Innovation and Risk Management in Asia
The Rockefeller Foundation has been working in Asia for nearly 100 years, and has undertaken a broad portfolio of philanthropic work, with a strong historical focus on health and agriculture. This has enabled the Foundation to develop a strong organizational DNA regarding what works, when risks are worth taking, and how to mitigate them.
Foundations are well-positioned to take risks because they do not report to shareholders or governments and thus have a greater ability to absorb, and ideally more tolerance for, risk and failure.
“Philanthropic spending will always be much smaller than government or private sector outlays.”
While philanthropy is growing rapidly in Asia, philanthropic spending will always be much smaller than government or private sector outlays. Thinking strategically and spending carefully will always be key attributes for any successful philanthropic effort.
In recent years, the Foundation has engaged in a range of new fields in Asia—including urban climate change resilience, health systems, and impact investing. These efforts require the Foundation to take on a substantial amount of risk in its work.
The Foundation’s basic principles to managing risk and innovation:
- Innovation and risk are inherently linked—fostering innovation requires a higher tolerance for risk, so both are managed within a broader portfolio of work.
- Accepting and learning from failure—if all grants perform optimally, it would signal that we are not taking much risk.
- Fostering two types of innovation—adaptive and disruptive. Within both types there are social and technical components. However, social innovation tends to be more adaptive, while technical innovation can be either adaptive or disruptive.
Rockefeller’s efforts to develop public health and medical education in China in the 1920s, as well as its formative role in the Green Revolution in Asia, are two examples of highly innovative approaches to development that integrated multiple strands of work into impactful efforts.
“Risk is managed by creating a flexible structure that can engage when countries are ready to move, and back off when they are not.”
In China, the effort was to build not only the Peking Union Medical College, but to train people and build national networks of practitioners and the field of public health, a field in its infancy then. Similarly, for the Green Revolution, the investments in agricultural research institutes in Asia, in the training of agricultural scientists, and engagement at the policy level and among large donors to build political and financial support were as important as the development of the improved rice varieties.
The Foundation is currently engaged in a number of innovative efforts in Asia that aim to “move the development needle” in significant ways.
The Asian Cities Climate Change Resilience Network (ACCCRN) is an effort to build the field of urban climate change resilience in ten medium-sized cities in four countries. This involves both technical innovation (the field itself is very new), while also employing a highly consultative process with key stakeholders, and fostering a network that will live beyond the life of the current work.
The efforts to foster universal health coverage (UHC) in Asia have been promulgated through a combination of building high level political support at national and international levels, undertaking strategic in-country investments focused on core technical/political agencies that can drive UHC, and supporting the Joint Learning Network among nine countries in Asia and Africa. This network innovates socially by placing a heavy emphasis upon leveraging “existing knowledge” in non-traditional ways by creating a facilitative South-South policy/practice learning network among health ministries and insurance agencies, as opposed to sending technical experts to countries. Risk is managed by creating a flexible structure that can engage when countries are ready to move, and back off when they are not.
- Don’t innovate or take risk for the sake of doing so. Rather, undertake a rigorous calculation regarding when innovation will enable achievement of broader objectives.
- Innovation cannot be content-free. It’s not a means of throwing ideas around to see what sticks, but an effort to reflect deeply upon problems and opportunities, and identify new approaches.
- Risk is part of a larger portfolio of work—not all efforts are high risk, but if none is risky, then something is wrong.