By Parnika Jhunjhunwala, Junior Innovation Specialist at OECD Innovation for Development Facility, Benjamin Kumpf, Head of OECD Innovation for Development Facility, and Johannes F. Linn, Co-founder Scaling Up Community of Practice and Senior Fellow at Brookings Institution
Limiting global warming to 1.5°C necessitates radical, quick and large-scale transformations, as echoed throughout the IPCC’s 1.5°C Special Report. The same is true for achieving the Sustainable Development Goals by 2030. To achieve these transformations, we need disruptive, context-fitting, technological and social innovation, and to create incentives to ensure that once proven effective, innovations are scaled-up. Unfortunately, too many promising innovations fall into the ‘pilot project trap’ and fail to have an impact at the national, regional and global scales.
Scaling up social and climate innovations: what are the challenges?
Local actors – government, private sector and civil society organisations – and international funders alike are guilty of lacking a long-term vision, political commitment, and sustained resource deployment when it comes to scaling innovations.
- All too often, innovators and their funders make the false assumption that the innovations or projects they support will “grow organically” because someone, anyone, will pick them up and run with them.
- The “fund and forget” and “next big idea” approaches to development and climate programmes lead to funders pursuing one-off projects for a limited duration, leaving innovators stranded for lack of a longer-term vision and adequate capacity and resources for sustainable scaling. Inflexible budget practices, which allow only short-term funding, and limited financing options – predominantly grants and loans, rather than equity contributions and guarantees – add to the constraints imposed by traditional project cycles.
- A “do-it-alone” or “not-invented-here” mind-set of development and climate actors leads to missed opportunities for partnerships and cooperation for scaling. With increasing aid proliferation and fragmentation, it is important for donors to coordinate their funding activities, even as aid coordination and partnership management can be staff intensive and time consuming.
- Finally, entrepreneurial ecosystems – the supporting environment of institutions, actors, financiers and social networks – are often weak. For example, out of the 2000 tech-incubators and 150 accelerators worldwide, only 70 are estimated to be targeting climate innovations. And only 25 are in low and middle-income countries. Capital-intensive investments and the long-term, uncertain nature of financial returns deter private investment in climate innovations.
How can external development and climate funders help scale innovations?
To begin with, funders can take small steps to support a more systematic focus on scaling by:
- Focusing on mid-term reviews on what happens beyond the end of the project
- Ensuring that project appraisals include assessment in terms of impact and scalability
- Helping to strengthen entrepreneurial ecosystems and local technology production capabilities that can support climate and development innovations
- Planning for and coordinating entrance and exit of different funders at different stages of the scaling process.
If funders wish to adopt a comprehensive approach to systematic scaling, they must invest in strengthening and mainstreaming institutional capabilities to prioritise scaling in their own organisations. Six key organisational factors allow scaling to be mainstreamed in development and climate finance agencies:
- Vision of scale: A pivotal first step is to formulate a vision for appropriate scale in the early stages of the project or programme
- Leadership: Scaling requires leaders at all levels of the organisation to work together to push through the required change in approach and mind-set. Not only the supervisory boards and top executives need to drive for impact at scale – as James D. Wolfensohn did as president of the World Bank -, but also leaders from the ranks of middle management and frontline staff who often play a crucial role in driving forward the scaling agenda.
- Institutional policies: Operating and funding agencies need to include scaling in their policies for programming and procurement, for funding instruments, and for partnerships and donor coordination.
- Operational procedures: To ensure that scaling becomes a systematic element of their financing approach, agencies need to incorporate it in their operational guidelines, such as their criteria for project selection and design, project supervision or monitoring, and ex-post evaluation. To break out of the one-off project mentality, funders must ask from the outset and throughout project implementation “what happens when the project ends?”.
- Organisational capacity and resources: Organisations should set aside sufficient resources to ensure that additional skills and training are available for staff to understand and support scaling.
- Partnerships and networks for scaling: Some funders (e.g. small bilateral donors and foundations) are better able to support the early stages of the innovation and scaling process, while others (large bilateral and multilateral donors and large foundations) are well equipped to support the later stages of the scaling process which require substantial financial support.
This post highlights key findings of a recent learning journey of the OECD i30 Group. More information can be found here and here.