I really have appreciate it. I wanted to draw out some useful learning from this report and useful reminders here in this post that there is no easy answers in innovation, social or business related.

The report outlines the difficulties of enabling innovation in social sector organizations. In this review the authors undertook exploring what enables organization capacity for continuous innovation in established social sector organizations, that operate at an efficient scale, delivering products and services.

Three oversights that conflict in working in the social innovation area

First, innovation is often perceived as a development shortcut where pushing innovation is often at the expense of strengthening more routine activities, which this ‘push’ might actually destroy rather than create value.

Second, social sector innovation has little external impact to show when it is enacted in unpredictable environments. Proven innovation can often fail when transferred to a different context and there is equally an undervaluing of the positive internal learning impact that comes from these ‘failed’ innovations.

Third, the power of negative organizational factors, such as bad leadership, dysfunctional teams and overambitious production goals as examples, makes the innovation task extremely difficult to succeed in difficult social conditions

This report helped me rethink the value of incremental in social innovation

I have been constantly complaining about incremental innovation needs to become more radical, more disruptive, more breakthroughs and what this report provides is a totally different slant on incremental innovation.

Also I have talked often about the knowing of the context of innovation and this report offers a brilliant reminder of this.

Over-rating the Value of Innovation.
The report offers this thought within social innovation: “Most of the value that established social sector organizations create comes from their core, routine activities perfected over time”.

It is the efficiency being produced in providing standard products and services is the place that creates tremendous value, particularly in places of widespread poverty.

The organizations involved have found a working model in a particular context requires predictable, incremental improvements and lots of them to generate superior outcomes over time.

The authors cite the Aravind Eye Care Hospital for their focus on continuous improvement of practices and investing any profits in building additional capacity. It is the dedication to standardization that drives operational productivity.

They spend their time eliminating variation to build constantly capacity to make an impact at an increasing scale.

The important point here is “constantly building capacity to make an impact at an increasing scale” and it is in finding the contextual linkages is where incremental has its greatest value potential.

Perhaps I push for different types of innovation within business far too hard and this observation might argue for a better viewpoint on the pursuit for incremental innovation. It brings my own pendulum into a better position perhaps of valuing incremental improvements?

A few ‘call out’ points here

• “Unpredictable innovation activities always compete with predictable core routines for scarce resources.”
• “Poverty-related or persistent problems may not need innovation solutions but rather committed long-term engagements that enable steady and less risky progress”.
• “Innovation is not triggered by change but progress and impact may come from dedication and routine work” and that this can challenge the argument for more innovation.

Recognizing the value of productive innovation.

The report uses as their innovation type “productive social innovation” and argues the need to rely heavily on trial and error and constant organizational learning to make this truly productive. To yield improving results where scale is critical.

The value of learning from failed innovation.
In the world of complex social issues innovation actions are inherently unpredictable, often placed in hostile environments, where you need to understand local power structures and the many root causes of the situation you are attempting to solve through innovation.

The call-out for me here is the emphasis for the systematic learning and building the knowledge base that provides the capacity to innovate or not. Also each situation needs significant evaluation before any adoption of practices from other places

The impatience with making fast progress
The report touches on “doing the right things” but it is within the unique dynamics and contextual factors that often innovation is prevented from happening. Innovation relies on a constellation of many enabling and contextual factors fueled by excessive optimism of the ones pushing for innovation solutions. There is so much that can stifle innovation or derail the process.

The recommendation is for greater critical diagnosis and evaluation of all the negative factors and hurdles that set about unearthing a large number of cognitive, normative and political factors.

You simply can’t reply on “simple recipes” as a prevailing dogma or well-meaning recommendations, it boils down to exploring the factors, complexities, challenges and realistic time-scales involved in dealing not just with the poor but all complex social challenges.

My call out here: I find this such a timely reminder for all innovation, as business leaders constantly express their frustrations with innovation failing to deliver.

The learning for me here is from the report is this increased emphasis on understanding all the negative factors that constantly block innovation and these are different from one situation to another. The environmental analysis becomes vital.

A summary within the report gave me these thoughts.

