Background. At its Ninety-fifth Session in December 2008, the Executive Board requested the Office of Evaluation (IEO) to undertake a corporate-level evaluation of IFAD's capacity to promote pro-poor innovation. The main objectives of the evaluation were to: (i) assess the performance of the Fund in promoting innovations that can be scaled up; and (ii) generate findings and recommendations for enhancing future IFAD activities in this area. The evaluation and IFAD Management's response thereto were discussed by the Evaluation Committee and the Executive Board at their respective sessions in April 2010.

Main findings. The evaluation found that, since the mid-1990s, concerted efforts had been made to incorporate innovation into the Fund's key policy and strategy documents. This is demonstrated by the inclusion of innovation, learning and scaling up as one of the six principles of engagement in the IFAD Strategic Framework for 2007-2010, and by the fact that, of the five organizations covered by the evaluation's benchmarking study, IFAD was the only one to have a definition and stand-alone strategy for innovation. Nonetheless, the evaluation found that insufficient resources and attention had been allocated for the purpose of translating policy and strategy pronouncements into concrete action. For instance, some recommendations generated by the first corporate-level evaluation on innovation, undertaken in 2000/2001, were never implemented, others only partially.

As far as results on the ground are concerned, the performance of IFAD-funded projects in promoting innovation has improved over time. This should not, however, give rise to complacency as almost 50 per cent of all projects evaluated in 2008 revealed only moderately satisfactory results in terms of innovation; very few were satisfactory; and even fewer were highly satisfactory.Two qualifications should be borne in mind when interpreting positive results: (i) evaluations have paid more attention to assessing the innovations introduced and piloted during project/programme execution, and much less to verifying whether successful innovations had been scaled up – which would have been essential to ensure they had a greater impact on rural poverty; and (ii) IEO's selection of projects for evaluation in any one year is largely done on a non-random basis, which may lead to a bias towards evaluating better-performing IFAD-funded interventions.

The evaluation revealed that the Fund has paid relatively more attention to (and found more success in) innovative solutions in social engineering and institutional arrangements (e.g. promoting participatory approaches to planning and resource allocation) rather than in agriculture. Although IFAD has provided a fair amount of grant resources for agricultural research to develop innovative, low-cost agricultural technologies that can lead to better productivity and incomes, the results of such research have not easily found their way into its investment projects. The relatively higher proportion of social engineering and institutional innovations may be attributed to the fact that, in the 1990s and the first part of the new millennium, IFAD generally focused more on social capital formation and empowerment than on agricultural activities or identifying economic opportunities for poor rural people. This gives rise to concern, first of all because of the number of poor people who are also food-insecure, and because of the Fund's mandate to enhance agricultural productivity and incomes through on-farm activities.

Scaling up is particularly weak in IFAD-funded operations. With IFAD's relatively limited resources, scaling up is of paramount importance. While the evaluation found examples of successfully scaled up innovations, these were largely the result of individual initiatives and commitment rather than of a systematic approach. Indeed, it was found that far too much is left to the initiative and entrepreneurial skills of individual IFAD country programme managers, who frequently act without clear incentives and/or accountability.

There are two other reasons why IFAD's performance in scaling up has been inadequate. First, as a general rule, little attention has been given to knowledge management, partnership-building, policy dialogue, etc., partly because IFAD has concentrated on designing investment projects/programmes (and, more recently, on direct supervision and implementation support) instead of allocating time, space and resources to non-lending activities. Second, in the past, the Fund's operating model (which did not allow it to perform supervision directly or to provide implementation support) and lack of a country presence constrained its ability to promote, replicate and scale up innovations. In any event, it is fair to state that, having recognized the importance of scaling up, IFAD is now making due efforts in that regard, including a scaling-up initiative in collaboration with the Brookings Institution. Moreover, the strengthening of the Fund's country presence, better quality assurance and quality enhancement systems, direct supervision and implementation support, and greater focus on non-lending activities are expected to collectively contribute to better results, not only in scaling up but also in identifying and piloting innovations.

As mentioned above, lesson learning and knowledge management are essential for documenting and sharing successful innovations with a broader audience. While it is recognized that IFAD introduced a dedicated knowledge management strategy in 2007 and that some useful initiatives have been made to share experiences over the last two years, knowledge management may be further strengthened to support innovations within IFAD-supported country programmes/projects. The recent decision to integrate stand-alone knowledge management and innovation strategies is a step in the right direction, given that the two processes are mutually reinforcing and essential for innovation management.

