Traditionally, the market has been seen as the primary source of innovation. This is because it has the structures, mechanisms and incentives that drive innovation. In Joseph Schumpeter’s formulation, it has the power of ‘creative destruction’, destroying the old in order to open the way for the new. Neither the state nor the third sector has the structure or incentive to innovate in this way. It is argued that they lack the mechanisms that allow the best to flourish and the less effective to wither away. The household on the other hand – that most distributed of economic systems – generates ideas but on its own lacks the capital, surplus time and organisational capacity to develop them.So what is the Social Economy?
Themes give it its distinctive character. One comes from technology: the spread of networks; creation of global infrastructures for information; and social networking tools. culture and values: the human dimension; on putting people first; giving democratic voice; and starting with the individual and relationships rather than systems and structures.
The social economy is a hybrid. It cuts across the four sub-economies: the market, the state, the grant economy, and the household.united by their focus on social goals, by the importance given to ethics, and by their multiple threads of reciprocity. Entities in the social economy have a base in one of the four sub- economies, but also operate across its boundaries.
Every year, hundreds of new innovation books are published with well meaning and intriguing recommendations for managers and organizations. They tout such innovation success factors as a risk-taking culture, inspired leadership, and openness to outside ideas. An increasingly impatient social sector sees innovation as the holy grail of progress. These challenges—this crisis, if you will—have legitimized a collective quest for new solutions—innovations!With the focus on innovation has come a tendency toadopt the language of markets and business, such associal ventures, hybrid business models, and impact investing. But while the innovation language has been adopted, the existing organizational and managerial knowledge base on innovation has remained largely unengaged.Applied studies tend to treat innovation primarily as an outcome and therefore imply that social innovation occurs when desired outcomes such as positive social change can be observed. Meanwhile, organizations that are the main locus of innovation activities are mostly treated as a black box and we know little about how social innovation develops within these organizations.Generating impact also depends on the ability of organizations to operate and innovate at the scale of the underlying social problems. The capacity of established organizations to keep innovating, therefore, is central to understanding the link between innovation and social progress.
innovation is often perceived as a development shortcutthus innovation becomes overrated. The tremendous value that is created by incremental improvements of the core, routine activities of social sector organizations gets sidelined. Therefore pushing innovation at the expense of strengthening more routine activities may actually destroy rather than create value.innovation in social sector organizations often has little external impact to showwhen it is enacted in unpredictable environments. Even proven innovations often fail when transferred to a different context. Yet the cumulative learning from failures may be tremendously valuable in understanding how a particular context ticks. This potentially builds and strengthens an organization’s capacity for productive innovation over time. In other words, if we evaluate innovation primarily by its outcome in the form of external impact, we may undervalue the positive internal organizational impact that comes from learning from failed innovation.Third, the hoped-for success factors for innovation that researchers and consultants have identified ignore the power of negative organizational factors, such as bad leadership, dysfunctional teams, and overambitious production goals.
Overrating the Value of InnovationMost of the value that established social sector organizations create comes from their core, routine activities perfected over time.Strict task specialization at every level of the organizational hierarchy—reminiscent of Adam Smith’s pin factory—enables steep learning curves and focused skill development.Look at the £20 note ( ASK for 20 pound note: Farinaz, Anna, Ruby , Chandra ????), which features the eighteenth-century economist Adam Smith staring fixedly at workers toiling in a pin factory. Smith argued that this factory would produce far more pins if workers specialised in just one or two tasks – such as straightening the wire or sticking on the head – rather than doing all the stages of pin-making themselves. The result was his most famous invention: the division of labour. relentless attention to incremental improvements lies at the core of an organization’s ability to build capacity and to make an impact on a scale appropriate to the social problem being addressed. Unpredictable innovation activities always compete with predictable core routines for scarce organizational resources, such as staff time and money. There needs to be a healthy balance between the allocation of resources among core activities, which enable predictable improvements and innovations, and the allocation of resources that lead to unpredictable results.Unfortunately, dedication and routine work do not have the sexiness factor of innovation. Undervaluing Failed Innovationinnovation often, almost always fails. complex social unpredictable world. Just as in the corporate business environment, productive social innovation thus relies heavily on trial and error and organizational learning. And despite high error rates and little positive impact long term, innovation as experimentation is often an essential prerequisite to continuous social innovation.…experimentation that leads to innovation failures can slowly improve an organization’s understanding of how a particular environment ticks. But then again unfortunately you can no write ”we experimented a lot, and failed a lot” in your corporations development report, right? Risk and financial support don’t go together well. Underappreciating the Difficulty of InnovationThe focus on outcomes and impact in the social innovation literature implies that the organizational side of social innovation is trivial and can be enacted by just doing the right things. The impatience with making fast progress has fueled a hunt for the critical success factors that can drive more innovation in organizations. The reality is that there are a myriad of factors that influence the characteristics and dynamics of innovation.Productive innovation therefore depends on the constellation of a large number of enabling organizational and contextual factors. But even a single negative factor, such as a shortsighted leader or a culture that is hostile to change, may prevent innovation.It needs a myriad to succeed and only one to fail.
