Chapter
2
Social Innovation
Prepared by: Minale D.
McGraw-Hill/Irwin Copyright © 2008, The McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OBJECTIVES
At the end of this chapter you will develop an
understanding of:
• Social entrepreneurship and social innovation.
• Social entrepreneurship as an organized and disciplined process
rather than a well-meaning but unfocused intervention
• The difficulties in managing uncertain and risky process as
‘conventional’ economically motivated innovation.
• The key themes needed to manage this process effectively.
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What Is ‘Social Innovation’?
Social Innovation is about creating value and one
important dimension of making change happen in a
socially valuable direction.
‘Social entrepreneurs’ individuals and organizations
recognize a social problem and organize an innovation
process to enable social change.
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• For example, George Cadbury led to innovations in
social housing, community development and education.
• The great wave of industrialization and urbanization in
the 19th century was accompanied by social enterprise
and innovation: like mutual self-help, microcredit,
building societies, cooperatives, trade unions.
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• Unlike traditional business entrepreneurs, social
entrepreneurs primarily seek to generate “social value”
rather than profits.
• Their work is targeted not only towards immediate,
small-scale effects, but sweeping, long-term change.’
• Social innovation has a long tradition and dating back
to some of the great social reformers in the 19th
century in the UK.
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• Major social innovations include the kindergarten, the
cooperative movement, first aid and the Fair Trade
movement, all are began with social entrepreneurs and spread
internationally.
• The growth in social innovation has also accelerated through
enabling technologies around information and communication.
• It becomes easier to reach many different players and to
combine their innovative efforts into rich and new types of
solution.
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• A social entrepreneur uses the same process of
entrepreneurship that we saw in Chapter 1 but does so
to meet social needs and create value for society.
• These are people who undoubtedly fit our entrepreneur
mould but target their efforts in a different, socially
valuable direction.
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Key characteristics of social entrepreneurs
• Ambitious:- Social entrepreneurs tackle major social issues like;
poverty, healthcare, equal opportunities, etc. with the underlying
desire and passion to make a change.
• Mission driven:- their primary concern is generating social value
rather than wealth.
• Wealth creation may be part of the process but it is not an end in
itself. Like business entrepreneurs, social entrepreneurs are
intensely focused and driven, in their pursuit of a social vision.
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• Strategic;- Like business entrepreneurs, social entrepreneurs
see and act upon what others miss: opportunities to improve
systems, create solutions and invent new approaches that
create social value•
• Resourceful:- Social entrepreneurs are often in situations
where they have limited access to capital and traditional
market support systems. They must be exceptionally skilled
at mustering and mobilizing human, financial and political
resources.
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• Results-oriented:- Social entrepreneurs are motivated by
a desire to see things change and to produce measurable
returns. The results they seek are essentially linked to
‘making the world a better place’, for example through
improving quality of life, access to basic resources or
supporting disadvantaged groups.
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Different Players
Social innovation involves the same core entrepreneurial
process of finding opportunities, choosing amongst
them, implementing and capturing value, but it plays out
in a number of different ways. Like
- Individual Start-ups
- Passionate Individuals
- Public Sector Innovation
-Innovation in the ‘Third Sector’
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Individual Start-ups:- social innovation is an individual-driven
thing, where a passion for change leads to remarkable and
sustainable results.
Not Just Passionate Individuals:-
Public Sector Innovation:- Providing basic services like education,
healthcare and a safe society
Innovation in the ‘Third Sector’;- The voluntary and charitable
organizations which operate to provide various forms of social
welfare and service.
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Motivation: Why Do It?
It is worth pausing for a moment to reflect on the motivation for
social innovation, talking about passionate individuals, enlightened
corporations, public sector institutions or ‘third sector’
organizations.
Just as mountaineers climb peaks simply ‘because they are there’,
sometimes the motivation for innovating comes because of a desire
to make a difference. Many people find entrepreneurial satisfaction
through social value creation, and with a long track record of
building successful businesses. For example, Bill Gates’ withdrawal from
running Microsoft to concentrate on the Gates Foundation and other activities
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Why Organizations Do It
It is not just individuals who undertake social
innovation: it is increasingly part of the offering by all
kinds of business organization.
There are several reasons for this, and we focus on
three:
• Social innovation as securing a ‘licence to operate’
• Social innovation as aligning values.
• Social innovation as a learning laboratory. 1-14
Enabling Social Innovation
Innovation doesn’t simply happen; it is a process which can be
organized and managed.
The process begins with seeking out opportunities, requires new or
different combinations which no one else has seen, and working
them up into viable concepts which can be taken forward.
It’s a matter of persuading various people – venture capitalists,
senior management, etc to choose and put resources behind the
idea rather than backing something else.
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A process model of innovation includes four key steps
Recognizing the opportunity.
Finding the resources.
Developing the idea.
Capturing value.
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The Challenges of Social Entrepreneurship
• Changing the world with social innovation is
possible, but it is not easy because there is no direct
profit motive doesn’t take the commercial challenges
out of the equation.
• The following lists are some examples of the
difficulties that social entrepreneurs face when trying
to innovate for the greater good for the society.
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• Resources:- Not easily available and may need to cast the net
widely to secure funding and other support.
• Conflicts:- While the overall goal may be to meet a social need,
there may be conflicts in how this can be balanced against the need
to generate revenue.
• Voluntary nature:- Many people involved in social innovation
because of core values and beliefs and contribute their time and
energy in a voluntary way. This ‘traditional’ forms of organization
and motivation may not be available and posing a significant
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• ‘Lumpy’ funding:- Unlike commercial businesses where a stream
of revenue can be sued to fund innovation in a consistent fashion,
many social enterprises rely on grants, donations and other
sources which are intermittent and unpredictable.
• Scale of the challenge:- To being addressed many of the issues –
like to provide clean drinking water, deliver reliable low-cost
healthcare, and to combat illiteracy having a clear focus is
essential. Without a targeted innovation strategy, social
enterprises risk dissipating their efforts.
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Summary
Social enterprise an organization that tries to pursue a double
bottom line or a triple bottom line.
Social entrepreneurship applying entrepreneurship to achieve
social goals rather than (but not excluding) financial reward.
Triple bottom line simultaneous assessment of a company’s
performance against its financial and shareholder performance, its
internal and external stakeholder expectations and responsibilities,
and its environmental responsibilities.
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