Where innovation comes from

The ideas that power our next generation of growth are just as likely to originate in a coffee shop as in the laboratory of a big corporation.

That is Eric Schmidt in today's Washington Post.  Though he is talking about the US economy in general, the points are perhaps even more compelling for the global development sector, where innovation is exceptionally slow.  Schmidt goes on to say:

[I]nnovation is disruptive and messy. It can't be controlled or predicted. The only way to ensure it can flourish is to create the best possible environment -- and then get out of the way.

Top-down, expert-driven approaches that predominate in much of the aid world cannot tolerate such messiness, and experts find it very hard to "get out of the way."  What are some of the other critical ingredients in innovation?

First, start-ups and smaller businesses must be able to compete on equal terms with their larger rivals.

This is key, too, for international aid, where large contractors and non-profits receive the vast majority of funding. During the 1990s, for example, seven out of the top ten non-profits not only stayed in the top ten but increased their share of the market during the decade.  And the top six percent of non-profits account for four-fifths of the revenue.  But that's not all:

Second, encouraging risk-taking means tolerating failure -- provided we learn from it.

Failure is something that most international aid organizations cannot tolerate.  When I left the World Bank in 2000, pressure from the board of directors led my unit to shoot for an 85% success rate for projects. This target was unrealistic, given the challenges of doing good aid projects. Consequently, many units spent a lot of energy and resources hiding failures or massaging them to make them look like reasonable successes. Worse, such targets discouraged everyone from being innovative, since the likelihood of failure was much higher.

The goal of aid marketplaces such as GlobalGiving and others is to provide access to those in the "coffee shops" as well as the big aid agencies. And we try to provide an environment where success is rewarded but where people who learn from failures are encouraged by donors to keep working at it.

Schmidt's full article is here.

Pepsi's Refreshing Campaign

Our theory of social change is that new ideas are born from optimism, a curious mind and a creative spirit. We can make a difference by equipping people with the means to bring their ideas to life.

If you think the above comes from a leading foundation, that would be a good guess.  But it would be wrong. It comes from a 100-yr. old company: Pepsi.  They have just launched an innovative and maybe even pathbreaking initiative called Refresh Everything. As described in a post by Bonin Bough on Beth Kanter's blog," Pepsi is giving away an unprecedented $20 million in grants and inviting the public to rank the best ideas in an open vote."  


Read the whole thing here.

(We at GlobalGiving are happy to be assisting Pepsi with this program.)

iPads or iAid?

Within seconds of the unveiling of the iPad by Steve Jobs, Twitter lit up with women complaining and/or joking that the name immediately made them think of a certain feminine hygiene product. #iTampon was the #1 trending topic on Twitter yesterday and remains so this morning.

That is from a half tongue-in-cheek post by Bill Easterly at Aid Watch.  The comments section has a lot of back and forth about the state of feminism in the US, but one comment in particular caught my eye.  One person griped: "I thought this was an aid blog," and went on to say that the post was more suited for a tabloid.

Well, it turns out that this issue does relate to aid.  The likelihood that girls in developing countries will stay in school once they hit puberty is directly affected by their access to sanitary pads.  If they don't have them (along with private bathroom facilities at school), they tend to drop out.

The silver lining of the controversy is that it raised consciousness about this problem on Twitter and Facebook. As a result of tweets and Facebook posts, 28 donors gave $1,300 to that provides affordable sanitary pads for girls in Uganda.  A total of over 1,200 donors has now given $56,000 to this project.  Keep in mind that $30 is enough to help keep a girl in school for an entire year!

How to improve health and save lots of money

Here is a great TED talk by Dan Buettner describing 9 diet and lifestyle habits associated with much better health and longer lives.

Getting Americans to adopt these habits could lead to dramatically lower health costs. And fortunately these habits are not expensive - to the contrary, certain things like increasing walking rather than driving would directly save people money.

Making these changes would help stem run-away health care costs for society as a whole, which is a concern for nearly everyone - regardless of where they are on the political spectrum. So what's the problem? The problem is that changing behavior is tough - even when people know it is in their own interest.

Nonetheless, even modest investments in getting the word out could have big returns. So pass the word.

Happiness = Giving/Getting

Dunn and her colleagues found that the higher the percentage of their windfall workers spent on others, the happier they were, an effect that still existed when statistically controlling for relevant variables such prior happiness, income amount, and bonus size. What’s more, the data revealed that how the employees spent their money was a better predictor of their happiness than the size of the bonus itself.

For more, see this article by Noah Goldstein reporting the work by Dunn, Aknin, and Norton over on Bob Cialdini's website.

A blast from the (GlobalGiving) past

In late 1999 when Mari and I began to think about the concept of what is now GlobalGiving, we jotted down this "manifesto," a copy of which I found in my new year's cleaning.  GlobalGiving has come a long way since then (and has a long way to go), and some of what we wrote ten years ago seems naive.  But I am also struck by how many of the main principles remain the same.

[Click on image for larger view.]

Innovation v. Novelty

Innovation is about finding new ways of meeting consumers’ needs, including ones they did not know they had. Sometimes it comes from a laboratory scientist but, more often, the innovation that changes the business landscape comes from the imagination of a Henry Ford or Walt Disney, Steve Jobs or Sir Stelios Haji-Ioannou.

