The seven building blocks of a successful innovation agency

Rotavirus – a highly contagious genus of viruses that cause diarrhea – kills more than 500 infants a day. In 2016, India introduced a rotavirus vaccine, Rotavac, to its national immunization program. An Indian firm, Bharat Biotech, had developed the vaccine to curb infant mortality from diarrhea. The vaccine could prevent 27,000 deaths and 300,000 hospitalizations each year in India alone.

Developing new vaccines like Rotavac is highly challenging considering the substantial financial and scientific investments to bring it to full scale. Only one in 10,000 candidate vaccines makes it to human clinical trials. It can take an average of 10 years to progress from the pre-clinical stage to market development.

This is why, public investment and government support are indispensable for research and development. In India, the Biotechnology Industry Research Assistance Council (BIRAC) played a critical role in supporting the development of Rotavac. BIRAC’s mission is to improve the research and innovation capabilities of Indian biotech companies. Innovation agencies like BIRAC act as enablers and facilitators for budding start-ups and innovative firms by providing support to catalyze private sector innovation.

Over the past 15 years, innovation agencies of diverse types and features have proliferated around the world.  They have been tasked with implementing and coordinating policies and programs to improve economic competitiveness, boost firms’ productivity, and maintain industrial leadership.

This new genre of institutions varies in purpose, size, structure, and policy outcomes, reflecting each country’s unique context and needs. Some are government led and others are designed as public-private partnerships. Many offer financial grants and contribute to infrastructure investments while others promote and facilitate networking. Unlike BIRAC, which is sector-focused, innovative agencies can also dedicate their agnostic support to enterprises and entrepreneurs. Budget and staff are also another defining feature.  At one end of the spectrum, Poland’s National Center for Research and Development has 360 staff and an annual budget over US$1 billion. At the other end, the Rwanda Development Board (RDB) Information and Communication Technology Unit has 20 staff and a much smaller budget to support its mandate.

Our knowledge and operational work at the Finance, Competitiveness and Innovation Global Practice over the past few years has given us some preliminary insights on the metrics of success, the tools that allow some of these agencies to perform better than others and the mechanisms that support the implementation and coordination of innovation policies.  

A new report by the World Bank Group, Innovation Agencies: Cases from Developing Economies, offers an evidence-based perspective on the origin and evolution, organizational structure, policy interventions, delivery and sustainability challenges of 13 innovation agencies in developing countries. The analysis conducted by the team reveals that effective innovation agencies stand on seven building blocks, as highlighted below.

Figure 1. The seven building blocks of performing innovation agencies

1. A clear mission with flexibility to accommodate an emerging economy’s changing needs and priorities. The mission of Sri Lanka’s Information Communication Technology Agency (ICTA), for example, is to provide policy leadership and implement interventions to develop the country’s ICT industry. This entailed leveraging the emerging capabilities of the sector to digitize government services.
2. Capable staff and strong management practices are key to building trust among prospective beneficiaries and improve an agency’s effectiveness in working with entrepreneurs, firms, investors, partners, and donors. Serbia’s Innovation Fund worked closely with external experts, advisors, and skilled diaspora members to develop staff technical and managerial capabilities. South Africa’s Technology Innovation Agency (TIA) relies on attracting private sector talent to complement the capacity of its civil service.
3. Effective governance and management structures help agency staff make decisions without political interference. Turkey’s Technology Development Foundation (TTGV), a not-for-profit PPP, received some initial funds from the government but now relies on income from its services and investments. TTGV’s board includes both public and private sector members.
4. Diagnostic-based interventions contribute to the design of a diverse range of instruments that can respond to the evolving needs of an emerging economy. Poland’s NCBR, for instance, adjusted its innovation programs based on diagnostics to shift the focus of interventions toward research and technology commercialization.
5. Robust monitoring and evaluation (M&E) systems are essential to inform decisions to continue, modify or sunset programs based on their progress and impact. Armenia’s Enterprise Incubator Foundation (EIF), Sri Lanka’s ICTA, Malaysia’s Technology Development Corporation (MTDC), and others have established dedicated M&E units. Other agencies use independent consultants or external organizations.
6. Diversified funding helps ensure the sustainability of financing. Without sustainable funding, innovation agencies face operational difficulties. Colombia’s iNNpulsa, for example, relies primarily on government funding, which fluctuated from US$21.4 million in 2013 to US$1.4 million in 2016, creating substantial operational and programmatic challenges.
7. Strategic partnerships and networks enable the connection between innovation agencies, knowledge, financial resources and other specialized capabilities. Lebanon’s Kafalat, for instance, owes its existence to a unique partnership with local financial institutions and its programs supported by several commercial banks, and international institutions such as the World Bank and the European Commission.

In pursuing their pathways to success, the experience of innovation agencies will vary. That is true of the 13 agencies and the evidence included in this report. It is also true of the many other agencies that are being developed across regions today. That said, it is also evident, that for an innovation agency to sustain its performance and contribution to society and the economy over time, it needs to realize these building blocks in one way or the other.

For more information about what the world’s innovation agencies have in common, see the report: Innovation Agencies: Cases from Developing Economies.