Cuba: a hotbed of "Reverse Innovation"

The Wharton School’s article on reverse innovation points out a growing trend of innovation from the developing world that promises to be the next big source for new ideas and solutions to challenging development problems. The time I have spent in Cuba lends credence to this analysis.

Cuba is home to some of the world’s most creative innovators. Decades of scarcity and hardship have produced a society that innovates as a matter of necessity. Cubans innovate to meet quotidian needs, circumvent government restrictions on information, and in some cases leave the island for good.

The combination of an ineffective government and a 50-year-old U.S. embargo has made manufactured goods we take for granted in the U.S. difficult to come by, so many Cubans have adapted outdated technologies to meet their everyday needs. For example, during the time of close USSR-Cuba ties, hundreds of Soviet washing machines were imported into Cuba. Most Cubans, however, wash and dry their clothes by hand, so most of the machines were disassembled and repurposed to power everything from key copiers to coconut shredders.

Another common innovation that becomes immediately apparent when looking across the Havana skyline is the use of metal lunch trays from elementary and secondary schools as television antennas.

Transportation is another key area of innovation in Cuba, even on the public side. In many rural areas, and even in Havana, public buses have been assembled from old semi-truck parts. 

It is also common to see bicycles that have been turned into motorcycles by welding on weed whacker or lawnmower motors.

Innovation has also helped cut through the information barrier put in place by the government and by the U.S. embargo. One example of this is the paquete, a system of hard drives and USB drives with web pages, videos, apps, and software downloaded in Miami and distributed throughout Cuba via an informal (and technically illegal) network of users.

Among the more well-known products of Cuban innovation are the homemade boats many Cuban migrants assemble to traverse the Florida Straits. This particular example, though evocative of the somewhat darker driving force behind such innovations, gets at the very core of reverse innovation – people in developing countries discovering new ways to use what they have to meet their unique needs.

Perhaps now that the U.S. and Cuba have normalize relations and eased restrictions on financial transactions, these innovators can be connected with the capital they need to produce new ideas and take them to scale. If that does happen, I think it is reasonable to expect Cuba to become one of the leading innovators of this hemisphere.  

Photo sources:
Photos 1-4: Travis Daub and Jenny Marder, "Photo essay: The bizarre, brilliant and useful inventions of Cuban DIY engineers," PBS, January 7, 2015.
Photo 5: Sarah Kessler, "In Cuba, An Underground Network Armed with USB Drives Does the Work of Google and Youtube," FastCoexist.
Photo 6: Andrew Ho, "Floating Cubans."

Creating Policies and Ecosystems for Innovation

Creating Policies and Ecosystems for Innovation

In a 2008 article, published in the Stanford Social Innovation Review, titled, Innovating the White House, author Michele Jolin outlines policy goals for a presidential candidate to adopt policies that promote social innovation. Jolin recommends four policy goals, only one of which suggests a non-investment or funding-related recommendation. This particular policy goal addresses the removal of taxes and regulatory barriers that prevent innovation by entrepreneurs. There is an increasing amount of entrepreneurs using for-profit investments to promote social impact, thus the line that differentiates traditional for-profit behavior from non-profit behavior is more nuanced, but current regulations and respective taxes fail to represent these nuanced entrepreneurial shifts in behavior.

Jolin highlights the opportunity the White House has in innovating its behavior to promote social innovation among entrepreneurs, and suggests the establishment of the Office of Social Innovation and Impact as the primary mechanism to enact these socially innovative policy goals into the future. Conceptually, this mechanism for social innovation provides a landscape, ecosystem, or framework for social impact.

Established in 2009, President Obama’s Office of Social Innovation and Civic Participation (SICP) is a manifestation of much of Jolin’s recommendations. The SICP currently operates as a mechanism to create an ecosystem that facilitates social innovation and advances the public interest. Obama’s SICP strategy re-conceptualizes how the aforementioned mechanism should function; instead of promoting innovative programs “at the top,” the SICP promotes “bottom-up” social innovation by equipping “cities and towns across the country” with the necessary funds and resources “[to come] together to solve tough problems.” A bottom-up strategy effectively democratizes the power of “the bottom” to socially innovate “to the top.”

According to a “Harvard Family Research Project” that evaluated the SICP practices, the SICP provides various non-monetary resources to promote social innovation: “develop[ment] partnerships between the government and nonprofits, businesses, and philanthropists” and support[ing] the use of new media tools to encourage greater civic participation.” Aside from providing monetary resources and incentives, support through partnerships and shifting cultural norms whose outcomes are socially impactful, seems to me like a more sustainable and innovative strategy that effectively creates an ecosystem for innovation.

I tend to support the notion that effective social change is helped by monetary incentives, but sustained by fundamental shifts in value and behavior—most historical political, cultural, and social movements follow this logic. The strategies of the SICP manifest this logic, however my research cannot speak to SICP’s societal impact.

