Growing Social Innovation

With it’s Office of the Third Sector, the UK invests a lot of money into supporting the social enterprise sector. NESTA – the UK’s National Endowment for Science, Technology and the Arts brought out a report titled “In and Out of Sync: The Challenge of Growing Social Innovations,” brought out a report which looks at the ways in which social innovation grows and spreads.

Drawing from 11 cases studies, the establishes conditions for growing a social enterprise. It also addresses the fundamental issue of growth: synchronizing ‘demand’ and ’supply’ factors through several strategies. Additionally, the report seeks to establish that there is in fact a distinct difference to the diffusion of social innovation from a diffusion of technology innovation, and therefore emphasizes the need to address social innovation differently.

The four necessary conditions for scaling up innovative products and services are identified below:

• A ‘pull’ factor, in the form of addressing an acknowledged societal need.
• A ‘push’ factor which stems from effective supply
• Effective strategies that connect ‘pull’ and ‘push’ factors, and finds the right organizations structure for the innovation
• A process of learning and adaption that ensures the innovation achieves its social impact, and adapts to changes in the environment

One finding that comes out of the report is the lack of institutions that connect ‘pull’ and ‘push’ factors.  The report identifies several causes for this — fragile markets, an underdeveloped capital market, weak institutions and networks, a lack of knowledge of established methods and strategies for nurturing and growing innovation, and a lack of managerial talent.

Key to the growth of innovation is the strategy in use. The report develops a framework for classifying the growth/diffusion of innovation — depending on the organizational form, the control exerted by the innovator, location and the intended beneficiaries.

The framework identifies the following types of innovation diffusion:

• Uncontrolled diffusion: Typically carried forward by a self-appointed champion. Such diffusion tends to adapt itself to local conditions.
• Innovator-led diffusion: Such innovation typically follows prescribed processes and methods established by the innovator or parent organization. This can be done through concerted promotion through formal or informal networks, franchising, licensing and so on.
• Taken-over diffusion: Where innovators can adopt a deliberate strategy to allow their innovation to be taken over by a larger organization.
• Diffusion through organizational growth: Where the innovation spreads through the growth of the company itself

Besides adopting different strategies, the report goes on to list a set of priorities required for improving and scaling up innovation:

• Availability of more mature sources of financing. Particularly those that allow genuine risk-taking
• Developed exchanges and intermediaries
• Stronger knowledge and experience base for the field of social innovation
• Incentivizing the adoption of better performing models

While the case studies used in the report are not based in the developing world, the findings of the report definitely have implications for how social innovation globally can be enhanced.

This report was authored by Geoff Mulgan with Rushanara Ali, Richard Halkett and Ben Sanders. Read the entire NESTA report here.