Innovation systems of the future: What sort of entrepreneurs do we need?

Abstract

Agricultural innovation invariably involves a whole range of partnerships, alliances and network-like arrangements that connect together knowledge users, knowledge producers and others involved in enabling innovation in the market, policy and civil society arenas. There is now a very large conceptual and empirical literature that reveals agricultural innovation not as process of invention driven by research, but as a process of making novel use of ideas (old and new) with the specific intention of adding social, economic and/or environmental value (Juma, 2010).

Full text

77
Chapter 4. Innovation systems of the future: what
sort of entrepreneurs do we need?
Andy Hall and Kumuda Dorai
4.1 Introduction
Agricultural innovation invariably involves a whole range of partnerships, alliances and
network-like arrangements that connect together knowledge users, knowledge producers and
others involved in enabling innovation in the market, policy and civil society arenas. ere
is now a very large conceptual and empirical literature that reveals agricultural innovation
not as process of invention driven by research, but as a process of making novel use of ideas
(old and new) with the specific intention of adding social, economic and/or environmental
value (Juma, 2010).
It is only in the last 20 years or so that policy frameworks have gradually come to acknowledge
what has been written about in the literature for long: agricultural innovation emerges out of
this interaction among a range of actors. is is reflected in the widely accepted convention
of conceiving agricultural research not as a stand-alone intervention but as part of an
agricultural knowledge system or, more recently, as part of an agricultural innovation system
(World Bank, 2006).
What is increasingly becoming significant is that the range of actors involved in such
partnerships now goes beyond the traditional domains of public-private sector actors, NGOs
and research, and has come to include a whole host of new players who often challenge
conventional thinking and blur the lines or straddle multiple roles in pursuing their mandates
of social and environmental good while still keeping note of profitability margins.
is new class of entrepreneurs, often operating below the market and policy radar1, is
pioneering new, disruptive modes of innovation that address the social and environmental
concerns that public policy is currently struggling to deal with. e emphasis on the private
sector in innovation systems thinking – and an assumption that this means companies – has
obscured the importance of other forms of entrepreneurship. Many of these have a long
history in development practice. Perhaps it is time to look below-the-radar and support the
entrepreneurship we find there.
1 We refer to these enterprises as ‘below-the-radar’ in terms of being ignored or overlooked, not just
by policy-makers but also the mainstream private sector actors, as part of the innovation landscape and
having something important to contribute to its further development.
OI 10. /978- - - _4, ©
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E Coudel et al. (eds.) Renewing innovation systems in agriculture and food: How to go towards more
sustainability? 903920 8686-768 4 Wageningen Academic Publishers 2013

78 Renewing innovation systems in agriculture and food
Andy Hall and Kumuda Dorai
ese are troubling times for those who like to classify organizations into comfortably
familiar, watertight, categories. Take for instance the Bangladesh Rural Advancement
Committee, better known as BRAC. is is a non-governmental organization with a mandate
of ‘empowering people and communities in situations of poverty, illiteracy, disease and social
injustice’. But this is also an NGO that is a major value chain player involved in both inputs
supply and agro-processing. It poses serious competition to private agro-industries, yet it
services the needs of its poor clientele. It flags social entrepreneurship as one of its key
strategies. Or take Amul – the famous dairy cooperative in India, jointly owned by 3.03
million Indian milk producers which collects milk from producers, processes it into various
products and markets the milk and milk products in markets in India and abroad. All the
while Amul also provides necessary input services to its producers and conducts training to
develop skills.
BRAC and Amul are just a couple of many such actors emerging as key players in the
development arena that policy largely tends to overlook and which the agricultural
development literature is just gradually beginning to acknowledge (see Box 4.1).
Do these sorts of organizations offer new avenues for innovation capacity building at a time
when the idea of constructing pro-poor innovation systems is starting to run into the sand?
To answer this, it is first useful to go back and look at what the innovation systems idea has
had to contribute and where it has got stuck.
4.2 Innovation systems: beyond concepts?
A key feature of the debate about the nature of agricultural innovation in developing countries
has been the understanding that it is a process embedded in a much wider set of relationships
than those implied by research-extension-farmer linkages. Biggs and Clay (1981) and Biggs
(1990) talked of different and multiple sources of innovation. Röling (1992) introduced the
idea of agricultural knowledge systems and the Wageningen School of Innovation Studies
used such ideas to explore multi-actor rural innovation landscapes (see Engel, 1995; Leeuwis
and Pyburn, 2002). At the same time two interlinked debates were also underway. First,
starting in the 1980s, was the global trend to revisit the role of the state in national economies.
is rolled out from Europe and North America to emerging economies of South Asia and
Africa as an accompaniment to development assistance and development bank investment
conditionality – so-called structural adjustment. e second was the reappraisal of the role
of private sector activity in innovation in the most successful economies and the realisation
that innovation was not solely associated with public R&D (or even R&D, more generally) but
was an activity distributed through the whole of the economy. e most successful countries
were found to be those where dense networks of interaction underpinned a national system
of innovation (Freeman, 1995).

