Who will really support social innovation?

Imagine a world in which Ferdinand II of Aragon and Isabella I of Castile hadn’t supported Columbus’ plan to sail West instead of East to reach Asia. It seemed like a crazy idea at the time, most monarchs and rulers around Europe had already turned him down. They too could have just said: “Sorry old man. We are not giving you a penny”. Or imagine a world in which powerful countries like the US didn’t spend almost 3% of their GDP on R&D, trying to develp - alas - new weapons most of the time, but occasionally life-changing technologies, like the Internet. Imagine a world in which innovations of all sorts didn’t rule our world, and innovators in business (like Richard Branson), in music (like the Beatles), in technology (like Steve Jobs) or in the arts (like Giotto) weren’t hailed as heroes. Well this would be a pretty dark world, close to what the Middle Ages looked like, ruled by supersticion, fear and disease. I have often argued that our ability to come up with inventive and creative solutions to the constant problems and challenges that surround us is probabily our most reassuring trait, one that gives me hope for a better and brigther future.

Now, who is better placed to come up with a lasting solution to a problem than the very person who is affected by it? Obviously, no one. The best example in this sense is still the one of young William Kamkwamba, a boy who, in order to power his family’s home in Malawi, built an electricity-producing windmill from spare parts and scrap. He became world-famous and I am not sure whether he is still pondering how to come up with brilliant ideas, but you get my point. Inside everyone of us there is an innovator who will do his or her best to make the world a better place. In other words: a social innovator.

This is not the place for me to enter into a discussion about what social innovation really is. If you have 2 minutes, you can watch this brilliant video by Social Innovation Exchange (SIX) which gives you an excellent idea of it all. On the surface, it’s a win-win solution. Citizens (us) become more involved in their communities, come up with great ideas to make the world better, and everyone’s happier at the end. Everyone seems to be talking about social innovation these days. The UK Government’s Innovation Agency (NESTA), for example, has just launched a nation-wide campaign called Britain’s 50 New Radicals, which will celebrate “the inspiring people or organisations that have come up with ingenious, practical and scalable ways of tackling challenges in areas such as health, education, unemployment, aging, community regeneration and wellbeing”. Other nations are becoming interested, and even large corporations like Dell run annual competitions to find innovative solutions to some of the world’s greatest challenges.

Except: this isn’t really how the story unfolds. At least, it wasn’t in my experience and in the experience of a lot of social innovators I know.

When I started The Hub in Milan, I arrived with a solid idea that had already been tested in other countries and that was working well: creating a shared workspace and cultural centre promoting social entrepreneurship and social innovation by connecting people and helping them develop new projects and ideas for a radically better world. It was having a social impact, it was creating social value, and it was also sustainable from a financial point of view, being based on a business model that had been implemented successfuly in other European cities like London and Amsterdam. True, there were some cultural differences, Italians are not like the Dutch or the English, prone to work in open spaces and to collaborate, but evidence suggested that these cultural differences were not going to sink the project.

I started fundraising for the social start-up I was launching. I went to foundations, to corporate sponsors, to the public sector, to investors and to social venture capitalists. I wrote and re-wrote business plans, answered countless emails detailing all sorts of things, went to endless meetings where everyone kept saying what a great project this was, how excited they were about its arrival in Italy, although unfortunately they were not in a position to fund it. One after the other one all doors were closed. On one occasion, I remember a group of venture capitalists telling us, once the space had already been launched: “Guys, we are not going to give you money, but please keep inviting us to your parties and events, because they are great and we like the vibe in here”. I had no words.

Long story short: I went to my family and told them: I need you to invest in my idea. And my family supported me. I did what the great majority of social innovators (and general innovators) do: I turned to one of the 3 Fs: Family, Friends and Fools, notoriously the only ones who will support risky (and in this case non-risky) start-ups.

This wasn’t only my experience. It echoes the story of so many other social innovators I know. My friends Augusto and Matteo over at Critical City had the most extraordinary experience ever, being promised EUR 100,000 by a group of VCs, only to be told - once the cameras were off - that it wasn’t true. They eventually got a grant from a large foundation, but not before they had stretched themselves thin trying to keep the project afloat with their own personal resources (and probably with some help from their family). It’s not just a Southern-European problem. My friend Karen recently launched a brilliant project in London, Ekologi, a noticeboard for social change that makes it easy to find funding, facilities, contacts and support. Again, it was her husband who helped her out, not NESTA, social investrors or grant-makers.

What does this tell us? It seems to me that while there is a lot of talk about supporting grassroot initiatives that are innovative and socially-relevant, the funding channels are still dry or geared towards the “usual suspects”. But isn’t this exactly the opposite of what social innovation should be about? Shouldn’t we start breaking the boundaries and walking away from the beaten path, by supporting outsiders, leftfield creatives, crazy “Cristopher Columbuses” who might just have the right idea about the shape of the world? Or at least should we not recognise the role that personal networks play for us social innovators and give recognition to them, for example through tax breaks? My idea, for example, is that when a person invests 10,000 euros in a start-up social enterprise or a socially-innovative project that has the potential to improve our society and world, they should be able to deduct this amont (or part of it, depending on whether it’s a loan, a grant or an investment) from their taxes. This would be a far more realistic reponse by policy-makers to a de-facto situation in which funders and investors are mainly talking about supporting social innovation, while the burden of forking out the cash is stil on us, our families and our friends (and the odd fool).