That is from John Kay, writing in the FT, who also notes:

[U]nderstanding the needs of customers is what distinguishes innovation from novelty. Quirky inventors have a place in the affections of everyone who enjoyed physics or chemistry at school. But...[p]ioneers of innovation are routinely pushed aside by competitors whose skills are in the marketplace rather than the laboratory.

Thanks to Keith Hansen for the tip.

When Small Changes Bring Big Results

Earlier I wrote about how a small change in the external environment can turn a modestly successful product into a runaway success.  The example was Evernote, a software program that allows people to store and synchronize information across their various devices.  Evernote's user base grew respectably after launch, but nothing special.  In June 2008, they had about 100,000 users.

And then the iPhone App Store launched, which turned out to the be the perfect distribution and application platform for the software.  By November 2008 they had 500,000 users.  And recently the NYT reported Evernote had surpassed 2 million users - fully half of which are iPhone users.

As usual, there may be other confounding factors that explain the growth, so this is not conclusive.  But it does reinforce the importance of persistence in entrepreneurship and the introduction of new products.

President Obama: How to Spend that Nobel Prize

Dear President Obama,  

We would like to congratulate you on your distinguished honor as the 2009 Nobel Peace Prize Laureate. We respect and admire your efforts to strengthen international diplomacy and cooperation between peoples around the world, particularly when it comes to your advocacy for achieving change from the bottom up.  

It is in this spirit that we write you to offer a recommendation for how to use your prize - one that will spark further grassroots investment in bringing peace, economic development and opportunity to individuals across the U.S. and around the world. We believe an impactful use of the $1.4 million reward would be to offer the funds as a financial incentive for others, a matching donation that would engage Americans and individuals around the world in the spirit of generosity.  

By significantly multiplying the impact of your gift, you would have the opportunity to share with the world your true commitment to bringing about transformational change from the bottom up. And what better way to use this prize than to leverage it to raise multiple millions more towards the pursuit of peace?  

Just as your Presidential campaign inspired millions of Americans to donate small amounts to bring about the change they believed in, your Nobel Peace Prize matching campaign could inspire a groundswell of global generosity to support the amazing work being done by non-profit and non-governmental organizations all over the world. 

Especially in times of economic uncertainty, when organizations working to build stronger communities are struggling, this signal of support would be a powerful call-to-action for not only the American people, but for the entire international community.  

We founded GlobalGiving.org nearly eight years ago to connect individuals to the causes they care about most here in the U.S. and around the world. As former World Bank executives we saw the impact individuals empowered with the proper resources and a commitment to bringing about change can have in their communities and beyond.  

In the years since our founding, we have been consistently inspired and awed by the altruism, spirit and dedication our donors, project leaders and supporters have in their pursuit of making the world a better place. Once armed with the knowledge that for as little as $10 you can help educate a girl in Afghanistan, offer clean drinking water to a school in Kenya, provide solar energy to low-income families right here in the U.S., or support one of the thousands of other earth changing ideas just waiting to be funded - there is no end to the energy an individual can muster in pursuit of change.  

We urge you to consider taking the honor you have received and using it as a launching pad to further your advocacy for service, generosity and commitment to others by creating a matching campaign through GlobalGiving.org. This platform will allow individuals to support the causes they care about most, whether it's microloans to help a woman start a business in Ghana, a school uniform to help educate an orphan in India, or training for a child with Autism right here in Washington, D.C.  

Your offer of a matching gift will challenge the world to give back in this time of great need. We would welcome the opportunity to work with you and your Administration in the future to build peace and opportunity from the ground up.  

Sincerely,  

Dennis Whittle co-founder and CEO of GlobalGiving.org and Mari Kuraishi, co-founder and President of GlobalGiving.org

There is way more luck involved...

But something else is going on here, says Princeton University psychologist Daniel Kahneman, who won the Nobel prize in economics in 2002. "We believe that people with certain characteristics will produce certain consequences," he says. "But we're wrong, because there is way, way more luck involved in determining success than we're prone to think."

That is from a nice article in the WSJ by Jason Zweig, who describes how we tend to attribute success and failure to leaders rather than other factors.  Boards and stockholders often treat newly recruited CEOs as saviors:

"...a company will be much more inclined to replace the CEO after a run of bad losses—and to bring him in from a firm that has been on a hot streak. That leads to an illusion: "You change the CEO," Dr. Kahneman says, "then performance reverts to the mean, and you attribute the improvement to the new guy."The problem, as this article notes, is that the effect of bringing in an excellent new CEO on the performance of a business is not much better than the "flip of a coin."

The same illusion of causality holds true for many things we observe in life.  The role of luck and external factors on our lives and on the effect of programs and policies create a paradox for us that is similar to others I have discussed in this blog.  Namely, in order to stay motivated to do good (or to achieve any goal), we must tell ourselves that our efforts are connected to the outcome.  Realizing  the effect of luck on the outcome is a hard thing psychologically: why should we keep trying so hard every day?  Yet we do.