 "Generating demand is often difficult for social innovators: Madeleine Gabriel")
Social innovations can be said to have scaled up when their impact grows to match the level of need, Madeleine Gabriel tells Sonali Chowdhury
One of the key findings of your study on scalability of social innovation is that all innovations are not scalable and scaling brings risks. What is the key to sustainable innovation?
Scaling social innovation is not just about growing organisations. It is about growing a social innovation's impact to match the level of need. Sometimes the best route to address the need to scale involves giving up some control over how the innovation spreads, working through others rather than attempting to scale through organisational growth alone. In our report 'Making It Big' we set out four elements of a scaling strategy: being clear on goals; deciding what to scale and defining an innovation to scale up; choosing a route to scale (that is,organisational growth, strategic partnerships, delivery networks; or influencing and advising, or a combination of several of these); getting the skills and resources in place that are needed to manage the scaling process.
There's no magic bullet for getting a sustainable innovation but we encourage innovators to think about what we call 'effective supply' and 'effective demand'. 'Effective supply' means getting an innovation that works - you can show that it is better than the alternatives - and that it is also scalable. For example, it is not too expensive and it doesn't rely on the skill sets of unique individuals to deliver. Generating 'effective demand' is often more difficult for social innovators, at least in the UK. This means finding people who not only want the innovation but are able to act on this desire.
One of the most important things is finding people who'll pay for the innovation - and recognising that these are often different from the people who are the end beneficiaries. In the UK, for example, it is often the public sector that is the 'customer' while the people who benefit don't pay directly.
Most organisations find it difficult to access working capital in the early stages. What are the other barriers in the emerging economies that comes in the way of social innovation?
In terms of the barriers, access to skills and support can be a really big issue. Often the social innovators themselves - the people who come up with the new idea or technology - are very passionate and skilled in their area of expertise, but are not experienced in running a business. So they usually need help from people who know how to develop business models, run the operational side of a business. A research on social innovation in India specifically suggests that finding employees with the right skills is difficult, and accessing business support, particularly outside the main metros, can be challenging.
Which are the areas where there is a need for innovation and where innovation can be scaled up? I am talking of India...
I perceive a difference in the types of innovations that are deemed scalable in India and in the UK, or Europe. In India, there seems to be a bigger focus on innovative products that can address the needs of people at the 'bottom of the pyramid'. For example, new healthcare technologies. In contrast, in the UK, the focus is on public service delivery and newer ways of supporting people to improve their own health by better management of conditions, or improve their skills. In Europe, many social enterprises provide 'work integration', that is, work opportunities for marginalised groups, such as people with disabilities.
A lot of innovation in India is written off by Western authors as "jugaad". Is this perception good or bad? What can Indian entrepreneurs learn from the innovation ecosystem in the UK?
I think the perception of 'jugaad' and the related concept of 'frugal innovation' is very positive and that it is widely seen as an approach that people in developing economies can learn a lot from. Frugal innovation is increasingly relevant to developed economies as well.
In some parts of the UK, we've got quite a well-developed ecosystem to support social innovation, such as universities teaching and researching social innovation; support organisations, incubators and accelerators; investors and active networks and media to share information and bring people together. I think the lesson is - to support social innovation, you need all these elements working together (as well as a wider culture that supports social innovation and entrepreneurship). Having said this, the social innovation ecosystem in the UK is by no means perfect - there is more we can be doing, for example, to make sure we have better geographical coverage; to facilitate access to markets and customers; and to provide bridging finance after seed funding and before innovations are ready for larger-scale investment.
Raising funds for social ventures is not so easy. In such a scenario can crowdfunding help in scaling up social innovation? How has this phenomenon played out in the UK?
Nesta has just published a major review of crowdfunding and other forms of alternative finance in the UK and it shows that this is a very fast-growing market. The biggest form of alternative finance in the UK is peer-to-peer (P2P) business lending where members of the public make loans directly to businesses through platforms like FundingCircle. What we don't know as of now is how far alternative finance is funding innovation. The report shows that most of the businesses receiving loans through P2P business lending could have accessed the same funding from a mainstream bank, but they prefer the alternative finance because the interest rates are better. Having said this, some forms of alternative finance, such as equity crowdfunding, seem to be providing finance for much higher-risk innovative businesses.
This form of finance is still relatively small but it is growing fast - our report estimated the current size of the equity crowdfunding market in the UK as £84 million, but found that this had grown by 410 per cent in the last two years.
How can big corporates facilitate social innovation?
