What the public sector can learn from startups

How can we learn more quickly what works, and discard what doesn’t? This question is at the core of virtually every startup across the globe. Launching a new product or service with limited resources makes finding good answers to these questions a matter of survival and not success. Those small startups that succeed may not necessarily be due to creative genius. Most owe their success to well thought-out experimentation, such as the lean startup approach, and a passion for data collection and analysis.

With the new global development agenda in place and an ambitious set of 17 Sustainable Development Goals, it seems appropriate to design equally ambitious plans. But could a pathway to design solutions that positively impact millions of lives start with small experiments?

Governments and international development organizations are rather risk averse and depend on multiyear linear planning instruments. Is it possible for these institutions to innovate, to borrow concepts from the world of startups to run well-managed and ethical experiments?

We are seeing more governments and international organizations embracing innovation to transform bureaucracies, bringing together an increased focus on data and evidence, with creativity and openness. The United Nations Development Program set up a dedicated innovation facility in 2014, which just released its annual review “Innovation for 2030” on Tuesday. It highlights the current shift from innovation as a process of creativity to a process that tests hypotheses, and uses quicker feedback loops to learn and iterate. This entails calculated risk-taking but it also de-risks the investment of public funds as faster feedback enables swifter adjustments.

In Papua New Guinea, the Department of Finance and UNDP partnered to see if an SMS reporting system could help address rampant corruption in the country, which ranks 144 out of 175 in Transparency International’s Corruption Index.

A few prototypes of SMS reporting systems were developed, shared with end users and their feedback informed the design of the first version of the service. Within the first four months, 6,254 text messages were received from 1,550 unique users. The reports enabled the government to take action against public officials alleged to have mismanaged more than $2 million in funds. To date 251 cases of alleged corruption are under investigation. The initiative is now being scaled to cover six additional government departments.

Despite innovation efforts and optimism across the development sector, few innovations lead to actual sustainable, systemic change, noted the Overseas Development Institute in a recent research paper. Barriers for bringing innovations to scale are often political in nature. The assessment of the political economy influencing a development challenge is an integral part of an innovation.

Innovation can help find solutions that impact millions but it has to start with small iterative experiments. For international development organizations, this necessitates a shift away from the current operating model that provides known solutions to different contexts based on the assumption that solutions can be replicated.

The authors of the recently published book “Innovation for International Development” call this “answer delivery systems”. Can innovation help governments and international development organizations instead transform into “answer generating systems”?

Development practitioners need to let go of the assumption that “our innovations” will solve “their problems.” Instead, a sequenced approach could be:

1. Invest in understanding the problem and the context as best as possible and help reframe policy issues. This starts with investing in understanding the needs of users and their problem-solving capacities through methods such as human-centered design, a deliberate search for positive deviances, or behavioral insights.

2. Connect citizens, government, academia, private sector organizations and new actors in the development landscape, such as from the emerging social innovation ecosystem, and co-create testable solutions in innovation camps or labs. Design the work plan to further develop solutions as a hypothesis test and design for scale from the get-go.

3. Support partners in rapid prototyping, parallel field tests and experiments with ‘minimum viable products,’ borrowing from disciplines such as human-centered design, lean startup and agile development;

4. Partner with academia and think tanks to include the best possible monitoring frameworks and impact assessments. The key is achieving the desired change or outcome, and that requires solid monitoring and evaluation.

Innovation as described, requires complementary skills, ideally from a diverse team that brings them to the table. The challenge lies in the ability to identify and collaborate with new and sometimes unusual partners, creating coalitions across sectors. And the ability to combine knowing when to apply “good development practice” and “proven solutions” and when to adapt or create based on relentless research and finally, the competence to manage innovation, to conduct risk-informed and ethical experiments. This includes the ability to draw decisions from evidence on what works and what should be discontinued.*

Innovation means change and change means a shift in power relations and privileges. It is political.

To sum up, innovation is not an end in itself. It is about finding better ways to create impact for people and the planet, to strengthen resilience and more inclusive societies. It is about using the most up to date and best-fit models to get the best development result possible. Achieving the Sustainable Development Goals requires investments in testing new ways of doing business. Calculated risk-taking to identify more effective solutions that add value for the people affected by development challenges — people and their governments, our users and clients.

Join the Devex community and access more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.

* Update, June 8, 2016: This article has been updated to provide further insight into ways to innovate.