, Kim As of 2015, UI also operates short, five-day “labs” in different Scheinberg, Seth Levine, Jane Miller, Rafe Furst, and Bob countries, typically focused on schooling ventures in the Pattillo. The budget of U.S.-based operations in 2015 was case study: Unreasonable Institute 91 $997,000, which covers the Global Institute in Colorado and the • UI offers a money-back guarantee, allowing teams to events UI runs and supports. lower or cut altogether the royalty terms if they feel the institute experience was not worth it. UI supports with grants some of the labs, Unreasonable East • There is no upfront fee for participating in the program, Africa and Unreasonable Mexico. However, UI does not take on and UI does not take a cut of funding raised. There may be a cap on the royalties, depending on the situation. most of the costs of Unreasonable Mexico and East Africa. Its expenses includes upkeep and rent of the Colorado mansion 3. Beneficiaries that houses the entrepreneurs, food, logistics, transportation for mentors and fellows and office equipment. Participants UI has primarily benefitted early- to growth-stage startups in self-fund the cost of travel to the institute, though a loan is need of mentorship guidance, fundraising training and a kick available for those that require assistance. start in their startup trajectory. The ventures supported have encompassed a wide span of topics, though some dominate: The cost of attending the program is technically $10,000, livelihoods is the most popular sector, with 32 percent of but 100 percent of participants raise that amount on UI’s ventures incubated from 2010 to 2014 targeting that field; crowdfunding platform, the Marketplace. health follows at 18 percent of ventures; environment is close behind at 16 percent; followed by education (10 percent), In exchange for the program experience, teams partake in security/housing (6 percent) and energy (6 percent). Other a revenue-share agreement that comes into effect the year topics include government and civic engagement; agriculture, after the team participates in the program. The terms are food and nutrition; ICT and digital inclusion; microfinance and negotiable after completion of the program, but the initial financial inclusion; transportation and mobility; women and terms include: children; and more. • A royalty of 2-4 percent of gross revenues for 4-8 years. For teams participating in the 2015 program, UI won’t take a Of the ventures incubated at UI in 2010 to 2014, the largest percent of previously earned revenue all the way through region of focus has been Sub-Saharan Africa, with 38 percent the end of 2015. of ventures targeting that region. South Asia ranks second with • Teams pay the royalty twice a year. For the cohort in 20 percent of ventures working on its issues; followed by Latin 2015, first payments will be due in July 2016, with second America/the Caribbean (13 percent), East Asia and Pacific (11 payments made in January 2017, and continuing on that schedule for the term of the revenue share. percent), North America (11 percent), Europe and Central Asia (5 percent) and the Middle East and North Africa (2 percent). case study: Unreasonable Institute 92 Recruitment and Selection of Participants UI mandated that the crowdfunded amount come from several sources, to avoid the issue of a single donor contributing all UI seeks ventures that demonstrate evidence of customer the funds. However, UI stopped that practice when it became traction, such as through sales and/or customer engagement, apparent that the selection process simply filtered for those and employ a minimum of two full-time staff. The product or people with the largest networks, and not necessarily the service of the venture must target a widespread problem, so best entrepreneurial skills. Now, UI still allows ventures to that a customer base of one million people is possible. There is crowdfund their tuition on the Marketplace, but after they have an emphasis on the economic viability of the venture: while UI already been selected. takes in both for-profit and nonprofit ventures, it does not accept ventures that solely depend on donations or grants for revenue. Program Impact The UI selection committee also evaluates prospective teams for cohesion, skills and drive. So far, UI’s three institutes have incubated 116 companies from 58 countries targeting social and environmental Programs in different countries have their own language re- quirements, but participants of the main Global Institute ought issues. Global Institute, the main institute, has housed 93 of to be fluent in English. Prospective ventures submit online ap- those ventures. UI also launched in 2015 the five-day labs, plications, consisting of written answers to a series of questions, which aim to reach at least 100 entrepreneurs in 10 countries. for the five-day labs or the five-week incubation program at the UI reports that ventures grow their revenue by an average of institutes. Different programs occur at different times and have 1.8 times a year after incubation, and 9.6 times after two years. their own application schedule, which can last several months Of their 116 graduates, 88 percent are still active. from application to acceptance (for example, Global Institute applications open in September and fellows are chosen in The current status of active ventures from the program fall January). Applicants deemed a good fit undergo a 30-minute into a bell curve, with most in the stages of early traction, Skype or phone interview. The selection committee then con- strong revenue traction, solidifying operations, or rapid growth. ducts reference checks, and then finally 10-20 participants are However, these stages are not explicitly defined. Of the Global chosen per institute, or 10-12 participants per lab. Institute ventures, 93 percent of them have raised funds, totaling over $72 million. That figure is not evenly distributed— In the past, from 2010 to 2012, participants were selected most of that funding has been raised by 2010 alum Mosaic—so on the basis of whether they could raise the amount of their far its most prominent success—which raised $41 million for its tuition, $10,000, on UI’s Marketplace, a crowdfunding platform. online solar marketplace. case study: Unreasonable Institute 93 Global Institute estimates that its 93 ventures have impacted 8 The program has two types of partners: Capital partners, million lives, though as with any estimate of such a nature, the including funds, foundations and other investors; and Pipeline definition of impact can range over a variety of interactions, partners, which help UI find entrepreneurs as well as provide from shallow to deep. opportunities for the entrepreneurs post-incubation. There are 219 Pipeline partners, and UI is in touch with over 500 4. Human Resources representatives from Capital partners. These partners attend UI’s Investor Days, which are run in the U.S., Europe, East Africa UI’s human network includes 186 active mentors and 543 and Mexico, and entrepreneurs can connect with them there. active funders, and spans more than 60 countries. While Some of them are also available as mentors at the institutes. these substantial numbers suggest that ventures are awash in mentorship and funding opportunities, UI has had to learn In the digital realm, there are 11,000 email newsletter the best ways to make use of the opportunities. For example, recipients, plus an active social media following of 31,000 ventures often experienced “mentor whiplash,” where they Twitter followers and 23,000 Facebook fans. would receive several contradictory opinions from different mentors. To address this issue, UI now allows mentors and 5. Organizational Model ventures to “date” before committing to working together. UI also arranges meetings with groups of mentors at once—with UI is a registered 501(c)(3) nonprofit organization. The Global all the mentors in one room, they are less likely to directly Institute is based in Boulder, Colorado (in the U.S.), and has 8 contradict each other and more likely to work together to give staff members. The East Africa Institute is in Kampala, Uganda, the best advice. and employs 10 staff. The Mexico Institute is in Aguascalientes, Mexico, and also employs 10 staff. As for taking full advantage of funders, UI has had to revise their strategy over the years. Previously, UI had a heavy focus Institutes in Mexico and East Africa seem to run semi- on training the ventures how to pitch their business, as opposed independently on a quasi franchising model. to actual business building, and the ventures would walk away from pitch days empty-handed. Since then, UI has directed 6. Innovation Ecosystem more attention to building out businesses, and sharing the strengths and challenges of ventures in one-on-one meetings UI’s main flagship Institute in Boulder, Colorado enjoys the with investors. This has resulted in more success in gaining resources of a U.S.-based incubator in a city prospering in investor interest. entrepreneurship. Boulder’s tech startup scene ranks as one case study: Unreasonable Institute 94 of the largest in U.S. metro areas, and its proximity to the investors and startups on the West Coast is a boon for securing talent and funding. The Uganda and Mexico locations have less resources to varying degrees. In Uganda, startups typically do not have access to venture or angel investors, and operate in a country with economic instability. Meanwhile, Aguascalientes, Mexico, enjoys a better position as one of the more business- friendly cities in Mexico. Texas Instruments and Xerox have facilities located there, and the city hosts a number of tech startup events. case study: Unreasonable Institute 95 QUIRKY at a glance Indicator Value Special Features of the Program Typology Product/Service Number of beneficiaries 1.14 million community members • Quirky is a crowdsourcing platform for product design, where an online, global community contributes at the early stages Number of staff Approx. 200 in 2014; now defunct of product ideation and development in return for a cut of the Financial arrangement Inventors get 3.5% royalties up to profits. with beneficiaries $500,000; after that 1.5% for perpetuity • The company lowers barriers to participation by providing Typical program duration 120 days product cycle manufacture, marketing, and distribution services for the products. Countries of operation United States; international reach via online platform • Quirky has a blazing fast product cycle of 120 days or less, Program annual budget $79 million Series D round of financing in distinguishing them from traditional product developers. 2013 ($185.3 million in total funding since 2009) Lessons Learned Program start year 2009; filed bankruptcy 2015 • By creating a community-driven pool of ideas and concepts, the company allows its engineers and developers to focus their energies on implementation rather than conception. • Users seem attracted as much by the community as by the prospect of profit. • A large cut of sales revenue initially given back to the community, quality assurance issues due to the rushed timeline, and product misfires led to financial troubles for Quirky. 