iXc: the first four years

The innovationXchange logo
The innovationXchange logo
Written by Stephen Howes

iXc (the innovationXchange) was the first major aid initiative of the current Coalition government. Indeed, it was only the major new aid spending commitment during its first term, a time of massive aid cuts. It was announced in June 2014 by Australia’s Foreign Minister Julie Bishop, and launched in March 2015. Given its high profile, iXc unsurprisingly received a fair amount of commentary at the time. But there has been no analysis of its performance since.

Now, four years since iXC was first announced, is a good time to look back and see what can be learnt.

iXc is both a centre within the Department of Foreign Affairs and Trade (across the road from the main DFAT building), and a program of activities. The iXc budget was set at $140 million over four years, from 2014-15 to 2017-18. Going forward, its budget is being continued at $35 million a year . The iXc website identifies some 24 projects that it has financed. The largest investment is $30 million into the Global Innovation Fund, a multi-donor initiative. Other major investments have been into the Bloomberg Health Partnership ($24 million), which is focused on health data, and Frontier Innovators ($15 million) to support social enterprises. “Challenges” – in which proposals are sought in relation to defined problem areas, and the most promising ones selected – have been popular.

Any assessment of iXc must begin with the question of whether a greater emphasis in aid on innovation is warranted. My own view is that, while there are potential downsides, we should welcome a greater emphasis in aid on new technologies and private sector solutions. And this is what, at its core, the focus on innovation seems to be – or at least should be – about. Such an emphasis has the potential to be an important and more practical counterweight to the position that has dominated and still seems to dominate in Australian aid, despite its mixed track record, which is that the aim of aid should be to build capacity and strengthen institutions. In addition, the use of competitive approaches to unearth good ideas is refreshing. I am therefore at the outset favourably disposed to a centre/program such as iXc.

It is, however, difficult to assess the achievements of iXc. Many of the projects look promising. But there is far too little information available about those projects to support an overall assessment. Given the lack of public information, rather than attempting to reach an overall assessment, this blog – and the report which it summarises – is written from the perspective of a sympathetic critic. It explores a range of factors that are likely to have undermined iXc performance and reduced its potential.

Fragmentation

One of the oldest lessons in aid is the need to focus, to avoid fragmentation. iXc activities demonstrate a very wide sectoral coverage for a very small part of the aid program. The ten “challenges” iXc has run cover the following areas: humanitarian aid, oceans, food, technology, fresh water, education in emergencies, young people and work, social enterprises, water data, and urban sanitation. iXc has also funded projects which, while they may be useful, appear to be not that innovative. An example is the Bloomberg Data Health initiative, which seems to be largely a pretty standard cross-country technical assistance and training program.

Transparency

iXc lacks transparency. It has one progress report on its website. This is a public-relations document, which provides minimal information, no project ratings, and makes no mention of any possible risks or challenges. Data at the individual initiative or project level is sparse. This lack of transparency is particularly concerning since it suggests a lack of underlying evaluative and performance material. Yet iXc itself emphasises the importance of experimentation and learning, which are two of its three pillars (the third is partnering). Evaluation is not only about uncovering failure; it is also about documenting scaled-up success. Failure on both fronts will undermine iXc credibility and support.

The downsides of innovation

iXc’s experience highlights what might be called the downsides of innovation. As famously remarked by Bill Easterly, aid agencies already have a tendency to “engage in obfuscation, spin control, and amnesia (like always describing aid efforts as ‘new and improved’) so that there is little learning from the past.” Emphasising innovation runs the risk of further exacerbating these long-standing weaknesses of the collective aid effort. I have already mentioned the under-investment in evaluation. In my report, I go in some detail into the sad story of SEED Pacific. Announced by the Foreign Minister at the launch of iXc in March 2015, it has barely materialised since. Part of the reason for its failure, I argue, was a refusal to learn from earlier experience with similar Australian aid projects, in particular the Enterprise Challenge Fund. The desire to position SEED Pacific as innovative led to an unwillingness to learn from the past.

The iXc also gives the impression that successful aid is a matter of one-off transactions. Identify a problem, fund a solution, move on. The Pacific Humanitarian Challenge website announces the winners of that challenge, back in 2016, but provides no updates. The same site plaintively asks “Where are they [the winners] now?”, but gives no answer.

High political profile

iXc is closely associated with the Foreign Minister. The Minister’s personal backing of innovation will certainly help promote both innovation as an idea and iXc as a centre within the aid program. But her close association with iXc may also be detrimental. It likely has contributed to the problem of fragmentation, it has made the centre less likely to survive a political transition, and it would have increased the political price of admitting to any failure.

Conclusion

There is a strong case to be made that the Australian aid program would benefit from a greater focus on the application of new technological solutions to development problems, and from a greater engagement with the private sector. From these perspectives, the creation of iXc was a very welcome initiative. However, over its four years of existence, the centre has suffered from: insufficient focus; a lack of transparency and learning; too high a political profile; and what I call the downsides of innovation – a disregard for the fundamentals of aid effectiveness, an under-appreciation of prior experience, and an over-reliance on one-shot approaches, with insufficient follow-up.

I conclude my report with a number of recommendations for iXc. There are also a number of useful suggestions in the new DFAT innovation strategy. I won’t repeat them here. But clearly, going forward, change is needed.

Read the full report here.