1. It is time to move from innovation as an ideology to innovation as a process—a transition that might be less glamorous but will be more productive
2. These recommendations should enable social sector organizations, their stakeholders, and researchers to develop analytical models and tools to unearth negative factors that prevent productive innovation.
3. Similarly, funders who carefully think through the implications outlined in the report may find ways to escape over-supporting fashionable innovation initiatives and under-supporting promising but difficult innovation efforts, particularly those in complex environments where formulas for social progress have not yet been found.
4. Finally, the process approach they are recommending to social innovation is an attempt to swing the pendulum back from the supply side of social innovation to the demand side of social innovation.

The authors finish with “Our hope is that an increased emphasis on innovation as a process will help avoid bad social sector investments and thwart unproductive debates about quick fixes to entrenched social problems.”

This report gives a useful reminder that there is a lot to keep constantly learning about the differences within innovation

This report gave me a shift in insight by explaining many of the enabling factors for organizations already established, that are searching to operate at scale within specific social contexts.

Incremental innovation is where they might create more social value through focusing on continuous ongoing improvements to extract learning, and reinvest this into scaling improvements to then build this into further capacity.

Also we can’t take anything for granted, the context, the environment, the application of different types of innovation all are unique and simply ‘applying’ general solutions just doesn’t work. I have argued this consistently but this report deals in understanding the specific conditions for a ‘given’ type of innovation as being essential to be really alert too.

Again, this report is “Innovation Is Not the Holy Grail” and well worth your time to read.

Seeing innovation from a specific social perspective has some very useful learning from a business perspective.

By understanding the value of incremental improvements can be more valuable in certain contextual situations than simply applying additional innovation creative investments without understanding all of the factors behind the challenges that are being tackled.

The post There are no easy innovation answers. first appeared on Building Your Innovation & Ecosystem Intelligence.

Well, no actually. There is a growing recognition of the need for effective solutions to social and environmental challenges that have increasingly real threat and growing inequalities.

Impact investing or more often housed under the broader heading of “Impact Economy” is about finding the ways to combine investors, philanthropists, entrepreneurs and business executives along with governments in finding new and different ways to explore the changing economic and social landscape.

Through this emerging newer type of investing there is potentially that the promise of new jobs and profits, mixed in with improved social impact, can be derived from new innovation activities.

It needs this convergence and seems to be gathering in pace and broader recognition.

Scaling up needs capital and different business models

In one of my recent blogs I spoke of the issues of the difficulties of scaling up within social innovation projects (http://bit.ly/qLPJHe). I raised the question “how do you scale up a highly fragmented set of solutions when we lack more often than not the developed networks and the intermediaries that can assist?”

It is the ability to certainly raise the capital that often constrains this. I have to also say, it is the business social model that often can’t scale equally due to a failure to recognize the mechanisms or levers to achieve that. Scale suffers if these are not recognized and in place and great ‘local’ ideas just simply stay local.

The Impact Economy
“The act of sense making is discovering the new terrain as you are inventing it.”—Brian Arthur

The Impact Economy is about using profit-seeking investment to generate social and environmental good by placing capital into businesses and funds that can provide solutions to scale, that often the philanthropic organization is not able to do due to its limited funds or covenant.

Recently the White House hosted a meeting of all the different interested parties around this Impact Economy (June 22, 2011).  In collaboration with the Aspen Institute it was bringing together the Impact Economy Initiative, a project of the Philanthropy and Social Innovation (PSI) program, and working directly with the Office of Social Innovation and Civic Participation at the White House to enable this event and explore ways to take this further.

A report about the outcome recommendation comes out later this summer.

So far in a report completed earlier it has been identified than $50 billion of assets under management are associated with impact investments. The predictions are this can rise rapidly to $500 billion, even talk of $1 trillion in the year’s ahead if this momentum moves from a present uncoordinated set of innovation activities into a new domain, a major complementary force for providing capital, the talent and creativity needed to address pressing social and environmental challenges.

The ability to address global challenges at scale would be dramatic.
The combination of a number of ultra- wealthy investors, high net-worth individuals, corporations and foundations all seeking to diversify, to leverage investment as a tool to drive social change can realize this ‘scale’ promise.

They are still looking for returns, perhaps less market-rate returns but where their capital is catalyzing impact. This means they are getting more interested in the pull of growing emerging economies, the more value-driven behaviours of consumers that is emerging post recent crisis and the need for relating and contributing to finding effective solutions to social and environmental challenges across all societies.

Part of the aim also is to recalibrate supply and demand that looks harder at social impact.

There is also talk of a social contract that may develop into Social Impact Bonds- investors provide capital to fund community-based programmes whose successful implementation lessens long-term public expenditure and improves society outcomes.

