Housing innovation through action - Habitat’s Shelter Venture Labs

Terwilliger Center’s nationally based Shelter Venture Labs have evolved to blend two distinct but complementary approaches: market systems development and human-centered design.

This blog is the first in a series that reflects on the structure and principles of the Labs, sharing Habitat's experiences with other market systems practitioners of how they are managed and funded, and what makes them unique. 

The context

Earlier this year, UN-Habitat released new estimates for the global housing deficit, finding that 2.8 billion people are currently living without access to adequate housing. This is up from the already massive deficit of 1.6 billion people estimated in 2016. Governments and civil society organisations cannot build us out of a deficit this large. We need housing markets to be more inclusive and better positioned to address the needs of the lowest-income families – a largely invisible segment, who build their homes incrementally and informally.

The importance of market-based solutions

Although best known in the United States for volunteer-supported housing construction, Habitat for Humanity has long recognised the importance of market-based housing solutions in emerging markets. In 2016, building on a decade’s experience working to expand housing finance markets, the organisation launched the Terwilliger Center for Innovation in Shelter. 

The Terwilliger Center’s mandate is to identify and test new, high-potential solutions to address both supply- and demand-side constraints on housing markets, with a view to influencing the market to become more inclusive and responsive to the needs of low-income households. While the Terwilliger Center’s work is global – working with partners in 54 countries – the centre recognised early-on that its market-based approach would need to be informed by, and grounded, in a deep understanding of how specific national markets function and a strong learning agenda to apply that knowledge.

The establishment of nationally based Shelter Venture Labs as platforms for exploration and market testing

In recognition of this need, the Terwilliger Center established nationally based Shelter Venture Labs as platforms for exploration and market testing. Located in India, Kenya, Mexico, Peru and the Philippines, the Labs engage directly and dynamically with financial services providers, actors in the construction value chain and other partners across the public sector, academia and the media. 

Both organically and intentionally, the Labs have evolved to blend two distinct but complementary approaches: market systems development and human-centered design. 

Market systems development examines the root causes of markets failing to meet the needs of low-income households. For housing, understanding the motivations of market actors and end-customers are particularly critical to devising initiatives that incentivise sustainable, scalable change. 

To ensure that target communities do in fact benefit from the centre’s work, programme leads and subject matter experts employ human-centered design to continuously centre households’ needs and aspirations for their homes. This approach is grounded in the belief that families navigating the seemingly intractable challenges of poverty are also best positioned to identify solutions. 

Both these approaches are well established for a number of sectors. By blending them within the structure of the Shelter Venture Labs, the Terwilliger Center has been able to pilot new solutions to long-standing housing crises.

The Labs help actors navigate the dynamics that affect a market system

Taking these dual principles, the Labs have found their niche in their respective affordable housing ecosystems. They act as facilitators to help various actors understand and navigate the dynamics that affect a market system, then co-create initiatives to open new market opportunities and overcome barriers to change.

^{The owner of Cebu Overseas Hardware stands in his company’s warehouse in Cebu City, Philippines. The Terwilliger Center’s local lab is working with Cebu Overseas Hardware to expand their offering of materials tailored to the low-income segment and introduce new research-informed marketing strategies to reach this customer segment, previously not served by the company}.

The Labs conduct and then offer research on the local housing market. At its best, this research is iterative and builds upon past findings. For example, a research study by the centre on the attitudes and practices of artisans in the low-income home construction segment across three Lab countries, built upon a past study that mapped the housing journey of self-builders by the Lab in Peru. In this way, local learning also begets global ideation and innovation.

With market insights in hand, Labs connect market actors, including private-sector materials and building services providers, and their potential customers in the low-income housing sector. 

Initiatives like the Lab in Peru’s Guardian Constructor platform, connect households with financial institutions and FinTech start-ups expanding access to credit scoring, small and medium enterprises in the housing value chain, vetted construction managers and architecture services – where such a service bundle did not previously exist. 

In this way, the platform simultaneously allows various market actors to reach a different segment of clients in new ways, while providing those clients with higher-quality services to build more resilient homes.

Measuring the impact of the Labs

The Labs’ unique structure and strategy as facilitators also makes it more difficult to quantify their exact impact by traditional measures. 

One way to approach this question at a high level is with the counterfactual: "how would the local housing market in each Lab’s geography look without their efforts over the past five years?" 

When the Lab leads were recently asked this question, they had a lot to say. Jessan Catre, the Lab lead in the Philippines said that, at a minimum, “there would be no data on the significant number of low-income families who belong to the owner-driven construction segment” – a massive market segment across the country had not been tabulated until 2021. Mexico Lab lead Fernando Mendoza answered that “there would be no organisation to tell [market actors] about the importance – and potential financial return – of generating housing products and services tailored to the needs capabilities of the low-income segment.”

While growing the scope and capacity of the Labs work over the past five years, the Terwilliger Center has prioritised decisions and changes that ensure they can remain agile, largely autonomous, and lean. 

The next blog in this series will explore the management approach that supports the Labs’ work, specifically the role of autonomy and two-way information flows.

We invite you to stay on for the ride – and share your own experiences – as we explore key learnings from our innovation hubs – the Shelter Venture Labs – in the blogs still to come.

This blog is authored by Habitat for Humanity's Terwilliger Center for Innovation in Shelter and was originally posted on MSD Hub