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Sustaining

Only a minority of ideas will survive tests and pilots. Even promising ones may simply not be sufficiently effective, or sufficiently cost effective. When an idea or cluster of ideas is new, there are likely to be many competing alternatives. Usually just a few of these survive. Think for example of the bicycle or car, each of which took an extraordinary variety of forms in their first decades (from penny farthings to three-wheelers) before a handful of variants became dominant.

Public feedback may be key, but evaluation methods also have a vital role to play since there is always an element of judgement in determining what counts as success or failure. But the ability to judge innovations, and screen out a high proportion, is critical to the success of an innovation system. Trying to keep too many ideas alive may starve the best ideas of the resources they need to be sustained.

For those that do pass through a period of successful prototyping and testing, launching a service or product on a sustainable basis involves the development of an economic model that will secure its financial future. Often that requires changes to the idea itself: streamlining it; simplifying it; turning into more modular elements so that it can work even without the enthusiasm of pioneers.

In this section, we survey a wide range of assessment tools since similar judgements need to be made as to whether an idea should be sustained or scaled.

(See Robin Murray, Julie Caulier-Grice and Geoff Mulgan, Social Venturing, London: NESTA, 2009.)

Creating a business

Turning a good idea into something sustainable outside the public sector depends on a business model – which means, at root, a clear idea of how it will generate a sufficient income stream that more than covers costs. Effective supply and effective demand need to be brought together. Effective supply means that whatever is being provided has been shown to work and to be cost effective. Effective demand refers to the willingness of someone to pay for what’s on offer, which may be a public agency or the public themselves.

Organisation and management models

Much of the social economy is made up of organisations that are not dissimilar to those in the state or private business which have a pyramid structure with authority flowing downwards and accountability flowing upwards. In charities the trustees sit at the top, above the Chief Executive. Hierarchies have survived because they are effective and well-understood models. However, in the last few years, new models of management and organisation have emerged. This is especially the case with online ventures and organisations which are open and collaborative.

Relational capital

New ventures put much of their energy into securing financial capital, money to invest in fixed assets on the one hand, and working capital on the other. But relational capital is just as important. This is both the knowledge and trust built up between a venture and its users and suppliers, and the relationships between a venture and its staff and circle of volunteers. Conventional accounting takes little account of this intangible capital, yet in all social ventures it is the foundation of their strength and of their distinctiveness.

Operations

The distinctive value and values of a social venture show up not just in its structures but in its operations – how it works with others, uses technologies or works in partnership.

Venture finance

Every innovation process requires some finance. For social ventures it is key that the sources of finance should share the venture’s social goals as the primary driver of the enterprise. This may not always be possible. Raising capital may involve some compromise with the providers of capital, but the goal should always be to find ways for the core finance to come from those who share the venture’s mission.

Sustaining innovations through the public sector

Sustaining ideas in the public sector involves different tools to those needed in markets or for social ventures. There are similar issues of effective supply (the proof that a particular model works) and effective demand (mobilising sources of finance to pay for the idea or service).

Ownership and organisational form

There comes a point when every venture has to decide what organisational form to take, what kind of decision-making and accountability processes to adopt and which kinds of information and financial management systems to put in place. These decisions can be costly and time consuming. But getting it right early on provides structures and systems which act as skeletons that help hold the organisation together. As a rule, the more complex the task, the more there may be a need for hierarchy and formal coordination. Yet strong values and commitment can allow structures to remain flat.

Governance

Ownership structures then bring with them important dynamics that may help or hinder the organisation in realising its mission. The best forms of ownership and governance reinforce relational capital, creating a source of resilience for when the enterprise goes through difficult times.