What are we truly incentivizing?

Week 6: Creating Policies and Ecosystems for Social Innovation

The articles this week reminded me of a TedX talk I watched awhile ago. Romeo Dallaire—the former UN Force Commander in Rwanda who stayed against UN orders during the Rwandan Genocide—was talking about the role of NGO’s in addressing social ills. He talks about continued growth and change, that governments structures must continue to grow, “there is no way you can sustain status quo—it’s simply not sustainable. You will regress.” He goes on to discuss how NGO’s are the future of solutions to major social issues and I think it aligns beautifully with the readings.

As a whole, social innovation exists at the intersection of the existing sectors, and is emerging as a unique field. It requires dynamic thinking, and I really appreciate that it is taking hold in pockets of our culture.

It makes sense to me that social innovation would draw from the emerging tenants of open innovation. It reminds me of Bill Joy’s famous statement, “No matter who you are, most of the smartest people in the world work for someone else”(Fedscoop.com). I’ve heard Joy speak a number of times, and one of the things that I really appreciate about this statement is it is really discussing the underlying assumption that people with good ideas don’t always end up in the field for which their ideas will have the greatest impact. So, in particular, I appreciate that the White House along with a number of major foundations are willing to outsource brainstorming for it’s major social problems to the general public.

This is a form of flexibility, I will admit when I first heard, that I did not expect from my understanding of government bureaucracy.

Though, I’d like to draw out a specific point—what is the impact on our social value of incentivizing behavior with “prizes”? I appreciate that it allows us to look at issues we wouldn’t otherwise, but how do we then create an effective long term implementation? 

http://www.youtube.com/watch?v=b6q0aA0KiA4

http://www.ssireview.org/articles/entry/innovating_the_white_house

http://opinionator.blogs.nytimes.com/2012/02/29/prizes-with-an-eye-toward-the-future/?_r=0

http://www.economist.com/node/16789766

http://www.americanprogress.org/wp-content/uploads/issues/2007/12/pdf/social_entrepreneurship.pdf

CCT and Innovation Frameworks

Creating frameworks through which government, non-profits, and for-profit businesses can help the poor seems like a good idea, but I keep coming back to the question of how relevant could a top-down distribution of investment, brain power and other such capital be to a target that has so many different variables in its poverty problem. Many social innovation projects are well thought out and deliver excellent results. They encourage self-empowerment and teach techniques for overcoming particular poverty sinks. To what degree their services are accessed and the scope of their ability to help is the bottleneck that I think could be better addressed.

The article on innovating the White House provides some logical, if vague, starting points for fast-tracking the growth of social innovation enterprises. For example: “provide seed capital to create a pipeline of innovation” seems logical, but how long will that take to make its way through the political trenches, and what kind of oversight and control would come attached to the money? Federal regulation is notorious for being cumbersome and bureaucratic. Furthermore, do social innovators have the resources and expertise to deal with the lengthy, expensive and involved process of funding applications? Certainly large social innovators like Teach for America would, but what about something that has come out of our IdeaLab?

In thinking of social innovation and all these vehicles to fund and implement them, I keep coming back to the idea of cash transfers both unconditional and conditional. This is the kind of bottom-up approach that empowers people to prioritize the way that they address their needs. I think the distinction between whether or not the transfers should be conditional must depend on whether or not those receiving aid have the ability to address the stipulations. For example, Bolsa Familia was successful because there was the infrastructure and personnel available to stipulate mandatory schooling. But in cases such as crisis prone or extremely poor regions in Africa? That’s where a group like GiveDirectly comes in. Giving cash without reservation shouldn’t be a radical idea. Really, it is a way to help people help themselves by giving them the direct means to address their most urgent problems. Not only that, but they are able to address them within the context of their culture and environment instead of addressing needs according to a foreign perception of them. Despite many observer reservations, the amount of good they do per dollar seems to be high compared to other organizations.

Sources:

http://opinionator.blogs.nytimes.com/2013/08/28/the-benefits-of-cash-without-conditions/

http://opinionator.blogs.nytimes.com/2011/01/03/to-beat-back-poverty-pay-the-poor/

http://www.ssireview.org/articles/entry/innovating_the_white_house

Know your government, utilize what they can offer

Not surprisingly, any discussion involving governments always split into opposite directions. Are governments helpful when facilitating and supporting social innovations? It depends on what value that specific government pursues, what are their priorities and what do they do well.

