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 Ãœber 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?
The Cynefin framework is helpful in making a distinction between the worlds of complicated problems and the worlds of complex ones. One simple distinction between these two worlds is the extent to which they can be known. In a complicated domain, the parameters of the problem can be known and several good practices can be hammered out, with largely knowable results. In the complex domain, the initial conditions are unknown and the results are unknown which is why small experiments designed to tell us more about what is going are very useful for creating emergent practice.
Financial markets are famously complex beasts. To the extent that you can manipulate them, you can externalize the unknowable parameters and create equations that tell you what will happen if you create and sell certain things. This interesting article by Ian Stewart in the Guardian is the story of an equations, the Black-Scholes equation – that is responsible for much of the large profits that derivitives traders are able to make. In the article, the author talks about how pure markets work, and how any financial models have to necessarily modify the complexity out of the market’s dynamics:
Any mathematical model of reality relies on simplifications and assumptions. The Black-Scholes equation was based on arbitrage pricing theory, in which both drift and volatility are constant. This assumption is common in financial theory, but it is often false for real markets. The equation also assumes that there are no transaction costs, no limits on short-selling and that money can always be lent and borrowed at a known, fixed, risk-free interest rate. Again, reality is often very different.
In other words, for the sake of profit, people using this equation just made stuff up that was more often probable than not and proceeded with their blindners on. They received substantial awards for this behaviour, because in our world at the moment we are addicted to knowledge. If you can show that you can make an unknowable system knowable, you will become a hero in this culture. We are so afraid of not knowing, so afraid of emergence that we are willing to bet trillions of dollars on a contrived view of reality. The consequences of this action are that fatal mistakes are amde when the true complexity of the world creates an emergent situation.
In these times, we need more honest leadership. Not leadership based on clever imaginings about how the world works, but leadership based on a collaborative approach to being in the emergent messiness of the world in every time. Of course there is a time and a place for models, but when we become addicted to them such they they take us into a complexity domain without the right thinking, we set ourselves up for catastrophic failure.
Despite its supposed expertise, the financial sector performs no better than random guesswork. The stock market has spent 20 years going nowhere. The system is too complex to be run on error-strewn hunches and gut feelings, but current mathematical models don’t represent reality adequately. The entire system is poorly understood and dangerously unstable. The world economy desperately needs a radical overhaul and that requires more mathematics, not less. It may be rocket science, but magic it’s not.
To which I would add it probably needs a healthy dose of tolerance for emergence as well.
Just coming off an Art of Hosting with friends Tenneson Woolf, Caitlin Frost and Teresa Posakony. Something Tenneson said on our last day as we were hunkering down to do some action planning, has stayed with me. He said something like “it is easy to create actions that go off in a million different directions, but much more sensible to create actions that come from a common centre. There is something about holding that common centre together invites trust so that we can release responsibility to action conveners and known they are initiating works that comes from our common shared purpose.”
People often make the distinction between talk and action, largely in my experience as an objection to the amount of time it takes to be in conversation around complex topics. It seems that with complexity the conversation is endless and can go on forever. And almost by defintion, that is true. That can be a very frustrating experience if you consider the action – reflection process to be a linear one in which we spend time figuring out what we are going to do and then go and do it.
That approach works well in the complicated domain where everything can be known, or enough can be known that we can discern the wisest path forward. But the complex domain contains a number of features which makes that kind of linear thinking folly. First of all there is the prospect of emergence: things will happen as a result of interactions in the system which could never have been predicted and which may radically alter strategy and action. Secondly, actions undertaken in the complex domain cannot have their success or effectiveness guaranteed and therefore complex systems actually benefit from having many actions undertaken, with an ongoing developmental evaluation process as to the efficacy of these actions and the connection to the centre of action is constantly changing.