Clearly this emerging concept will not be easy but it does bring together all parties to attempt to drive impact and innovate in different fields where we have bigger social challenges. The key is it does need to generate shared value for all and that is going to be a hard road to travel.

Let’s look at some of the critical success factors for this to succeed.

The Monitor Institute wrote a report, released in 2009 (http://bit.ly/eH5UQ) on impact investing, and it provides an excellent overview of what needs to happen.

Their list of critical success factors was to view this from different parties’ perspectives but let me provide the list of significant issues to be resolved:

• Developing a range of different but creative packaging instruments that make it possible to gain sufficient returns and bring the different parties together in this project.
• Most probably have some infrastructure specially suited to manage opportunities (separate stock exchanges, intermediaries and specialists)
• Form a clear network/ community to enable linkages between investors and explore common goals.
• Encourage sufficient commercial capital to participate in joint deals by involving all possible investors that see this as critical to contribute funds too.
• Build sufficient submarket funds or grant capital that might have different investment rates so a more ‘blended’ rate is attractive and resolves different ‘benefit’ criteria between parties.
• Achieve a common approach for assessing social/ environmental elements of investment from research and valuation aspects.
• Structure a viable market for investment opportunities where competitive returns can be demonstrated that
• Impact rating systems can be developed that offer acceptable minimum standards to certify companies and verification and are not actually equally destructive.
• Achieve a growing standard of metrics that set out goals of achieving social or environmental objectives
• A real push will be needed for more product innovation that meets the challenges, is able to be scaled up and overcomes potential (parts of) society’s objection or concerns with accepting the changes it might bring.

This is an evolutionary path.

The view is this is going to be a ‘messy’ transition in the evolution of  the activity surronding this. The fact that it is bringing together significant parties at the White House recently does indicate that this is getting a level of ‘traction’ and serious policy attention.

There is certainly growing interest along with real social pressure on the recognition for finding new innovative solutions to social and environmental challenges that reduce these pressing issues and become catalysts for new job opportunities and provide positive impact for societies.

We do need to explore new ways to resolve difficult issues. It is worth exploring and watching this Impact Economy movement as this can lead to that necessary combination of capital, talent and social challenge resolve that can partly help move us forward in new innovating ways that can hopefully engage all parts of society.

We do need some positive movement in this and if there is real convergence that solves societal problems through new innovation then we should all take note.

The post Impact investing for social good through new innovation- a growing momentum? first appeared on Building Your Innovation & Ecosystem Intelligence.

Social demands will inevitably increase as nations are being confronted with budgetary constraints, increased deficits and mounting debts to resolve.

Social needs will become more pressing and innovation, social innovation, will increasingly explore opportunities to extract ‘more from less.

Innovation can play an increasing part in resolving social challenges that are increasingly confronting us.

Starting a new movement on social innovation in Europe

Recently I became a member of www.socialinnovationeurope.eu . I certainly feel this is going to offer something exciting and vibrant. It is a growing community of thinkers, creators and innovators with the knowledge and skills to change the way we face Europe’s most pressing issues.

Contributors to the site will take a strong hand in shaping the direction of social innovation across Europe, breaking down silos and raising a unified voice. I need to find my own part in this, as there are multiple ways for contribution, which I’m still presently figuring out.

Social Innovation Europe (SIE)’s online hub present aims are to become an indispensable resource providing the latest information on European social innovation. It will feature interviews with prominent innovators, case studies of successful ventures, the latest research, and in-depth analysis from the leading thinkers in the field.

Why do we want to address social innovation even more now?

Social needs are now more pressing than ever, they will regretfully get worse before they get better. The combinations of the recent global crisis, the economic shifts from the West to the East will increasingly reduce opportunities and increase the social dimensions that will need to be dealt with. We are in social strife with unemployment challenges, ageing and climate change that all have growing stress on declining revenues in the West.

As our financial resources are getting more limited, new solutions must be found. The short term fiscal stimulus packages and bailouts have alleviated the short term but we do need to provide new innovative solutions to pressing social demands that will occur in increasing ‘waves’ over both the short, medium and long term perspective.

Social challenges are actually innovation opportunities

The challenges are tough but should be viewed as potentially new opportunities for economic and social innovations to take place. Providing solutions that are high in quality (or high enough), beneficial and affordable to the needs of the users requiring these, and that can add hope and provide value to improving their daily lives.