Do you think this logic and strategy is effective for social innovation and impact?

Source: http://www.ssireview.org/articles/entry/innovating_the_white_house

Source: https://www.whitehouse.gov/administration/eop/sicp/initiatives/community-solutions

Source: http://www.hfrp.org/evaluation/the-evaluation-exchange/issue-archive/current-issue-scaling-impact/white-house-office-of-social-innovation-and-civic-participation

Incentivizing Innovation

            Prizes with an Eye Toward the Future is a New York Times article that details the benefits of prizes in innovation is insightful and it touches upon ideas discussed for social innovation. The idea behind prize money is that it brings some extrinsic motivation to smart people who can solve a problem others can’t. Without the prize these people may have never heard or even cared about the problem. The example given in the article discusses the prize awarded in 1714 to a British person who could figure out how to find the longitude of a boat at any given time. This innovation definitely has its societal benefits and it opens up the discussion for the role prizes and other incentives have in the field of social innovation and entrepreneurship.

            The key behind incentivizing people is giving them what they want. There can be incentives that are very ineffective when applied to the field of social entrepreneurship with one such incentive being patents. Patents discourage meaningful innovation because they allow the patent holder to control the market for their good for twenty years. Patents promote innovation in fields that can lead to large capital gains in those years. This dissuades entrepreneurs from researching difficult fields such as rare diseases. Prize money also has its shortcomings. A one-time disbursement of funds dissuades further innovation from happening.

            Perhaps the best motivator for social innovators and entrepreneurs is profit. Building a business around an idea is one of the best ways to see it succeed because the incentive for profit is tied into how effective the product is. A product that properly addresses the problems of the community it’s supposed to serve will find success. Properly addressing the problems of the community involves having an effective product, a fair price point, and the ability to scale operations. KickStart is a good example of companies that can provide socially innovative products with a business approach that benefits the consumer and incentivizes the producer through profit. The classical approach to social innovation often involves NGO’s and it shies away from a classical business model. What KickStart has demonstrated is that the classical business model can work well within the world of social innovation without sacrificing the potential impact of the product. There is already a move toward facilitating the creation of for-profit businesses with an emphasis on societal well-being through B-corps. Though B-corps is a move in the right direction, governments should not stop there to facilitate innovation. The for-profit model has been demonstrated to be one of the best motivators for social entrepreneurs. It would be beneficial to facilitate the creation of these businesses that want to create social change instead of pursuing the disbursement of one-time prizes that do little to insure long-term impact.

Macro-level Solutions

When you hear the term “social innovation” you may immediately think of a social enterprise or a single organization working towards creating social impact. However, this week’s readings have shown the importance of thinking about social innovation as a macro-level approach, looking at governments as active actors and facilitators rather than being unable to meet demand. 

Bolsa Familia, a program that grants Brazil’s poor families with cash transfers,  is an example of governments actively pursuing policies through a socially innovative lens. The program has been deemed successful, covering about 50 million Brazilians in 2011. Mothers receive cash funds if they meet certain requirements such as making sure their children attend school, attending certain classes, and going in for routinely checkups. Looking at the impact of the program, the idea seems like a no-brainer: address the multiple facets of poverty through creating incentives and a safety net for your citizens. The thought-process behind the program, which originated from Mexico, is simple: rejecting the idea that low-income communities simply chose not to send their children to school or not receive healthcare services, but actually provide the safety net for them to do so. The Brazilian government took a microeconomic approach at a macroeconomic level, creating large impact throughout the country.

In class, we often discuss the challenges a social venture might face such as lack of funding, the inability to reach its target population, or its non-sustainable business model. In theory, countries’ governments would have better access to funding, its population, and other important impact factors. It is important to recognize that is not the case for various nations, which is why a market for grass-root projects exists. Certain policies and resources need to be set in place and available in order for governments to foster innovation and perhaps participate in it themselves.  The right environment for social innovation to thrive depends on a magnitude of things. For example, Paul Carttar’s article discusses American individualist culture, which he reasons is why the government is not seen as a facilitator of social innovation. However, he also points out that even the most well-known organizations for social innovation, such as the Bill and Melinda Gates Foundation,  “easily the largest private foundation in the world, awarded a total of ‘only’ $3.2 billion last year, less than 20% of which was focused on the US.” This shows that governments continue to play a large role in this area. Government investment in research and social innovation initiatives is a way of allocating resources to more efficient uses and could prove to be beneficial to its citizens. Macro-level solutions such as Bolsa familia should be further pursued in order to provide necessary services to the world's population.

Where does Government Fit in Social Innovation?

This week’s readings relate to identifying critical roles of government in social innovations. It became evident through a series of articles that government does have a critical role in the development, implementation and impact of social innovation initiatives. The role of government can vary from financial capital, human capital, “funder-in-chief”, or simply creating a space for social innovation to flourish.