My point here is, utilize what they can offer and find what you need elsewhere if they don't care. Typically  some governments don't care, some seem to care but have done little. Some can work great as an incubator or supporter.

I agree with what Tina Rosenberg wrote in her article: government programs sometimes work better then you imagine when you want to make things work on a bigger scale. But be careful, even when governments  show a nice attitude in helping social enterprises and social innovations, they are not completely helpful.

I read through Sean's blog and find something worth a discussion. He mentioned a program in Singapore that seems to be well-planned and successful. But Singaporeans normally find the harsh regulations and  clear-cut role of their government is hampering their willing to start a business. That probably is true when we're talking about entrepreneurship in business, but is somehow different when the discussion moves to social innovation. From what I know and my previous experience living in Singapore, it's true that the government tends to be paternalistic, in a way that it regulates, forbids, guides, and punishes in details to make sure nothing goes wrong. But it's doesn't necessarily mean social innovation has no where to play in Singapore. A stronger government somehow means social innovations are easier to be implemented and have no obstruction from the gov once it is put into place. Sure they have a small population and market, but their government reveals high efficiency and integrity. From what I saw, the society thrives and rapidly improves due to their government: no thefts, no homeless, high average income. Their business scope is rather outward-facing and industry-limited, but the impact of social innovation go far beyond what industry can cover.

When we're looking at the role of government in social innovation, see what their attitude is, and focus on how we can utilize the resource and opportunities they offer.

http://www.concern.sg/SocialInnovation

This is a website concerning social innovation in Singapore. A brief description on the website kind of summarizes the picture of social innovation in Asian countries.

The biggest social innovator in Singapore has long been the Singapore government itself – innovations such as Central Provident Fund (a social security savings plan), Electronic Road Pricing (for the Central Business District) and the Marina Bay Reservoir(originally a confluence of several river systems) are a few examples of how it has addressed some of the long term social, urban and environmental challenges that this small country with no natural resources faces. The Singapore Economic Development Board itself has also been cited by Volans as a pioneer in social innovation in their report on The Phoenix Economy.
But the picture of social innovation in Singapore is a fast evolving one. The past 4 years have seen a number of civil society and non-profit organisations enter into the social innovation space. The language of social innovation is embedded in the people sector, although the practice of it less so.

In Singapore, really there's no need to draw a line between civil society and government, as long as necessary functions are carried out and people benefit from it. When I was an undergrad, I was involved in a project funded by Lien Foundation mentioned in the website, which is a big participant in social innovation in Singapore, called Lien Service-Oriented Government Index in China. So it's intuitive to me that Singapore has foundations dealing both with government  and with social innovation.

Here's an example for an environmental project called "Greenroof", which is designed to make major buildings' roofs covered by greenery.
http://www.greenroofs.com/blog/tag/singapore/
In social innovations related to environment or large scale efforts, governments are a key role to play.

It is true what Sean said, though, that governments are driving forces for a lot of major changes especially in Asian countries.Not only because they dominate power, money and resources, but also because its civil society is less autonomous and needs further education to be trained to master their own society. So at this particular stage of development, when citizens are starting to realize their own power and the government still holds bigger power and most of the resources, seek a way to collaborate with them and utilize what they can offer. Probably programs and innovations of larger scale can harvest unexpected outcomes.

Question here:
Can we generalize what governments typically can benefit or hamper social innovation in a nutshell? That way social entrepreneurs can have a general idea of where to seek help and what to avoid, and it may help social innovations to spread world-wide.

questions for a social stock market

Thinking about Social Impact Bonds led us to a long discussion that essentially tried to describe a new stock market in which investors tried to choose between these bonds. The hurdle implicit in this is trying to find a way to measure the amount of social impact of one bond versus another when the two social bonds are for completely different types of social benefit.