96 1. Business Model Unique Value Proposition Quirky was a product development company that combines The unique value proposition of Quirky is based on its an in-house staff of engineers and developers with an online crowdsourced model of product design, combined with community of global contributors of product ideas and a rapid product development cycle that takes ideas to expertise, who themselves make money from products they commercialization for consumer products much faster than work on commercializing. Once ideas are submitted, Quirky traditional paths. It is able to incentivize people to participate designs, manufactures, packages, markets and distributes the in its unique social-design model because each person product. can contribute as much, or as little, as s/he is able, and be remunerated accordingly. Quirky’s pitch is that people with great ideas worthy of being developed do not necessarily have the time or are in the right position to develop those ideas into a market, so other people ought to be able to step in and help out. Differentiating itself from other crowdsourced models, Quirky offered a high royalty payment of 30 percent revenue from direct sales and 10 percent from indirect sales to contributors (though that was lowered greatly over the years as it led to Quirky losing money on some products). This socially networked model relying on speed and a new IT architecture developed by the company differed substantially from well-established competitors like Proctor & Gamble, which generally source their product ideas in-house and take years to bring a product to market. It has caught the eye of those competitors too: rather than attempting to replicate this model, which would take considerable time and resources, appliance maker General Electric (GE) developed a partnership with the company. case study: Quirky 97 Structure/Solution Pivot toward Corporate Model Individuals join the community and submit ideas at various In February 2015, however, Quirky pivoted to a direction more stages of maturity and development. Once an idea is submitted focused on creating products for corporate clients, and reducing the community then has seven days to vote online, and the the number of products created through its community. The top ideas are discussed at a weekly meeting of Quirky staff, company had trouble making money off of its inventions for industry experts and community members participating online, a number of reasons, including expensive development of called Eval. If half of the people think the product should products that didn’t sell and a rushed product commercialization be developed based on the discussion, Quirky’s design team timeline that led to poor quality assurance practices. As part begins the co-creation process with additional inputs from of its new direction, the company shut down its ecommerce the community and state-of-the-art manufacturing tools/ site and manufacturing operations. Instead, the new initiative, technology and resources. Community members are paid called Powered by Quirky, aims to help corporate clients, such royalties based on how they influenced the development of as headphone-maker Harman and toy maker Mattel, find new the product. Products are then sold at retail outlets such as products to launch. Previously the company produced items in Target, Staples, and Bed Bath & Beyond. Ideas that do not move 12 different categories. With the change in strategy, it will focus forward are archived and available for Quirky staff to search on three areas: Wink devices, a new line of Amazon Dash Poppy and review in the future. Quirky staff may also select ideas for appliances, and the most successful products such as Pivot deeper evaluation with industry experts that are not voted Power (see under Program Impact). forward by the community. Partnership with GE: GE opened thousands of its patents and This model focuses on speed and eliminates several barriers to technologies to the Quirky community for the development entry for individual entrepreneurs with product ideas. Quirky of new consumer products after the two struck a deal in has developed its own IT architecture to allow for increased 2013. They also established a co-branded initiative to build automation and a smaller team, particularly in operations. It also a full line of cloud-connected devices for the home, in fields relies on its online community for market research, rather than such as health, security, water and air through GE’s advanced large investments in R&D and publically available market data, manufacturing tools and technologies. This new line of which is costly and delays product development. Decisions are products was co-branded Wink: Instantly Connected, for which “educated guesses” based on the information available through there was a large marketing campaign. GE Ventures also the community and industry experts and the risk of failure for invested $30 million in Quirky. some of these products is understood as part of the model. case study: Quirky 98 However, since then Quirky lost access to the patents its financial arrangement with contributors have changed after losing a bid to buy out GE’s appliance business to over time. Quirky originally reserved 30 percent of gross Swedish group Electrolux in September 2014. Wink has also revenue from direct sales and 10 percent from indirect sales experienced trouble. In April 2015, it had to recall its Wink for contributors, but in 2013 Quirky revised the numbers to 10 Home Automation Hub nationwide because an expired security percent from direct sales and 10 percent from indirect sales software prevented hubs from connecting to the Internet. in 2013. This was lowered again with the strategy change (see Quirky reportedly tried to sell Wink due to its financial troubles, below). Different contributions are entitled to a different cut of but a would-be buyer backed out after the recall. Quirky the community pie; idea contributors are entitled to the largest chief executive Ben Kaufman has indicated Wink may receive percentage of royalties at around 40 percent. additional outside funding to keep it afloat, but this is not guaranteed. This financial model didn’t bode well for the company. While Quirky was adept at raising money—raising $185.3 million Quirky also plans to roll out a line of “smart” appliances, under over the years from investors including Andreessen Horowitz, the Poppy brand, in partnership with Amazon’s new Dash Kleiner Perkins, RRE Ventures, General Electric and others— program. The Dash program connects a physical button to its financial model caused it to have very thin margins, and different appliances allowing people to easily reorder supplies sometimes lose money on products. The company also had related to that appliance (such as detergent for a washing misfires in product choice, investing in expensive products that machine). Quirky’s Poppy line will include coffee makers, pet didn’t sell. Quirky paid out more than $9 million to inventors; feeders and baby formula machines that can automatically at the same time it spent more than $150 million developing reorder supplies when they are running low. the products and running its operations. Its net losses are reportedly $120 million. 2. Financial Model Pivot Quirky assumes all of the costs associated with the design, manufacturing, marketing and distribution of the products. As part of the pivot announced in February 2015, Quirky no Royalties are paid to all community members for each unit sold longer assumes the costs of product development, instead as long as it is being produced by Quirky. shifting that burden to the corporate partners. Because of this, Quirky will not directly receive revenue from products; rather, Quirky assumes all costs, but it also owns most of the revenues the partner receives the revenue and gives a royalty to Quirky, of any successful product that is developed. The details of part of which is then portioned to inventors. This arrangement case study: Quirky 99 effectively lowers the cut to inventors from 10 percent to 1.5-5 partners include Target, Bed Bath and Beyond, and other large percent. Specifically, inventors collectively get a 3.5 percent retailers. Similar partnerships are being established abroad. royalty, up to $500,000. After that the royalty is lowered to 1.5 percent for perpetuity. Quirky intends for this smaller cut to be Program Impact offset by larger sales volumes. Founded in 2009, Quirky has developed more than 300 Following several rounds of downsizing in late 2014 through products—at one point churning them out at a blistering pace early 2015 as it tried to forge a more financially sustainable of three new items launched per week. Some of these products path, the company filed for bankruptcy in September 2015. go from sketch to store shelf in as little as three months. The Wink is still operating as normal, though. record for commercializing a product is 39 days, with the target timeline for all products set at under 120 days. Revenues have 3. Beneficiaries jumped every year since 2010. Quirky projects revenues of over $100 million in 2014, up from $48.7 million in 2013, and $18.2 Quirky’s beneficiaries include: contributors to inventions who million in 2012—though the company filed for bankruptcy in are able to help produce an item they have interest in, while September 2015. earning a royalty; retail centers that gain new products to sell; corporate partners who have access to a more rapid production The company’s most successful product so far has been Pivot cycle and an agile talent pool; the design community, which Power, invented by then college student Jake Zien. The product has an outlet for new designs; and consumers, who potentially is a flexible power strip and is sold at various retail outlets. It gain a product of benefit to them. has earned Zien and other contributors more than $1.5 million in royalties from sales. On the other hand, some of Quirky’s Recruitment and Selection of Participants products have been less appealing to consumers, which has contributed to its current financial woes. Its headline product Continuous idea submissions are the most essential resource, in 2014 was Aros, an app-controlled air conditioner built with followed by inputs from the community and a top design and GE and connected in the Wink system. The air conditioner has development team. Ideas that are not successful still receive garnered poor reviews due to technical problems and design feedback from the community and industry experts. Royalties issues. Staff have blamed these issues on the rushed timeline, paid to community members are calculated according to very which didn’t allow them to test and tweak the product. Perhaps specific guidelines based on the category of contribution (e.g., Quirky’s most infamous product is the Egg Minder, an egg idea, design, enhancement, name, price, etc.). Distribution carton that reminded the owner how many eggs were in the case study: Quirky 100 carton and when to buy new ones. The product was panned not clear exactly how many staff would remain. Quirky seeks internally during the evaluation stage, but CEO Kaufman and encourages six core traits in its employees: get sh-t done, pushed for its production—despite the fact that likely sales impatience, futurist, agile, selfless, and embrace conflict. would not justify the cost of production. 6. Innovation Ecosystem 4. Human Resources Quirky is headquartered in a hotbed of innovation, New York Quirky’s partners include large corporations with considerable City. It has close access to top investors, as well as a deep human resources at their command, an impressive roster of pool of talent. Quirky also has an office in San Francisco, investors, including Andreessen Horowitz, Kleiner Perkins, RRE which is located in a region with a reputation of being the Ventures, General Electric and others, who are willing to give startup center of the world. Though, with Quirky’s rehashing their time and connections to help Quirky succeed. Several of strategy, the San Francisco office has been diminished. members of Quirky’s Board of Directors are drawn from these Quirky also had a foot in East Asia, with an office in Hong firms. In terms of the participant network, there are 1.14 million Kong, but that office has been reportedly closed as part of community members on its platform. the strategy change. Quirky enjoys a strong ecosystem of participants, with its online nature allowing it to tap into a 5. Organizational Model worldwide community of idea generators, graphic artists, writers, 3-D modelers and other contributors. However, while Quirky is a private company that had about 200 employees that ecosystem thrived with Quirky’s model for a few years, it and a leadership team of 11 people in 2014, with founder Ben now needs to search for a new home. Kaufman serving as CEO. Under the leadership team there are general managers for each product sector, engineers, product developers, photographers, packagers, salespeople, technology experts and others. The company brought on a new CFO, Ed Kremer, in September 2014 to try to turn its finances around. As part of these changes, Quirky had three rounds of layoffs—in November and December 2014, and February 2015—that resulted in more than a third of staff being cut. In July 2015, Quirky announced that it was laying off more than 100 of its employees due to its funding challenges. It was case study: Quirky 101 VILLGRO at a glance Indicator Value Special Features of the Program Typology Products, services, and business models Number of beneficiaries 109 innovators, 40 fellows • The program has a laser-sharp focus on the rural space, training entrepreneurs from the rural environment who design Number of staff 25-30 products for their own communities. Financial arrangement Provides early-stage startups with seed • Its own definition of “innovation” is technology embodied in with beneficiaries funding: grant equity, milestone based, new goods and services that are adapted to the needs of rural goes up to $100,000 populations and to the limited purchasing power of poor rural Typical program duration 1-3 years households. Countries of operation India • Villgro attempts to redress lack of funding and lack of Program annual budget Not available incubation support for early-stage growth. Program start year 2001 Lessons Learned • It is important to get management basics—good governance, transparency, building highly capable teams —right before attempting to transform an entire agricultural sector. • There is no substitute for being in the market, for knowing what potential customers value and for understanding what is available in the market. • Incubators can get the most resources out of business partners by effectively engaging the partners’ skills and competencies. 