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Stephen Howes

Stephen Howes is the Director of the Development Policy Centre and a Professor of Economics at the Crawford School.

3 Comments

  • Thank you very much Prof Stephen Howes for this interesting, informative blog post.

    Thank you also to Sarah Pearson, Chief Innovation Officer, DFAT, for providing a detailed response.

    I was really interested to read both the blog post and the responses. I hope this discussion will help to generate positive outcomes for the people in our region who need them the most.

    Amanda 🙂

    Dr Amanda Watson
    Lecturer
    Australian National University

  • Thanks Stephen for an interesting blog post.

    The term innovation, at least as used in the world of aid, is popular because it sounds like something exciting that the private sector does.

    To the extent that the private sector does innovate in ways that are welfare enhancing, this works, at least to some extent, because market mechanisms provide quite good feedback. (That is, if the new widget is useful people will buy it; if it isn’t they won’t).

    The trouble with aid is, of course, that equivalent feedback loops are missing.

    There is a potential alternative though that could help with the work the iXc: high quality impact evaluations. These should be pre-registered and built into the design phase of iXc projects. Public reporting should be mandatory. Evaluations needn’t be RCT’s; just the best possible method for gauging the impact of the project at hand. The evaluations would be quite costly, but that would be a small price to pay for the learning that ought to be part and parcel of this type of work.

    Terence

  • Thanks Stephen for your review and for sharing your thinking with us. Great to have your support and input – iXc has been an experiment, an innovation itself, so we’d expect not to get it all right, and learning from external opinions is valuable – so thanks again. As DFAT’s new Chief Innovation Officer though I obviously have to make a few comments.

    iXc has been operational for just over 3 years now with an early focus on trialling new approaches, seeking new ideas, attracting others to invest in our region and finding new partners. We’ve done a great job of that:
    • supported 106 innovative programs sourced from around the world through global challenges, applied in 32 countries in the Indo-Pacific;
    • delivered 3 internal Ideas Challenges, generating over 500 DFAT staff ideas, of which over 100 proceeded to implementation;
    • attracted investment usually focussed on other geographic regions to the Indo-Pacific (e.g. partnership in the Global Innovation Fund has directed 67 per cent of their investments into the Indo-Pacific region, and overall leveraged over USD150M of follow on funding);
    • Worked closely with private sector partners such as Google and Atlassian;
    • In July, one of the technology innovations we have supported, Tupaia, won the Digital and Data award in the 2018 IPAA Innovation awards and was identified as a “game-changer” for how Australian aid is delivered.

    This has been a very broad approach, and you are right, diversity of experimentation has made managing this challenging. But, in the early days of such an entity, in startup phase, when you don’t know where the demand or supply will lie, it is a good idea to experiment broadly and see where the uptake is. The beauty of the Open Innovation approach we have used (through Challenges) is that you don’t need to be an expert in all fields – the ‘global crowd’ and our collaborating partners are.

    As you state, we are focussing in on a few areas in our recently launched DFAT Innovation Strategy. We are also looking at how we scale some of the early stage ideas we have supported – we have experimented with how to access ideas, now we need to build our capability regarding scaling the ones worth scaling. Lots for us to develop, such as decision methods for which ones would benefit from further support, and who to support them as DFAT will not necessarily be best placed to do that.

    With regard to your comment on communicating more about our projects and journey, this is something we are addressing in the new DFAT Innovation Strategy – it’s a key pillar and I personally am highly engaged in this. Check out one of my speeches from this year where I start to talk about our journey (which you can find here https://psn.webcastcloud.com.au/Mediasite/Play/2b056ac888e54e68bc5079e3aae1a3681d and on our iXc resources page – recognising I’d been in the role only a few weeks so still had lots to learn) – I am lined up for more of these. We are also working on podcasts and short videos so that interested parties can get bite size info.

    Another of our four new pillars is evaluation and learning – we have an external entity evaluating our programs (initiated earlier this year), and have M&E incorporated into our individual projects. We are about to set up a Champions network and hope that this will be a channel to share lessons learnt across DFAT. We are also an active member of the International Development Innovation Alliance (IDIA), where we share lessons learnt with like-minded donors (such as USAID, DIFID and Gates Foundation). We have also engaged in the usual DFAT internal processes of Aid evaluation such as AQC.

    And finally, I think we will probably disagree on our definitions of innovation – a much debated word. As you suggest, iXc has been focussing on new technological solutions to development problems and greater engagement with the private sector. Some of the ideas we have supported are not radical innovations, but in the context of their application they may as well be; and in terms of partnering with the private sector have been highly valuable, drawing new investment into our region. Innovation encompasses much more than technology solutions. It also encompasses doing our work differently, and the piece that excites me most, helping people in the Indo-Pacific to innovate themselves. We have started working with entrepreneurs, investors and governments to help grow the necessary innovation infrastructure to allow people to solve their own challenges, build their own economies. Check out this video of entrepreneurs who are changing the shape of their world (you can find the link here https://ixc.dfat.gov.au/projects/scaling-frontier-innovation/).

    So change is happening, building on our valuable early experience. We are treading this path with others – USAID for instance has been on a similar journey and we are learning with them. We expect our early experimentation to take a while to reap benefits – that’s experienced globally, inside government and industry innovation entities and labs. The important thing is to keep doing – innovation is a verb – to pursue it consistently and collaboratively with agility and for long enough to reap the benefits.

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