A little social innovation in the policy world could really change the lives of millions of people. Policy-makers: what are you waiting for to really support social innovation?

Bring down the rhetoric

Alberto, this is a very important post. For most of human history innovating has been an activity of last resort: human communities have innovated mostly when their back was to the wall, and they just could not make do with the old ways. Over and above the rhetoric, it seems that - altough for different reasons - this is still the case. Everybody wants innovation; everybody acknowledges that failure is a critical part of innovating; but very few people are up for risking their own money or their standing in their home buraucracy to endorse an innovative idea.

The Silicon Valley-type innovators have tried to work around the problem by leveraging greed. If they can show some probability of a very large financial gain, they can sometimes get venture capitalists to fund them: in this case, the investment is more like a lottery, implying a relatively small loss in case the new company folds but a fabulously large gain in case it is successful. With social innovation that is generally not possible: most successful cases are cases in which some money is made, financial sustainability is achieved, but not a lot of wealth is generated. Success is measured by social impact: you make a dent into a social problem, you are successful. If you put yourself on the line for a new social innovation idea, and then that idea is successful, you stand at most to make a reputational gain. It is not a very big incentive for making what you perceive to be a risky move.

In a different Edgeryders post, Vinay wrote about “thinking outside the fundable sphere”. It is a different perspective onto the same phenomenon: the more innovative the idea, the more difficult is it to support it. People are asked to innovate, but innovative ideas are rarely backed. This is understandable; I don’t blame it on venture capitalists, bank managers, government agencies directors or evaluators. They react to incentives. I do blame it onto policy makers, because they are supposed to design incentive systems. The ones in place now, I would argue, are not doing a very good job.

Innovation rhetoric is no substitute for a well-designed set of incentives. If we want people to innovate, we need to be ready to enable them to do so. It is difficult, but it can be done. And it starts with the recognition of what you, Alberto, are saying here.

thank you

:wink:

hi alberto

Hi Alberto your opinion about social innovation and practices in Italy are really interesting. I appreciate that you shared your personal experience and feelings about it. I hope to visit the Milan Hub in the next future…I would like to ask you if something similar it’s happen in Napoli too… do you know if ther’is some person or group of people that are organizing to open an Hub there? Also in Napoli the social innovation wind and the startup world it’s arrived and maybe my city it’s ready for an experience more structured… thank for your time

Irene

Innovation on helping innovators

Ok, creative hats on, we don’t know where this takes us.

First, already there are ways to be funded by friends. Crowdfunding works, and there are several implementations in Europe. Maybe what’s needed is to make them more mainstream, to the point of being tax-deductible money entities? Nothing radical, but rather change what’s already there so that it works better for what’s needed.

Second, maybe there could be some incentive structure. Something small but segmented: finalist donations with a ceiling of 1% per individual or a 2% per business (just making the figures up), that would have big deductions (big deductions are the why for the ceiling).

Third, there’s a market for losers. Ideas that are not funded should be recycled, networked, improved. In other words, reward failure. How’s that done? Wherever there’s a project repository, the rules might be that if you don’t get funded there’s a way out in which you and your idea become part of a larger pool of replaceable parts. A fermenting or composting pot.

An even stupider idea: let the poor pay. Let me explain. There’s this “out of poverty” book by Paul Polak, a psychiatrist turned development-entrepreuner, who says products must be designed with a price tag first, and that there’s a huge market in the “two dollars a day” part of the economic pyramid. (The bottom part of the real 99%.) He suggests ways around the problem such as thinking in terms of reducing the scale a lot. So, if you can’t buy a horse, maybe you can buy a pony, or a dog, to help you carry the load - or maybe you could buy a hundred ants. So maybe there could be a way to aggregate the microfunds of those in need (yes, them - or us), to start things that serve their (our) own needs. Kind of a subscription, maybe. Bottom of the pyramid crowd-funding, by those who understand the problems? Because maybe we can’t beat a dead horse, trying to get the big guys to start emptying their pockets even though they clearly “should”. This has been done by Marcin Jakubowski for his http://blog.opensourceecology.org project, with the True Fans way to finance his stuff. So maybe there’s a role for people who help you find your market and then help them fund you?

The elements of the situation are at least three: people with projects, people with funds, and the rules of the game. People with projects can be taught to write business plans, but I’m not sure that’s the main issue (except where it is). I’ve heard in Spain it’s harder and more expensive to start a business than in other countries in Europe. So maybe that falls under the “rules of the game” area: simplify the rules - write the current rules in a wiki and “fork” the darn body of regulations (=create an alternative body of rules), suggesting alternatives that are much more agile while still sticking to the stated aims of the regulating body.

