Prof Concepción Galdón, Social Innovation Director at IE Business School and Joshua Entsminger, Applied Researcher in International Affairs, propose an approach to scaling up innovation to enable everyone to benefit equally.
“Whether you are talking about cardiac care or education, the fundamental question is: how do you provide it for everyone?” Thulsi Ravilla, Exec Director of Aravind.
Is innovation for the privileged few?
Social Innovation and social entrepreneurship have become well-established processes to come up with solutions for prevalent social and environmental problems. Accelerators, incubators, social impact funds, labs, contests and awards have emerged globally in the last few years focused on inspiring the birth of such initiatives. As a result, myriads of talented people are putting their mind and effort today into creating new and better ways to tackle a broad variety of issues ranging from access to education, health care or civic participation. This is certainly good news. However, in the face of such diversity of tested existing solutions Ravilla’s question resonates louder than ever: How do we provide them for everyone?
Government’s role in scalability
Far too often, we hear much criticism of the limitations of government when it comes to innovating in public service. All that social entrepreneurs and innovators usually request from government is for it to remove red tape and provide funding directly or via tax breaks. However, it should come as no surprise that innovation is not governments’ main skill. They need to maximize impact of taxpayers’ money and innovation is intrinsically a risky activity with uncertain results. Put otherwise, we are not sure we want to have government experimenting on our tax money. Now, guess what government is incredibly good at? Universal provision of public services. That’s the animal government is. That’s what it was built to do, and that’s its very nature. In our opinion, government has a protagonist role to play in scaling up social innovations.
Governments around the world share the intuition that they have a role to play and are looking for their fit in the social innovation process. The UK has launched the UK Big Society Initiative, which attempts to create 1BN impact bond market by 2020. In Canada the MaRS center for impact investing, together with the Government of Ontario has launched SVX with the goal to conduct due diligence on social impact investing opportunities. The White House Office of Social Innovation and Civic Participation has launched the US Community Development Finance Institution, aiming to gather 20 dollars of private funds for every 1 dollar of Government funding. Malaysia’s MOSTI has pledged a 7.3 million social innovation fund to pair innovators with Government. All these initiatives will inject cash in the social ventures. But, what if government focused on doing what it does best: provide universal access to solutions through its own structure. How about government actually buying over selected projects and incorporating them to their “business as usual”?
Piggybacking on the big fish
How do many startups with commercial products/services quickly scale up access to their solutions? Through M&A with big corporations. Here is how it’s done in the private sector. Big corporations are in a permanent pursuit of innovation. In the words of David Fogel, head of acceleration & deputy director at Wayra UK by Telefonica: “if you don’t innovate, you die”. Together with the traditional strategy to bet on internal R&D processes, more and more corporations have understood that internal innovation is too risky financially and they engage in Open Innovation schemes. Corporate accelerators are only one common way of engaging in open innovation. Corporations set up units whose duty is to systematically search for startups with solutions that meet the corporation’s challenges. Once these startups have been identified, and after thorough due diligence, tested solutions are bought over and incorporated to the company’s value chain. This way, solutions initially offered to several thousand people are available to millions worldwide. Startups do what they do best: innovate and test. Corporations do what they do best: deploy big time. Entrepreneurs cash in for the effort of innovating and are ready for their next adventure. Win-win all around.
Innovation aligned with national needs
Unfortunately, today this path is not available for social entrepreneurs/innovators. Who would be interested in buying their tested solutions and making them available universally? Who would be able to incorporate those social solutions to its own value chain and processes? Social entrepreneurs/innovators, and the investment funds that support them in the initial phases, have few to none exit strategies today, leading to stagnation in the sector. Government is in a privileged position to fill in this gap. We propose a new approach to public innovation that is cheaper and lower risk than insulated government research and development: Public Open Innovation Initiatives.
By having an open innovation program, government can match existing innovative public sector start-ups with already tested solutions to national current needs. These solutions can be identified both internationally and locally. Keeping an active international radar allows for a broader pool of potential M&A opportunities but calls for a dedicated team to prototype locally prior to scale up. Buying and scaling up local social innovation solutions will expand on existing social innovation ecosystems. Also, it has the advantage of taping into solutions built from the understanding of the local culture and rules of the country, region or city.
In a nutshell…
The specific design of the Open Innovation Program requires a case-by-case approach, given the specificities of national regulations when it comes to procurement and sourcing. However, any design should guarantee that government focuses on what it does best, moving from being the elephant in the room, to putting its know-how at the service of scaling up of social innovations. Public service at its best.
- Browse Prof. Concepción Galdón’s academic profile
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