Between Innovation and Development

World Bank Institute Practice Manager for Innovation Aleem Walji. (Photo courtesy of Aleem Walji)

As part of an on-going series on social innovation, I recently interviewed Aleem Walji, practice manager for innovation at the World Bank Institute. We discussed the intersection between innovation and development, the future of social enterprise, current initiatives, efforts underway in the Innovation Practice, and challenges and opportunities moving forward within these sectors.

Aleem joined the World Bank Institute as practice manager for innovation in November 2009. Previously, he was head of global development initiatives at Google.org and CEO of the Aga Khan Foundation in Syria. Aleem was trained as a social anthropologist and urban planner at Emory University and MIT.

Rahim Kanani: How would you characterize the intersection of innovation and development, and the emergence of social enterprise as a widely studied, taught, and advancing discipline?

Aleem Walji: Governments alone cannot meet the service delivery needs of all their people. They need partners, expertise, and access to pools of capital. The private sector helps to fill this gap as commercial actors and non-commercial actors expand access to public goods and basic services to the poor. Social enterprise is a fuzzy term that’s used to describe many things but largely refers to private actors providing goods and services to the poor, and optimizing for something other than a pure financial return.

The challenge has been in measuring non-financial impact. Investors may be willing to accept lower financial returns if they can measure precisely what they are achieving in meeting health, education, or water outcomes. The emergence of industry standards for social metrics are very promising, and will help unlock additional sources of capital motivated by some combination of financial and social objectives.

Capital is often but not always the primary constraint. The challenge is matching the right kind of capital with the needs of entrepreneurs at a particular stage of development. Cash-flow-based lending and access to working capital for example, are still rare in much of Africa and South Asia, and yet that’s what many early stage entrepreneurs need. Rationalizing the deployment of capital—that is, understanding when grants are the right instrument, when equity can play a role, and when debit is appropriate—is key to helping the sector grow. And from the perspective of the World Bank it is critical in leveraging private resources to complement public capacity in meeting the needs of the poor.

How will social innovation and social enterprise shape the next decade of international development, and what role do you envision the World Bank playing?

Our role is to be a catalyst. We should be focusing on creating infrastructure for others to build on and use. In the world of social enterprise, and social innovation more broadly, we’re focused on developing platforms and networks that bring global players together to solve really important problems.

For example, if we can contribute to the creation of a new asset class—impact investing—by supporting intermediaries, targeted technical assistance, and incentivizing investments where gaps exist today, then others will help grow the sector and expand opportunities within it. Our role may not always be most visible, but good infrastructure works in ways that people sometimes take for granted.

Another example is our work around Open data. Data is fuel and good data is rocket fuel. By making information and better data available on indicators like infant mortality, GDP growth rates, and CO2 emissions, we motivate others to build applications based on our curated data sets, and we reach people we cannot reach ourselves. Our Apps for Development competition is a case in point. Developers built applications we would have never thought to create. They saw a pain-point and used our data to build their own aspirin solutions. It’s not about vitamins and telling people what’s good for them. It’s about making ingredients available so people can develop their own remedies to their own problems. The right information available to the right people at the right time can be transformative.

What do you now know, that you didn’t know when you joined the World Bank Institute in November 2009?

I feel even more certain after joining the World Bank Group that no single institution can be the global repository of knowledge. Knowledge lives everywhere and is inherently decentralized. The key is to make it easy to find and accessible when and where where it is needed. In agricultural extension for example, the expertise of the best farmer in a region is often more valuable than any textbook or external expert. Making that knowledge available to large numbers of farmers is hugely valuable. That’s the central goal of the World Bank Institute’s practitioner-to-practitioner exchange. The bank aspires to connect learning, knowledge, talent, and innovation wherever it lives. It’s about South-South, North-South, and South-North learning; connecting experts and expertise; and putting innovators into direct contact with each other.

