Breaking out of the current economic dilemma needs radical innovation

I gaze through unbelieving eyes at the continued rise of unemployed in Europe. Unemployment in the Eurozone has reached another record high with the seasonally-adjusted rate for April  2013 going to 12.2%, up from 12.1% the month before according to the European Commission’s statistics office, Eurostat:Eurozone Unemployment May 2013 EurostatAn extra 95,000 people were out of work in the 17 countries that use the Euro, taking the total to 19.38 million. Both Greece and Spain have jobless rates above 25%. The lowest unemployment rate is in Austria at 4.9%.

It seems never-ending.

Youth unemployment remains a particular concern; you simply have to wonder what we are storing up in the longer term with this situation. Can the youth ever catch up, can our society as it is positioned give them the opportunities to turn today’s grim world into a world of optimism and contentment, or is it a lost generation?  In April, 3.6 million people under the age of 25 were out of work in the Eurozone, which translated to an unemployment rate of 24.4%.

Why does this issue of growing unemployment seem to be drowned out by events that seem important on the day but realistically pale in their significance against something as damaging as this present crisis?

Examples of persistent economic and social challenges

We are facing significant society challenges. These include declining Economic competitiveness, deepening Social inequalities, rising Mental ill-health, increasing Crime and social disorder and we see growing Alcohol and drug abuse, to name some of the issues being increasingly tackled as part of the consequences of these tough economic and social times.

We must increasingly recognise that the cost of deferring concerted action to confront these growing set of social challenges is beginning to rise – and could easily outpace our ability to respond.

Can we afford to wait? There are so many pressing questions.

The cost of lock in

More fundamentally, our existing approaches and institutions are also inadequate because, in the main, they lack the capacity to develop the new approaches we need through innovation.

We are faced increasingly with the ‘innovator’s dilemma’, identified by Professor Clayton Christensen, where a company or in this case whole nations can’t seem to address the changes (rapidly) going on around them.

Their existing models become obstacles in the face of changing conditions, deepening issues, new threats from emerging nations, rapidly changing technologies and a growing inability to overcome rapidly changing circumstances wrought by deteriorating economics, (infra) structures and upheavals.

Any organisation or system or even nation is susceptible to ‘lock-in’, whereby it loses the ability to develop novel ways to serve its customers or clients or markets because it has invested so heavily in its existing processes and technologies. This is part of one of the fiercest debates on the future of the European Union we have yet to have.

Our understanding of innovation has broadened

Today innovation is increasingly being understood in a broader perspective than just products alone. We are in a period of major transformation in what we mean by ‘innovation’. We need to push innovation across its broader understanding to explore new business models, unique services, greater collaborative techniques and community engagement.

Traditional innovation is insufficient for the challenges we face, this will not resolve climate change, an ageing society or reinvent public/ private services that match demand and need. We need greater connections across society.

There is a growing buzz around the Quadruple Helix of Innovation, where Government, Institutions (Academia, Foundations and NGO’s),  Industry and Citizens need to collaborate together to drive structural changes far beyond the scope of one organizations and what it can achieve on its own. These will be increasingly through innovation engagement platforms where people use the designed structures to purposefully intensify exchanges to co-create value to solve our growing bigger problems.

Seeking out unconventional solutions through more radical innovation

These are times when we need some visionary leadership and thinkers out there. Those that dare to breach present accepted boundaries of rigid beliefs and conventions. Those that push beyond the normal practices and can depart from the commonly held goals of establishment, by looking for non-conventional novel solutions that can draw in more of the disenfranchised, we are seeing today.

Facing New Challenges: Promoting active inclusion through social innovation

Social inclusion is a pre-requisite for the creation of a just and cohesive society in which each individual can fully participate and realise his or her potential. Active inclusion, as one strand of the broader social inclusion concept is looking to draw in and deal with inclusion into society of people furthest away from the labour market.

We need to make new markets full of engaged young people.

 There is clearly a latent demand building in our societies and we need to turn this into a more ‘effective’ demand, to forge the links between supply and demand that will generate new value and opportunity. For example, who can invest in effective supply by supporting promising projects and collecting evidence of what works that shows promise of broader societal impact?