It’s a huge area, and new ideas seem to be needed. The old ways don’t seem to work. Let’s all bring more logs to the fire, as this won’t be solved with a post or two. This looks like a hard problem. Incentives, and the incentives to put good incentives in place, are always hard.

I am with you

Lucas, I absolutely agree with you. We need to think outside the box! There are - I am sure - hundreds of different way to unleash social innovations in our societies. Most importantly, as Alberto C said below, we need to create new incentive structures beyond plain greed, which seems to have driven people so far, and which frankly is a bit insulting to the human brain if seen as the ONLY incentive, like the market does…

Grow Options In Many Small Boxes

Alberto MZ,

Thinking outside the box is almost a job, if we want to.

For years I’ve looked into specific lateral thinking tools (basically, look at how our ideas flow inside our minds, and then challenge every assumption so that flow will go to other places). The point I want to make is that, even though the specifics of each tool change, the biggest emphasis is in focus.

The broad focus is we want to help society help the change-maker. How can we slice and dice the work so that we will find new ideas for each smaller focus point?

First, slice and dice … I think “society” is too vague a word, and can be mapped as “all the concentric circles around the change-maker”. Or maybe as “a set of networks of which he or she are a node”. Or even “the networks of which the individual is not a node”. Or maybe there are other ways to model reality?

In any case, the outcome of this first step is that the specific foci would be “we want to help X help the change-maker”, where X = self, family, friends, neighbours, other change-makers, regional businesses, regional institutions, regional governments, country and international entities, etc … leaving room for the yet-to-be-invented, and for cooperation among levels.

I’ll be off-line for a week or so, but maybe we can be systematic about this? For each X, look at what works (you have experience, I don’t), what the blocks are (same), what the ways forward could be (I can help with that, maybe). Looks almost like a spreadsheet to me, and some rows (each X is a row) are possibly not even touched yet, or touched in an effective way!

After that, cross-pollinate between rows, select a number of ideas, process them further to select one or two first-steps for each, and end up (actually the process never ends, so release-early-release-often) with a two-pronged fork: a number of ideas to be suggested as policy and also to be left in the open so individuals and networks may act on them.

Ideas don’t grow or move themselves. But we can kick the can just one more step forward, openly, keep the questions open (thank you!), and invite each other to keep at it doing what we like. (Cooperative thinking is work, but may feel like play.)

Maybe?

Me too!

Great approach! I am not sure that crowfunding works (it does in some cases, but I don’t think it can be a general purpose tool). i really like the “market for losers” concept. Definitely something to think about. It’s already happening, of course: the global Internet is a repository of ideas, failed and otherwise. Still, it might be a good idea to make them a little more visibile and point smart people in the right direction.

I don’t understand yoo well your other comment, I must say. In more general terms, the issue of how to help change makers is quite hotly debated in public policy in Europe, both at the Euro level and at the national one - the UK has the lead, but most other countries are looking into it too. What Edgeryders can contribute to this debate, I think, is above all experience. War stories. So let’s search for them: which change makers we know were helped by whom?

List of social entrepreneur funders- would be great to rate them

Hi Alberto,

Jean Russell, another Edgeryder and the source of inspiration for the name, shared a list of places to turn to for Social Entrepreneur, Social Enterprise and Social Innovation Sources of Funding. The original list was compiled by put together by Mark Grimes and others on Ned.com. It would be great to hear from social innovators entrpreneurs about their experiences interacting with the different funds in Europe. Do you think we could maybe ask people on twitter/ via email or something of the like?  What do you think? Also I would be very curious to hear from the funders themselves about their experiences in dealing European social innovation actors…Think maybe the hub community might be up for this? I’ve set it up as a new Mission and am emailing people about it today: /t/help-us-evaluate-sources-of-funding-for-social-entrepreneurs-social-innovators/402

Pedro Pietro Martin has set the ball rolling with his experiences with Goteo and Ashoka here: https://edgeryders.eu/help-us-evaluate-sources-funding-social-entrepreneurs-social-innovators/mission_case/short-contribut

Recap

Alberto MZ, thanks for sharing your story.

I can feel your deep disillusion regarding how greed is still the main fuel to keep making the engine run. I am currently suffering from the same symptom. I will talk about this on my social innovation mission though.

However it would be interesting to differentiate the attitude of those players (foundations, corporate sponsors, public sector, investors, social venture capitalists) from when it all started to now that you are a fully grown (social) business.

Are the listeners willing to engage/participate now that you have real examples and do they require social impact measurements in order to understand its value?

Yes…great post!

Thanks Alberto ,

great post there. I want to say two to three things:

-Keep the faith crowdfunding works and Will work.

-There are people out there with no faith in government screaming to be taxed: here’s a recent article from

Stephen King to illustrate: http://www.thedailybeast.com/articles/2012/04/30/stephen-king-tax-me-for-f-s-sake.html

These people form a market for the implication of globally conscient forces for positive world change and should be leveraged.

-Never underestimate a Fool

:slight_smile: