Innovation... it's all about innovation these days. And more and more often, you hear the calls for more social innovation. But what exactly do we mean by this? A new form of charitable innovation? Or perhaps a more equitable innovation? But what is equitable anyway?
No. Social innovation stands for the development, introduction and implementation of new ideas, practices, services or models that can better address the management of social problems. These innovations are responses to existing social constraints and challenges. Home office, food sharing, and energy cooperatives are just a few prominent examples in recent years. Those who are now rolling their eyes as entrepreneurs have not understood that this form of innovation is very often based on technological inventions. For example, the smartphone is now the hub of many social activities, and car sharing can only be implemented as a common alternative to owning a car because corresponding booking systems have become established via the Internet. There are many reasons why social innovations are important, e.g., to improve working conditions, to provide more education or to feed the population more healthily. Thus, it can be said that social innovations are necessary for the strengthening of civil society.
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Green water technologies and innovations, such as drinking water generators that capture moisture in the air and convert it into drinking water, are examples of social innovations that can help alleviate the problem of unequal distribution of clean drinking water now and in the future, according to a 2015 Huffpost article. One would expect NGOs (Non Governmental Organizations) in particular to be the key drivers behind social innovations. And yes, they are. Surprisingly, however, implementation often occurs as a consortial effort between representatives of politics, society, academia and business.
Characteristics of Social Innovation
According to IdeaScale.com, social innovations have several key characteristics that distinguish them from other forms of innovation, such as:
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These characteristics are the essence of social innovation and define its approach and mindset to bring about meaningful and lasting social change.
Examples of Social Innovation
IdeaScale.com has compiled some notable examples of social innovation in various fields and sectors that we are all aware of, but may never have perceived as such:
Microfinance institutions like Grameen Bank have developed an innovative financial business model to provide small loans and financial services to individuals traditionally excluded from the formal banking system. This approach has helped empower low-income entrepreneurs and foster economic development in many communities.
Renewable energy initiatives, such as solar and wind power projects, are important examples of social innovation. These solutions address environmental concerns and offer sustainable alternatives to fossil fuels by providing clean energy options and reducing carbon emissions.
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Organizations like TOMS Shoes and Warby Parker have adopted a "buy-one-give-one" model in which they donate a similar product to those in need for every product sold. This incremental innovation approach combines profitability with social impact by addressing issues such as access to shoes and eyewear for disadvantaged populations.
Social innovation labs, such as the MaRS Solutions Lab and the Nesta Innovation Lab, provide space for experimentation, collaboration, and co-creation to address complex social challenges. These labs bring together diverse stakeholders, including policymakers, researchers, entrepreneurs, and citizens, to develop and test innovative solutions through a participatory and iterative process.
The open source software movement, exemplified by projects such as Linux and Wikipedia, has revolutionized knowledge sharing and collaboration. It allows people to freely access, use, and contribute to software and information resources, fostering global collaboration and democratizing access to knowledge and technological innovation.
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Circular economy models, such as recycling and upcycling programs, aim to minimize waste and maximize resource efficiency. These initiatives promote sustainable production and consumption patterns by redesigning the entire lifecycle of products, reducing environmental impact, and creating economic opportunities.
Digital platforms and technologies such as crowdfunding platforms (e.g., Kickstarter, GoFundMe) and online advocacy platforms (e.g., Change.org) have enabled individuals and organizations to mobilize resources and raise awareness for social causes. By leveraging digital innovations, these platforms facilitate grassroots participation and empower individuals to drive social change.
Social impact bonds, also known as pay-for-success contracts, are innovative financing mechanisms that bring together private investors, nonprofit organizations, and governments to solve social problems. Investors provide capital upfront to fund social programs, and the government pays them back with a financial return only if predetermined social outcomes are achieved.
These examples illustrate the diversity of social innovation initiatives that have emerged around the world and demonstrate the transformative power of innovative ideas, approaches, and collaborations in solving social problems and creating positive social change.
Why Social Innovation Matters
As Diana Porumboiu of the Finnish software developer Viima points out on its in-house blog in early 2021, in today's hyper-connected world, a foreign country's social problems can quickly become your own. Third World countries face slow economic growth, financial instability, political unrest, hunger, poverty and disease. These are all social problems that must be addressed in one way or another to prevent mass exodus to more prosperous regions as the only solution. And such major problems naturally offer good opportunities to make financial profits by offering solutions. According to a 2007 OECD study, more than 80% of economic growth comes from innovation and the application of new knowledge. A truly prosperous society today consists of both economic and social prosperity. Traditionally, this has been assessed by a country's GDP. Today, it is increasingly common to also consider peace and happiness, individual freedoms, and financial well-being (Joshanloo, Jovanovic, and Taylor, PLoS One 2019; 14-10: e0223221).
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When prosperity is viewed from this angle, it is seen that prosperous societies have an innovative approach to current social issues because, according to a 2013 Standford Social Innovation Review article by Urama and Archeampong, complex problems need innovative solutions. And this is where social innovation enters the picture, as it brings a new way of thinking that leaves behind the narrow view of social and for-profit enterprises as two mutually exclusive fields. Social innovation is still often mistakenly viewed as charity. However, it is now clear that social innovation adds an extra dimension to the innovation field and promotes economic as well as social growth. Social innovation is not only about doing good for society, but also about doing good business.
The Discrepancy Between Growing GDP and Stagnating Happiness
What are the factors that make people happy and satisfied and give them a sense of fulfillment? And how are these related to innovation? Abbas J. Ali's 2014 research suggests that there is a strong link between innovation, happiness, and economic growth (DOI:10.1108/CR-09-2013-0075). According to the 2022 World Happiness Report, Finland is once again the happiest country in the world. And it is closely followed by countries like Sweden, Denmark, Switzerland and the Netherlands. They are all prosperous societies that provide social welfare and are also among the top ten most innovative countries in the world. Germany is an inglorious exception in this respect. At 14th place, Germany is not among the top ten happiest countries, but it ranks one place above Finland in terms of innovation (Global Innovation Index 2022). From this, we can conclude that growing GDP is not enough to create happy, prosperous societies, as they need more than just financial power. The best example of this is China, the country with the second highest GDP, but far from having a prosperous and happy society in the Western sense. The economics of happiness is not a new concept, but now more and more companies are discovering its business value by harnessing the role of wellness and well-being in their own productivity growth.
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Conclusions
"Social innovation is the process of developing and deploying effective solutions to challenging and often systemic social and environmental problems in support of social progress. Social innovation is not the prerogative or privilege of any organizational form or legal structure. Solutions often require the active collaboration of actors from government, business, and the nonprofit world." Sarah A. Soule, Neil Malhotra and Bernadette Clavier, Stanford University
Now that some business leaders may have realized that increasing sales is no longer sufficient as the sole marker of their companies' success, it would be desirable for them to recognize the great potential of social innovation. Companies have the power, and therefore a pioneering role, to bring about positive changes in consumer behavior. They can change and improve the standards that currently exist and add social value without sacrificing business objectives. The approach to innovation may vary from company to company, from organization to organization, and social innovation may not be the only - but possibly a very important - solution for one's own company, one's own organization!