Measuring social impact can be very subjective, but our interests are just as subjective, so perhaps that doesn't matter. Presumably, everyone interested in social change has a particular area to which they are partial. Social innovators don't go into social innovation for the money, they go into it because they've chosen an area in which they'd like to see social change. The same may be true for investors in the social stock market. It may not be necessary to find an overarching way to compare all types of social impact. We talked about the possibility of different categories for different types of impact, like perhaps environmental, housing, poverty, etc. Wouldn't this be enough, since people will choose what they are partial to, or what they have a personal interest in anyway?

Even trying to compare social value within one social problem is problematic. We tried to discuss it through an economic perspective, seeing the value in terms of the supply and demand. But how can you quantitatively determine the demand for a given social problem? We can say there is a large or small demand, but can we pinpoint the demand precisely enough to be able to form an equation that will give us the amount of social value a social project can achieve? And given that we could, do we even want to think of social value economically?

It's hard to believe that a social stock market would ever turn into a cutthroat market where investors were in it just for the returns, so perhaps we shouldn't treat it as such. Or maybe it's the other way around, maybe we shouldn't treat it as a cutthroat market to prevent it from becoming one. Either way, perhaps it's in our best interest to allow a bit of subjectivity by limiting our comparisons of social impact to projects that deal with the same social problem.

The Role of Government in Social Entrepreneurship

This week’s social innovation topic is “Creating Policies and Ecosystems for Social Innovation”. The articles written by Tina Rosenberg and Michele Jolin serve as a strong base for discussing whether governments should foster social innovation through social programs that provide subsidies and grants, or if social entrepreneurs should lean on the private sector to raise capital for their ventures.

I think that governments and large corporations, particularly multinational organizations, are increasingly in a place where their impact on society is closely monitored and evaluated. With the advent of a number of tools including social media, governments and corporations are becoming increasingly transparent. One reason may be that business is facing more regulatory oversight, and another may be that the public is demanding government and business to play a more central role in creating a more equitable society. In this case, social media has played the role of a regulatory agency. What I am getting at here is that the paradigm in which governments, large corporations, and social entrepreneurs exist has greatly changed over the course of the past decade, and the public has had an increased and stronger voice.

The social programs we have seen in Brail and Mexico, and now in many other countries around the world, are an additional element in this new landscape. The conditional cash transfer programs implemented by government are changing societies for the better, bringing down Gini coefficients, and providing real opportunity now only for today’s generation, but for future generations to come. Government does play an important factor in sustaining these programs and for the growth of new programs in countries around the world. But, as Jolin outlines in her article, we need to “do more to create a pipeline for future entrepreneurial efforts”, and that includes here in the United States.

In his Forbes Magazine article “Three Things Governments Should Do for Social Entrepreneurship”[1], Felix Oldenberg suggests that government has a more important role to play. Oldenberg suggests – like the authors of our readings had – that each country has its own conditions, and as such, there needs to be a hybrid approach to fostering social innovation. That is to say, government needs to support private enterprise, and private enterprise needs to support social entrepreneurs, and social entrepreneurs – through their programming and ventures – can have the opportunity to improve inequality in the same ways as those have in Brazil and Mexico. Oldenberg suggests that “governments need to create regulation-free special social development zones” and “help drive a culture of recognizing and celebrating change-makers.” Do you think there are adequate policy support systems in place here in the United States to support social innovation? Does social innovation financing allow government to partner with innovative social entrepreneurs who help to supply the needs of the people? Or, will government budgets constraints pose an imminent threat to any collaboration with social entrepreneurs?

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[1] Oldenberg, Felix. Contributor. Forbes Magazine. “Three Things Governments Should Do For Social Entrepreneurship.” November 23, 2012. http://www.forbes.com/sites/ashoka/2012/11/23/three-things-governments-should-do-for-social-entrepreneurship/

Government's Role: Show Me The Money!

Over the summer, I had the opportunity to speak with one of the editors of American Progress. I had ran into him at the lobby of its building where my cousin worked as a security guard. I joked with him about the number of emails they send on a weekly basis, and he told me that if I had any article ideas to send them to him for a possible freelance gig. After our quaint introductions, the conversation took a more serious tone, "What is the role of government and its responsibility to the people?" We both wrestled with the idea, but figured out that we both agree that government, being comprised of thought leaders and elected officials should have the obligation of taking care of its citizens.