102 1. Business Model Unique Value Proposition Villgro is a nonprofit business incubator based in Chennai in the Villgro is a business incubator with a unique rural orientation. state of Tamil Nadu, India. It aims to improve the lives of India’s Its primary sources of new business ideas, as well as the targets poor by supporting entrepreneurs and their social enterprises. for new applications of those ideas, are rural. In its own words: Villgro incubates early-stage, innovation-based for-profit “Villgro is a user centric innovation developer.” Villgro concerns enterprises that impact the lives of India’s poor. itself not only with the launch of new businesses but more generally with the transfer of new products, knowledge and services into the rural space. Many of these are recycled. That is to say, new products and ideas both originate in and are subsequently delivered back into rural space. Villgro believes that rural innovators understand the challenges and technology absorption capabilities of rural life best and that they are uniquely able to respond to these challenges with creative and appropriate solutions. In an effort to add value to the Indian rural-enterprise system, Villgro attempts to redress what it perceives to be the system’s two biggest problems: lack of funding and lack of incubation support for early-stage growth. The companies Villgro works with are in their early stages and often need capital to address needs such as developing or improving basic products or production technology or expanding to a new business center. Many enterprises lack capable managers. Villgro seeks companies that need innovation, soliciting new product concepts widely, screening potential incubatees and providing entrepreneurs with specific support (for example, augmenting their management teams, refining their products, testing those products in rural markets, improving manufacturing or service delivery productivity, or facilitating case study: Villgro 103 sales through affiliated distribution networks). Faced with Incubation the challenge of finding technologies that match rural requirements, Villgro has linked marketable product/service In the incubator, Villgro attempts to select only zero-stage concepts from diverse sources with entrepreneurs who have growth businesses, which are likely to respond quickly startup experience—so-called serial entrepreneurs. to the kinds of support services it offers, and refers later- stage emerging businesses to other, more suitable business Structure/Solution incubators. Villgro provides each incubatee with services tailored to its specific needs. Service needs assessments are Entrepreneurs can apply at various stages of product/service made through a rigorous multi-stage diagnostic for each creation (development, commercialization, scalability). Villgro prospective incubatee. offers support programs for each stage; support types include money, mentoring, and human capital support (placement of a Villgro services include: (i) business plan development; Villgro fellow). (ii) business valuation and preparation for negotiation with potential venture capital investors; (iii) patenting and The primary programs include the following: intellectual property right protection; (iv) market research; • Incubation, an 18- to 36-month program that provides (v) technology transfer and product design enhancement; (vi) early-stage enterprises with the funding and mentoring creation of mission-appropriate technical commercial reports; to commercialize their inventions. (vii) deal closing support; (viii) identifying, assessing and • The program provides capital of between $50,000 and securing market channel support; (ix) formation of boards of $100,000 in a mix of grant funding and equity. Incubatees directors. get the services of an experienced mentor, talent through a Villgro fellow, and access to Villgro’s network of service providers. More information below. Villgro supplements these internal support services with services supplied by third parties with particular areas of • UnConvention, which organizes conferences and a speaker series. specialization. Villgro makes soft loans of up to 25 lakhs ($60,000) to cover the cost of these services, with payback • The Villgro fellowship, where fellows are placed with one of Villgro’s startups for one year terms linked to the expected and planned development • SEED (Social Entrepreneur and Enterprise Development), trajectory of each incubatee. an eight-month program for early-stage entrepreneurs to sharpen their business models and raise their first round As previously noted, Villgro distinguishes innovators from of funding entrepreneurs. It finds that innovators are more likely than not case study: Villgro 104 to be located in rural areas, but that entrepreneurs who can Villgro incubatees. Villgro Marketing extends the “last mile” of qualify for incubation are not. Villgro attempts to facilitate commercial outreach between its Villgro Store outlets and the the transfer of new products and service designs from the rural poor by training a sales force of village-level entrepreneurs. latter to the former. It does so by securing innovation assets The nonprofit incubated Villgro Stores before raising additional to the innovator (through claimed intellectual property investments, piloting the model with donor funding. Now the rights) before facilitating their transfer to enterprises for-profit company will grow and scale up the model. Villgro headed by entrepreneurs with successful track records and management announced plans to scale up its proprietary rural internal competencies in manufacturing, distribution and/or distribution network from 10 stores to 400 stores over five years, marketing that are well matched to the innovations. Before but it is not certain what the current status of these plans are. the transfer of intellectual property rights, Villgro offers technology incubation services to innovators. These technology Villgro engages rural users to screen, test and refine development services include: (i) lab tests, (ii) assistance with products through its User Centered Innovation Development product design and (iii) field trials and market tests. (UCID) program and through product testing it conducts in cooperation with Villgro Stores. This market feedback, Villgro also supports a variety of other programs: a new consisting of user preferences and suggestions for product entrepreneur-in-residence program, where entrepreneurs improvements, is extremely useful for manufacturers. spend one year in residence to start up their enterprise; Edupreneur Quest, a business plan competition for education- 2. Financial Model related startups; an incubation program focused on energy businesses; and more. Villgro’s service delivery is funded by donor organizations based within and outside India. More than 75 percent of the Villgro Stores nonprofit’s cash flow comes from grants and other third-party contributions. Villgro Innovations Marketing Pvt. Ltd, a former incubatee started by the founder of Villgro, operates a network of retail Management of donor relations is an increasingly strategic outlets in underserved rural areas in South India, where most function. Villgro has grown only because the numbers of customers are poor. Through this network Villgro markets donors and average support have increased. new products and services that aim to improve agricultural productivity, open new livelihood options or increase the quality The number of major donors increased from one in 2005—the of rural life. Many of the products in Villgro Stores come from Lemelson Foundation—to 10 in 2014: the Lemelson Foundation, case study: Villgro 105 Rockefeller Foundation, the IRDC (Canada), RSF Social a single donor; (ii) it allows for several distinct incubation Finance, the Technology Development Board of India, the Citi process experiments to be conducted simultaneously and their Foundation, National Science & Technology Entrepreneurship success to be monitored side-by-side in controlled real-time Development Board, Shakti Sustainable Energy Foundation, the experiments; and iii) it facilitates the process of outreach and Impact Economy Innovations Fund grant (funded by Omidyar networking at the more agile “program level,” in contrast to the Network and the Rockefeller Foundation) and ALTIS (the more cumbersome enterprise level. Postgraduate School of Business & Society of the Università Cattolica del Sacro Cuore of Milan). Competition for Funds As of 2013, Villgro secured grant-funding commitments As a result of rapid sector growth, competition has increased of $493,000 (Rs 29,500,000) from four donors for three for donor funding, for skilled personnel interested in of its existing programs—Villgro Fellowship, SEED and undertaking social enterprise work, and for high quality UnConvention. The Lemelson Foundation, a repeat donor, also investment-ready projects. As a nonprofit, Villgro is dependent committed $2.2 million (Rs 131 million), for a three-year period. on grant funding. Competition among social enterprises for Funding of around Rs 75 lakh ($130,000) was secured from the limited amounts of donor funding has made securing sufficient Shakti Sustainable Energy Foundation for an energy incubation resources to fuel growth more difficult. project in Bihar, which began development in April 2013. Villgro’s tax-free status limits its degrees of business flexibility. In line with its efforts to grow its donor base, most of In the event that Villgro violates its qualifying restrictions, its Villgro’s expenses involve projects rather than general tax-free status would be lost and its donor contributions put at expenditures—82 percent of 2010 expenditures involved risk. Tax code restrictions affect both how Villgro is able to use project funds. Each successive programmatic innovation has funds, and how it is obliged to manage its financial resources. In the aspects of a strategic line of business, with its own funding addition, Villgro is subject to certain permits, which affect how sources, performance monitoring systems, and accountable it is able to receive foreign funding. The nonprofit company is implementation team. As noted, each program is designed to not allowed, for example, to generate revenues in excess of Rs test new approaches to innovation delivery. 