Then who can we involve who can invest in effectively ramping this up. Perhaps focusing the different Foundations already set up can turn this latent demand into effective demand. This might mean shifting resources from other parts of the world, back into Europe to get the economic engine kick started again.

Applying innovation intensity to what we do.

We need to rapidly accelerate a rigorous experimentation mentality by focusing far more on major societal challenges that need addressing, before it is too late. Ones that can encourage and embraces local solutions needed and engagement within communities but the learning can be rapidly absorbed and the winning concepts can be scaled up to benefit more communities or areas of need and resolution.

Different type of economic statecraft are needed to position ourselves

How can we encourage and accelerate more of our companies to pro-actively integrate environmental and social impact into their business models? To put into place better measures of investment performance over the long-term that ties into greater social good?

There is also a real challenge today to lay out a different position for government. One that is more the facilitator, setting out the conditions for  the impact economy ecosystem and  supporting in ways that invest in the longer-term infrastructure and platforms that can scale the innovations and partnerships needed to achieve sustainable, long-term growth.

Government cannot ‘play’ in all three horizon investment areas, it does not have the capacity, experience, capital and resources. We need leaders who not just make tough decisions but set about putting in place the different conditions, incentives and clarification of who does what and why. The more the short-term crisis extends, the harder it becomes for Governments to participate in mid-term future innovation activities. They simply can’t easily.

A time and place where we are converging to make social innovation a critical element

We are in a current battle to address both short and long-term economic and growing social challenges. We are faced with growing unemployment still, especially here in Europe. The youth of today need to engage, otherwise we are in a great danger of losing a whole generation and that has such significant impact on or nearly everything we have in place today.

How are we going to draw upon the imagination and expertise of a broader set of innovators and tap into the entrepreneurs that are out there, to tackle some of these significant societal challenges?

Are we at the early stages of a new economic order with even more disruption?

Of course we might be in the beginning of a very different set of economic factors. We might actually be heading to a completely different type of economy that melds features which are very different from economies previously based on the production and consumption of commodities. Today we are already seeing blurred boundaries between production and consumption.

We need to think about repeated interactions, care and maintenance and not one-off consumption; and a strong role for values and missions that are far more inclusive for society and less focused on individuals; otherwise we end up with a divided society that clash in ways reminiscent of past revolutions where the majority finally rebel.

Are we facing even more instability in the coming years?

The present value equation in our societies is rapidly getting unstable; we need some fairly radical solutions to reverse the existing trends. I think the challenges will only get harder in the months ahead.

We do need to positively disrupt before we get more unexpected disruption occurring. Innovation needs to play an ever increasing part in this to explore alternatives and allow those lost from current economic activities to begin to participate and make a contribution where they see there is a future for them.

Declarations and Social Innovation

I always get nervous when declarations are made. Over two days in the middle of September, 2011 in Vienna a “Vienna Declaration” was made determining “the most needed social innovations and related research topics”

Maybe it is the way it has been written as a declaration but I’m left uncomfortable. When you read within the declaration document:

the ‘deliberations’ took place on what could be done to strengthen the social sciences capacity to play a prolific role in conceptualising and research of social innovation, and thus favour desirable development of the globalised knowledge society. This led to the idea of a Vienna Declaration that should identify critical areas of social and scientific development, and state a number of equally important corresponding research topics

The rationale behind the declaration states the Vienna Declaration is the first and immediate Core Deliverable of the Conference, created and established during the conference by joint efforts of all participants.

This makes me even more nervous, those that went decided to make a ‘universal’ declaration but OK, I can’t fully comment as it is difficult to see the whole context for this meeting. it remains unclear if it has a pivotal role or not within SIE in Europe, on behalf of the EU, on behalf of society within the EU? I’m left really not sure.