A lot of the work I do in hosting conversations is about both discerning what is our shared purpose as well as generating action that can come from that shared purpose. And, with the smart clients I have, we repeat that cycle over and over as they continue to operate in a changing and complex world. It creates strategy that represents a fine line between reacting and hedging your bets on some pretty good ideas. Conversation and time and a wicked question helps us to check into and explore a deeper core purpose that can lie at the centre of ideas for action. I have been lately calling this a generative core: an idea at the centre that is so powerful and compelling that it alone can inspire interesting and creative ideas. There is an energy to a generative core that is inviting, and that seems to make people WANT to be in conversation and relationship with it. There is a quality to the questions that lie in the generative core that open ourselves in exciting ways to new possibilities. Good conversation can help to illuminate this core purpose
Action planning from this place means coming up with good ideas and designing what David Snowden and others have called “safe-fail probes” which allows us to begin small. In the Berkana Institute we call this approach “start anywhere and follow it somewhere” indicating that this kind of action creates its own momentum over time and therefore needs to be shaped and carefully watched. Action that arises from agenerative core can be borne in conversation, and should be developmentally evaluated in conversation. Conversation becomes a key tool in designing, evaluating and making meaning of what is going on. And while actions and probes are being designed, tested and implemented, at the same time we have to pay attention to what we are learning about our core purpose, because that is always changing too.
This is not easy to understand, especially in a world where proceeding in an orderly direction from point A to point B is a desirable and seemingly sensible thing to do. But understanding the nature of complexity is important for action planning, because it can actually unleash the kinds of ideas that otherwise seem to never come to the surface. And it can make a community or organization powerfully resilient to shifts and changes that require retooling without stopping. It seems like a long investment of time to be in conversations that slow things down, but I invite slowing down to go fast, because the speed at which activities and ideas can be implemented on the other side of a well centred and well bounded discernment process can be breathtaking.
This is an estuary. It is the place where a river goes to die. Everything the river has ever been and everything it has carried within it, is deposited at it’s mouth where the flow slows down and the water merges with the ocean. These are places of incredible calm and richness, but they lack the exciting flow of the torrents and waterfalls and cascades of the upper river system.
Yesterday I was speaking with a client who worried that an initiative we had begun together was heading towards the estuary of action – a long term visioning processes where lots of things are said and very little is done. “We’ve done that before,” she said. Nobody likes that. I wracked my brain to see where it was that I had led this group to believe that this is what we were doing. We had done a World Cafe to check into some possibilities for the organization and we had done a short Open Space to initiatie some experimental actions. We had learned a little about the organization from these two gatherings, and we were, at least in my mind, fully entered into a participatory action learning cycle, working with emergent ideas, within several well established constraints. I was surprised to hear the fear spoken that what we were doing was “visioning.”
Then I realized that what we were dealing with was an entrained pattern. People within this organization associated dialogue with visioning, and the results of dialogue with a mass of post-it notes and flip charts that never get typed up, and action that never comes of it. Likewise, it turns out that the associated planning with a process that begins with a vision, and then costs out a plan and takes that plan to a decision making body which then rules on whether the project can proceed, by allocating resources. Both of these views are old thinking, rigid patterns that lock participants in a linear view of action that looks like this:
The truth is that I had been viewing the process as an action learning cycle:


So now that we are a little clearer on this, there was a distinct relaxation among the group. We are heading into some uncharted territory and it is too early to nail down concrete plans about what to do and likewise simply visioning doesn’t take us anywhere either. Instead, we are harvesting some of the rich sense of community that exists, opening some space for a little leadership, inviting passion and responsibility and making small starts, The small starts are confirming some of what we suspected about how the organization works, which is good news, because we are developing a pattern of action together that will help us all as we move forward to do bigger things with more extensive resource implications. This is the proper role of vision and planning in emergent and participatory processes – gentle, developmental, reflective and active.
My friend Tom Atlee has been a remarkable documented of the lessons from the #Occupy movement. Since I was at Wall Street two months ago I have continued to be astonished at the creativity, leadership and communication styles emerging from the movement.
Today though, Tom has a long post on perhaps the most astonishing event yet. Following the well publicized pepper spraying of students at UC Davis, a remarkable non-violent action took place to de-escalate the situation. Take the time to read the whole post and watch the full video. It is moving, inspiring and possible ground breaking in the way police and protestors can be invited to work together to keep peace. It is the essence of real time chaotic action.