Renewing innovation systems in agriculture and food 79
4. Innovation systems of the future: what sort of entrepreneurs do we need?
Box 4.1. Examples of entrepreneurship.
Real IPM (Kenya). Real IPM is a private company in Kenya that makes its money producing
and selling bio-pesticides to the commercial horticultural sector in East Africa. Not only is
its philosophy deeply green, but it has also recently moved into a new and large market
opportunity – poor farmers. In collaboration with the UK’s Department for International
Development’s (DFID) Research Into Use (RIU) programme, it developed a network of village-
based advisers to help promote and sell a bio-pesticide to combat striga, a parasitic weed
of the food staple crop maize, to small-scale farmers. The company encountered numerous
regulatory hurdles in registering its products for commercial application – legislation made
provision for licensing chemical pesticides but not bio-control agents. Real IPM was forced
to engage in policy brokering activities that included engaging with government officials and
scientists, presenting scientific evidence from field trials and building relationships with a range
of interested stakeholders in the regulatory process. This brought about a review of import
regulations and the consequent drafting of Kenya’s regulations for biological inputs, although
the bio-control agent is yet to be licensed for sale.
FIPS (Kenya). Farm Input Promotion Services (FIPS) is a company promoting small seed and
fertiliser packs among smallholder farmers in Kenya. Adoption of fertiliser and improved seed
in parts of rural Kenya is low due to the high cost of large packs of inputs. With limited demand
many rural areas are poorly served by private input suppliers. FIPS has tried to address this
by kickstarting demand by negotiating with input companies to provide small low-cost seed
and fertiliser packs. FIPS then provides technical advice to farmers to encourage them to use
these inputs. To achieve this, FIPS brokers networks between farmers and local input stockists,
public research institutes and input manufacturers. Providing farmers access to technology has
been a starting point, but FIPS is now playing a role in brokering linkages with local supply
systems and research.
TerraCycle Inc. (USA). TerraCycle is a private company in the USA that specializes in making
consumer products from waste materials that are hard to recycle. Starting out with producing
fertiliser from worm waste products (feeding organic waste to worms), the company has
diversified its range of products to include bags, park benches and flower pots made from the
packaging waste of other companies’ products.
Gram Mooligai Company Ltd. (India). Gram Mooligai is a public limited company that
specializes in collecting, cultivating, processing and marketing medicinal plants and honey
abroad. It is owned through equitable profit sharing by several women’s self-help groups,
involving over 1000 households, in South India. The company, and the foundation that set it up
through donor funds, also spend their resources in training farmers in organic farming practices.