The declaration rationale then went onto stating:

The topics selected and prioritised do not represent the completion of the process of determining the most needed social innovations and the corresponding research issues. In fact the whole operation was built on being courageous enough to start the process of getting there, while at the same time remaining modest enough to know that this is just a beginning. It is perceived and shall be read, commented, and considered as the starting point in further clarification, specification, and operationalisation of important research topics social sciences shall deal with in an attempt to support processes of identification, development and implementation of the most needed social innovation of the 21st century. In addition, of course, social sciences also are requested to also study, analyse, and assess the societal impact of innovations in general, and of social innovations in particular

Finally the report suggests three main ways to build on the results achieved by the Challenge Social Innovation. (their wording)

  1. To collect questions, recommendations, comments of support and critical assessment alike, the first and unchanged result of the identification, wording and voting processes of the Vienna Declaration is published for discussion in an open forum at www.socialinnovation2011.eu. Any entry in this forum from 1st until 31st of Oct. 2011 will be recorded and analysed by the Steering Committee, (steering committee of the very people involved in the declaration?) feeding in to the revised and commented version of the Vienna Declaration in the first week of November.
  2. The revised version, taking into account suggestions and remarks to the initial version, will be broadly published and brought to personal attention of EC Commissioner for Research, Innovation and Science, Ms. Máire Geoghegan-Quinn, on Nov. 11th, 2011……..  At this stage of development it is neither possible to predict a certain impact in research and innovation support programmes, nor is there any guaranty that policy makers will really take into account proposed topics highlighted in the Vienna Declaration.
  3. The sensational high interest in Challenge Social Innovation – with 371 participants registered and many more who could not register any more because of extreme overbooking – together with high standards of presentations, discussions, and results delivered emphatically call for establishing further collaboration and community building. The European School of Social Innovation, formally based in Vienna, is conceived as an international Competence Network, reaching out to European and global scholars and institutions involved in social innovation research, academic education and vocational training. The proponents will organise a formal inaugural meeting later this year to establish the Board and other Organs of the Association, and to kick-off first concrete activities to become executed during  2012

This is a clear opening response to social need or is it?

It does sound like the conference was an overwhelming success for the participants. They are agenda setting, they are goal defining, they are research shaping. They are raising social innovation as a high sense of urgency to organize around. The question is for whom? For themselves to become an effective influencer independent of EU structure or an arm of the body set up to lead this?

They have adopted a set of research themes going forward made in response to major societal challenges  the Europe 2020 strategy sets measurable targets such as Employment of 75% of the workforce, investment of 3% of the EU GDP in Research, Development and Innovation (RDI), adapting to the challenges of Climate Change (20% less greenhouse gas emissions, 20% increase in energy efficiency, 20% of energy from renewable resources), reducing school drop-out rates below 10% and enabling 40% of age cohorts to complete third level Education, and reduce the number of people in or at risk of Poverty and Social Exclusion by 20 million.

I by the way have trouble with these strategies for Europe.

So far all I’ve seen does not tell me where we are coming from in regarding these measurable targets. Also I’m not clear how these strategies really does tackle real social problems of chronic health, promoting growth and well-being not only for, but also with the citizens, a stated objective of the initial social agenda documented by the European Commission. Where the citizens engaged in determining these? Does it offer effective ways or just more of the same ‘push’ of existing policies? These measurable results, have they been challenged, debated or discussed- I might have missed that.

This declaration leaves me concerned. Let me explain why

The explanation, I felt actually was very dismissive, as captured in the declaration:

“To aim at such specified targets involves the determination of a multiplicity of objectives and the need to co-ordinate scientific as well as practical activities in the wide domains of employment, RDI, climate change, education, and social inclusion. What is required here is only to a limited degree further development of business innovations and new technologies”. (my bold emphasis)

The declaration went on…..

The most urgent and important innovations in the 21st century will take place in the social field. This opens up the necessity as well as possibilities for social sciences to find new roles and relevance (my bold again)  by generating knowledge applicable to new dynamics and structures of contemporary and future societies”

In the present way this document is written it seems to have a narrow agenda where social science is seeking out its new role and relevance but what I found constantly missing was the social good that it will deliver?

For me social innovation needs scope, scale and impact in all we focus upon, otherwise it will not ‘shift the gauge‘ on social issues needing urgent action.

Is this socially reflective enough?

I’m just worried that the momentum behind this declaration is not as well thought through, balanced out, social inclusive, socially reflective enough.

