Very interesting little article from David Wilcox about the differences between social entrepreneurs and social innovators. Here is how he describes those differences, from a tactical perspective:
4 Differences Between Social Entrepreneurs & Social Innovators
Here are four reasons why social entrepreneurs are significantly different than nonprofit social innovators:
1. Two Worlds
Most foundations and many nonprofits came into existence through a significant donor or donation. The people who shepherd the outcomes for those donors must be attentive and accommodating. Quite simply, donors drive much of the nonprofit world’s activities.
Most social entrepreneurs start with their very personal obsession to improve lives by solving a challenge or inequality, prefer to spend as little time as possible fund raising, and often bring innovations to the table that decades of nonprofit work have not uncovered.
Social enterprises typically begin with a small loan, such as the $46 that funded Professor Yunus and the invention of microfinance. As Yunus points out in every speech he gives, “When I saw a problem, I started a business to solve it.”
2. The Against Position
In branding, claiming the against position means using a competitor’s dominant spend and mindshare to carve out an anti-space—the Un-cola for example.
Social entrepreneurs are quintessential against positioners. At the New York Forum on Africa held in Gabon, Professor Yunus stated it clearly: “I looked at how traditional banks do business and we did the exact opposite.”
In very practical terms, these stubborn, opinionated entrepreneurs frequently show up after the aid and development models have failed or at least failed to become sustainable. Their arrival on the scene is less a Kumbaya moment and more a “disruptive innovation” one.
3. Core Competencies
Successful nonprofits are either great at fundraising or great at measuring impact. The superstars are good at both. These critical capabilities assemble billions of dollars to accomplish good works and they represent an important innovation source for the world.
Social entrepreneurs fundraise too, but they hate it. Seldom do they surface innovations in fundraising. A primary goal for most social entrepreneurs is to demonstrate that appropriate capacity building enables their innovation model to solve problems profitably and reduce dependence on fundraising altogether.
4. Buying Impact/Measuring Success
Jason Saul of Mission Measurement exhorts funders to stop thinking about giving to charities and to shift to buying impact. As valuable as this change to the donor frame would be, the repercussions would also result in significant reductions in the total charity population.
Funds should flow to the organizations making and reporting measurable progress actually solving key challenges. But impact buying reinforces the prevalent tendency in the nonprofit world to spend significant dollars on measurement. Funding those added “measurement investments” makes solutions more expensive and less sustainable.
Successful social entrepreneurs create business models where measurement is integral to the normal course of solving a challenge. This one innovation actually can make the difference between a profitable and a non-profitable model. Healthpoint Services in the Punjab is the first to couple the delivery of clean water and healthcare. This disruptive innovation touches villagers each day: when they pick up their water they are also exposed to an urban quality healthcare clinic offering services at a much lower cost.
So what does Healthpoint management measure?
Here’s one: At what monthly water subscription price do half the villagers become customers in 90 days? For Healthpoint, measurement is not a separate expense, it is a core business activity.
I do a lot of work in the non-profit, social benefit sector and find that there is a real stifling of innovation there, especially in the traditional services sector. It’s not that there isn’t an understood need for radical change in how services are delivered, but there are a number of factors weighing against these strategies being created. Riffing on David’s observations, here are four things that get in the way of social innovation…
1. Funding Über alles
Funding and the attendant accountabilities that come with it determine much of the scope of what can be offered. Whether it is government funding or private funding, social innovators have to work within highly constrained fiscal environments. In many cases, they cannot even raise money outside of their operations for fear of losing charitable status. IN Canada recently, organizations that have been trying to create social innovation in the environmental sector have had their government funding revoked, their charitable status questioned and their operations audited. In times of scarce resources, leaders are unwilling to jeopardize what little they have to take a risk on new ways of doing things.
2. The For Position.
Most who are working in the traditional and mainstream social services sector are constrained by societal expectation of what services should be. Some exist in a regulatory environment that makes them little more than non-governmental delivery channels for government services. In the work I have done over the years in Aboriginal child and family services this has been a huge frustration. Agencies that want to transform the nature of these services are unable to do so because they get locked into having to deliver services the same way the Ministry for Children and Family development does it. This is frustrating for families and communities who accuse their own community-based agencies of being little more than Aboriginal faces on non-Aboriginal government services. Social innovation os hampered by an inability to take an Against position.
3. The wrong Core Competencies
Many mainstream social service agencies have gone to a management model of leadership that values the MBA as the primary qualification. Increasingly, CEOs of charities are being hired from traditional business schools and they don’t even have the range of experience or innovative approach that social enterprise CEOs have. This is the result of risk aversion…if we can hire a good manager to be careful with our money, we will survive the funding crises in the sector. the problem of course is that the work becomes narrowly defined on operational efficiencies and strategies that are about problem solving and fixing rather than taking the long view about the complexity and disruption facing the sector. Relying too much on risk aversion constrains the ability to innovate other than incrementally. It won’t surprise you that I believe leadership that hosts the margins of the social field for co-creation and emergence is critical to finding and precipitating real social innovation.
4. Becoming a slave to measurements
Alongside the management approach to services and the constraints on funding comes a slavish amount of accountability to targets. These targets are often chosen because they are easy to measure but they sometimes have little or no relevance to the context. I like Healthpoint’s metric of asking “At what price do half the villagers become customers in 90 days?” I also like what is happening in the field of developmental evaluation, which provides a set of tools and resources for working in complexity with safe fail prototyping of new actions. But in the current climate, with managers and funders demanding easy to see outcomes, their is a hard sell. A group I have been working with that is trying the impact the social determinants of health finds itself often wanting to know what changes have been happening in quarterly periods. That is simply not the right way to look at things, but without numbers, funding is held up. The flip side is that the wrong numbers get the wrong stuff funded, and rarely are the numbers representative of innovation.
Perhaps the biggest reason why social innovation and social entrepreneurship are different is the location of power. In social innovation power is often vested in the funder and the extend to which the funder is wedded to status quo or simply risk averse is the extend to which social innovation is constrained. In social entrepreneurship, power rests largely with the entrepreneur and there are many more degrees of freedom to pursue radical innovation. And it’s your money to lose!.
I think an application of more strategies from David’s list to the shadow list of problems that I’ve seen would accelerate social innovation. Probably the best way to innovate in the social sector is to steal from social enterprise. One leader I know makes strong recommendations for her network to watch TED talks as a daily practice, and that simple form of cross pollinating opens minds for sure.
What strategies have you experienced that have acce;erased real, deep and lasting social innovation?