1,000,000 (approx. $25,000) per year. Most of Villgro’s revenues accordingly flow through its for-profit subsidiaries, Villgro Villgro’s serial program approach to rural enterprise Innovations Marketing Pvt. Ltd and the recently proposed Villgro development offers several advantages: (i) it facilitates innovation Fund. fundraising by allowing entire programs to be “owned” by case study: Villgro 106 Taken together, these conditions have a significant effect on requires three months and intensive interaction between the the nonprofit’s operations. For these reasons, for example, prospective incubatee and Villgro staff. A team studies the Villgro cannot invest directly in any of the companies with enterprise, its management, the industry and the types of whom it works nor can it charge a fee for the services it incubation support the enterprise is most likely to require. The provides its clients. team makes its recommendations to the incubation committee, which the CEO heads. 3. Beneficiaries The incubation committee’s “go” or “no go” decisions are based Villgro’s ultimate clients are small and marginal farming and on estimates of the social impact the enterprise is likely to non-farming communities in rural and semi-urban South India. have on rural communities. Criteria include scalability, per Villgro intends to create social benefits for those who earn capita benefits, and rural community benefits. The application between $2 and $4 a day. The incubator does not use any management team works with the incubatee to develop a specific parameters to determine the geographic territory of business plan and detailed incubation plan, which specifies its clients or the total size of the market they represent. Its required incubation assistance and the specific third-party portfolio is spread across much of rural India. services each applicant requires to succeed. Recruitment and Selection of Participants The incubation plan sets enterprise maturation benchmarks and a corresponding budget for each applicant. The incubation Participants in either the incubation or fellowship program plan is attached to a performance contract, which each are selected through an application process. The incubation applicant is expected to sign. This contract defines the program screens applicants for the strength and skills sets relationship between Villgro and each of its grantees. The of their team, the potential social impact of their idea, and final decision is made by Villgro’s investment committee, an the business feasibility and scalability of the idea. Fellows external committee that meets quarterly and includes experts are selected on a number of factors, with a preference for in rural technology, agricultural engineering, social enterprise those with three years of work experience in either business development and venture capital. development, sales, operations, finance, product design or marketing. Despite this application process, Villgro has discovered no single best method or single source for discovering appropriate After the screening committee approves an application, technologies, services or knowledge-based solutions to the next stage is a due-diligence review, which typically serve rural needs. Villgro has learned that its best chance for case study: Villgro 107 successful outcomes is through referrals. Toward this end, it India’s rural business ecosystem are the multiple commercial works with other incubators, donors and government agencies experiments it has conducted. at different stages of product and enterprise development. However, other incubators may have difficulty imitating Villgro’s Program Impact business model. The conditions for its development are unique, its management approaches are relatively untested and the Villgro measures its success by whether rural livelihoods values of its management team are deeply intertwined with improve based on sales figures provided by incubated perceptions of how the rural business system operates in India. companies. Villgro estimates that its incubatees have been able to sell goods and products to at least 350,000 rural people over 4. Human Resources the past decade and thus improve their lives. The nonprofit is refining its social-impact-assessment methodology and tools. The chief executive of Villgro, Paul Basil, founded the Over the past five years, the product/service categories in organization in 2001 with the mission of incubating early-stage, Villgro’s investment portfolio have been mostly unchanged: innovative businesses. He has a background in mechanical agriculture, dairy, water and energy. Villgro has identified engineering. more than 1,500 innovations or products. It has supported 109 innovators and 40 fellows. The more than 50 startup Most employees on the incubation and scouting team have a enterprises supported have obtained Rs 76 million, or $1.2 background in engineering, finance or business management. million in seed funding. The companies have raised Rs 1,124 They are expected to be able to carry out due diligence and million in investments. In the process, Villgro has created 4,000 to possess some level of business-planning skills, along with jobs and impacted 15 million lives, by its metrics. an understanding of social enterprises. Villgro actively seeks out potential new employees with a passion to work in the Villgro’s creativity has helped it succeed. Examples of that development sector. It actively recruits in several of the creativity include its specialized “innovation” language, which institutions of higher learning with which it is affiliated. narrows the definition of innovation to that directly relevant and accessible to the rural population; the multiple programs it Villgro engages multiple partners to form supportive business has pioneered and continues to roll out; the service concepts its networks. Much of the support Villgro provides as its clients management has conceived, which it protects under copyright; move up the ladder from commercially viable ideas to and its use of the Internet to distribute know-how about social prototype products, to bench-scale production and on to entrepreneurship. Villgro’s uniquely valuable contributions to marketing to rural communities, comes from this network of case study: Villgro 108 specialized partners. Recently, Villgro has pruned partners from its various activities from the contributions that donors and its network in order to include only those from whom it derives benefactors make. All donations made to Villgro are income significant value in the pursuit of its goals. tax deductible under Section 80G of India’s Income Tax Act. Its legal status directly affects the nonprofit’s business strategy Villgro’s partners include research and teaching institutions, and constrains the ways in which it operates in its business which are sources of technical knowledge and product environment. design know-how; law and consulting firms, which provide specialized expertise in intellectual property rights protection; The Board of Directors includes six people. Board members and other incubators whose specialized functional/technical work with top-ranking Villgro executives in three critical areas: competencies complement Villgro’s. (i) the Investment Committee, which chooses incubatees and other beneficiaries; (ii) the Revenue and Audit Committee, Villgro’s relationships with its partners have become which reviews revenues and costs and approves their increasingly structured, as some partnerships have proved accounting; and (iii) the Management Committee, which more beneficial. In 2009, Villgro engaged a consultant to assess provides strategic direction, recommends the development and its association with five universities and training institutes, refinement of basic business systems and reviews and approves which resulted in Villgro terminating its relationship with three all personnel decisions. of them. Relationships with specialized providers of business support services to Villgro incubatees are also important. These Villgro’s total staff numbers 25-30. Villgro divides its work services include business-plan development, product prototype among five different functional teams, which include (i) the creation, packaging design, market research, customer incubation and scouting team, which does of all the fieldwork preference testing and legal support services. and due diligence review required before investments are made; (ii) the technology transfer team, which manages Villgro has developed standard service contracts with some interfaces with various technical institutes and transfers dozen firms. It uses the fee schedules it negotiates with these knowledge from various sources to the incubator, to investors providers as the basis for its own programming and budgeting. and to other support systems; (iii) the knowledge management team, whose role is to manage internal learning and thus 5. Organizational Model assure that the status quo is challenged and that new ideals are celebrated and embraced; (iv) the Villgro Stores team, which Villgro is organized as a nonprofit company under Section manages and supports Villgro Stores; and (v) the capacity- 25 of the Indian Companies Act 1956. The nonprofit supports building and training team which manages student and case study: Villgro 109 innovator competitions, the UnConvention and other external outreach programs. 6. Innovation Ecosystem Overall, the rural business environment, in which Villgro operates, is weak. Few incentives exist to prompt private investment or to undertake change-oriented initiatives. The educated talent pool available to work in rural enterprises is limited as well. Rural infrastructure in South India is poorly developed and the distribution networks required for the delivery of farm inputs and household products are weak. The prevailing legal structure, moreover, prevents nonprofit organizations from working effectively with for-profit organizations. case study: Villgro 110 BOP INNOVATION CENTER/3P4PPI at a glance Indicator Value Special Features of the Program Typology Transactions Number of beneficiaries 3 pilots in 6 locations with local • Netherlands-based BoP Innovation Center has partnerships with other Dutch organizations not usually exposed to the beneficiaries base of the pyramid population in order to create pro-poor Number of staff 5-10 per pilot team interventions. Financial arrangement Varies. In Vietnam, contract farming was • The program carried out three pilot projects to create and with beneficiaries arranged with the beneficiaries while in market products with the BoP community, in six different Ethiopia, BoP were customers of the cooling unit. countries, and shared what it learned with a consortium. Typical program duration 3.5 years • The program is heavily based on the BoP Innovation Cycle, a methodology originating in Cornell University to create Countries of operation Netherlands (HQ), Kenya, Rwanda, sustainable BoP businesses. Bangladesh, Tanzania, Ethiopia, Vietnam Program annual budget Average €1 million Lessons Learned Program start year 2010 • To get businesses to invest in new opportunities, a good starting point is identifying the market opportunity iteratively with market players rather than identifying market players who have already figured out the “perfect market opportunity.” • Brokering market opportunities with businesses in different locations can require very hands-on involvement that goes beyond the role of a mentor or broker. • Ensure that an enabling environment exists before going through an experiment that can allow for actionable results. 