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What Drives Social Innovation?

April 6th, 2014 by admin Leave a reply »

The Rise of Global Social Entrepreneurship

1971-4 were big years for global social reform…but it took us 40+ years to fully realize how big. It was in the early 1970′s, that two new enterprises were formed, one in the U.S. And one on Bangladesh, that would go on to positively affect the lives of tens of millions of individuals around the world. Opportunity International (founded in 1971 by Al Whittaker, Bristol-Meyers President) and Grameen Bank (first loan  in 1974 by Bangledesh university director, Mohamed Yunis) formed  “micro-credit” organizations, offering loans, credit/savings, insurance and training for impoverished families.  These two organizations were early to innovate in the “social” or “impact” sector. Their focus as organizations.

In 1981, Ashoka was founded by Bill Drayton who recognized that entrepreneurs through a social venture capital approach could impact many aspects of society, addressing the needs of the poor, marginalized and under-represented. Ashoka today operates in over 70 countries and supports the work of almost 3,000 entrepreneurs, chosen and mentored as “Ashoka Fellows”.  Drayton calls these workers “social entrepreneurs”.  For the past 30 years, Ashoka, and others that have followed their path, have sparked a movement toward the citizen-driven social innovation.

Other organizations, such as Echoing Green, The Acumen Fund, Omidyar Network, Skoll Foundation, and many more have followed Ashoka’s lead in supporting social entrepreneurs around the world.

What’s Fueling Social Innovation?

What’s fueling the move toward Social Innovation in our world today?

Chasms and “Bankers”: first, we can all agree that there is a growing chasm between The Have’s and The Have-Nots – the disparity between wealthy and lower income classes is growing each year.  This chasm has forced Those Who Have a Lot to re-think the meaning of work, life, and philanthropy.  Many of the richest Have’s earned their money from technology and  innovation – Bill Gates through innovation in the software space; Warren Buffet in financial innovation;  Pierre Omidyar and Jeff Skoll in e-commerce innovation; Marc Zukerberg in social media innovation; and Marc Benioff in enterprise business model innovation.  Their form of philanthropy is ENTREPRENEURIAL.  “Let’s apply entrepreneurship to the world’s greatest problems and see if we can’t make a dent.”. The Chasm is creating consciousness and this consciousness is manifested in new social innovations.

Technological Shifts : are making the world a smaller place.  New advances in communications, networking, social networks, and other technologies have created an unprecedented array of new opportunities and have disrupted just about every business, government and learning institution on the planet.   The falling cost of Internet access and mobile communications has opened up the Developing World to instant knowledge and information, often disrupting the old ways of thinking.

Citizen Sector:  one big outcome from technological shifts has the rise of the citizen sector – people around the world are able to compare themselves with others, and see the differences. Boundaries are broken down, and real needs become well know and exposed to the world.  The Have-Nots suddenly are exposed to what the Have’s have.

Governments Failing to Keep Up: unfortunately in the conscious and technological shift we are facing, large organizations, like the government and corporate entities are falling behind – they will be forced to innovate or perish. It is becoming clear that large-format government is not going to be able to innovate quickly enough to solve our growing social problems on which they are expected to act. Something has to augment government and large corporate understanding and efforts in order to keep up with the pace of change.

Corporations Waking Up : Perhaps due to increased popular and governmental pressure (think: environmental issues and greenhouse emissions), or perhaps due to leaders of our global corporations “awakening” to the realities of pure profit motives, most global corporations have focused some attention to social issues in the past decade. Many have formed internal task forces, departments of “Corporate Social Responsibility (CSR).

A few leaders have made social give-back a part of the corporate culture – notable examples are Toms’s Shoes, Ben & Jerry’s, and Salesforce.   A few corporations have grown due to the focus on social issues, such as Triodos Bank,

 

Global Urgency: Against the above background, it is becoming clear that our Earth’s resources: oceans, forests, food & water supplies are in jeopardy.  An urgency in such matters as democratic change, environmental hazard/waste, global warming threats, and more – has come to the forefront of our consciousness as a people.

The New Era of Innovation

In  the last decade, a dramatic confluence of economic, technological, political and spiritual shifts appears to be  shifting global consciousness on social issues such as poverty, education, human rights, environment, and basic human needs.  In my opinion, we are now entering a new global Era for Social Awareness and Innovation never before experienced.   These innovations turn new leadership styles, business models, processes, technologies and products/services into forces of good to address the world’s most challenging needs.

The market term for this new form of innovation is Social Innovation.

Seven Forms of Social Innovation

The late Peter Drucker, in his book Entrepreneurship and Creativity, discusses 7 forms of  innovation. These 7  explain  the background for nearly every innovation that has occurred in modern times. Today,  we are seeing social innovation occur in all seven of these areas.

1. Unexpected occurrences (serendipity, chance & surprise) – Drucker believes some inventions and innovations have come from surprise, and of course this is true.  A famous example of this is Art Fry, at 3M, who came up with the idea of Post-It Notes from the unexpected failure of a new glue that the company had experimented with.  Today, social innovations also come from serendipity – or “being in the right place at the right time”.  An example I like to use is Donorschoose.org.  Founder Charles Best invented his service when, out of frustration for lack of resources,  he created a simple internet site to post the local needs of teachers at his school.  By chance, others outside the school system found it intriguing and DonorsChoose became a phenomenon after Best was featured on the Oprah Show nationally.

