Study on Social Innovation

Social Innovation Exchange and the Young Foundation prepared a report ‘Study on Social Innovation’ for the Bureau of European Policy Advisors (BEPA) about social innovation in Europe.



The six grand challenges facing Europe are economic growth, unemployment, climate change, ageing population, social exclusion and public sector innovations. A swarm of think tanks, panels and papers have called for resources and efforts to be invested into solving these challenges and many of them found that innovation is the key.


Partially in response to this report, the European Commission’s Department of Enterprise and Industry launched Social Innovation Europe in May 2011. It is part of their industrial innovation policy, which is about helping companies to perform better and contribute to sustainability, growth and jobs in Europe.

Bureau of European Policy Advisers and the European Union

Bureau of European Policy Advisers provides policy recommendations, research and advice to the European Commission which is responsible for proposing laws for the European Union, a group of 27 nations in Europe that uses the Euro as a common currency. The laws are debated and adopted by:

    The European Parliament , directly elected by and represents the European Union’s citizens.
    Council of the European Union, representing the European Union’s individual member states.

After adoption, the European Commission and the member states implement the laws which are then upheld by the Court of Justice. A Court of Auditors monitors the finances for the European Union.

Over all of these bodies, the general political direction and priorities of the European Union is set by the European Council.


What Is Social Innovation

Social Innovations are innovations that are both social in their ends and in their means. Another way of putting it is that social innovations are new ideas that meet social needs and create new relationships or collaborations.

Previously social innovation was considered to be the province of the social sector. Nowadays, social innovations are recognised as coming from all sectors; the government; the marketplace; the social sector and households, which are people like you and me. Often the true power of social innovation is unleashed when ideas cross sectors. For example, Homeshare International is a charity that facilitate home sharing arrangements between older homeowners who need low level physical assistance and younger tenants who want cheaper accommodations.

Recognising social innovations in its own right allows it to be studied, developed, and nurtured with commonly accepted tools and methods.


How Social Innovations work

In an ever-changing environment, systems and ideas become less efficient over time. People will feel the pain of inefficiency, especially during crises. The young, the marginalised and the ambitious will advocate changes. Artists, writers and poets can create stories, images and metaphors that will help to redefine mental models and assumptions. When changes are imminent some will resist and others will embrace will will strain relationships or even break them.

For social innovations to work, there must be effective demand and supply, and way to connect the two sides with the space to learn and adapt, The most common and cost effective connector is via internet.

Social innovations can be small, however when they spread and come into contact with power and money, they can become large scale systemic innovations. Such widespread change releases tremendous amounts of new energy which creates many opportunities. Consider the impact of the internet or even the results of the industrial revolution. A key purpose creating networks and incubation is to accelerate its spread and the reach of social innovations.


Barriers to Social Innovation


Access to Finance
Finance is difficult to access outside of established power structures. Management for small innovative companies spend disproportionate effort obtaining money. Investors often require that capital is used for beneficiaries rather than capacity building, which results in weak organisations. Property rights for social innovations are new and unclear, which discourages investments.


Scaling Models
There are not many successful scaling up stories for social innovation. The drive for the public sector efficiency has replaced many smaller contracts with fewer large contracts to push the price down, which in some cases cannot be recovered by the supplier. Such contracts also lock spending which precludes experimentation. Big organisations have the resources to use public procurement, such as getting on preferred supplier lists and completing the required administrative work. They also have the project track record, the capacity to fill large orders and have financing capital that small organisations do not. NGOs reliance on grant financing is seen negatively when it comes to market style project fulfillment.


Skills Development
Training resources for social innovation is fragmented and are generally do not cover the full range of resources and tools available. Areas that need to be covered include finance, development of projects, business models, design and marketing. On the job learning and network development is common in social innovation, which is inefficient. The social sector also suffer from financing issues which lead to understaffing, staff payment issues, hiring on project basis, inability to hire the right talent for the job and many professionally trained employees see their work as springboard for jobs outside the social sector.
Some programmes do exist to address these challenges such as Europe’s EUCLID network for NGO leaders, UK’s NCVO and AVECO’s training programmes and some European Social Funds are being explicitly being allocated to capacity building. There is a need for the Europe to invest in training materials, courses and understanding of methods in social innovation.


Networks and Intermediaries
A key factor in the success of Silicon Valley in technical innovation is the clustering and networking and alliance building of technology firms. Social innovation is made of many closed and separate innovations areas. Networking intermediaries, such as Mindlab in Denmark, need to be developed to create connections and synergies between areas of social innovations. Even more importantly, social innovation within the small “bee” organisations need to access money and power of the large “tree” organisations, so that social innovations can scale up.


