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Why do we need social innovation?

What is social innovation?

We define social innovation as the development and implementation of new ideas (products, services and models) to meet social needs. This broad definition encompasses the innovations associated with fields as diverse as fair trade, distance learning, hospices, urban farming, waste reduction and restorative justice. Social innovation can come from individuals, groups and associations, the non-profit sector, the market and the state. The basic distinction between social and other innovations is that production is driven by social values as a primary imperative rather than private financial appropriation.

Intractable social problems

There are a range of problems that existing structures and policies have found it impossible to crack – such as climate change, the world wide epidemic of chronic disease, and widening inequality. These are all issues that cut across the boundaries between the state, the market and the household, between different parts of the state, and between national states themselves. As a result the classic tools of government policy on the one hand, and market solutions on the other, have proved inadequate.

Rising costs

The prospective cost of dealing with these (quite apart from the rising costs of other social issues) threatens to swamp public budgets – and in the case of climate change, or health care in the US, private budgets as well. To take only one instance, if radical policies cannot stem the increase in chronic disease, the cost of healthcare is forecast to rise from 9% to 12.5% of GDP in the UK in 15 years and from 16% to 20% in the US within a decade. As in climate change, pollution control, waste reduction, poverty and welfare programmes, and other fields such as criminal justice or traffic congestion – the most effective policies are preventative. But effective prevention has been notoriously difficult to introduce, in spite of its transparent economic and social benefits. This is a challenge for social innovation. The current recession and impending public spending squeeze have brought these issues into greater focus.

Old institutions are incapable of dealing with new challenges

As in earlier technological and social transformations, there is a disjunction between the structures and institutions formed in a previous period and the requirements of the new. This is as true for the private as for the social economy. New paradigms tend to flourish in areas where the institutions are most open to them, and where the forces of the old are weak. So, for example, there is more innovation around self-management of diseases and public health than around hospitals; more innovation around recycling and energy efficiency than around large scale energy production; more innovation around public participation than in parliaments and assemblies; more innovation around active ageing than around pensions provision. Everywhere innovations give rise to pressures for wider change – to the way the economies are managed, to the supply and housing of appropriate labour, to new infrastructure and sources of energy, to new forms of consumption, and to the organisation and financing of government.

A new world - the social economy

The early years of the 21st century are witnessing the emergence of a new kind of economy that has profound implications for the future of public services as well as for the daily life of citizens. This emerging economy can be seen in many fields, including the environment, care, education, welfare, food and energy. It combines some old elements and many new ones. We describe it as a ‘social economy’ because it melds features which are very different from economies based on the production and consumption of commodities. Its key features include:

• The intensive use of distributed networks to sustain and manage relationships, helped by broadband, mobile and other means of communication.
• Blurred boundaries between production and consumption.
• An emphasis on collaboration and on repeated interactions, care and maintenance rather than one-off consumption.
• A strong role for values and missions.

This economy can be found in parts of the public sector, the non-profit world as well as commercial markets, though it thrives most in the spaces where the sectors overlap.

Distributed systems

This new world is formed around distributed systems as much as centralised structures. It handles complexity not by standardisation and simplification imposed from the centre, but by distributing complexity to the margins – to the local managers and workers on the shop floor, as much as to the consumers themselves. Those at the margins have what central managers can never have – knowledge of specificity - specificity of time, of place, of particular events and in the consumer’s case of need and desire. We enter a world of differentiation and the dissolution of the norm. The micro can now be aggregated to the macro. In place of scale (which is the simple issue) the new concerns are with economies of scope, of information, of flow, and most strikingly of trust.

In factories and workshops we have witnessed over the past twenty years a radical reorientation of the governing principle of production – something like a magnetic reversal – from a push‐through to a pull-through economy. Instead of the focus being on optimising the use of capacity of the mass production line, with a stock of products always in search of an average consumer, the supply and distribution chain has been re-oriented to respond to real time consumer demand, ‘just in time’. This is itself a revolution within a revolution, enabling a whole productive system to meet a differentiated demand.

