Incubators are in. They are popping up everywhere; Google the word and see. Most of your hits will have nothing to do with babies born too soon. There are even national associations of incubators. In these economic times an incubator is a thing that helps starting entrepreneurs further develop and scale up their idea. For a good definition, see here. Incubators started in the strictly for-profit world. With the rise of social entrepreneurship and the idea of impact investing, they have also moved into that area. I have been asking myself for the past year how we can benefit from this development and build justice incubators connected to justice impact investment. I took a few further steps in understanding how to do this at the 2014 Impact Forum – held this year under the theme From Niche to Market. The Impact Forum is convened by the inspiring Durreen Shahnaz, founder of Shujog and the first stock exchange for social enterprise, the Asia IIX.
Over the past three years HiiL has mapped more than 150 innovators in the justice sector from all over the world. Their incredible work is showcased and categorized on www.innovatingjustice.com. Through a questionnaire and interviews with these justice innovators we have been able to formulate best and worst practices: things that make justice innovations more likely to succeed and things that make it more difficult. We have also been able to get a better sense of what makes a good justice innovation. The handbook on justice innovation we wrote using these invaluable experiences shows that innovation in the justice sector has a number of particular aspects. I’ll name just a few. It’s an environment full of rule-thinkers, so there will always quickly somebody who brings up a rule or a principle ‘against’ an innovation. It’s an environment where the definition of a wildly multi-disciplinary team is a team with lawyers that each have a different specialty. And: unless you run a law firm, the justice world is not a world in which people think a lot about value propositions and revenue models. Yet all successful (justice) innovators tell us that successful innovations need free thinking, multi-disciplinary teams, and an integration of business model thinking from the start.
Around the innovators we have built a community of 11.000 justice innovation enthusiasts. We have found ways to connect the innovators and those in need of innovations through our website and the annual Innovating Justice Forum (the fifth edition is coming on 25/26 November). We have even worked on strengthening particular initiatives.
We are not alone. The World Justice Project Opportunity Fund is another amazing catalogue of justice innovations. What makes this initiative more special is that it is linked to en Opportunity Fund, which gives innovators a small push to further develop their innovation. Namati brings together organisations and experiences in the field of legal empowerment. ReinventLaw brings together and builds innovations, amongst other things through engaging and energizing events in different cities in the world. The Global Forum on Law, Justice and Development is a forum provided for by the World Bank that brings together best practices in the area of rule of law development.
So I think something is afoot. Innovation is entering the justice world. Innovators and those in need of innovations are being brought together. Experiences are being shared in different ways. That is good. But we don’t really have incubators yet, coupled with an investment ecosystem. If our now almost four years of scouting innovations have taught me one thing, it would be that there is a huge untapped justice innovation potential in the world. That untapped potential often does not even know it is innovating. It sometimes does not even realize it is working on justice (for example, the truckers App for Africa, through which truckers are used to crowd source information on supply chains and their compliance with human rights and environmental standards. So there is really something at stake here.
An incubator fits in an ecosystem that firstly attracts innovative ideas. As shown above, we seem to have an increasing number of good examples where this is happening. Secondly, that ecosystem should have ways to assess and qualify the best ideas. That is more challenging. What works and what does not? How can you pinpoint the stronger and less strong aspects of an innovation? HiiL has developed some criteria based on its research into innovations. They are also used in selecting the annual Innovating Justice Award winners. They focus on the uniqueness of the innovation, considering the local context (what is new, what is different and what is the comparative advantage compared to services that are already available). They also look at the scalability and sustainability of the innovation. As part of its work on impact investment, Shujog has pioneered ‘harder’ and more numerical criteria. IRIS has developed a catalogue “of generally-accepted performance metrics that leading impact investors use to measure social, environmental, and financial success, evaluate deals, and grow the credibility of the impact investing industry. So, here too, we are moving in the right direction in terms of knowledge. I do however not see these that knowledge being widely applied by institutions that spend money on rule of law. Nor do I see a proliferation of efforts being put into further developing it. That must change. That brings us to the next point: such an ecosystem, with its ability to assess innovations, should have a way to select ‘the best’. Somehow, and based on some kind of benchmark (or benchmarks), the best should drift upwards and, as they do, be connected to better access to expertise, human capital, and funding. Upstream, when the stream is still small, HiiL and the World Justice Project are examples of organisations that have developed assessment criteria. Shujog, IRIS and GIIN have provided us with good benchmarks – already used in the world of impact investment – at the downstream end (when the river gets really wide and bigger investors come into play).
Ideally, the different stages a justice innovation is in terms of size, impact, business plan and overall quality should also be linked to different sources of funding. Good incubators are vehicles with which to do this. Each part of the development process has different types of funding, which are all essential. Grants to develop risky and wild ideas with potential (for which selection criteria are needed). Interest free loans for initiatives that have passed that stage and that need to be taken to a next level (for which assessment criteria are needed). And finally, impact investors who can invest millions (one such investor told be last year that doing anything under 3 million euros was too expensive) but who want a return on that investment (for which assessment criteria are needed.
The impact investment world is showing us what is possible if you get such an ecosystem going, with incubators that help good ideas navigate upwards. Both a Davos this year and at the 2014 Impact Forum I saw that the health and environmental sectors are seeing tremendous positive impact of such a way of working. It’s time to apply that to justice.