WHAT does that mean for SOCIAL INNOVATION: Treat innovation as a practice, not result. Treat innovation as an independent variable, and reflect on multiple positive and negative outcomes during the innovation process. Recognize that innovation processes integrate different organizational and external factors. Understand the prevailing cognitive, normative, and political dimensions within organizations to determine how they might enable or stifle innovation. Reflect on the differences in innovation processes, influencing actors, and outcomes across different cultures and geographies rather than on general innovation factors. We know very little about such innovation-related factors as creativity, idea evaluation, and learning in organizations as they apply to non-Western settings.
organizational capacity for continuous innovation
Internal idea creation and/or accessing external ideas or innovations — the starting point of innovation processes, i.e., when organizational members create new ideas or access externally established ideas or innovations that are new to the organization by actively searching for them or through processes of diffusion and dissemination. Interpreting and evaluating ideas — new ideas that give rise to innovations lie somewhat outside the established mental models of organizational members; they need to be communicated and interpreted at the individual and group levels of organizations. Their potential value requires evaluation, and organizational members need to agree on appropriate actions from the context of prevailing organizational goals, cultures, and mental models of organizational members. Experimenting and consensus building — new ideas need to be integrated into the organizational system (e.g., through resource allocations and assigning responsibilities) to generate explorative action that evaluates the practicalities and actual value of the potential innovation; groups seek a consensus about its potential and fit with organizational objectives; this includes decisions about retaining the new idea and deciding on appropriate scale and scope.Formalization and routinization— innovations are transformed from prototype status to new ongoing programs by formalizing appropriate structures and processes as a basis for creating value, i.e., exploiting the innovation. This creates a new reality for organizations and a new knowledge base — the organization has changed.
External-relational — the impact of relations to the institutional context, funders, diffusion of external ideas and innovations, competitors, and collaborators on OCCI External-instrumental — the impact of serving and engaging with direct beneficiaries (i.e., an SSO’s customers and communities) on OCCI Internal-relational — the impact of relations between the members of an SSO and between individual members and the organization as a whole on OCCI Internal-instrumental — the impact of technical and managerial organizational processes and structures on OCCI
State of the Social EconomyWhat role does innovation play? Mikolaj Norek Innovation & Impact in Building the Social Economy 11 September 2012/The HUB Stockholm
Reflecting together on:• What makes the SE space special? (If so?)• Where innovation comes from in this space?• Why so much focus on innovation?• How to think about/work more structured with innovation in a SE organisation?
Managing Director, Forum for InnovationManagement, Karl Adam Bonnier FoundationResearcher, Ratio InstituteBoard Member, SE-ForumFounder, Global Entrepreneurship Programme, Lunch forChange, Stockholm Startup SummerMIKOLAJ NOREK
“You’re here because you know that we have an opportunity with theconvergence of the recognition on the part of government, the privatesector, civil society, that we can be so much more effective workingtogether than working at cross-purposes.”
Key features* – intensive use of distributed networks to sustain and manage relationships – Blurred boundaries between production and consumption. – Emphasis on collaboration and on repeated interactions, care and maintenance rather than one-off consumption. – A strong role for values and missions.* NESTA: THE OPEN BOOK OF SOCIAL INNOVATION
more innovation is anyway betterUNDERLYING ASSUMPTION?
Innovation is a complex process and depends on theunique constellation of a myriad of organizational andexternal factors in a special context.BUT, IN FACT…
I-challenges*• Innovation is often perceived as a development shortcut• Focusing on external impact of Innovation (both failed & successful) is too narrow• Success factors for innovation ignore the dynamics of negative organizational factors*developed basing on Rockefeller Foundation
I pitfalls• Overrating the Value of Innovation• Undervaluing Failed Innovation• Underappreciating the Difficulty of Innovation
Best guesses• Understand innovation as practice, not result• Be aware & vigilant of both positive and negative outcomes during the innovation process• Innovation combines both internal (organizational) and external dynamics• Be aware of dynamics within your organisation that works against innovation (see OCCI)• Pay close attention to specific characteristics (actors, stakeholders, cultures…) of your ORG; not 5/7/9/… steps
organizational capacity for continuous innovationSOCIAL ECONOMY & OCCI**Christian Seelos and Johanna Mair/both PACS
Internal idea creation and/or accessing external ideas or innovationsInterpreting and evaluating ideasExperimenting and consensus buildingFormalization and routinizationOCCI SUB-PROCESSES**Christian Seelos and Johanna Mair/both PACS
OCCI*• Internal idea creation and/or accessing external ideas or innovations — the starting point of innovation processes, i.e., when organizational members create new ideas or access externally established ideas or innovations that are new to the organization by actively searching for them or through processes of diffusion and dissemination.• Interpreting and evaluating ideas — new ideas that give rise to innovations lie somewhat outside the established mental models of organizational members; they need to be communicated and interpreted at the individual and group levels of organizations. Their potential value requires evaluation, and organizational members need to agree on appropriate actions from the context of prevailing organizational goals, cultures, and mental models of organizational members.• Experimenting and consensus building — new ideas need to be integrated into the organizational system (e.g., through resource allocations and assigning responsibilities) to generate explorative action that evaluates the practicalities and actual value of the potential innovation; groups seek a consensus about its potential and fit with organizational objectives; this includes decisions about retaining the new idea and deciding on appropriate scale and scope.• Formalization and routinization — innovations are transformed from prototype status to new ongoing programs by formalizing appropriate structures and processes as a basis for creating value, i.e., exploiting the innovation. This creates a new reality for organizations and a new knowledge base — the organization has changed. *Christian Seelos and Johanna Mair/both PACS
Together reflecting on:• What makes the SE space special? (If so?)• Where innovation comes from in this space?• Why all this focus on innovation?• How to think about/work more structured with innovation in a SE organisation?