111 1. Business Model Unique Value Proposition The BoP Innovation Center, based in Utrecht, Netherlands, BoP Innovation Center’s 3P4PPI program differentiates itself seeks to incite wealth creation in the base of the pyramid from other programs with similar aims by its uniquely academic (BoP) population—4.5 billion people who earn less than $8 perspective and methodology. It features the BoP Innovation per day—by encouraging local entrepreneurship and business Cycle method in the three interventions, which includes a development. Its strategy for this centers on using the BoP large user testing component. The BoP Innovation Cycle is an Innovation Cycle, a methodology based on traditional BoP iterative-step method to develop new inclusive businesses— thinking and which builds on the BoP Protocol 2.0 developed businesses for low-income communities that include low- at Cornell University. One of BoP Innovation Center’s projects income members in its value chain. The cycle includes five is 3 Pilots for Pro-Poor Innovation (3P4PPI), which piloted three steps: define, explore, develop, implement and scale. The pro-poor innovations for market in Africa and Southeast Asia cycle provides a clear overview of the BoP innovation process, and shared what it learned with a consortium. helping companies to become more aware of the nature of inclusive innovations, identify the role they can play in the innovation process, assess their capacity to develop inclusive innovations and access appropriate sources of knowledge. The intent is to save them time and investment in developing and implementing inclusive innovation strategies. The BoP Innovation Center is sponsored largely by the Dutch government and thus has the flexibility to invest in unproven and risky endeavors, such as 3P4PPI. As a first mover into a new environment, one of 3P4PPI’s primary objectives was knowledge creation and sharing. In addition, part of the mandate is that Dutch companies benefit from this intervention; therefore, captive partners are involved with the pilots. The program has partnerships with a number of Dutch organizations that otherwise would not be exposed to BoP populations in Africa, Asia and South America. While such interventions are not the first of their kind, the pilots are unique case study: BoP Innovation Center 112 in how they have involved partners to look at this problem in in rural Rwanda and Bangladesh, while the Netherlands terms of scaling it up or strengthening the value chain. Organisation for Applied Scientific Research (TNO) researched and posited the solution of using biogas digesters to power Structure/Solution small household appliances. Second, explore opportunities that speak to the needs and wants of the users and beneficiaries. A 3P4PPI’s main objectives were to gain pilot experience and proof of principle of the medical test kit pilot was created with share the knowledge with other stakeholders. As per the user needs in mind, based on DSM-standard procedures and BoP Protocol 2.0, 3P4PPI interventions were co-created with insights from the Interchurch Organization for Development the BoP community rather than only for the BoP community. Cooperation (ICCO) on criteria related to the BoP context. The three pilot projects, which took place in Rwanda, Kenya, Third, develop a product plan that outlines how the product Bangladesh, Tanzania, Vietnam and Ethiopia, consisted of the or service will be developed and get to market; this involves following: field-testing, as was done in Ethiopia with the milk cooling unit • Medical test kit for substandard drugs, to combat by partner Mueller. Fourth, implement a formal business plan counterfeit drugs in Kenya that follows the product plan, listen to customers and iterate as • Biogas socket for charging small electric devices, to necessary; finally, scale for growth that expands new customer address the issue of rural electrification in Rwanda, segments and builds for long-term sustainability. Bangladesh and Tanzania • Small scale storage for fresh dairy in Ethiopia; cold 2. Financial Model storage for vegetables in Vietnam The BoP Innovation Center derives income from providing busi- These three interventions in six locations were operated ness services to companies to develop new products and services independently and did not have clear links to each other, but with low-income groups. Learning from these assignments, the they focused on inclusive innovation. There was an element of center develops acceleration programs to solve systemic issues, tolerance for failure, as long as it was recorded and disseminated like the Inclusive Business Accelerator (https://iba.ventures/). Its through knowledge channels. main clients include companies (for the business services) and donor organizations (for the acceleration programs). In 3P4PPI, The service delivery process included the following steps: each pilot had its own business model, and each was designed first, define the scope of the engagement with partners and to be financially sustainable through the partnership and as- beneficiaries. For example, in the biogas socket pilot, Dutch sistance of local NGOs and businesses. Initial operational costs partner company SNV pinpointed the need for electricity (market exploration, partnership brokering) were supported by case study: BoP Innovation Center 113 a grant from the Directorate-General for International Cooper- distribution and consumption of inferior drugs. In Rwanda, ation (DGIS) of the Dutch Ministry of Foreign Affairs. Tanzania and Bangladesh, socket manufacturers, NGOs and researchers stand to benefit from the biogas socket production. The 3P4PPI Consortium, led by the BoP Innovation Center, In Ethiopia, farming co-ops, dairy consumers and transporters includes ICCO, DSM, the Ecumenical Pharmaceutical Network would be positively impacted. Farming co-ops in Vietnam (EPN), the Dutch Organisation for Applied Scientific Research would similarly benefit, as well as end users in Hanoi and the (TNO), LEI Wageningen University & Research Centre (LEI) and technology solution providers. SIMGAS B.V. Associated business partners are SNV, Mueller B.V., the Fruit Republic and Fresh Studio. Recruitment and Selection of Participants 3. Beneficiaries Different tactics were used to recruit participants for each of the pilot projects. A number of partners already had a working The pilot projects targeted a wide range of beneficiaries. In history with the BoP Innovation Center (e.g., Fresh Studio in Kenya, the pilot targeted medical patients who need low- Vietnam), while others were strategic partners of BoP Inc. (for cost, but effective medicine. The medicines are distributed example, ICCO in Kenya). Competitive calls were used to select through small-holder pharmacies. In Rwanda, Tanzania the rest of the companies. For example, in the biogas initiative, and Bangladesh, the biogas socket was intended for rural Singer, one of the partners, used a business plan competition to households that depend on off-grid electricity solutions. select the implementing party for the pilot. Meanwhile, dairy farmers in Ethiopia have customers in major cities, but preserving dairy before and during transport is an Fresh Studio, the local partner in Vietnam that works in issue, so the pilot devised a small- scale storage solution. Ethnic agriculture, coordinated the pilot in the northern part of the minority vegetable farmers in Vietnam had the same issue country, where there is a large number of minority farmers. for their vegetables. They have customers in major cities like To better understand the end user, Fresh Studio employees Hanoi, but transporting fresh goods is an issue, and the pilot actually lived with the ethnic minority farmers for several sought to resolve that with cold storage. months. The innovations tested by the pilots can potentially benefit Program Impact a wide range of other stakeholders as well. For example, in Kenya, a counterfeit drug testing kit would aid nurses, chemists, Each pilot in 3P4PPI had its own impact framework that was doctors, medical suppliers and the government in combating linked to innovation. Each pilot tracked partnership and case study: BoP Innovation Center 114 product engagement metrics and evaluated the change in In these pilots, a major lesson was to co-create the product these metrics periodically. These measurements and changes with the end user to fully anticipate their usage habits and all factored into the final impact assessment. needs. The pilots had a variety of outcomes, and most ran into These pilots are now finished and the successful pilots have roadblocks common in BoP markets. In Kenya, the directions been absorbed into the Inclusive Business Accelerator, which for testing drugs proved too complex for end users. Chemists, includes local offices that assist in making connections for meanwhile, were not incentivized to give back bad drugs. entrepreneurs and an “online open innovation platform that Furthermore, the Kenyan government pulled out of the project. connects social innovators, business coaches, impact investors and businesses.” A series of five learning briefs were published In Vietnam, there was difficulty in sourcing and in the value (only three are available online) chain. Opinions of the freshness of vegetables also varied • Inclusive Innovation between individuals, such that cold storage was not considered • Gaining BoP Insights necessary by some. Also, smallholder farmers must be certified • Developing BoP Partnerships under the industry standard, a costly and drawn-out process. To streamline the process, 3P4PPI developed a digital method • Co-creating BoP Ventures for reporting certification processes, delivered on a software • The BoP Innovation Cycle framework called SCRUM. SCRUM can be adapted for other purposes too. 4. Human Resources In Ethiopia, Muller, the private company behind the pilot, was The resources used were contributed by the members of able to learn from the experience and plans to roll out 700 the consortium. The staffing from BoP Innovation Center for cooling units in Ethiopia next year. 3P4PPI included a manager, three business advisors, an impact assessor and a knowledge manager. Outcomes in Rwanda and Bangladesh for the biogas socket were not clear, but valuable information was gathered by For the biogas socket pilot, there were teams in the countries manufacturers. End users did not immediately take to using the (Rwanda, Bangladesh and Tanzania) gathering user data and socket, and there were cultural issues with usage. For example, then sharing knowledge with the product development team in in some cultures, women must have approval from their the Netherlands. husband to get involved in user testing, and sometimes only men, or only women can be in the room. case study: BoP Innovation Center 115 5. Organizational Model The BoP Innovation Center is an independent foundation and was founded in 2010 by a consortium of partners, to create a one-stop shop for businesses, investors and advisors with a clear interest in inclusive business. Its performance is monitored and controlled by the Supervisory Board. The consortium doesn’t have a clear governance structure and is managed by individual pilots. The BoP Innovation Center is the primary and coordinating partner, while the other partners’ level of participation varies by their role in the pilot. 