Is DFAT open to 'fail early, fail often' with innovationXchange?

By David Donaldson

March 25, 2015

Aid experts who spoke to The Mandarin have cautiously welcomed the announcement of the new innovationXchange at the Department of Foreign Affairs and Trade, amid scepticism over whether the department will succeed in shaking off its risk-averse approach.

Foreign Minister Julie Bishop launched innovationXchange on Monday, calling it “an Australian Government initiative to revolutionise the delivery and effectiveness of Australia’s aid program.” The $140 million project, she said, “will mainstream innovation throughout the Department of Foreign Affairs and Trade.”

Opening with praise for the disruptive practices of Apple, Google and Facebook, Bishop stated:

“Innovation is the natural territory of entrepreneurs, businesses, private sector operators, NGOs, academic institutions — where necessity pushes, where risk is a given and encouraged, where creativity is embedded in the way people think, and the way work is conducted and projects are run. Private sector organisations innovate to seek the most efficient means of production, to remain competitive and to provide return for investors.

“…DFAT is one of the oldest portfolios, governed by perhaps the most deeply traditional protocols, and hierarchies — if I could put it that way secretary. So I’m asking all of our DFAT personnel to become innovators and I can assure you I won’t be cutting anybody’s ears off if they come up with some great ideas.

“…I aim to put innovation at the heart of all we do — my challenge for the Department of Foreign Affairs and Trade is: come up with the biggest, best and brightest new ideas about how we do business across the board — how we operate in all our spheres of influence.”

When questioned at Senate Estimates in February about the role of risk and failure within the then-unlaunched innovation hub, department secretary Peter Varghese stated:

“On this question of failure, I think it does shift us into some relatively uncharted territory. It is not common for a public sector organisation to engage in this sort of calculation. This is closer to a venture capital framework than it is to what we normally do. We will have to do quite a lot of thinking about how we handle, explain and are accountable for projects that do not succeed … you cannot innovate without failure. It is in the nature of the process of innovation.”

Beyond high-level signalling, it’s unclear how the initiative will help make the leap to a Silicon Valley-style culture of risk-taking, given the structural pressure on the public service to be risk-averse — and in a department that has seen severe cuts under the current government and is sometimes considered to have no strong constituency.

Terence Wood, a research fellow at the Australian National University’s Development Policy Centre, is unsure whether the touted “Silicon Valley” approach can really flourish in such a risk-averse culture:

“It seems like an interesting initiative but it is hard to offer unqualified support at this point in time,” he told The Mandarin. “I think it may be the case that it is difficult, in a risk-averse political climate, for a government-run initiative to allow too much failure — and, importantly, to discuss it publicly in a way that allows for learning.”

The Lowy Institute’s Alex Oliver told The Mandarin she thinks it is “a fairly big change in direction from the department”.

The Ideas Challenge, an internal competition for staff to present new ideas, “looks to be a positive step to engage the smart people who make up DFAT’s staff — to motivate them and stimulate a more positive culture as well as creating an innovation hub within the organisation,” Oliver says. “innovationXchange appears to reflect initiatives from other ministries of foreign affairs; the US State Department, for example, has similar mechanisms for drawing on, and rewarding, staff for contributing new ideas. The UK has a Science and Innovation Network run out of UK embassies and consulates which seeks to build partnerships between UK innovators (both public and private) and those in other countries.”

The recent Capability Review of the department, conducted by the Australian Public Service Commission and released in late 2013, spoke of “insularity” within the department, an “innate caution in the department’s culture” and the need to broaden exchanges with other agencies, departments and stakeholders.

“The integration of the aid function, which has been seen as more agile and less risk-averse than its foreign affairs parent, may well have made a positive contribution to this ‘innovation deficit’,” Oliver says.

Julie Bishop’s office did not respond to questions about how risk and failure would be managed by the time of publishing.

Private sector engagement

The foreign minister has also announced the first three projects for the hub, including SEED Pacific, which “will harness the collective power of business and society to solve development challenges in the Pacific”, according to the foreign minister; the Ideas Challenge; and the Better Data for Health partnership with Bloomberg Philanthropies, the charity organisation for the former New York mayor Michael Bloomberg, which alone will see a budget of $130 million over four years.

Bloomberg will contribute AUD$110 million, with the Australian government contributing $20 million.

Alex Oliver thinks the health partnerships program looks “promising”:

“Our health services exports are obviously a strong sector of our economy, and exporting expertise in health services would seem to be smart ‘economic diplomacy’, as well as potentially very useful to our neighbours in the developing world. Stimulating innovation here will be good for Australia, and helping developing countries in the region through innovative aid projects should be good for their own economies,” she says.

The private sector partnership approach is not new in the world of aid, and there are examples of it working well, says Terence Wood. “However, it can be hard to align incentives to make this the case, and the devil is often in the details.

“As for the health records initiative: it is hard to say to much without knowing more details. Better data are great to have, but they don’t necessarily translate into better health outcomes. They might not, for example, if the key constraint is health infrastructure, not records,” he added.

“If the focus of the Bloomberg partnership is mainly on harmonising existing data collection systems and identifying gaps, then that could be of significant benefit — if not it could potentially duplicate and introduce further complications. Health information and vital registration systems only really work when they are integrated and comprehensive.”

Although he stresses that he does not necessarily think the initiative is a bad one, Wood echoes others’ concerns when he states: “Aid work is complicated … it is often much easier to talk of innovation than it is to deliver results. Hopefully the innovationXchange delivers but we’ll see.”

Another aid expert, who did not wish to be named, said that it was difficult to judge how useful innovationXchange would be because relatively little information about the program had been made publicly available.

“Of course improving statistics is a good idea,” they said, “but a lot of the problems are very practical problems. We’re swamped with good ideas in foreign aid. The problem is that the implementation of those ideas is often pretty difficult.”

Inevitably, some are sceptical of what they see as the encroachment of government “buzzwords”. Foreign aid involves a large amount of in-person delivery of services in low-tech situations, so improving IT systems in developing countries to fix public records would be pointless if there were no vehicles to collect the data, for example.

The expert added that similar initiatives had appeared and vanished in the past with relatively little impact. In 2001 then-foreign minister Alexander Downer announced the Virtual Colombo Plan, a $1.5 billion aid partnership between Australia and the World Bank, which aimed to bridge the digital divide in Asia. But, says the source, “after the big launch it more or less died.”

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