In tandem with loans, grants can play a useful role in selected phases of the innovation journey. IFAD has invested a fair amount of grant resources in developing pro-poor innovative solutions in agriculture and related areas. Nevertheless, although IFAD's grant programme could play a strategic role in supporting the innovation agenda, evaluation experience confirms that the links between grants and investment projects have not been adequately defined in country strategic opportunities programmes (COSOPs) and thus have been mostly weak in operations. It is to be noted, however, that IFAD's revised Grant Policy, approved in December 2009, emphasizes the strategic role of grants in innovation and, for the first time, also provides an opportunity to involve the private sector in research and pilot innovations for replication and scaling up through investment projects.

Perhaps the evaluation's most important finding is that IFAD's past efforts to promote innovation have been too broad-based. That is, rather than pursuing innovation in a focused manner, building on its comparative advantage, track record and specialization, the Fund has followed a "let a thousand flowers bloom" approach. One reason is that the Fund's innovation strategy does not require it to channel resources to selected strategic areas, or to chart the way to become an innovative organization.

The evaluation found that while IFAD's organizational capacity and culture to promote innovation have both improved since 2000, results have been rather poor and in any event start from a very low base. Among other things, there is a need for further development of human resource skills and competencies, for strengthening knowledge management systems, promoting a more open environment to foster creativity and for setting clear, focused directions for promoting innovation and scaling up. In this regard, IFAD's recent appointment of a Chief Development Strategist as the focal point for knowledge and innovation is a move in the right direction.

In continuation to the above, the evaluation notes that a number of organizational capabilities are required to support the innovation journey: systematic learning, structure and processes, culture, competencies (including staff skills and incentives), decision-making, and leadership and direction – capabilities that the 2000/2001 evaluation considered to be weak. The present evaluation found that the third, and probably the most important objective of the Initiative for Mainstreaming Innovation (IMI) – changing the organizational culture and practices to support innovation – has not, by and large, been met. The evaluation pointed out that, overall, IFAD's organizational capacity for innovation remains weak and has changed only marginally since the beginning of the decade. In other words, the Fund's strong strategic commitment to, and pronouncements on, innovation have not been adequately converted into action to become part of IFAD's corporate culture.

According to a staff survey conducted in 2009, despite having moved up five places IFAD still falls within the lowest quartile of the 43 organizations surveyed. More generally, the survey also showed that while staff considers IFAD to be relatively good at searching out or scouting for innovations, it is somewhat weak in prioritizing their promotion and scaling up. The survey also noted that while a number of key operational processes (e.g. quality enhancement and assurance) have been strengthened, the required human resource skills/incentives have not been put in place to promote innovation. Training opportunities are limited and it is not easy to obtain additional resources for advancing promising innovations. It was found that managers do not deal promptly with blockages that may hamper change (e.g. identifying additional resources for scaling up), and that IFAD's knowledge and information systems do not perform well with regard to deciding on innovations for scaling up. The Fund is also slow in taking new ideas through the system and, importantly, is not sufficiently open to ideas from a wide diversity of sources, including poor rural people. All these and other factors constrain the development of IFAD into a more effective, innovative organization.

Generally speaking, there is a disconnect between IFAD's strategic pronouncements and its (still) weak institutional capacity to promote pro-poor innovation on the ground. Undeniably, however, progress has been achieved and a number of initiatives have been taken (such as that on scaling up). But if IFAD is to become a more effective, agile and innovation-driven development organization in the twenty-first century and, even more importantly, if it aspires to becoming a leader in promoting pro-poor innovation, it will need to make a quantum leap, particularly in terms of organizational culture change and capabilities, and follow its "let a thousand flowers bloom" approach within a few strategic areas. However, the evaluation recognized that IFAD should also remain open to promoting country-/project-level innovations that respond to perceived challenges related to the agriculture and rural development of specific country circumstances. It should also focus more attention on the process of scaling up than it has in the past. Clearly, this will not be possible without sufficient allocations of resources.

Recommendations. The following recommendations aim to improve IFAD's capacity to move from its strong strategic commitments and pronouncements towards a more systematic approach, thereby enabling it to achieve better results on the ground in promoting pro-poor innovations for subsequent scaling up.

