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5 Things Humanitarian Innovators Can Learn From the Private Sector

By Guest Writer on February 17, 2022

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While simplified stories of success from the private sector are often unhelpful for humanitarian innovators, there are things that we can learn from entrepreneurial startup companies, particularly in how complexity and uncertainty of the scaling journey is handled. Here are five useful lessons for humanitarian innovators from the private sector.

Lesson 1: Focus on Entrepreneurship

The first helpful lesson from startups is to focus on the people, not just the product.

Innovators need to be nimble, adaptive, reactive and able to create the conditions for success at scale. For example, though major pivots may require board involvement and approval, the concept of ‘restricted income’ is not recognisable in the private sector where capital investment is not restricted to specific activities (though investors may negotiate specific terms).

The humanitarian sector needs better ways of supporting innovation teams to carve their own paths. We need to be more confident in our ability to identify the strongest teams and the innovations with greatest potential to improve outcomes for people affected by crises and less reliant on log frames, workplans and deliverables. Particularly in the UK, unrestricted grant funding is like gold-dust. This needs to change.

More funds should be designed intentionally to enable this shift. Our own Journey to Scale initiative does to some extent, providing purposeful training and support as grantees embark on their scaling journey. Initiatives like the Shuttleworth Foundation and the African Visionary Fund that provide longer term, unrestricted funding to visionary leaders are great examples from the philanthropic space, strategically designed to help overcome systemic barriers to change.

Lesson 2: Business Models are Hard

The second helpful lesson from startups is that corporate business models are not simple.

Finding a viable and resilient business model is difficult in the profit and purpose sectors alike. Though we may think we understand the business model of an organisation, it is usually more complicated than it first seems.

On the surface, Amazon is a massive online marketplace generating revenue through direct sales (supermarket model) and taking a cut of sales it processes on behalf of its merchants (affiliate model). The reality is multifaceted: it has built a flat rate & subscription model through Amazon Prime, it is building a lock in model first by selling Kindle e-readers then adding Fire tablets and Alexa home assistants at low prices.

Amazon also has multiple subsidiaries, including its cloud computing platform Amazon Web Services — interestingly, the platform that enabled it to become the world’s most efficient online marketplace has been further monetized through white label & make more of it models, sold to millions of other businesses and governments, including the likes of Netflix (despite Netflix being a direct competitor to Amazon Prime Video) and Uber.

Amazon’s layered business model demonstrates the huge scope for creativity in the humanitarian innovation space. Elements of different business models can be tweaked, mixed and matched to create a viable whole — there is rarely a single, simple solution.

Lesson 3: Cash Flow is Challenging

The thrid helpful lesson from startups is that cashflow issues are not a sign of failure or mismanagement.

Manging cashflow is a major challenge for all entrepreneurs and small businesses. A quick internet search of “top challenges for entrepreneurs” returns multiple articles listing “managing cash flow” in the top three. However, it’s a challenge some donors view as an indicator of financial mismanagement or instability, despite their policies and procedures often significantly exacerbating pressures on cashflow.

Funders and buyers of innovations should change their procedures to ease this pressure, such as by no longer making grant payments in arrears, improving payment terms and removing prescriptive spending restrictions.

Lesson 4: Open Source Works

The fourth helpful lesson from startups is that sustainable organisations can be built on open source technology.

Many big companies have built success and deliver huge value based on open source technology. When announcing that Tesla was applying an “open source philosophy” to its patents by pledging not to enforce them, CEO Elon Musk said: “technology leadership is not defined by patents”.

Tesla also publishes at least some of its software code under open source licenses. Linux and Mozilla are well known and widely used software examples of open source projects. Linux systems are relied on by researchers and prominent tech companies: every supercomputer in the world uses a Linux operating system, as do many smart TVs, cars and smart watches.

The debate around open source in humanitarian innovation is complicated and often misunderstood. Critically, it should be for innovation teams, not their donors, to seek expert advice and make decisions that align with their aims and values.

Lesson 5: Innovation Inspiration is Everywhere

The final helpful lesson from startups is that Silicon Valley is not the only source of innovation inspiration.

As Max Vielle of Response Innovation Lab wrote last year, we see Silicon Valley as the home of innovation but that doesn’t mean its model can be applied wholesale for innovation in humanitarian settings. Where else could we look to find more useful approaches?

Though the social enterprise model isn’t right for all social innovations, the sector does offer some great role models. Belu, the high end drinks brand “that puts people and the environment first” succeeds in a hugely competitive water market, while minimising the environmental impact of their products and donating net profits to Water Aid (over £5 million to date).

HTC Group competes with commercial providers in transport and training services, with social impact at the core of every element of the business — from the types of services it provides and the way it provides them to understanding its impact. Chatterbox operates in a more niche sector, training and employing refugees as language coaches.

Community Dental Services is an employee owned community interest company (CIC, a pretty interesting corporate legal structure for social enterprises in the UK), profitably providing dental services to individuals excluded from mainstream services.

These examples serve as great inspiration for innovation teams looking to sell to, partner with, or work alongside, more established humanitarian agencies. Organisations driven by social purpose and guided by clear values are much more relatable to the sector than those driven by pursuit of profit.

The 3,500 certified B-Corps around the world, including big names such as Patagonia and Ben and Jerry’s as well as smaller businesses, are forging an increasingly mainstream path for businesses that balance profit and purpose.

Not all innovations will, can, or should generate revenue from sales — and that doesn’t make them inherently unsustainable. Charities have existed and relied on voluntary donations for centuries. In the humanitarian sector, the International Red Cross and Red Crescent Movement was started in 1863, and the Save the Children movement is over 100 years old. Reliance on voluntary donations and grants can be a sustainable source of income.

We Should Adopt Whatever Works for Us

These lessons show that there is no single, magical solution to scaling and sustaining innovations. But there is a lot to be learnt from many different places. Humanitarian innovators should not focus on the fantasy of the unicorn.

The ‘hodgepodge’ mammal, the duck-billed platypus, seems a fitting point of inspiration — from nature, not from the economy. It is not a highly optimised wonder creature, but instead cobbles together the best from other more familiar species — and is considered incredibly effective in its own ecological niche.

By discarding the idea of a replicable one-size-fits-all scaling blueprint, and instead testing and combining different business models, ways of working and approaches to implementation, humanitarian innovators may finally find their own niche and unique way on their journey to scaling success.

A lightly edited version of Platypuses are Real by Abi Taylor, Humanitarian innovation manager. Grant maker. Author.

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