If the wording is right “What is required here is only to a limited degree further development of business innovation and new technologies” then social innovation may never get off the ground. This cannot be right surely?

I still subscribe to the barriers that were identified in a document dated May 2010 entitled “Empowering people, driving change: social innovation in the European union”

It stated:

Social innovation is a risk-taking operation that requires imagination, perseverance and confidence to develop a creative idea of a product or service, and then implement a participative process and establish strong partnerships for its implementation and subsequent scaling-up. Social innovators are confronted with barriers that are often linked to an incompatible audit or regulatory culture.

Reviews and evaluations of EU programmes managed by the Commission have highlighted a number of obstacles to the development and mainstreaming of social innovations, including the traditional risk-averse and cautious organisational cultures of administrations, closed systems which favour single-issue solutions developed within clusters of organisations lacking mutual awareness, communication, networking and trust, fragmented capacities (resources, infrastructures and intermediaries) and skills (training, design tools, monitoring, validation and evaluation) preventing the development of a rich ‘eco-system’ for enabling social innovations, and insufficient stable, seamless and sustainable funding throughout all stages of the innovation cycle”

I must be missing something here– maybe social innovation inclusion

I seem to be reading another message with the Vienna Declaration from the above EU document. I’m certainly having a hard time to equate to this declaration. For me it needs an awful lot more contextual work and linking it back to all the social validation that has gone on before it needs to take place. Maybe I’m just reading this declaration wrong. Maybe I’ve missed some critical steps on how we got here.

I do get nervous on declarations, a lack of contextual background and timelines that allow for little constructive response. The implementation of any declaration is within the details and this misses much for me as it presently stands,  not in their enthusiasm but in relationship to what has been developed before this declaration, in policy outlines and direction of social concepts.

Declarations can be noble but the wider community needs fully engaging for any implementation otherwise it becomes, in this case just a further body of academic suggestions that might miss the real mark.

Impact investing for social good through new innovation- a growing momentum?

A growing group of investors around the world are increasingly seeking to make investments that generate social and environmental value as well as financial return. Sound impossible?

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 gathing 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.

Shortage and Plenty- the growing shift towards Social Innovation

On 16 and 17 March 2011, Social Innovation Europe will be launched in Brussels. Funded by the European Commission, Social Innovation Europe will create a dynamic, entrepreneurial and innovative new Europe with the intent for Europe to embrace the broader concepts within innovation and set an example globally for this social movement.

The aim is by 2014, Social Innovation Europe will have become the meeting place – virtual and real – for social innovators, entrepreneurs, non-profit organisations, policy makers and anyone else who is inspired by social innovation in Europe. This can provide the opportunity for social innovation – for so long on the margins – to take its place alongside business innovation at the centre of the economic stage.

Social Innovation Europe

The intent will cover the following:

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Social innovation comes of age in Europe

Social innovation is about new ideas that work to address pressing unmet society needs”

The shifts taking place in Europe

The competitiveness and challenges that Europe faces in the next ten years are significant. Innovation has been placed at the heart of Europe’s 2020 strategy. It is this clear recognition that innovation is the best means of tackling issues that will affect our future living standards is not new in itself, but it is this real political recognition of its place and importance, now that is.

Innovation is also our best means of successfully tackling major societal challenges, such as climate change, energy and resource scarcity, health and aging and becoming more urgent each day to address in more systematic ways.

European funding of innovation in recent years has perhaps placed far too much emphasis on research and development to deliver the growth and jobs it requires.

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Social will dominate innovation thinking in 2011 and beyond.

Putting the word social into our innovation thinking is going to be a really important thing to do in the coming year, if you haven’t already. It will dominate our actions increasingly.

The challenges of ‘social’ is everywhere; within organizations, in all sorts of collective movements, in politics, across government, society, markets, academic institutions and effecting our personal lives in a host of ways.

Society has to face up to some really tough challenges and only innovation can solve these with human beings inventiveness and ingenuity. Regretfully we have still an accelerating ‘creative destruction’ and we are often more Schumpeterian than ever.

Something has got to give and it will be within the broad social domain where it will all come together, many social things are converging or feeding off each other. Let’s take a brief look at all this social orientation going on.

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