Abstracts and Articles
Making a difference: strategies for scaling social innovation for greater impact, Westley,F and N.Antadze
Social finance intermediaries and social innovation ,Moore, M.L. F. Westley, T. Brodhead
Editorial: the social finance and social innovation nexus, Moore, M.L. F. Westley, A. Nicholls
Funding social innovation: how do we know what to grow, Antadze, N, F. Westley
Impact metrics for social innovation: barriers or bridges to radical change , Antadze,N, F. Westley
Enabling social innovation through developmental social finance, Geobey, S, F. Westley, O. Weber
This paper defines social innovation and provides its systemic view, particularly in relation to social enterprise and social entrepreneurship. It delineates the relationships between vulnerability, resilience, and social innovation, and explores the strategies and dynamics of scaling up social innovations. Social innovation is defined as a complex process that profoundly changes the basic routines, resource and authority flows, or beliefs of the social system in which it occurs. In order to understand the trajectories of successful strategies associated with social innovation, various applications of marketing and diffusion theory are helpful to some extent. It seems unwise, however, to rely solely on a market model to understand the dynamics of scaling social innovation in view of the complex nature of the supply-demand relation with respect to the social innovation market. The authors highlight various dynamics created between key intermediaries that affect the relationship between supply and demand for social innovation. They then propose a distinctive model of system transformation associated with a small but important group of social innovations and dependent on discontinuous and cross-scale change.
Social finance intermediaries and social innovation
This paper explores the ways in which foundations can partner with intermediaries to support social innovation for broad system change. The authors identify two different types of intermediaries. The first supports a foundation’s investment goals by seeking out attractive impact investment opportunities, and providing sound advice based on background research. The second type supports a foundation’s grant-making activities by serving as a coordinator, coach, convenor, or mentor to both the foundation and its grantees. In this paper, the authors examine the McConnell Foundation’s efforts at generating social innovation at three successive scales by incorporating partnerships with intermediary organizations into its philanthropic investment strategy. Using concepts from transition management theory, the authors found that three variables helped determine the different patterns in the social innovation processes and in the foundation-intermediary relationships at each scale:
the various degrees of coordination between and by the foundation and the intermediary,
opportunities for learning and the formation of an intellectually supportive relationship, and
the types of intermediary organizations engaged at each scale.
The most successful social innovation processes occurred when intermediaries had their own internal resources to support the coordination and opportunities for learning, and when the initiative focused on transforming macro-scale elements.
Moore et al suggest that, as philanthropic funding becomes an important source of support for social innovation, these lessons are critical for those interested in ensuring that social investments lead to the capacity to respond effectively to societal challenges
System innovation and a new 'Great Transformation' - re-embedding economic life in the context of de-growth
The paper argues that broad-scale innovations are constrained by the current capitalist system that prioritizes continual private sector economic growth and devalues our ties to communities, societies and the environment. Globalization is the latest approach to treating places as generic, interchangeable nodes in an abstract economic space. Social innovation is viewed as a renewed attempt to tame self-regulating markets and weave societal values into the fabric of economic life, with social enterprise and social entrepreneurship at the forefront. Quilley draws upon Karl Polanyi's ideas as a framework for an historical analysis of the limits to social innovation that the capitalist growth imperative imposes. He argues that opportunities for social innovation and a new great transformation of economic systems are possible in new contexts created by de-growth and counter-movements focused on community development and addressing global scale environmental degradation. In a de-growth context this means more localized economic activity, social welfare and mutual support, and the re-emergence of economies tied to ecological cycles and re-embedded (once again) in social and cultural ways of life. In a community development context, social innovation seeks: to have more products consumed within the same communities that produced them; to encourage economic activities that benefit local communities and cultures; and, to reduce the vulnerability of communities to external markets. However, the extent to which social innovations can bring about a new great transformation in either context is dependent on a broad-scale shift. What is needed is a shift from a consumer focus on things to the pursuit of the good life one oriented towards family and community participation, civic virtue, and the fullest expression of human nature through collaborative and creative activity. In sum, system innovation has been constrained by an economic system that views markets as disconnected from society and the environment. Social enterprise and social entrepreneurship may be seen as innovations that speak to an old problem, the see-saw tension between the self-regulating market and diverse goals for societies, or what Polanyi called the double movement. These innovations may lead to systemic change if developed within de-growth and community development contexts.
