Challenges for Social Innovation

Globalization has shortened the distance among cultures and sets of beliefs, enabling some values to influence and prevail over others. A wide acceptance and application of market based principles around the world has changed the way in which people think, turning community values into individual beliefs. This era could be seen as a modern Renaissance in which the individual is the central piece of the puzzle and in which a new reality is being human-centered designed. As this individualization phenomenon expands, the definition of “what people need” has disintegrated, in a literal sense, into the needs of smaller units: a country, a community or even an individual. Hence, as demand has sophisticated, innovations in every level and dimension of supply have been exerted in order to respond to a more complex reality.

In this sense, new institutions have surged to norm, regulate and set a framework for action of firms, governments and civil societies trying to supply an increasingly complex demand. In the near future, the greatest challenge social innovation will experience will be related to institutional change. As Samuel Huntington says, the survival of an institution depends on its ability to adapt to a changing reality.

Therefore, ties among private, social and public sectors will have to strengthen to improve and increase the information flow. If governments do not assume their co-responsibility on social innovation and development by legislating and creating a favorable environment for that can norm new forms of social enterprises, there will be a bottleneck, entrepreneurs will be discouraged and many social needs that cannot be met by the government won’t be met by other actors either.

Also, the survival of traditional non-profit organizations will most likely be put at risk. As new and more institutions are created, the sources of funding will be more limited for existing non-profits. Consequently, they will have to increase their fundraising efforts or revaluate their business models. In addition, innovators should focus in developing new ways for reducing transactions costs derived between non-profits and donors, and between entrepreneurs and investors.

Moreover, another challenge for social innovation will occur inside the firms, which are discovering new frontiers in the base of the pyramid. In the near future, corporative ethics and corporative social responsibility will take a central role and will possibly make many enterprises to question the balance between their profit-maximization principles and their social impact concerns.

The future is uncertain, but nature is wise. So, only the fittest will survive this major changes driven by social innovation. Then, the question that arises is which institutions will be the fittest to survive? Which new business models and institution will be created? The limit is set by individual imagination.