6. Innovation Ecosystem The pilots took place in locales that usually pose significant barriers to new enterprises and scaling of innovations. But the emphasis on process and learning has produced innovative pilots and created momentum among the partners to further scale the ideas. For example, Muller, a Dutch company, is nearing completion of a biogas prototype in Tanzania. In Vietnam, the flexible SCRUM software development framework was used in the IT solutions to get vegetables from farms to market. case study: BoP Innovation Center 116 ENOLL at a glance Indicator Value Special Features of the Program Typology Communities Number of beneficiaries 370 accredited living labs (LL) + 175 LL • The program brings together “living labs”—labs where innovations are tested in the real-world environment, and active in network users and producers co-create products—in a network to share Number of staff 20 board members, 4 employees as part of and attract more resources than any one lab could do on its the Secretariat own. Financial arrangement Three-tier subscription fee: effective with beneficiaries members (€5000/yearly), associated • The program sets standards across a wide range of labs, members (€5000/yearly) and adherent ensuring quality of output. members (administrative fee of €500). • The program has a partnership in place with the World Bank Typical program Varies by lab and has developed a publication in 2015 on citizen driven duration innovation. Countries of operation Canada, United States, Brazil, Venezuela, Colombia, Chile, Portugal, Spain, France, Lessons Learned Germany, United Kingdom, Ireland, Denmark, Poland, Holland, Belgium, Czech Republic, Austria, Italy, Switzerland, • There is a willingness to pay among existing living labs for Slovenia, Hungary, Croatia, Greece, Turkey, them to connect with other labs for knowledge sharing. Finland, Sweden, Norway, Egypt, Lebanon, South Africa, Mozambique, China, Taiwan, • It is very difficult to get consensus and behavior change in labs Japan, Australia around developing and implementing common impact metrics. Program annual budget Unknown • It is important to emphasize the value of co-creation, at times more than pushing design thinking, among members. Program start year 2006 117 1. Business Model Unique Value Proposition The objective of the European Network of Living Labs The defining value proposition of ENoLL is twofold: the (ENoLL) is to create a community of “living labs”—labs where connection of disparate labs scattered across a large region, innovations are tested in the real-world environment, and users and the ensurance of standards across those labs. ENoLL seeks and producers co-create products—that adhere to a common to address key issues that plagued living labs in Europe: a standard. This community can collectively attract larger lack of standards with living labs resulted in a wide range in partners and can communicate impact results and research quality. Living labs also lacked a forum to interact and share more effectively than any individual lab. knowledge. Furthermore, individual living labs did not have the clout to attract the partnerships and resources that an association or network could. ENoLL operates on the belief that the whole is greater than the sum of its parts; that combined, the living labs could foster even more innovation via knowledge sharing, as well as attract levels of funding and resources for all of its members that separated labs would be hard pressed to do. Toward this end, the program has shown an enviable ability to scale, from 19 labs at its inception in 2006 to a current 370-strong membership less than 10 years later. ENoLL is the largest network of living labs globally and has expanded beyond Europe. However, ENoLL appears to be a first-mover in the field, and the industry may not be able to support more than one such organization. Structure/Solution Living labs and other organizations join ENoLL, where they receive access to information, other members and support services according to their membership status. The benefits case study: ENoll 118 include being granted use of the ENoLL label as proof of Living Labs certification, a newsletter, support for building a project consortium, a marketplace to offer services, access to Living labs are engaged in four main activities: communities of practice, and opportunities to take part in 1. Co-Creation: Co-design by users and producers workshops and other learning activities. 2. Exploration: Discovering emerging usages, behaviors and market opportunities ENoLL offers accreditation and certification to living labs 3. Experimentation: Implementing live scenarios within globally. Members can join on three levels: effective member, communities of users adherent member and associated member. 4. Evaluation: Assessment of concepts, products and services according to socio-ergonomic, socio-cognitive • Effective members are living labs that have a vote in and socio-economic criteria. the direction and activities of the ENoLL organization. They pay an annual membership fee of €5000. The following are a few examples of living labs with effective • Adherent members are selected as living labs, but they do not pay a membership fee and have no voting rights. membership: • Associated members are not living labs, but are • iMinds iLab.o, a test and experimentation platform in involved in the object and activities of the ENoLL Flanders, Belgium, that performs living lab research association. They do not have voting rights (unless for achieving policy and business goals using they are elected to council), but can submit candidates stakeholder co-design for the ENoLL elected bodies. They pay the annual • Tech Living Lab, aimed at developing two areas in membership, €5000, and include entities such as central Finland for tourism and business services in an companies, universities and cities. innovative, user-centric way • Amsterdam Living Lab, which designs future user ENoLL also participates as an association in several EU-funded experiences in the Amsterdam region, primarily by projects that are strategically important for the whole network. establishing the European Center for design and These projects are in the areas of smart cities, future Internet, development of products and services in the area of ICT and new media cross border, cross-sector collaboration, user center design, big data, game design and serious gaming, education and creative industries. 2. Financial Model Full dues are €5000 and adherent dues are €500, so estimated revenue (not accounting for discounts offered by ENoLL) is €173,500 per year. No information on costs is available. Besides case study: ENoll 119 the costs of a staff of four at the secretariat, ENoLL hosts a member, they must submit an application to the ENoLL office number of workshops, conferences and events every year. in Brussels, including proof of their legal existence, the bylaws of the organization, a signed proxy for joining ENoLL aisbl, and 3. Beneficiaries other materials. These are then evaluated by the ENoLL General Assembly for approval. The main beneficiaries are the member living labs, which are in the public sector (city and regional governments), nonprofit ENoLL communicates to existing members through newsletters sector (education) or private sector (health, tech). Most of and engagement during General Assemblies, which happen the living labs are based in Europe, although 20 percent of twice a year. ENoLL and their associated labs also reach out members are based outside of Europe. to citizens through events, such as festivals, but it is unclear if this is for promotional purposes or for testing. Members There are 19 listed effective members, 3 associated members and potential applicants are also exposed to ENoLL through and 127 adherent members. The remaining 205 members are newsletters, the knowledge center and social media channels. listed as “non-active,” and it is assumed that they don’t pay dues. Program Impact Other stakeholders benefit as well. The output of the living lab ideas and best practices are helpful to strategic partners, such Originally founded by 19 living labs, this has become the as the World Bank, and beneficiaries of tested concepts in the largest network of living labs globally and has expanded labs (academia, private sector, etc.). beyond Europe. There are now labs in Canada, the U.S., Brazil, Venezuela, Colombia, Chile, Portugal, Egypt, Lebanon, South Recruitment and Selection of Participants Africa, Mozambique, China, Taiwan, Japan and Australia. The program has demonstrated impressive ability to scale, as each Living labs are recruited to become members of ENoLL during wave accepts more living labs. periodic “waves.” During each new wave, a screening committee evaluates applicants on output and standards of their living lab. As an association, ENoLL participates in several EU-funded Since the process began in 2006, there have been eight waves projects per year with partners. For example, ENoLL has helped that have resulted in 370 accepted living labs. These living the following organizations in their projects: labs are either adherent or effective partners at ENoLL and • Helsinki-based CitySDK created a toolkit for employing that dictates what services are available to them. ENoLL living the expertise of developer communities in city labs are adherent members by default. To become an effective development, which comprises digital service interfaces, and process and usability standards. case study: ENoll 120 • The SPECIFI project, which aims to demonstrate the a partnership with the Beijing City Administration Information benefits of Future Internet infrastructure (fiber-to-the- System and Equipment Center (CAISEC) to help improve city ad- home and wireless), called the European Creative Ring ministration and public services. ENoLL has ties to the living lab of Smart Cities and Regions, to enable creative industries networks in southern Africa and France. Other strategic partner- across Europe. The project takes places in five living labs across three smart cities, and surrounding regions. ships are listed in the next section on the organizational model. • The FIspace project, which is one of the second-phase Future Internet-PPP projects, develops and tests new Associated members, which are not living labs but provide Future-Internet-enabled solutions aimed at issues in community support, include ESADE Business and Law School– collaborative business networks, focusing on use cases Barcelona in Spain, Haaga-Helia University of Applied Science from the Agri-Food and Transport & Logistics industries. in Finland, and Krakow Technology Park in Poland. ESADE includes living labs and open innovation in its research and 4. Human Resources teaching efforts, and has produced several papers, workshops and conferences on the topics. Haaga-Helia has a number of The program has 4 paid staff and 19 members on the ENoLL projects involving living labs, mainly focused on connecting Council. The ENoLL secretariat is based in Brussels, Belgium businesses to living labs. Krakow Technology Park joined ENoLL and is hosted by a living lab on the campus of the Vrije to work on smart city issues in Krakow. Universiteit Brussel (the Flemish Free University). The current council includes Jarmo Eskelinen, CEO of Forum Virium 5. Organizational Model Helsinki, as chair; Lauri Tuomi, vice president (Research, Development and Innovation) of Haaga-Helia University of The programs started in November 2006 after being informally Applied Science, as treasurer; and Pieter Ballon, director of networked for several years. A nonprofit association was Living Labs, iMinds, as secretary. Council members do appear to formed in order to formalize the network and take on be paid and none of the council members work exclusively for membership dues. The association is in Brussels, Belgium. a lab; therefore, this role could be voluntary. ENoLL is led by a council that consists of a chair, treasurer and ENoLL has a number of strategic partners, including the World secretary and a number of Council Members. This council is Bank. The two collaborated on a publication, “Citizen Driven elected by the General Assembly, which includes all members. Innovation,” a guidebook published in March 2015, and also However, only effective members and elected associated signed a memorandum of understanding for ENoLL to provide its members have voting rights. The General Assembly meets ICT expertise to the World Bank and its clients. In Asia, ENoLL has twice a year. case study: ENoll 121 The ENoLL secretariat in Brussels has four staff members, all of whom work on project development. ENoLL has eight strategic partnerships, with signed memorandums of understanding. The partners include the World Bank, European BIC Network, France Network of Living Lab, Asian Smart Living Summer School, LLiSA (Living Labs in Southern Africa), FAO (Food and Agricultural Organization of the United Nations), Ubiquitous Network Industry and Technology Development Forum (UNITED) and CAISEC (Beijing City Administration Information System and Equipment Center). 