TIPS FROM THE LIVING LAB RESEARCH #2: funding models

What: Organizations, innovation hubs, programs, and training projects are creating value beyond products  in multiple ways:

“(1) Through building a network for “collaborative knowledge exchange and research activities”, innovation hubs can help their stakeholders solve problems that they have defined, increasing the opportunities of co-creation innovation.

(2) In order to maximize the benefits for those involved, innovation hubs should play a role in accelerating the communication between academia and industries and encourage highly interactive “two way knowledge exchange”.

(3) By offering an environment to enhance the collaboration among people, innovation hubs would be able to support the economic, cultural and sustainable development for future generations.

(4) Innovation hubs can not only create communicating channels but also simplify the process of innovation by efficiently adopting existing knowledge, expertise and support from various stakeholders in order to make knowledge transfer spread widely.”

Source: The Modular Business Plan for the Creation of Design Innovation Hubs.

Needless to say, sustainability of training and innovation projects/programmes themselves is crucial in capacity-building for any field. For the GESCI-AKE model, we surveyed 14 innovation and training labs/hubs in Eastern and Southern Africa. In the majority of cases, international funders, either countries and/or businesses, are key to the sustainability of these actors. This is also the result of a research effort on Kenya. However, many of these hubs have developed co-funding and other sustainability mechanisms.

In general, it seems that the trend for sustainability for such hubs is that of social business, or the so called Fourth Sector; models that include multiple of sources and modalities of funding and sustainability. Here is a general overview of hybrids that may emerge in this Fourth Sector:

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How: Creating a business plan for innovation hubs, programs, and/or related  training projects is naturally a highly contextual effort. However, there are some concrete steps and issues that should most likely be included into modeling funding and sustainability.

  • Offerings – value propositions.  There are usually five main offerings that such a hub can offer:
    • Space
    • Event
    • Research – Training
    • Network
    • Making of products/services.
  • Besides donor funding and sponsorships, there are ten common streams of revenue for a hub / project:
    • Booking fee. The hubs charge money for space bookings.
    • Access fee. People have to pay to participate in an event or a network.
    • Membership fee.
    • Product/ material fee. Selling design products or relevant material in the hubs.
    • Tenant venue hire fees. Charge money for venue hire.
    • Brand license fees. Sell brand licenses to allow target people to use the brand logo in their own marketing activities.
    • Advertising fees. Provide a platform, such as an online website or presentation event for clients to advertise their products or services and charge for them.
    • Project fee. Charge to provide services for the whole project.
    • Intellectual property. Intellectual property as a resource to charge clients money.
    • Brokerage fees. Some hubs gain money through renting space from a landlord and subletting it as an office and network platform to target people.
  • A business plan for a hub or a related programme/project should most likely entail the following elements:

Key Activities  – and for each:

  • Value Propositions – what are the benefits for the activity for customers
  • Customer Segments – for whom the activity is targeted
  • Key Partners
  • Partner Relationships  – what are the benefits for the activity for partners other than customers
  • Key Resources – what is needed
  • Cost Structure
  • Revenue Streams

For detailed examples and further explanations, please see this useful report: The Modular Business Plan for the Creation of Design Innovation Hubs.

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