When I saw American Progress had published a report I wondered if it could include more insight and substance than the 10-minute conversation I had with an American Progress editor. According to the report, which was published in 2007, there were 200,000 non-profits founded in the United States since 1970, but only 144 had annual revenues of over $50 million. The paper reports that some social ventures and enterprises are not designed to be wide scale, as they address smaller problems, but the imbalance that exists between successful non-profit ventures that have truly scalable models and those that do not are daunting.

The report suggests the government fund social ventures. The practice has long been to have foundations and philanthropic organizations fund social ventures, but if the government played a role in helping organizations expand and become scalable, wouldn't that be better for everyone?

The report suggests that the next president create a "White House Office of Social Innovation & Impact." This office would presumably do a few things, including: direct funds to nonprofits that have demonstrated results, be a catalyst for cross-sector partnerships, and create a beneficial tax status for social innovation.

This is where the report lost me. It focused primarily on the government's role, but not on the role of the social innovators. The government has a role to provide for its social innovators, as we all know from economics class, innovation is one of the factors to spur economic growth, but how much reliance do we want in the government?

Throughout history, governments have been dictating the roles of innovators and have actually hindered innovation (remember the British government's role with the cure of scurvy?). I believe that there needs to be a two-way action plan between innovators and governments for success of social innovators. There needs to be a more comprehensive plan based on the needs of innovators (funding) and the government (cutting deficit) and see if there can be some common ground between the two entities.

The role of social innovation depends on the innovator, not the government, and the reliance on funding should not be one of them. What do you think?

BIG TALK OF BIG SOCIETY

There is no measure to quantify impact of social innovations in a society but a lot of investment both, in policy and money-terms, can be observed throughout the developed world. Ideas, discussions and policies have brought us to the point where there are expectations of having “social stock exchanges”. But, the primary question remains the same – how would the performance be measured to value or devalue the “social stocks”.

Looking back in time, history tells us that governments have always tried to make link their activities with that of social work organizations, could also be termed as social enterprises, for a larger benefit to the society. Governments are never resourceful enough to take care of all its residents according to a uniform standard, which results in stratification of the society. To fill this gap, charities, social welfare organizations, non-government organizations (NGOs), not-for-profit organizations and a lot more with synonymous titles play their role. This is actually doing government’s job but not being government or being funded by government. There could be a lot of motives driving such activities but for governments such acts are always very welcoming and supportive.

Owing to this support by the social sector, governments have always tried to offer this sector special benefits and partnerships; two major ways of doing that have been tax benefits and joint ventures. Governments have always intervened in the social innovations and enterprise sectors, which is not a bad thing because both government and social sectors have unique set of strengths that when combined make a perfect-mix. Thus, the impact becomes large and easily noticeable when these two sectors join hands.  

The idea of social impact bonds is being welcomed all over the developed world, which is a positive thing but the spirit behind the idea is not new. Same objectives were followed in the past as well but maybe with different names. But the major concern related to ideas like David Cameron’s BIG SOCIETY and having SOCIAL STOCK EXCHANGES is the doubtful persistence of governments to carry on with these ideas. It has been noticed, both in US and UK, that social sectors and concerns towards society always lead during election campaign times but for how long they stay alive on the policy desks has always been a big question, and something that points towards one of the primary elements we relate to social enterprises – the sustainability.

References:

http://blogs.lse.ac.uk/politicsandpolicy/archives/28060

http://www.theguardian.com/society/2012/nov/13/david-cameron-big-society-failed

http://www.ssireview.org/articles/entry/innovating_the_white_house

http://www.americanprogress.org/issues/economy/report/2007/12/21/3706/investing-in-social-entrepreneurship-and-fostering-social-innovation/

Social Enterprise is the New Black

A new buzz word is happening around our countries top MBA schools.  The new buzz is called “social enterprise”.  It is hip, in fashion, and for our future let’s hope it is here to stay.

Social Enterprise as defined by our good friend Wikipedia is “an organization that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. Social enterprises can be structured as a for-profit or non-profit, and may take the form of a co-operative, mutual organization, a disregarded entity, asocial business, or a charity organization.”