These can offer different combinations of business, government, and entrepreneurs different avenues to explore, that are both worthwhile and contribute to society but can offer valuable job and yes, profitable enterprises, and returns for investments made.

Social innovation means what?

Social innovation is innovation that is social in approach, in both the end result and the means of getting there. It offers new products, services and business model opportunities that simultaneously meet social need, that deliver more effectively than alternatives,(if there are ones) and most importantly, it create and builds new social relationships, communities and collaborations to achieve these ends.

They can make ‘us’ feel good by our direct contribution to enhancing society’s capabilities to act together to resolve part of the challenges we need to confront. Social interactions and vested interests need to be combined and as a direct result it generates a ‘social capital’ that builds in value by its activity and by its increasing movement up the experience curve.

There are barriers that will need to be knocked down to accelerate social innovation.

Like any innovation, social innovation has risks. It offers all the usual ‘suspects’ associated with innocation of good imagination, perseverance, overcoming adversity, shortage of funds and a continued optimism that your idea to create a product or service and its implementation, can and will happen.

There are some important differences for social innovation though.

Social innovation is far more a participative process, partnership forming, constantly identification seeking, that has more ‘scaling-up’ problems than business innovation and that is hard enough! You are confronted by more society barriers, which is often at odds with what you are trying to resolve.

Sometimes you meet a totally incompatible barrier that need that extraordinary leap of creative design to navigate around and that is where the model (social against business model) comes into play in analysing and resolving to overcome this. Social innovation does needs its own tools, techniques and models that today are somewhat lacking.

Equally, when you step more into the social innovation space you come up against a more traditional risk-adverse and cautious mindset unless the crisis is dire. The culture of administrators, their wish to stay with closed systems and often fragmented systems are tough to overcome.

The skills of many around you, wanting to help, can be more limiting in experience but often can make up this ‘deficit’ through their enthusiasm.

There is also the constant battle for funding through the scaling up from pilot or experimentation to larger scale (the social innovation life cycle) which can be demanding and often distracting, often taking you away from your primary task of resolving the social problem.

Scaling up seems a huge obstacle to overcome

In all I read and understand, the scaling up from that perfect local project into a regional than national one, is immensely hard. There are very few examples where the combination of coherence, comprehensiveness and broader outlook come together without significant changing of a workable local model.

The art of communicating, of diffusing the skills, knowledge, understanding of the key variables and the local experience are hard to often translate. Much in social innovation is intangible, more than business; as it is in tacit knowledge that often successful social innovation solutions are made.

How do you scale up a highly fragmented set of solutions when we lack more often than not the developed networks and the intermediaries that can assist?

Some of our established institutions like the Salvation Army can find major new roles to invent and work within, that provies the structure and need of networks, contacts and established infrastructure well established. Its mission and role emphasis might need to change to capitalise on this.

The three categories of social innovation

In a report, which has certainly helped shape this blog, on “Social innovation in the European Union” they are suggesting that you can schematically classify social innovation into three broad categories:

Firstly, grassroots social innovation that needs to respond to pressing social demands and directed more at the (growing) vulnerable groups in society.

Secondly, a broader one that addresses societal challenges where the boundary blurs between social and economic and directed more towards society as a whole. (My Salvation Army could be a clear example or the Red Cross or even the Open University)

Thirdly, the systemic type:  that relates to fundamental changes in attitudes and values, strategies and policies, organizational structures and process delivery systems and services. These include climate change, recycling as examples.
All three categories play a part in helping to manage and shape society.

Economic & Social Dynamism

There are many social challenges that will need creative and careful strategic framing that require innovation thinking. The pressing social issues will continue to rise to the highest political level and eventually ‘they’ will act, they will be forced too.

Social Innovation will then explode in importance when the combination of all our forces: government, non profit, business, communities and entrepreneurs all come together, as they have to, so as to resolve growing social problems through new innovative approaches.

We all need to first be aware and then engage in understanding the power and opportunity social innovation can provide and the part we can play.

Innovation can be a powerful enabler to many of the social challenges we are in need of facing up too.

It should be on everyone’s radar as it is only one ‘touch moment’ away from social issues that are all around us.

The post Renewing Innovation through the Social Innovation Agenda first appeared on Building Your Innovation & Ecosystem Intelligence.