In the article “To Beat Back Poverty, Pay the Poor,” the author identified government as the principle provider for the social innovation of conditional cash transfer grants. The of concept conditional cash transfer programs are not new to public policy and poverty alleviation, but the ways in which they have been used in recent years has shown innovation.  It shows how the concept of human centered design is not limited only to products and private firms. It shows how government’s and its agencies can act as social innovators in itself. The Program in Brazil has shown how Human Centered Designed (HCD) created through a government program can change the social impact of entire demographic in a country. The program fits the context of HCD perfectly. The program generated solutions to problems and created opportunities, through the act of creating a new outcome, where the program is driven by the needs, desires, and context for whom it was designed[1]. Poverty in Brazil has fell from 22 percent to 7 percent between 2003-2009[2]. The people in low-income areas need money, that why they are deemed to be in a low-income areas. The programs provide money to people with the condition that they invest in themselves. It’s the same concept that most low, middle, and high incomes families use. They invest in time, money, space, and everything else in themselves and their children. The only exception is that low-income families can do it even more now. The program looks at the needs and desires of people in the position in which they are placed in society, and gives them a new solution to their problem.

This case is a prime example of what social innovation is about. Its about the ability of people, agencies, corporations or entitles to address problems that have been gorging society by creating new ideas that impact societies problems, which impact everyone. It is false to think that a corporation or any entity can exist without society or even further peaceful society.  I challenge those that oppose the idea of human centered ideology to think of a company or government that can operate with no citizens or customers. It is apparent that social innovation needs a space in society where it can flourish and grow as a field and practice. Government can play a major role in creating the space and capacity for social innovation, especially in today’s time. So, the question for the reader is where does government and social innovation go from here?

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[1] Rosenberg, Tina. To beat back Poverty, Pay the Poor. 2011. 2015 <opinionator.blogs.nytimes.com/2011/01/03>.

[2] Zack, Tim. Solutions and Enablers to Basic Human Needs. Pittsburgh, 2015.

Funder-in-Chief and a Culture of Distrust

Income inequality has increased in over the past 20 years around the world. According to Oxfam, of all G-20 countries, only Korea, Mexico, Brazil and Argentina, proved to reduce the widening gap [1].

In our assigned reading, To Beat Back Poverty Pay the Poor, Brazil and Mexico can attribute decreased income gaps and poverty alleviation to a single conditional cash transfer program. Conditional cash transfer programs, like Brazil's Bolsa Familia and Mexico's Opportunidades, "give regular payments to poor families in the form of cash or electronic transfers into their bank accounts, if they meet certain requirements"[2].

Besides closing income gaps, these programs have had significant education and public health benefits. Opportunidades covers 5.6m Mexican's and has led to a 42% increase in rural middle-school education and an 85% increase in rural high-school education. Likewise, in Brazil, Bolsa Familia covers 50m Brazilian's and has led to an increase in rural school attendance, especially by older girls, and increased child weight, use of vaccinations, and use of pre-natal care [2].

What amazes me and would probably amaze other Americans, especially those working in politics or welfare, is the effectiveness of the programs and their lack of serious government regulation. For example, the Bolsa Familia gives extreme poverty stricken families $40 per month stipulation free. Meanwhile, the U.S. welfare system strictly regulates where and how welfare can be used through health care vouchers, electronic bank cards for food, subsidized rent, tax discounts, job training and substance abuse programs. These regulations are then even further regulated, since not all institutions accept these vouchers as proper means of payment, and direct cash is rarely disseminated through the U.S. welfare system [3].

The social innovation course has had one main call to action: in the capitalist system, to promote equality, we must dramatically increase the social impact for each dollar we invest in social programs. In my opinion, the large size and lack of regulation characterized in Brazil and Mexico's cash transfer programs has taken a giant step towards that direction.

However, many American elite and middle-class residents favor regulated systems versus direct cash, since they believe welfare will bring laziness and do not trust the poor to use tax money responsibly. Interestingly, despite the significant positive outcomes of the cash transfer programs, those from Mexico and Brazil who commented on the article, exclaimed elite and middle-class residents also believe these transfers will result in laziness.

Therefore, for such success to exist in the U.S., the elite, middle-class, and policy makers need to begin trusting its non-profit organizations and poor to make the best decisions for themselves. They must also remember, that under the world's capitalist economic system, with adequate education, that result is inevitable.

If we keep this culture of distrust, how will we have a government and President that acts as "funder-in-chief" instead of "regulator-in-chief," a change most of the articles advocate for.  Furthermore, if statistics and distinguished think-tanks advocate for greater government trust and with Brazil and Mexico's as case studies for success, what else is necessary to prompt a national cultural shift that actually trusts poor families and the non-profit organizations that support them?