Define an innovation agenda for IFAD. As the Fund has followed a "let a thousand flowers bloom" approach to promoting innovation in the past, the evaluation recommended that an IFAD-wide innovation agenda, consisting of a few selected themes or domains, be developed at the corporate level. The themes or domains selected – "big bets" – should be in areas of the agriculture and rural sector where there is a proven need for innovative solutions and where the organization has (or can develop) a comparative advantage in promoting pro-poor innovations that can be scaled up. The selected "big bets" would be part of the Fund's innovation agenda, conceived as a corporate rolling programme over a period of, say, three years, and including specific objectives, activities, timelines, budgets, management and oversight arrangements, and monitoring and reporting requirements. The agenda would be approved by the President of the Fund, who would communicate it to IFAD staff and the Executive Board, with a commitment to provide annual reports on its implementation. However, the evaluation recognizes that the Fund also needs to remain open to promoting innovations at the country/project level that respond to perceived challenges related to the agriculture and rural development of specific country circumstances.

The evaluation recommended that more attention be paid to developing innovative solutions in agriculture technologies and related areas aimed at the economic empowerment of poor rural people. Examples of domains that IFAD might consider as "big bets" include health and weather insurance for poor rural people; rural finance products for dispersed populations; research on high-yielding crop varieties both in rainfed areas and for poor small-scale farmers; carbon projects; market access and value chain development (e.g. risk mitigation for the transition from subsistence to commercial farming); land titling (to include rural women); valorization of out-migration, and so on.

Treat scaling up as mission-critical. It is essential that concrete approaches and strategies for scaling up be articulated by the time of COSOP formulation and project design. The role and contribution in this regard of IFAD's direct supervision and implementation support, and of its country presence, should be clearly defined. IFAD should set corporate targets for scaling up and monitor and report on them annually. In this regard, it is also important to underline the accountability framework for scaling up, which would ensure that this critical phase in IFAD's innovation journey is given due attention and resources. Adequate resources and space need to be allocated to non-lending activities, which are essential for scaling up. Staff competencies should be further developed to ensure success in this area. Greater effort is needed in terms of exchanging experiences and lessons on innovation and scaling up within and across the five geographical regions in which IFAD works, both in the regions and among operational staff at headquarters.  IFAD's policy dialogue and partnership-building agenda at the country level should be also driven by the objective of scaling up, and thus should focus on a few topics that are part of the Fund's innovation agenda in the country concerned.

The evaluation found that the concepts of innovation and scaling up were lumped together as a unique block in IFAD and that the measurement and reporting systems, including IEO evaluations, do not always distinguish between them. It is recommended that, in future, innovation be assessed and reported on as a separate process from scaling up. However, given the intrinsic relationship and dynamic between the two concepts, assessing the achievements of IFAD's efforts in the entire innovation journey from scouting, to piloting, documenting and scaling up will be also essential.

Strengthen organizational capabilities and culture. The Fund will need to develop practical innovation management skills. Management of innovation is different from implementing proven approaches inasmuch as it requires entrepreneurship, a capacity to cope with greater uncertainties, adaptation, a range of skills and the ability to make difficult choices on emerging evidence. Thus IFAD should develop an innovation-specific competency model for individuals and teams, drawing on current best practice. Such a model would provide the basis for a comprehensive skills enhancement programme and development of relevant tools, processes and monitoring systems. Innovation management skills should be developed as personal, team and networked competencies and adopted both by the staff of IFAD and by its partners.

Staff recruitment should explicitly include innovation as a necessary characteristic. Incentive systems should be introduced that reward staff for promoting innovation and fostering the learning/sharing of good practices and experiences in innovation, i.e. the annual staff performance evaluation system should consider innovation in the assessment process. The evaluation found that there had been some improvement in operational processes in past years, but recommended that a study be undertaken to establish whether further adjustments were required in areas such as policy formulation, COSOP development, project design, supervision, evaluation systems (including monitoring and evaluation), non-lending activities, etc., to ensure that innovation is fully built into key phases of the country strategy and project life cycle.

All the recommendations generated by the present evaluation, including that of improving organizational capabilities and culture, will have a bearing on the Fund's administrative budget. If IFAD's overall innovation and scaling up efforts are to give the desired results in future, a detailed analysis will be first required to determine the financial implications involved and to ensure that adequate resources are allocated in a timely manner.

The Initiative for Mainstreaming Innovation. The evaluation recommended that funds left unused from the IMI should be used for initiating implementation of the three main recommendations contained in the evaluation, in particular, for changing the organizational culture and practices to support innovation, i.e. the IMI objective that has not been satisfactorily achieved. The evaluation also recommended that the IMI be extended and a future work programme developed, which could be funded either through IFAD's administrative budget or from supplementary funds mobilized for that purpose.