As Judy Rodin from the Rockefeller Foundation eloquently says: “The world is our laboratory, and the combination of globalization and information technology just accelerates the spread of innovation”. If we can make innovation more inclusive, user-driven, and user-centric, there will be more opportunities to tackle poverty and to tap expertise wherever it lies.

What have been some of the milestone achievements of the Innovation Practice in recent past?

We’ve been involved in several areas that I think are worth mentioning. The first is Open Data. Last April, through a cross-bank effort, we adopted a new policy resulting in more than 7,000 development indicators becoming available in our data catalogue at no cost. Our information and data are not just public but searchable, downloadable in machine-readable formats (including through APIs), and re-usable. And users are coming to our data catalogue in huge numbers, surpassing traffic to our World Bank homepage. We’ve realized our clients and our users are not the same group. For most people we’re as much the Databank as the World Bank. This has led to our Development Economics and Research Group to expand our data catalogue regularly. Open Data is pushing us to re-think our role in the development space: What information do we share, how do we share it and collaborate with partners, and what does it mean to create open-source solutions to development problems?

The bank’s Mapping for Results initiative complements Open Data by adding a geospatial dimension. Interactive poverty maps overlaid with information about where the bank’s projects are located and where funding flows is eye-opening at many levels. We see relationships between for example infant mortality and where we’re our loans support health and water projects at the sub-national level. The question of who does what where is a such a black hole in development, and Mapping for Results shows where gaps exist in development programs, the clustering of aid programs, and whether results correlate with aid flows. All of this became possible by capturing geo-data (now even possible on most mobile phones) and creating simple mash-ups. We’re working with the Development Gateway Foundation to create a geo-coding manual that allows other donors and Governments to learn from our experience and develop their own geo-tools. We’ve learned that maps are a very powerful story-telling tool, particularly when they help visualize the relationships between very large and disparate data sets.

Walk us through some concrete examples of innovative development practices that your office was involved in, with respect to identifying the model, evaluating the model, and ultimately taking the model to scale.

Scale is everyone’s goal but eludes most development actors. At the World Bank Institute, we talk about moving from retail to wholesale. In practice, this often means working through partners, supporting intermediaries, and figuring out how and where we can best add value.

The Development Marketplace (DM) program comes to mind. For more than 10 years, we’ve been making small grants to social enterprises globally. The program aims to complement the provision of public goods by governments, by scaling-up the provision of public goods through non-public actors. But for the World Bank to make small-scale grants to social entrepreneurs is inefficient and often cumbersome for our grantees. So we want to support local intermediaries to provide pre-investment technical assistance to social enterprises and to connect them to a growing pool of socially motivated investors, particularly local capital.

Our goal is to use the DM Platform to connect high potential pipeline to impact investors, philanthropic capital, and social investment funds. We see a major gap between the needs of most social enterprises (requiring early stage angel finance) and where most impact investors sit along the conveyor belt of capital (wishing to deploy private equity/debt). To increase deal-flow, there is a role for targeted pipeline development, reducing due diligence costs, and making early-stage finance available for a broader range of small but growing enterprises. We’re working with a range of government partners, philanthropies, and social investors (including the Aspen Network of Development Entrepreneurs) to test this model in India and East Africa as a starting point. If we can leverage our convening power, relationship with governments, and balance sheet, we can help fill a key gap in the social investment ecosystem.

If your work and the Innovation Practice rest upon one core philosophy about the way in which the world works, what is that philosophy?

Focus on the user and start with problems that matter. Too often we’re answers looking for questions. And the answer can’t be the same if the question is different. Scale is ultimately about the repeatability of a solution based on a homogeneous problem. The private sector has learned the importance of listening to clients. Non-profits and public agencies struggle because the incentives of their funders and their end users are not always aligned.  But if you can create the right incentives for groups to be client or user-focused, I think you get better results. Getting something wrong because it’s a really hard problem is understandable but getting something wrong because you don’t listen to your users is totally avoidable. We can do better and we must do better in listening to our clients and ultimately our clients’ client—the citizen.

Read the full interview at World Affairs Commentary.

Read more stories by Rahim Kanani.