Co-production and 'prosumers'

The role of the consumer changes as a result, from a passive to an active player, not only as a navigator and even shaper of the emerging kingdom governed by the tyranny of choice, but as a producer in their own right – Alvin Toffler’s ‘prosumer.’ It has at last been acknowledged that retail purchases that have been cast as the end point of the linear process of mass production are part of a circular process of household production and reproduction. The so-called consumer doubles as a domestic producer - a cook, a mother, a carer, a shopper, a driver, a nurse, a gardener, a teacher or student - in short so much of what is entailed in making us human. This domestic sphere has previously been seen as outside the economy, as too complex and ungovernable, but has come now to be recognised as critical economically, with all the needs of support, tools, skills and advice that being a producer entails.

Humanising the social

In both the market and the state, the rise of distributed networks has coincided with a marked turn towards the human, the personal and the individual. This has brought a greater interest in the quality of relationships (what Jim Maxmin and Shoshanna Zuboff call the ‘support economy’); it has led to lively innovation around personalisation (from new types of mentor to personal accounts); a new world rich in information and feedback (such as AMEE, tracking carbon outputs in 150 different countries); and growing interest in pathways (for example from early childhood into adulthood) and service journeys (whether of a patient through a health system or a passenger through an airport).

With this emphasis on the individual has come an interest in experience as well as formal outcomes; in subjective feedback as well as the quantitative metrics of the late 20th century state and economy (hence the rise of innovations like the expert patients programme, or Patient Opinion). Public policy has also turned towards the household, through innovations like nurse-family partnerships and green concierges.

Some of what is happening in the market entails the adoption of ideas from the social sector – collaboration, cooperation, trust-based networks, user involvement in service design, for example, are all familiar concepts in the social field and are now seen as on the cutting edge of business. Yet some of the new methods are as challenging to existing charities, nongovernmental organisations and cooperatives as they are to mainstream businesses and public agencies. Indeed one of the common themes of social innovation is that it often challenges relationships of power, creating sites of contest and conflict. This is evident in relation to distributed networks which have the potential to devolve and spread power, but also great potential to concentrate power (think, for example of Google). Similar tensions are visible in the field of social entrepreneurship (which straddles decentralised models rooted in community organising and a powerful new cadre of entrepreneurs often educated in Western business schools, tied into global consultancies, and backed by foundations rooted in big business); and in relation to public policy (which often seeks to co-opt grassroots innovators to serve the interests of big government).

Methods for the social economy

The ways to design, develop and grow innovations are different within the public sector, the non-profit sector and the for-profit world of business. They also differ around the world, shaped by institutional, political and cultural histories, which have lent very different roles to the state, civil society and the market. But there are some common patterns, and new innovations from distance learning and microcredit, to open forms of governance, urban agriculture and patient-led healthcare have flourished in different environments.

However, this emerging economy still lacks adequate capital, methods and skills. There are major gaps on the side of demand, as the great majority of public and private money is still locked up in older models, providing services to essentially passive consumers. There are, too, major gaps on the side of supply. Although there are thousands of promising initiatives few have grown to scale, and there is a dearth of support to turn good ideas into big impacts. This last gap was one of the prompts for subsequent list of methods – that aims to map, understand and recast some of the many hundreds of methods being used worldwide to develop new social solutions.

For more information see:

• Robin Murray, Geoff Mulgan & Julie Caulier-Grice, ‘How to Innovate: the tools for social innovation’. London: NESTA/The Young Foundation, 2008.
• Geoff Mulgan, ‘Social Innovation: what it is, why it matters, how it can be accelerated.’ London: Basingstoke Press, 2006.
• Geoff Mulgan, ‘Ready or Not? Taking Innovation in the Public Sector Seriously.’ NESTA Provocation 03. London: NESTA, 2007.

Economic crisis

It looked at first as if the current crisis might marginalise social innovation. Instead conditions are emerging that require its acceleration. The impending squeeze on public spending in the face of growing social pressures makes incremental changes and efficiency measures in public services no longer plausible. Radical social innovation is needed to respond to these pressures. In many cases it will require systemic innovation – changing the way in which whole systems of production and service are conceived and delivered or the need for them avoided. Many of these changes do not require new resources, but rather radical new ways in which existing resources are used, in which regulations are framed and incentives provided.