Policies That Support Social Innovation

Policies can have varying degrees of effectiveness on social innovations, which means some experimentation and rapid learning is required. The ideal structure to support social innovations is a network of active players linked together with a central point of coordination.

The many tools that are available to governments to stimulate social innovation can be grouped as follows:

    Setting Strategic Directions: Social Innovation Europe is an example of a strategic direction setting unit.
    Laws, general regulation and sector specific regulations: Greece’s Mental Health Cooperatives KoiSPE, a limited liability social cooperative which require at least 35% of employees to be mental health patients and no more than 45% to be mental health professionals. It is a business as well as a mental health unit that is exempt from all taxes except Value Added Tax (VAT).
    Financing: Social Impact Bonds, in the United Kingdom, is where governments agree to pay for agreed upon social outcomes and this promise can be used to raise funding from traditional investment sources. In the United States, the Housing and Urban Development Department commits 1% of its budget to innovations.
    Capacity Support: In Spain, Denokinn is the Basque Centre for Innovation is a non-profit organisation promoted by local authorities and it adopts a comprehensive approach to supporting innovation within the region.
    Purchasing and Commissioning: Personal Budgets, introduced in several countries such as Belgium and Sweden, usually works along the line of letting individuals allocate the budget that is given to them for council services.
    Reporting Requirements and metrics: European Union is encouraging the use Social Return On Investment (SROI) for reporting.
    Creation of New roles and institutions: United Kingdom’s Young Foundation Social Entrepreneur-in-Residence in public agencies.

Measuring Social Innovation

Social innovation can cover education, health, the environment and more, There are many sophisticated metrics that evaluate the impact of innovation such as Quality of Life used in health fields and Blended Value methods for the non-profit sector; however these tools are rarely used to guide decisions.

Another set of tools looks at the amount of innovation being created and being spread. United Kingdom’s National Endowment of Science Technology and Arts’ (NESTA) Innovation Index is an example.

The European Commission should develop a common architecture for assessing social value in different fields so that individual projects can benefit from established peer comparisons. Measuring the rate of innovation itself is also important.


A Theme For Europe: Social Innovation

Along with business and technology innovations, social innovation should be a common and an expected requirement.

The Europe Commission should create a social innovation initiative which sets priorities according to Europe’s grand challenges. Identify and build the tools to resolve them and set milestones and targets. The initiative would encourage, create and manage social funding mechanisms, innovation incubators, networking intermediaries, skills development and resources. Existing high technology networks such as broadband can be used to facilitate the process.


Ad hoc innovation amongst four Sectors


Public Sector
The public sector can drive a tremendous amount of innovation through the use of policies and financing. Some public servants do seek out innovations, however the structure of public services with focus on centralised policies, emphasis on caution and the existence of departmental silos creates barriers.

    Participatory Budgeting: For 4 weeks in 2007, the Cologne City Council in Germany, asked citizens to submit proposals via a website on how to allocate €311 million budget for 3 areas: highways, byways and public spaces; green spaces; and sports. The council implemented 300 of the best ideas. The project only cost €300,000 to administer.


The Market
For profit businesses see social innovation as opportunities. One key development is the growth of social enterprises which can provide social services and employment for the disadvantaged. Social enterprises attract volunteers and have close relationships with the communities that they serve. As a consequence, they are tuned into the needs of their beneficiaries.

    Mobile Money: M-PESA in Kenya is a Vodaphone product that allows people to buy virtual currency that is stored on their SIM cards. M-PESA cannot be physically stolen and it is easy for users in remote areas to make loan repayments and transact with other users. M-PESA outlets allows users to buy and sell M-PESA with legal tender.



Civil Society and Grant Economy
Rich in ideas for social innovation and often pioneers of new approaches, however poor capacity makes them susceptible to shocks and unable to scale up successful ideas. While there are large organisations, the majority are small and not well connected with each other. Alternative revenues streams such as social enterprises and provision of specialist training are being created.

    Using Technology to Resolve Social Needs:Social Innovation Camp is a regular 2.5 day event that brings together software developers, designers, marketing and business experts, as well specialist in specific social areas to create web based social projects. Web development and business development time is awarded to the most promising ideas.



The Household Economy
Households are often ahead of the curve in terms of innovations. Issues such as ageing and parenting are felt in the homes first. There are many tools and platforms where individuals can develop their own networks, create their own solutions and even develop their own services. Households will continue to be stronger drivers for social innovation in the future.

    Commanding Attention: Complaint Choirs is where people come together, list their complaints and then sing about them. It allows citizens to express their pressing issues, build solidarity amongst them and is an innovative and noticeable way of publicising issues.