80 Renewing innovation systems in agriculture and food
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is idea of a national system of innovation was later adapted to explore the innovation
process in agricultural development (Hall, 2005; Hall et al., 1998, 2002). is built on the work
of Biggs, Röling and others, but was much more explicit about the importance of private sector
actors in the agricultural innovation process and flagged the fact that the macro enabling
environment for innovation was as important as the micro-innovation activities of farmers in
the rural space (World Bank, 2006). Early work rather prematurely predicted that such private
sector-dependent models of innovation had potential for development goals such as poverty
reduction (Hall et al., 2002). More recent writing on agricultural innovation systems has
embraced a greater diversity of innovation arrangements – some more participatory, some
more research-driven (Hall, 2009). is line of thinking nevertheless flags the importance
of the private sector for different types of innovation activity and at different points in the
innovation trajectory (Hall, 2006, 2009).
e greatest contribution of the innovation systems idea to agricultural and rural development
is conceptual. It has helped planners reconsider the place of agricultural research within
dynamic processes of innovation and it has revealed the importance of linkages needed to
connect research to others involved in this process. However, the innovation system idea
is not a new blueprint for how to organize innovation, but a metaphor to explain the vast
diversity of ways of organizing innovation for different purposes and in different contexts.
But how can its central message of distributed (rather than centralized) creativity be taken
forward to address social and environmental sustainability aspects of the international
development agenda?
A number of operational strategies have been suggested to help strengthen linkages and
coherence in different areas of action and policy. Many of these hinge upon the idea of public-
private sector partnerships, and, more generally, the role of the private sector as a driver of
the innovation process. In practice, partnership building has proven difficult. Even in cases
where new alliances have been developed, the real sticking point is the governance of these
to direct innovation towards a social and sustainable development agenda. is seems to be
the area where innovation systems ideas are reaching their limits as a guide to practice.
4.3 Alternative sources of disruption: entrepreneurship and
development
e glaring paradox is that while we have been struggling to construct grandly-titled pro-
poor agricultural innovation systems, modes of socially-relevant and sustainable innovation
have been going on all around us for many years. BRAC, Amul, Real IPM, FIPS, and Gram
Mooligai are part of an expanding diversity of such initiatives, some ancient, some modern,
ranging from the Chipko women’s environmental protection movement in India, Systems of
Rice Intensification (a low-input approach to rice production innovation), the micro-finance
approach of Mohammed Yunus in Bangladesh, the Intermediate Technology philosophy of

Renewing innovation systems in agriculture and food 81
4. Innovation systems of the future: what sort of entrepreneurs do we need?
Schumacher, to the Campaign for Real Ale in the UK and many, many more (see http://
aylluinitiative.org/ for an initiative that is trying to map these globally).
To varying degrees, all of these initiatives disrupted existing modes of production and
innovation. Yet many initiatives of this sort take place, because of perception and analytical
reasons, out of sight and below the market and policy radar. Of course, many simply fail
and only a fraction of initiatives come to national and international prominence despite the
opportunities that they present for both profit and social change. Have we then misunderstood
what really drives innovation and ended up overlooking major hotspots of creativity?
Having remembered this other world of pioneers and prophets, it now seem all too obvious
that there are many challenges and opportunities in agriculture and rural development that
conventional market-led innovation will not address, but are, nevertheless, important for
social and environmental reasons.
At this point, it is worth going right back to some of the early writing on innovation in
the 1930s by Austrian economist and political scientist Joseph Schumpeter. He pinpointed
entrepreneurship as the key creative force, talking in terms of a continuous process of
disruption, doing something different for gain and creative destruction of the old to bring in
the new (1934, 1950).
According to Schumpeter, entrepreneurs were the forces required to drive economic progress,
without which economies would become static and decayed. Entrepreneurs were entities that
identified a commercial opportunity and organised a venture to take it forward. Successful
entrepreneurship, he argues, sets off a chain reaction, encouraging other entrepreneurs to
propagate the innovation to the point of ‘creative destruction’– ‘a state at which the new
venture and all its related ventures effectively render existing products, services, and business
models obsolete’. us Schumpeter saw the entrepreneur as operating within a larger system,
sparking change by example and thriving on that change as fuel for more action.
Entrepreneurs – social, market and environmental – look for opportunities and often
complement or substitute for missing action by the public sector or other actors (Mair,
2008). While attention to profits is often a consideration while still keeping in mind various
developmental mandates, entrepreneurship is often not just about making money; rather, it
is about adding value – social, market or environmental – in a given societal context (Dees,
1998).
Other than taking risks what does entrepreneurship involve? It means being responsible for
the marshalling of ideas, resources, people, processes, institutions and policy to effect new
outcomes. Of course, these are precisely the sort of processes that innovation systems ideas
have been advocating, but struggling in their misguided attempt to orchestrate.