6. Innovation Ecosystem The mission of ENoLL is to build out innovative ecosystems with the member living labs and they have been successful in expanding their membership base. Countries and regions such as France and southern Africa have their own association of living labs that partner with ENoLL. In addition, some of the special projects have been funded by the EU, therefore showing a commitment to creating smart cities and understanding user-centered design. This enhances the European innovation ecosystem. case study: ENoll 122 WBCSD GLOBAL NETWORK at a glance Indicator Value Special Features of the Program Typology Community Number of beneficiaries 70 partners, representing over 35,000 • The WBCSD is one of the world’s leading business forums for issues of social responsibility and sustainable development. businesses Number of staff 2 people managing the Global Network at • The Global Network (GN) has a very wide reach, operating in the WBCSD head office 68 countries. Financial arrangement Members pay a fee to local chapter, ranging • The program is business-centered; it is operated by businesses with beneficiaries $100-$25,000/year; optional to join WBCSD for businesses, and its outcomes are tied to member interests. Typical program duration Ongoing • The GN is decentralized, presenting both flexibility, but higher risk and variability in outcomes. Countries of operation Switzerland (HQ); 68 countries (constantly expanding), two-thirds in emerging economies Lessons Learned Program annual budget Not available Program start year 1992 • You can attract a lot of companies and get them to work together if you build a strong and attractive network. • Large private sector players are able to more easily pursue sustainability projects due to fewer transaction costs as a result of the network model. • In addition to connections, the model helps transfer relevant knowledge on sustainable projects and market opportunities to members. 123 1. Business Model Unique Value Proposition The World Business Council on Sustainable Development The Global Network (GN) is unique among global business (WBCSD) Global Network is an alliance of business networks on account of its breadth—spanning 68 countries and organizations worldwide committed to advancing business 35,000 businesses; and its position as a business-centric alliance solutions for sustainable development in their respective for sustainability causes. The GN is operated by businesses for countries or regions. The network includes 70 partners in businesses, giving it singular influence in the private sector’s 68 countries, representing over 35,000 businesses. Two- social responsibility and sustainable development efforts. It thirds of those partners are located in emerging economies, also carries weight from its parent, WBCSD, which was created making it a good conduit for engaging with local SMEs and in 1992 on the eve of the Rio Earth Summit to ensure that the implementation of WBCSD sustainability pilot projects. business voice was heard at the forum. WBCSD has received several accolades as one of the first organizations to champion an ambitious balance between economic and environmental interests. Structure/Solution Companies and subsidiaries of large multinationals join their local GN partner organization by paying a membership fee to the local chapter, separate from the fee paid to WBCSD by all members. Through the various GN chapters, members can participate in events and projects at a regional/country level as well as feed into the larger WBCSD network and projects. The GN partners acts as the secretariat of the various initiatives (that is, projects, creation of knowledge products) and organizer of the events, whereas the companies implement the projects/business solutions together or individually. All GN partners are invited to the major, annual WBCSD events. WBCSD also hosts smaller, locally targeted events, workshops case study: WBCSD Global Network 124 and roundtables with specific GN partners, catered to the 3. Beneficiaries interests of the members and local context. To date there has been a top-down flow of information from the global to local The main beneficiaries of WBCSD’s Global Network are levels, but ideally WBCSD would like information, learnings, the 35,000 member companies that are part of the current and opportunities to flow both ways. 70 partner organizations. There is a wide range of services available depending on each GN chapter, as evidenced by the 2. Financial Model wide gap in fees, $100-$25,000 per year. From WBCSD’s perspective, the only costs associated with Recruitment and Selection of Participants running the GN are overhead costs (primarily staff time, travel and the budget for a session at the annual meetings). Much of the recruitment process takes place through formal WBCSD hosts the GN partners at two of its annual meetings. introductions by current GN partners, or other trusted parties. One meeting is held in Montreux, Switzerland, while the This is followed by a scoping phase where WBCSD does other meeting geared toward CEO level participants changes research on the organization and investigates the potential for location each year. Events are also often associated with fees collaboration and project overlaps. Phone calls and meetings to participate. are held between WBCSD and the potential partner to get to know one another. If both parties express further interest in Like the WBCSD, GN partners are primarily funded by collaborating, the partnership is formalized with the signing of membership fees. Each GN partner organization requires its a partnership agreement. members to pay a fee, which ranges from $100 to $25,000 per year. The GN partner organization determines its membership In terms of selection criteria, the potential partner must meet a structure and fee independently from the WBCSD, basing few requirements for WBCSD to sign off on the partnership. The them on the services it provides. However, most of the costs partner must be an independent business organization with associated with the projects are assumed by the participating progressive and active projects and work streams centered companies as part of their corporate social responsibility (CSR) around sustainability. The partner obviously must have a good efforts or business models. reputation and track record for its operations. WBCSD values such aspects as strong connections with WBCSD member companies, government and policy representatives, as well as with external parties. case study: WBCSD Global Network 125 In order to ensure an effective and efficient partnership However, WBCSD makes an effort to track how deeply partner between the organizations, it is key that the partnership is of an organizations are involved in WBCSD work streams and active nature. Each partner is therefore required to engage in projects—and whether they adapt these to their local contexts at least one WBCSD-led project or business solution. Partners to ensure an appropriate and successful implementation. are also requested to nominate one key contact to speak WBCSD also uses social media, its two annual meetings, and the directly with WBCSD on a day-to-day basis, as well as to attend governance structure to track partner engagement in developing at least one of the two annual events hosted by WBCSD, where and scaling up substantive sustainability projects locally. strategic actions and engagement opportunities for the Global Network going forward are discussed. While WBCSD is currently interested in scaling up its work on the ground through the GN, formerly made up of separate Lastly, GN partners are asked to help support WBCSD mem- regional networks, it seems difficult for WBCSD to manage bership. Various mechanisms are put in place for companies these projects without investing additional resources. There are to become dual members of a GN partner and WBCSD, giving also questions around the value members would identify at the them a marginally larger voice in WBCSD activities. global versus chapter levels. Program Impact 4. Human Network Each GN partner has its own metric available online, but there The GN covers 68 countries and is constantly growing. It is is little aggregated quantitative information on outputs of the currently expanding its presence in Africa and the Middle GN as a whole, particularly given the reliance on decentralized East in particular, as well as in northern European countries. governance. Taken together, it comprises 70 Global Network Together, the partner organizations represent more than partners in 70 countries representing over 35,000 national 35,000 businesses worldwide. businesses. Through their advocacy activities, the Global Network provides While this is a relatively low-cost model, the decentralized a channel for implementing local sustainability structure leads to high risk regarding control of outputs. Since initiatives and offers an effective platform to access influential the structure of the GN is decentralized and member driven, business leaders and opinion shapers at the national and the outcomes of the chapters are tied to members interests, regional levels. Global Network partners also play an important objectives and ability to implement projects and business role in addressing supply chain issues and engaging small and solutions on the ground. medium enterprises. case study: WBCSD Global Network 126 5. Organizational Model 6. Innovation Ecosystem The 70 Global Network partners are each self-funded, self- As the network spans across the globe, there is high variability supported. in the environment and economies that may foster innovation. However, as the network sets the bar for membership at a The Global Network governance is structured into six certain caliber, the member companies on aggregate have the regions: North America, Latin America, Europe, Africa, Asia, resources and connections to advance innovation within their Southeast Asia, and Oceania. All partner organizations fall sustainable development agenda. Furthermore, the reduction under the region in which they are based, and bi-monthly or in transaction costs that comes as a result of the network quarterly coordination calls are organized between them. model enables sustainability projects by large private sector All regions also have one appointed regional coordinator— players. In addition to connections, the model helps transfer a role they hold for two years before rotating. The Global relevant knowledge on sustainable projects and market Network secretariat is based at the WBCSD head office in opportunities to members. Geneva. It consists of two staff, who deal with the day-to-day management and coordination between the Global Network partners and the WBCSD. Prospective GN partners must be approved by WBCSD and all activities are coordinated by the GN director (Rabab Fayad) and associate (Karolina Sodergren). Each GN partner organization has its own governing structure. For example, the chapter in the U.K. is led by a CEO and a chairman, while the organization in Austria is led by a chairman and a managing director. WBCSD itself is led by a CEO, Peter Bakker, who is part of a managing team that includes a COO and CFO. It is governed by an Executive Committee, which is elected by a council composed of the heads of the member companies. The Executive Committee includes a chairman, currently Paul Polman of Unilever, four vice chairmen, and other members. case study: WBCSD Global Network 127 WEF GLOBAL SHAPERS at a glance Indicator Value Special Features of the Program Typology Community Number of beneficiaries 5165 shapers • The program features an extensive worldwide network of young professionals who have demonstrated exceptional Number of staff 11 staff listed on website leadership and contributions to their community. Financial arrangement with None; volunteer-based • The program has evolved from an original purpose of beneficiaries providing the youth voice to WEF events, to taking on a life of Typical program duration 5-year membership or until member its own in organizing local community projects. reaches 33 years of age • Members devote their time voluntarily to the projects that are Countries of operation All countries, excepting Syria, Cuba, run through local chapters, called hubs. Iran and North Korea Program annual budget Not available Lessons learned Program start year 2011 • Building a network of individuals selected for their initiative and past contributions to their community results in the individuals using the network to continue to do just that. • Members are not compensated for their time or work, but are driven by internal passion to participate in program activities. • On the other hand, projects could be more extensive and successful if members were not volunteers. 