As part of Bond's series of predictions for development in 2016, and alongside Nesta's own annual predictions, Giulio Quaggiotto from the Innovation Skills team makes the case that this year back-office functions will take centre stage in international development organisations.

These are uncertain but exciting times if you work in development: it is clear that a new paradigm is in the making, and that new, hybrid players are starting to challenge consolidated practices and power dynamics in the sector. But what exactly this brave new world will look like is a matter of intense speculation. In-the-field practice is ahead of the (often antiquated) sensemaking and programming cycles of traditional development players. Look at the experimentation happening, say, around the refugee crisis or Greece’s zero-cash health services for signs of the ‘post mutant’ development world to come. To paraphrase Jack Welch, the speed on the outside is greater than the speed on the inside.

So far, innovation efforts from development organisations (often driven by dedicated innovation units or lab) in response to this changing landscape have largely focused on technological or programmatic innovation.

I believe that in 2016 we’ll see back-office issues take the front stage of development innovation, and which may be more pedestrian but perhaps in the longer term more transformative. This will be largely driven by external factors, and will take a number of manifestations:

1. The physical presence of offices and headquarters will become an increasingly contested issue.

As their legitimacy is under scrutiny, big international NGOs will continue to re-assess where their key decisions are taken and consider a move to the south. The financial squeeze will force players like UN agencies and the World Bank to radically reconsider their in-country presence – expect virtual offices to become the norm.

The rising challenge of dealing with transnational issues and the impossibility of being physically present in conflict areas will foster experimentation with a whole new set of tools: from co-presence to transborder ID registration. Inspired by the Estonia e-residency programme, 2016 will see the first formal partnership between an established development player and “governance 2.0” type of solution, a la Bitnation, to deliver borderless back-office services.

However, arguably the most radical innovation of 2015 – EveryChild planning to close down its operations and hand over to local partners – is unlikely to find many followers.

2. Procurement, alternative finance and fintech will become ‘sexy’.

There is a growing recognition that the palette of tools and skills currently available to procure and finance contextually relevant solutions is sorely limited, and the pressure of dwindling funding will accelerate the back-office catch up game. Expect to see a good deal of fintech, logistics and innovative procurement job vacancies from development organisations in 2016. The current explosion of challenge prizes and hackathons sponsored by development organisations can already be interpreted as their ability to act as a Trojan horse to ‘hack’ the limitations of traditional procurement. Small scale experiments to change relationships with local suppliers and tap into their knowledge of local context are also under way. 2016 will see the birth of a Citymart equivalent for the development sector.

Tired of waiting for the sector to catch up, new, more agile players will also enter this space – whether it is to provide innovative solutions for cash transfers or remittances, to rethink supply chain verification or project finance. AidCoin will turn from a speculation into a reality, even if perhaps not in the form originally envisaged by the visionary Paul Currion.

New forms of automation and predictive analytics will become mainstream, perhaps not so driven by the desire for efficiency but by the hope that ‘if, then’ algorithms can circumvent the current deficiencies in governance and coordination. Expect to see more tools like forecast-based financing and the first smart contract in the development sector in the new year.

Sadly, following well-established patterns, 2016 will also see lots of duplication of efforts across the sector and “blockchain-to-solve-everything” type of pilots.

3. Human resources will struggle to connect sense of purpose with obsolete practices.

Development organisations will slowly take the cue from the private sector and begin to ditch performance reviews and performance ratings. The most forward-looking development players will replace application forms and incentive mechanisms with practices mediated by purpose-driven startups and social enterprises that keep employees connected with the organisation’s mission. Financial constraints and questions of equity will force many human resources department to reconsider local vs international staff policies and benefit divides still prevalent across the sector. New interfaces will be explored to engage with ‘the non-contractables’ centred around mission and purpose rather than formal contractual agreements.

In short, 2016 will be the year when the backbone of the development sector, so far only marginally affected by the innovation agenda, will take centre stage. The hope is that this limelight will foster a radical rethinking of entrenched patterns of decision-making, challenge assumptions as to where the real expertise sits and free up new energies currently trapped by obsolete back-office constraints.

Arguably, a reengineered procurement process has much more to contribute to the support of locally relevant solutions than many programmatic interventions. If that doesn’t happen and self-preservation instincts kick in instead, the speed of change on the outside will prevail. And, as per Jack Welch, we know what that means.