 Social Enterprise or Social Entrepreneurs was an uncommon term at MBA schools just a few decades ago.  Today there is a great demand and interest among MBA students in social enterprise, which MBA schools are responding too.  According to the Bridgspan group, “The MBA Drive for Social Value” which reviewed top MBA schools, there was increased interest in MBA courses with social benefit content rose 110% between 2003 and 2009.  Additionally, top MBA schools offered twice as many courses relating to social sector than they did in 2003.  

Funding and support resources to aid Social Enterprises are also on the rise.  President Obama created Social Innovation Fund (SIF) to invest in America’s most successful non-profits. President Clinton’s created Clinton Global Initiative and Clinton Global Initiative University to “turn ideas into action” by creating a space that provides inspiration, networking, knowledge building, and collaboration.  Harvard Business School hosts a student-run Social Enterprise Conference each year on campus to promote and explore the intersection of business and social impact.  Private companies such as Dell with the Dell Social Innovation Challenge are also doing their part to promote social enterprise and innovation.

The new access to classes, support and funding, it is no surprise MBA students are taking the opportunity to utilize their skills in creating a better world.

Read the Article the Rise of Social Entrepreneur: http://blogs.hbr.org/2013/02/the-rise-of-social-entrepreneu/

Harvard Business School Social Enterprise Conference: http://socialenterpriseconference.org/

U.S. News’s rankings of top business schools for nonprofit M.B.A.’s: http://grad-schools.usnews.rankingsandreviews.com/best-graduate-schools/top-business-schools/nonprofit-rankings

"...if you want to solve a molecular biology problem you ask only molecular biologists. Big mistake."

In her article in The New York Times titled "Prizes With an Eye Toward the Future" Tina Rosenburg highlights the following case study:

At Harvard Business School, Lakhani led a study of hundreds of scientific problems posted on InnoCentive. These were problems that the laboratories of science-driven companies had mostly failed to solve,  which is why they turned to InnoCentive. They found that InnoCentive’s network solved nearly 30 percent of them.

What made for success? InnoCentive asks solvers to check boxes indicating the different scientific fields that interest them. The more diverse the interests of the base of solvers, the more likely the problem was to be solved. The study also found that expertise in the field of the problem actually hurt a solver’s chances.

Rosenburg's point was to show not only the effectiveness of open, future oriented innovation prizes but also the power of unconventional perspectives and approaches in making such prizes so effective. This evidence-based observation fits well (how lucky for me!) with my concern regarding social impact bonds, or more specifically social impact bonds carried out in a certain way (my critique is more an opportunity for improvement rather than a condemnation). It is tempting to think that taking an organization or program that has been highly effective in positively changing a specific social problem and scaling it would logically create the same positive change only for more people. The very real risk is that this not only fails to account for the context in which the organization or program thrived but also creates a certain tunnel-vision. Consider this Ted Talk from Dan Pink on The Puzzle of Motivation:

What we're expecting with what I call "subject matter expert scaling" is that if Solver A can solve Problem A within Context A then Solver A squared should be able to solve Problem A squared within Context B. The math doesn't work. On a larger scale factors that create a context not only multiply, they morph. And as Rosenburg shows us, in scaling a single perspective, a single narrative, we diminish our chances of arriving at effective and innovative solutions.

So what can be done?

As I've been going through the readings, particularly this week and last, I've found myself coming back to the same question: But what about these intermediaries? They are these linchpins to new models for innovation, including social impact bonds and social innovation prizes, and yet I feel that there is so little said about them.

Well, considering the need we've already noted for self-motivated, diverse, contextually knowledgeable and trusted, and quite simply more perspectives approaching a problem, I believe those intermediaries channeling public and private funds into effective organizations and programs should be required to be all of those things. Consider The Sprout Fund, a catalytic funding organization in Pittsburgh that is on the ground and embedded in the community such that it can make connections between innovative ideas, effective organizations, and often inaccessible foundations. The White House Office of Social Innovation and Civic Participation shouldn't just position itself as a yet another high level funder among many; it should champion (through funding support among other things) the contextualized funders and connectors like The Sprout Fund as the appropriate intermediaries for funds.

