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  Research report: September 2007 In and out of sync The challenge of growing social innovations Geoff Mulgan with Rushanara Ali,Richard Halkett and Ben Sanders    In and out of sync The challenge of growing social innovations Foreword Social innovation has become a popular phrase with politicians and investors around the UK. Thisreport is about how private and third sector organisations innovate to respond to social needs.It seeks to explain why certain social innovations grow and why others don’t. It tracks many ofthose reasons back to the environment in which the innovation exists – how much demand there isfor it. But this is not a defeatist argument. Using eleven case studies, the best literature available,and a strong analytical frame, this report highlights how many innovators have sought to changethe characteristics of that demand – in effect to create a market for their innovation. And it showshow choices that are under the control of the innovator (like organisational form) can have adramatic influence on success.At NESTA, we like to work on research that has clear and practical implications. This reportdoes just that – ending with a set of recommendations for policy-makers and funders of socialinnovation, and with a toolkit for innovators themselves. We also like to work with outstandingresearch teams who represent leadership in their field. In this case, we have been fortunateenough to work closely with a team from the Young Foundation headed by Geoff Mulgan andRushanara Ali.The field of social innovation remains relatively undeveloped. We hope that this project advancesunderstanding considerably. However, as always, we welcome your input and your comments. Jonathan Kestenbaum CEO, NESTA September, 2007 3 NESTA is the National Endowment for Science, Technology and the Arts.Our aim is to transform the UK’s capacity for innovation. We invest in earlystage companies, inform innovation policy and encourage a culture thathelps innovation to flourish.  Executive summary This report is about how social innovations spread and grow. It aims toprovide a theoretically and empirically grounded guide for the manypeople involved in social innovation: innovators, funders, policy-makersand commissioners. It draws on a growing body of research on patterns ofgrowth, and distils its conclusions into a guide to help direct scarce resourcesmore effectively to maximise social impact. To validate and extend the existing literature,we undertook eleven case studies of socialinnovations. Although their patterns of growthvary in detail, they highlight four necessaryconditions for putting innovative products,services and models into practice sustainablyand on a large scale:‘Pull’ in the form of effective demand ,which comes from the acknowledgement of aneed within society, and from the recognitionof that need by organisations (or consumers)with the financial capacity to address it;‘Push’ in the form of effective supply ,which comes from: first, the generation ofinnovative ideas (by creative individualsand teams, potential beneficiaries andusers, often inspired by anger, suffering orcompassion); second, the development ofthose ideas into demonstrably workableforms; and third, their communication anddissemination;  Effective strategies that connect ‘pull’to ‘push’, and find the right organisationalforms to put the innovation into practice;and  Learning and adaptation to ensure thatthe innovation achieves social impact, andcontinues to do so as the environmentaround it changes.When these elements are all in sync,innovations achieve ‘resonance’ with theirenvironment and come to appear natural, evenobvious. However, many promising innovationshave foundered because critical elementswere missing or ‘out of sync’. There might bewide recognition of a need – but not on thepart of organisations with power and money.1.2.3.4.There might be plenty of innovative ideas, buta failure to communicate them widely or todevelop them adequately. Or there might be noorganisations with the capacity to implementpromising innovations effectively.If any one of these factors is deficient, thepotential of the innovation will not be realised.However, smart strategies can compensate forweaknesses. If demand is judged to be weak,the priority may be advocacy, rather thanorganisational growth. If supply is weak, thepriority may be further development of theinnovation itself. A wide range of other types ofstrategies are also possible, including seekingto change tax treatments or regulation, alliancebuilding, gathering evidence, or demonstratingeffectiveness on a small scale.The case studies in this report all point to thecritical importance of organisational choices. Inthe past, innovations have sometimes spreadthrough new organisations (such as the RedCross and Grameen, 1 or, in the last decade,OhmyNews and The Big Issue ), and sometimesthrough existing organisations. The ways inwhich they grow can be thought of as forminga continuum.At one end, innovators attempt to control howtheir innovation spreads by containing theinnovation within a single organisation, and insome cases, by protecting intellectual propertythrough legal means. At the other end of thespectrum, innovations such as rural micro-credit or community recycling spread in a muchlooser way, with no-one exercising ownershipor control. In these cases, the innovationsspread more like spores or seeds in the naturalworld, and implementation happens through arange of existing as well as new organisations.In between these two poles, there exists a 4 For further information onthe Red Cross and Grameen,see: http://www.ifrc.org/and http://www.grameen-info.org/1.  wide variety of halfway houses in which limitedcontrol is exercised over the innovation:licensing and franchising; structured open-source methods; federations or controlthrough professional networks. Which optionis best for maximising the social impact of aninnovation depends on many factors, includingthe importance of tacit knowledge and keyrelationships, and capital requirements.In the case that organisational growth is seenas the best way to spread an innovation,special challenges follow. Founders who playeddecisive roles in advocacy may be ill-suitedfor management as an organisation grows.Governance structures designed to providesupport for managers may be inappropriatewhen tough decisions are needed. Informalorganisational cultures may become disablingas scale increases and funding relationshipsbecome less direct and personal (e.g. withphilanthropists and foundations), and moreimpersonal and contractual (e.g. with publiccommissioners).However, social innovations’ biggest andmost lasting impacts are often not the resultof organisational growth, but come fromencouraging emulators, and transforming howsocieties think (with new concepts, argumentsand stories). The most successful innovatorsdo as much to change the conditions ofdemand as they do to create supply; theyare campaigners as well as organisers. In thelong-run, while ideas are often best promotedthrough the example of real organisations,their power and impact can far transcend theorganisations that first put them into practice. The missing middle: improving the socialinnovation system There are frequently strong pulls from politics,public agencies, civil society and the public forspecific social innovations, and strong pushesfrom people with creative ideas. However, thereis a striking absence of institutions that link thetwo. The fields of science and technology arereplete with intermediary bodies charged withlinking the supply of ideas to effective uses(e.g. the institutions involved in technologytransfer, high technology venture capital, andresearch foundations). By contrast, in the socialfield there are:Fragile markets for the results of socialinnovation – even the innovations with theclearest evidence of successful impact arenot guaranteed to find reliable funders andpurchasers; ã Underdeveloped capital markets to providefinance for social entrepreneurs and a lack ofother organisations trying to put good socialinnovations into practice, and then growthem;Few and weak institutions and networks forspreading innovation around communitiesof practice (albeit with some impressiveexceptions);Few established methods and strategies fornurturing and growing social innovations (sothat most practitioners feel themselves to beimprovising); andUnder-developed labour pools from whichto draw managers and others to help withgrowth.These weaknesses make it difficult forpromising social innovations to get throughperiods of difficulty and underperformancethat characterise even the most successfulideas. They explain why many innovationsstill depend on the personal commitment ofphilanthropists, individuals within foundations,or champions within government.At a strategic level, the priorities for improvingthe scaling-up and spread of social innovationsinclude:The availability of more mature sources offinance, including sources of finance thatallow genuine risk-taking where there is thepotential for substantial social impact;More developed exchanges andintermediaries;Stronger knowledge and experience base forthe whole field of social innovation; andStronger incentives and encouragement forcommissioners and managers in the publicand third sectors to adopt better performinginnovative models rather than sticking withfamiliar but less effective older ones.Together, these would contribute to a moremature social innovation system, analogousto the many and diverse systems which existaround the world to promote technologicalinnovation. ãããããããã 5
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