2. Incongruities (e.g. growing market, falling profits) – One of the most common birthing spots of innovation is Incongruity – when markets or situations are simply out of alignment, and something new is called for to take advantage of the situation.  I’ve witnessed many times, as a venture capitalist and angel investor, the affects of . An case study and example, which I use in my class at UC Berkeley is Reply Inc. Founder, Payam Zamani, realized in 2006 that hisprimary target markets (real estate and automobiles) were suffering in the economy, and his company needed to re-organize it’s business model to make products and services easier to use. Incongruities are a major driver of Social Innovation, of course, because the incongruities in many developing nations expose underlying political, economic and societal issues.  A favorite example of mine is Napo Pharmaceuticals (South SF), founded by consultant, Lisa Conte.  On a trip to Africa, Lisa saw children suffering from diarrhea and dying.   With further research, she found out some 2+ million children die each year from diarrhea-related maladies.  Yet most major drug companies found this “niche” too small and unprofitable to address.  She formed Napo to address this incongruity in the market. The company went public in , and today assists children all over the world.

3. Process Needs (e.g. linotype & advertising = desktop pub) – As a new worker at Apple Computer in the 80′s I witnessed a great example of process innovation – the rise of “desktop publishing”.   The Macintosh computer, released in 1984, represented a new way to interface with computer hardware – the roll of a mouse, the fonts on the screen – all approximated the realism of a printed page in a magazine. But the Mac went on to revolutionize the concept of self-publishing and advertising by allowing individuals to approximate the same things that expensive Linotype could do in upscale advertising, for a mere fraction of the cost using a computer and laser printer.  Today, we take this innovation for granted.  In the social innovation space, my favorite example of process innovation is happening today in learning and education.   Sal Khan (founder of Khan Academy) and others in the “blended learning” category have shown that education can be changed by bringing the homework into the classroom, and bringing the lecture to the home (videos that students can watch anytime, anywhere).  This reverses the thinking that teaching takes place in the classroom only. There is currently a revolution taking place in Education where the “old” process of teaching is being replace by the “new”, personalized process.

4. Industry and Market changes (e.g. Shifts, catastrophes, competition) – a classic example that fits this area is Salesforce.com.  In 1998, Marc Benioff attempted to convince his bosses at Oracle Corp that a new business model for providing software would address the needs of customers who were tired of paying huge prices for internals software installation and maintenance.  He was unsuccessful, so he started his own company to address the needs of mid- and large-sized clients.  His business model, today referred as “SaaS” (software as a service) is now used by most software companies on the planet.  In the social innovation sector, market and industry changes in Developing nations have prompted extraordinary new innovations.  For example,

5. Demographic Changes (e.g.changes and shifts in the world’s demographics) – the world is in constant change, and many innovations take advantage of shifts in the world’s population. An enormous demographic change in the US for our present generation is the aging baby-boomer segment of the market, who will soon be senior citizens, creating a vast array of needs in elder-care, housing, health and medical needs.  New innovative ways of addressing this demographic shift are underway.   My favorite example for “demographic change” that drives innovation in the social innovation space is SamaSource, founded by Leila Jonah. Samasource has created an innovative piece of software that disseminates work electronically to impoverished areas of the world, where qualified, but otherwise unemployed workers can earn a wage completing the work virtually.  This takes “outsourcing” to a new level. The company prides itself on bringing work to impoverished areas of the world where people can be quickly trained and made ready for meaningful jobs.

6.Changes in Perception (e.g. Health, fitness, education) – in time, human beings perceptions of life and the world we live in change. Racial, sex, sexual norms have changed in various societies.  Here in the US the perception for “Fast Food” has dramatically shifted in the past 20 years, going from a “convenience” to a national health driver. This has led to new innovations in “healthy” foods, as evidenced by new restaurants, innovative food distribution (think: Whole Foods) and new forms of weight control.  In the social sector, innovations are also driven by changes in perception.  The empowerment of women in the developing world is a good example.  In many cultures where women have been “second-class” citizens in the past, new social innovations are allowing them to become the bread-winners for their family, the leaders in their communities and even political heroes of social change.  Opportunity International, for example, supports over 2 million loans per year to family “entrepreneurs” – 85% of the recipients are the women in the family.

7.New Knowledge (e.g. computer chips, batteries) – Moore’s law, applied to chips, communications means that new technologies are coming on the market every 2 years that are doubling in capacity and power.  Adoption curves for new technologies seem to become steeper and steeper with each successive wave. It took 20 years for telephones to become popular;  it took 2 months for Instagram to catch on fire. An early pioneer in social entrepreneurship, Kiva.org, is a great example of how new technology can be used to bridge social gaps, match Have’s with Have-Not’s.  Today, Kiva is on track to transact $1 billion in loans between the developing countries and wealthy US/European families.  This new innovation has disrupted the common form of lending by banks, and has spawned a new generation of social innovations linking those in need with those who have via the internet and mobile

We are awash today in innovations in the social sector.  So much so, that attention has shifted from large monolithically non-profit organizations (think: American Cancer Society) to a new era of “social entrepreneurship” (think:  which encourages “lean” thinking and enterprising approaches, both in for-profit and non-profit formats.

Have your own example of social innovation and where it fits with Drucker’s 7 forces?  I’m interested to hear it!

 

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