82 Renewing innovation systems in agriculture and food
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4.4 What lies below the radar?
Having recognised that it is entrepreneurship, generally, rather than the private sector or
companies, specifically, that we are interested in, this then allows us to see different forms
of entrepreneurship and innovation and the potential for synergies between them: market
entrepreneurship (for profit), social entrepreneurship (for social change), environmental
entrepreneurship (for environmental change and protection).
As the social entrepreneurship literature (Mair, 2008; Gries and Naudé, 2011) is keen to point
out, these distinctions hide the fact that social enterprises often also encompass market and
environmental agendas. ey can also include researchers acting as social entrepreneurs
because they have seen a way of making their science count. What is interesting, however,
is that there is a growing class of entrepreneurs that is pioneering initiatives that explicitly
occupy the intersect between market, social and environmental concerns (× marks the spot
in the diagram, Figure 4.1). ose mentioned in the introduction fall into this category.
is sort of hybrid, below-the-radar entrepreneurship should not be confused with corporate
social responsibility. Rather, it includes organizations explicitly aiming to be for-profit and
for-a-difference simultaneously. What is critical here is that these entrepreneurs are not
necessarily profit-maximizers, but individuals and groups happy to live with the trade-offs
between profit and making a difference. ey range from seeming social activists to disruptive
innovators. ey often have iconoclastic tendencies, challenging what they see as the foolish
ways of old.
Figure 4.1. What lies below the radar?
Innovation driven
by market
entrepreneurship
Innovation driven
by environment
entrepreneurship
Innovation driven
by social
entrepreneurship
X
Education and
training resources
S&T resources
Venture capital
Policy frameworks

Renewing innovation systems in agriculture and food 83
4. Innovation systems of the future: what sort of entrepreneurs do we need?
e growing visibility of these below-the-radar entrepreneurs is driven by:
 Reaching the limits of the effectiveness of the corporate sector’s capability to innovate in
response to large markets of poor people (and the opportunities that this opens up for
alternatives).
 Limits to existing modes of innovation in environmentally-fragile production zones.
 A global shift in the centre of innovation gravity from the Northern corporate world to
new areas of economic and social dynamism in the South.
Kaplinsky and colleagues at the Open University in the UK argue (Kaplinsky et al., 2010)
that these new disruptive modes of innovation are going to assume prominence in India and
China and that this may have global implications.
ere is no standard prototype of an entrepreneur, but we are now beginning to get a fairly
good idea of the features that characterize one:

Self-organising, opportunity-driven. Individuals and groups see an opportunity for making
a difference. is may be a market opportunity (for example, for ethically-produced goods,
but also increasingly viewing the poor as a large market), a technical opportunity (for
example, technological advances in renewable energy, bio-pesticides) or an opportunity
arising from organizing activities in a different way for social purposes (for example,
microfinance).

Demand regime changes. Almost by definition below-the-radar approaches demand
changes in the way policies and institutions organize the world. e Real IPM Company
needed to push for regulatory changes to allow the approval and sale of bio-control
agents as ‘pesticides’. e successes of the organic food movement around the world
happened because they were able to amend food labelling regulations. e systems of
rice intensification movement continues to challenge the scientific understanding of rice
production.

Often get stuck. Just like in the business world, many social and below-the-radar
entrepreneurship initiatives fail. Many just aren’t very good. But many promising ones
fail because they get stuck. Sometimes networks are not wide enough to bring in new
technical support needed to cope with market or regulatory changes, as in the case of some
ethical-trade initiatives. e bio-fuels sector in Senegal got stuck because of the absence
of a coalition of companies and NGOs working in the sector to lobby coherently for
supportive policy regime changes. e bio-gas sector in Switzerland succeeded because
it did. e Intermediate Technology movement lost momentum because it couldn’t move
beyond engineering adaptation to deal with developing new policy frameworks. Modes
of financing available are almost always too short-term to incubate initiatives that need
to address both social and institutional changes – which may take 10 years or more to
come to fruition.

84 Renewing innovation systems in agriculture and food
Andy Hall and Kumuda Dorai
4.5 Conclusions and implications for policy
e way forward is to start to pay much more policy attention to the support of social and
below-the-radar entrepreneurs. We should stop attempting to construct new socially relevant
innovation systems. Instead we should use innovation systems principles to support these
hybrid, below-the-radar modes of innovation that are pioneering business models that
address the most critical goals of development in most countries, not only in the South but
in the North too.
ere are also opportunities here for companies and the corporate sector. Many of these
below-the-radar entrepreneurs are pioneering business models that are finding ways of
accessing large markets of poor people – a task, which for reason of size, structure and
perspective, many large companies have not been able to achieve. ese models are likely
to be very attractive to companies that have reached the limits of market share in existing
markets.
is implies some broad shifts in policy in support of innovation:
 From mainstream to every stream. Supporting a diversity of entrepreneurs and modes of
entrepreneurship occupying a multitude of niches that address different market, social
and sustainability objectives in different ways.

From replicable models to a mosaic of niche successes. Instead of looking for pilots that can
be copied and transferred with an aim of new ‘industry standard’ approaches, the emphasis
should be on identifying a wide diversity of promising enterprises and supporting their
successful development.
 Orchestration to facilitation. Innovation is largely self-organizing (at least at first) and is
driven by entrepreneurship. Policy, therefore, needs to play a supporting role. Activities
such as research need to organized as a resource that can easily be drawn upon. Incubation
and the creation of spaces for early stage entrepreneurial activity will be much more
important.
4.6 Practical Implications
e central message for planning interventions is that the emphasis needs to shift away
from attempting to construct new systems and instead focus on supporting emerging nodes
of creativity. is support needs to extend to creating the conditions for below-the-radar
innovation to emerge in the first place. Figure 4.2 (from World Bank, 2006) contrasts the
way policy interventions can be organised in orchestrated innovation trajectories and the
opportunity-driven trajectory of the sort driven by entrepreneurs. e following broad
categories of intervention and support will be important.
 Scanning. ere will be a strong analytical role for research to look below the radar for
promising new innovation processes with strong social and sustainability relevance.
Filtering out initiatives that are likely to fail will be a large part of this task.

Renewing innovation systems in agriculture and food 85
4. Innovation systems of the future: what sort of entrepreneurs do we need?
 Financing. New forms of financing will need to be made available – not only challenge
funds, but also novel types of social venture capital. It will also need to be recognized that
returns to investments in these initiatives may only take place over the long-run, due to
extended incubation requirements and the need for changes in policy regimes.
 Adaptive support services. e initiating phase of these initiatives is self-organizing, but
this is also when support is needed. Adaptive services – which can not only facilitate
change in technical, institutional, policy arenas but can also help with coaching , incubation
training, networking, financing – are required. is will include research support.

Risk reduction. Mechanisms to reduce the risks to new entrepreneurial activity – tax
incentives, grants and new financing mechanisms – are important.
e ultimate paradox of all is that while we have been musing about the shape of agricultural
innovation systems of the future, they have been with us all along – if only we had been able
to see them. e challenge now is to find ways of structuring support for ever-shifting patterns
of innovation in which the organizational categories of the 20th century are rapidly becoming
irrelevant.
Orchestrated trajectory Opportunity-driven trajectory
Pre-planned
phase
Pre-planned
phase
Market and other
opportunities
Foundation
phase
Emergence phase
Pilot phase Stagnation phase
Rapidly changing
threats and
opportunities
Piloting and
building on
success interventions
Remedial, piloting
and building on
success interventions
Dynamic system of innovation phase
Initiating
interventions
Piloting
interventions
Building on
success
interventions
Maintenance
interventions
A continuously evolving sub-sector delivering economic growth in socially equitable and
environmentally sustainable ways
Figure 4.2. Contrasting trajectories of innovation.

86 Renewing innovation systems in agriculture and food
Andy Hall and Kumuda Dorai
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