128 1. Business Model Unique Value Proposition Global Shapers, an initiative of the Swiss-based World The Global Shapers program is distinctive from other youth- Economic Forum (WEF), is a network of individuals between targeted programs in that the community and objectives have 20 and 30 years of age who have demonstrated exceptional taken on a life of their own and grown far beyond the original leadership and contributions to their communities. The intended bounds. The original intent of the Global Shapers individuals, called “Shapers,” run hubs in cities throughout the program was to gather exceptional individuals in their 20’s world that aim to improve their communities through projects. to contribute the youth perspective to WEF communities and events, including the annual WEF meeting at Davos, Switzerland that convenes top political and business leaders. However, the Shapers, grouped in hubs, have evolved to independently develop and implement socially geared projects and partnerships. The intended draw for the Shapers—which still holds—was association with the considerable WEF brand and access to the network of the program, including meeting like-minded peers one would be hard-pressed to meet otherwise. The program provided a path for Shapers to build their personal networks (horizontal networking) as well as to meet more senior individuals within their cities and abroad (vertical networking). Now, the program has edged out a solely networking value proposition to provide a recognizable, legitimate and established platform for project ideas and implementation. Structure/Solution The Shapers are individuals in their 20’s who have achieved notable accomplishments or distinguished themselves in some way, nominated by members of the wider community (WEF and non-WEF) and selected by the members of their respective hubs case study: WEF Global Shapers 129 (with final approval by WEF). hubs are a city’s local chapter by a Curator, selected from the Shapers, for one year. Other of the Global Shapers program. Once selected, the Shapers’ than that, organization varies from hub to hub; some hubs also memberships last for five years, or until they reach the age of have a vice-curator and an executive committee. 33, whichever comes first. Through association with the WEF, Shapers are given networking opportunities to interact with The hub structure is a departure from the usual centralized one another and other members of the WEF community. activities of WEF; in this case hubs manage themselves, select their own members and determine their own projects. There The Global Shapers program hosts a number of meetings are 453 hubs globally: Asia has the most at 111 hubs, followed and regional events every year. A small team at WEF is by Europe (93 hubs), North America (81), Sub-Saharan Africa responsible for management of the Shapers community (75), Latin America (53) and the Middle East/North Africa (39). and their involvement in events. In addition, hub leaders, Some large cities have two hubs. called curators, meet at an annual meeting at the Geneva WEF headquarters to discuss projects, future plans and Cosmopolitan areas tend to attract more Shapers, and most opportunities for growth. There are Shape conferences hubs host between 4-25 Shapers. A sizable percentage of multiple times a year on different continents, and Shapers hubs have only one Shaper. Some of the largest hubs include: can apply to attend the events. Shapers can also attend WEF Washington, DC, with 67 Shapers (divided between two hubs); Regional Forum events, where a number of seats are reserved New York, with 62 Shapers (two hubs); Tokyo, with 61 Shapers for them. At the annual WEF meeting at Davos, about 50 seats (two hubs); Oxford, with 49 Shapers; London, with 43 Shapers; are reserved for Shapers from worldwide hubs. Shapers are Chicago, with 42 Shapers; and San Francisco, with 42 Shapers. proactively embedded in the events, such as on discussion panels or in moderating panels. 2. Financial Model Shapers also carry out projects with their hubs. The objective The Global Shapers program is volunteer-based, and there is of the hubs has evolved from simply gathering Shapers in a no budget or direct support from WEF. Each hub sets its own local chapter, to the development and implementation of these terms of how money is raised and how often the community projects—and finding opportunities to collaborate with other meets. Some hubs have been set up as an association or NGO hubs. Each hub is required to organize at least one project a depending on local laws and based on the necessary legal year, with the size and topic left to the hub. These projects tend status in order to design and implement projects. Projects to cover areas such as nutrition, education and sustainability, are often funded by corporate sponsorships, grants and with a focus on local rather than global impact. Each hub is led partnerships. For example, the Coca-Cola Company runs the case study: WEF Global Shapers 130 Shaping a Better Future Grant Challenge, a grant competition process. In general, applicants are screened for a history of specifically for Global Shapers, with a $50,000 grand prize. entrepreneurial efforts, impact in their communities and drive to bring about social change for the better. In the Washington, Shapers may apply to attend WEF events including Davos, but D.C. hubs, for example, applicants are brought in for interviews, their access and involvement varies as there is limited seating as well as invited to social cocktail hours to get mutually available for Shapers. WEF sponsors Shapers for foreign events. acquainted with hub members. The selection process takes This has become increasingly competitive as the community about two months in the D.C. hubs, though this varies from hub continues to grow. to hub. Each hub also selects a curator who will lead their hub for a year. In 2014–15, the class of curators came from over 157 3. Beneficiaries countries. The beneficiaries of the program include the Shapers, the Program Impact communities they live in, and WEF. The Shapers gain access to a network of people working on similar projects, higher-level Outcomes of this network have surpassed the original design professionals in relevant fields and the wider WEF community. and connections have extended beyond the intended purpose They also gain prestige from their role as a Global Shaper, of the community—to gain the youth voice at WEF events. which helps facilitate projects that can in turn boost their While Shapers are an active presence at WEF events, their resume. The communities benefit from the projects devised activities outside of the events have scaled to a size that by the Shapers, in education, health, energy, environment and justifies the Global Shapers as a program on its own, aside from other areas. The WEF gains input from the young professionals simply contributing the youth perspective to WEF forums. There relevant to their events and activities, and also receives a boost are now 453 hubs and 5,198 Shapers that carry out hundreds of in its image with its name attached to constructive projects. projects a year. Hubs vary in their program impact and reach, and establishing and operating a hub is more easily done in Recruitment and Selection of Participants some areas and cities than others. For example, Shapers find more challenges in developing a hub in less cosmopolitan Applicants are nominated by people connected with WEF, cities and rural areas. as well as people outside of the WEF community, such as university professors. Applicants submit a general application, A few examples of recent projects: including a cover letter and resume, through the WEF • The Nairobi hub has embarked on a project to deploy clean Global Shapers website, but each hub runs its own selection energy solutions in rural areas around Kenya to improve case study: WEF Global Shapers 131 education, with the help of a $18,900 grant from the Abraaj projects and lack the time to properly invest in the program’s Group. The project, called Unda Elimu, follows a project called projects. However, those pleased with the program structure Powering Education (winner of the Coca-Cola Challenge), point out that Shapers voluntarily contribute to the community where the distribution of solar lamps for use inside homes because of their own interest, and hubs are not meant to be increased the ability of students to study, while decreasing health impacts from the toxic smoke of kerosene-fueled light. organizations. The Unda Elimu project expands upon Powering Education, with plans to distribute 220 more solar lamps to 10 schools in Some participants have also noted that a “forced process” of rural Kenya. coming up with project ideas, rather than on one’s own time • The Lusaka hub hosted a charity soccer fundraiser in and independently, can lead to unsuccessful project ideas that partnership with a local social football league, corporate are too vague. This seems to be an issue often faced by similar sponsors and a local NGO. The fundraiser consisted of a programs that bring people together specifically to come tournament between 13 soccer teams and helped raise up with ideas; it may be easier for people to come up with funds to support a clinic at a shelter for street children, as good ideas on their own, and then apply for support from an well as purchase school supplies for four children from organization. underprivileged households. • The Minneapolis hub has a project to launch the city’s first As the program is less than five years old, it remains to be seen large, community-owned Community Solar Garden, which will provide power to citizens as well as help Minneapolis reach how the decentralized model will pan out over time: whether its climate change goals. The hub has partnered with local communities can stay close to each other and with WEF, or member-owned cooperative Cooperative Energy Futures (CEF) evolve into a franchise-like model. to carry out the project. There is a range in feedback from participants. Shapers in 4. Human Network the program note the eye-opening effects of participating in such a global community with diverse perspectives. They The founding partners of the Global Shapers community are have remarked positively on the networking opportunities classified into two groups: the Global Community Partners, for finding others with similar interests and projects, and the including the Coca-Cola Company, energy provider Reliance contacts they can reach out to while traveling around the Industries and private equity investor Abraaj Group; and the world. Others, however, have expressed sentiments that a Regional Community Partners, including energy company strength of the program—recruitment of Shapers who have Oando PLC in Africa and the International Bank of Azerbaijan several impressive accomplishments under their belt—is a in the Commonwealth of International States, Central Asia and double-edged sword: Shapers are usually busy with their own Caucasus region. These partners provide financial support (in case study: WEF Global Shapers 132 the form of grants), promotional support and guidance to the Global Shapers community. 5. Organizational Model Each hub arranges its own organizational model. Hubs generally have an executive group made up of three people: a curator, vice curator and the curator from the previous year. The curator is elected each year by the hub members to serve a one-year term and liaise with WEF, including attending certain WEF events. The strongest touch point between WEF and the hubs is Curators Week in Geneva, which happens once a year and is paid for and facilitated by WEF. 6. Innovation Ecosystem The Global Shapers community is spread across the globe, and members work in widely diverse environments and innovation ecosystems. While the largest hubs exist in cosmopolitan cities (New York, London, Washington D.C., Tokyo) with ready access to promotional, cultural and financial support for their initiatives and projects, others operate in out-of-the-way communities, and several hubs have only one member. It is a significantly more challenging environment in those cases for fostering innovation, though the possible impact of a project may be greater. case study: WEF Global Shapers 133 bibliography HARGADON, A. (2005) Technology brokering and innovation: linking REPORTS AND PAPERS strategy, practice and people. Strategy and Leadership 30 (1): 32-36 CHESBROUGH, H. 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