Authors Moore et al, highlight the linkages between social innovation and traditional financial institutions' noting that the perceived risks associated with return on investment, often result in marginalizing both social entrepreneurs and those who might benefit the most from a variety of social innovations. The authors go on to explore alternative funding approaches, and find that social finance, apart from government and foundation funding, provides several important opportunities for social innovation. First, social finance can support social entrepreneurship and innovation directly throughout its development, adoption, and implementation stages. Second, it typically challenges the institutional logics associated with conventional investor rationalities; thus creating space for experiments that confront both this logic and the existing resource flows. The authors then touch on some of the institutional barriers and disincentives that exist within current mainstream economic structures for those interested in, and capable of, channeling private capital into innovative social and environmental interventions. Moore et al call for more research in finance mechanism for social entrepreneurs in order to further enable social innovation.
The article begins by dissecting an argument put forth by the Young Foundation in the UK who suggest that a market's supply and demand framework can direct investments for scaling social innovation. In their counter argument, Antadze and Westley argue that the relationship between those engaged in social innovations (suppliers and users) cannot easily be mapped onto the roles of consumer, buyers and the market because the relationships and exchanges between actors in social innovation is not as clearly delineated. They conclude that the market framework may not consistently highlight opportunities to fund social innovations that should be scaled. As an alternative to the market framework, the authors suggest three activities and three actors to support the scaling of social innovations. Activities include convening, (bringing various actors into a shared space) connecting (linking actors, resources and opportunities) and brokering (support development of relationships between actors). These activities can be undertaken by any of the following actors including, 1) interactive media and research centres, 2) governments, and; 3) foundations. Importantly, the authors find that foundations who are working with a systems perspective are best situated to act as convenors, build system awareness, and help to support innovations as they emerge.
Addressing society’s significant problems means fundamentally challenging the economic, social and environmental dimensions of our complex social-ecological systems. Often, programs geared to improving social conditions are evaluated using quantitative measurement tools that are grounded in conventional accounting practices, and thus tend to a focus on the economic outcomes of products and services. This presents a particular challenge when it comes to evaluating the impacts of social innovation, which, being cross scale and multi-dimensional by nature, are difficult to categorize and comprehend using numeric and fiscal tools.
In this paper the authors describe conventional measurement tools and their limitations for evaluating social impact. The authors argue that unlike technical innovations, the impact and outcomes of social innovations cannot, at least initially, be judged by growth in market share, profitability, or even consumer satisfaction. The difficulties inherent in attempting to capture and calculate the full impact of social innovation often hinder high-performing not-for-profits, social entrepreneurs and social enterprises from accessing capital from investors and donors. Antadze and Westley outline some of the challenges of measuring social impact, and, in response, they propose developmental evaluation as a practice that is more suited to evaluating social innovation. Finally, the authors describe the disadvantages for decision makers to using traditional evaluations methods for social innovation. In this paper the authors also provide background on the concepts of complex systems, resilience and the adaptive cycle.
This paper explores social finance as a strategy for generating social innovations and, at the same time, financial returns. A review of the current literature on social finance explores the challenges involved in attempting to capitalize social innovation to resolve complex problems. The findings suggest three sources of difficulty: setting boundaries, integrating heterogeneous values, and responding with sufficient speed and flexibility to support innovation. In response, the discussion focuses on the need to internalize externalities (understood as the internalization into the investment decision of what would otherwise be social or environmental externalities) and to adopt a modified portfolio approach that enables learning. Specifically, the adaptive cycle is used as a conceptual framework for understanding the phases and dynamics of social-ecological innovation and helps to build a rationale for an alternative evaluation model for social finance, referred to here as ‘developmental impact investing’.
Developmental impact investing is a process that involves both the use of a provisional understanding of a complex socio-ecological system to guide impact investment strategy and investing in a portfolio of theories of change to impact that system. The overall logic of developmental impact investing can be understood as a cycle that has three components. First, an understanding of the particular complex socio-ecological system is used to guide portfolio selection. Second, the portfolio of social finance projects injects capital into a set of activities that then generate changes in the complex socio-ecological system. Finally the impact is measured, allowing a better understanding of how the complex socio-ecological system operates.
A brief case study of the Vancity credit union is used to demonstrate how a strategy of developmental impact investing has worked in practice. Ultimately, the argument is made for the synergistic value of holding a portfolio of social finance as an integrated risk-management strategy, along with a parallel learning strategy based on developmental evaluation.