In turn, OSICP should itself be an intermediary within the government. Deregulating government agencies to be able to offer social innovation prizes and other innovation catalyzers is a great first step, but what the OSICP could do further is to connect fund intermediaries in communities with government inter-agency teams, bringing together local knowledge and support, high level expertise and resources, and most importantly diverse and ideally unconventional perspectives. Just as effective social innovation funding needs trusted intermediaries in the communities being impacted, as noted in The Economist article "Let's hear those ideas," so too does the effectiveness of this work need a trusted intermediary in government. 

Renewable Resources for Power Requirements in India

India suffered the world’s biggest blackout on the 30th of July, which left more than 600 million people without power, leaving the government shamed. Despite being the world’s second most populous country, its share in world energy consumption stands at a meager 4.2%,.
The International Energy Agency (IEA) estimates that India needs an investment of at least $135 billion to provide meet the energy needs of its population. However, it has a significant renewable energy power generation potential; solar energy is a source with the highest attractiveness in the country, and is among the 15 most attractive countries for renewable energy.
Despite an increase in the installed capacity of power through conventional energy sources and the National Solar Mission launched in 2010, India is energy-deficient. About 400 million people have no access to the power grid and therefore rely on kerosene, which is hazardous to health and releases tons of carbon dioxide in the atmosphere. Energy access is poorest in remote and rural areas: overall electricity access of rural households has increased from 36% in 1994 to only 56% in 2011. However, electricity access is limited even in electrified villages due to inadequate generation and distribution infrastructure. Ensuring a lasting supply of clean energy becomes a prime requirement to promote inclusive growth. The good news for the country is that its energy needs can perhaps be fully met entirely by solar and other renewable sources.
In the past few years there has been a proliferation of social enterprises adopting a variety of business models in the clean energy sector. Mainly they sell devices that meet basic lighting and cooking solutions, household energy systems and off-grid energy solutions delivered to large communities. 25 per cent of social enterprises surveyed in Intellecap’s 2012 social enterprise landscape report were in the energy sector and had the highest growth compared to other sectors. Investment in India’s renewable energy sector was down by 45 per cent in 2012 to $6.85 billion compared to the $13 billion in 2011 according to the Global Trends in Renewable Energy Investment 2013 report.

Shadow of Technology

A few years ago, I happened to read the book Entropy written by Jeremy Rifkin. I was shocked that the modern technology have destroyed nature and had bad impact on the world. Before I read this book, I had known that everything is a double-edge sword so that new technologies have pros and cons. However, I did not understand why new technologies could have negative influence to the earth where I am living. The key point of this book is to make people realize that modern technologies have transformed useful resources into a useless form of resources quickly. The speed and volume of these wastes and useless resources have been increasing as time goes by. For example, people created cars to get to the destination quickly; however, a problem like a bottle-neck is created as well. Did people expect this problem before they create a car? The answer is more likely to be "No."

Since I am interested in future trends, I like authors like Thomas Friedman, Jeremy Rifkin, and Peter Drucker. What they insist is that people should think about alternative solutions that are mutually beneficial to humans and nature. If technologies we take for granted are considered as threats in a long term to us, what business models or organizations' mission are supposed to be ideal? As Jeremy Rifkin mentioned in the book Hydrogen Economy, we need to find ways of creating innovative solutions that allow technologies to have a positive impact on nature.

According to Europe Commission, it will achieve the followings:
-A reduction in EU greenhouse gas emissions of at least 20% below 1990 levels.
-At least 20% of EU gross final energy consumption to come from renewable energy sources.
Sources: http://epp.eurostat.ec.europa.eu/portal/page/portal/energy/introduction

Source: U.S. Department of Energy

Developed countries have started to change the conventional ways of using energy because they realize that new technology developments do not always bring good results. Also, to adopt to new technologies, we should spend more energies that cannot be reusable. In the United States, this movement should be followed soon or later. If you see the chart provided by U.S. Department of Energy, the United States spends a lot on oil. To decrease the speed of consuming energy, we should think about the balance between profit-driven technology and Eco-friendly technology.