Untangling the Complexity of Financial Business Models for Innovators

Often when you find that it's difficult to have a coherent discussion on a subject, the underlying reason is because there is unrecognized complexity in the subject.  As a result one person starts talking about one aspect of the problem, and then another person seems to go off in an entirely different direction.  It can be frustrating because these complex issues often require serious thought and strategic work.   

The subject of financial business models for innovators is one of these messy areas that is difficult to think deeply about simply because there generally isn't a clear structure for seeing all the parts and how they fit together.  This is particularly true for innovators working in aid and non-profit sectors, where far more creativity is required to pay the bills.  

Innovation Norway is a donor that supports ambitious innovations.  They have funding, but they also recognize that it's not possible for donors to support all innovators from start to full operation with grants.  To supplement their contributions, alternative forms of financial support are needed, and that requires strategic discussion and action.  

Working with Alliance4Impact, Hannah Reichardt and I developed a structured approach for evaluating business model options.   It recognizes that financial options change and the innovator moves through the lifecycle of development. For example, there are far different possibilities for funding during light weight pilot testing phase than in the ramp up to scale, or during the sustained long term operations.  

The model recognizes that at each stage there are different types of investment and support available.  Further each of these business models for financial support might be enabled by a different actor.  Consider that a loan for scaling up an innovation might come from a private sector bank or a government agency.   

The complete report from Innovation Norway can be found here: 

Innovation Norway - Supporting creative business models for innovators in the humanitarian sector