We are seeing a couple of trends in the UK. One of the biggest trends is that of big corporates actively supporting social entrepreneurs either by providing mentoring and/or pro-bono professional services. For example, EY has a programme called 'Accelerate', which is a training programme for social entrepreneurs. It also provides professional services to social entrepreneurs in partnership with charitable foundation UnLtd.
Another emerging area is corporate social incubators. For example, Telefonica recently partnered with UnLtd to create a new social incubator called Wayra UnLtd. This is an accelerator and incubator programme for social technology ventures, they get workspace and business support for eight months with the aim to help them get investment ready. The interesting thing from a corporate perspective is that Telefonica is really interested in looking at how it can leverage its resources (for example, the skills of people in the company) to help make these ventures successful, and also how it can link these ventures with its own supply chain. It is not just supporting 'any' social venture, but those that are relevant to Telefonica's core business.
SOCIAL INCUBATOR
One of the key findings of your study on scalability of social innovation is that all innovations are not scalable and scaling brings risks. What is the key to sustainable innovation?
Scaling social innovation is not just about growing organisations. It is about growing a social innovation's impact to match the level of need. Sometimes the best route to address the need to scale involves giving up some control over how the innovation spreads, working through others rather than attempting to scale through organisational growth alone. In our report 'Making It Big' we set out four elements of a scaling strategy: being clear on goals; deciding what to scale and defining an innovation to scale up; choosing a route to scale (that is,organisational growth, strategic partnerships, delivery networks; or influencing and advising, or a combination of several of these); getting the skills and resources in place that are needed to manage the scaling process.
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One of the most important things is finding people who'll pay for the innovation - and recognising that these are often different from the people who are the end beneficiaries. In the UK, for example, it is often the public sector that is the 'customer' while the people who benefit don't pay directly.
Most organisations find it difficult to access working capital in the early stages. What are the other barriers in the emerging economies that comes in the way of social innovation?
In terms of the barriers, access to skills and support can be a really big issue. Often the social innovators themselves - the people who come up with the new idea or technology - are very passionate and skilled in their area of expertise, but are not experienced in running a business. So they usually need help from people who know how to develop business models, run the operational side of a business. A research on social innovation in India specifically suggests that finding employees with the right skills is difficult, and accessing business support, particularly outside the main metros, can be challenging.
Which are the areas where there is a need for innovation and where innovation can be scaled up? I am talking of India...
I perceive a difference in the types of innovations that are deemed scalable in India and in the UK, or Europe. In India, there seems to be a bigger focus on innovative products that can address the needs of people at the 'bottom of the pyramid'. For example, new healthcare technologies. In contrast, in the UK, the focus is on public service delivery and newer ways of supporting people to improve their own health by better management of conditions, or improve their skills. In Europe, many social enterprises provide 'work integration', that is, work opportunities for marginalised groups, such as people with disabilities.
A lot of innovation in India is written off by Western authors as "jugaad". Is this perception good or bad? What can Indian entrepreneurs learn from the innovation ecosystem in the UK?
I think the perception of 'jugaad' and the related concept of 'frugal innovation' is very positive and that it is widely seen as an approach that people in developing economies can learn a lot from. Frugal innovation is increasingly relevant to developed economies as well.
In some parts of the UK, we've got quite a well-developed ecosystem to support social innovation, such as universities teaching and researching social innovation; support organisations, incubators and accelerators; investors and active networks and media to share information and bring people together. I think the lesson is - to support social innovation, you need all these elements working together (as well as a wider culture that supports social innovation and entrepreneurship). Having said this, the social innovation ecosystem in the UK is by no means perfect - there is more we can be doing, for example, to make sure we have better geographical coverage; to facilitate access to markets and customers; and to provide bridging finance after seed funding and before innovations are ready for larger-scale investment.
Raising funds for social ventures is not so easy. In such a scenario can crowdfunding help in scaling up social innovation? How has this phenomenon played out in the UK?
Nesta has just published a major review of crowdfunding and other forms of alternative finance in the UK and it shows that this is a very fast-growing market. The biggest form of alternative finance in the UK is peer-to-peer (P2P) business lending where members of the public make loans directly to businesses through platforms like FundingCircle. What we don't know as of now is how far alternative finance is funding innovation. The report shows that most of the businesses receiving loans through P2P business lending could have accessed the same funding from a mainstream bank, but they prefer the alternative finance because the interest rates are better. Having said this, some forms of alternative finance, such as equity crowdfunding, seem to be providing finance for much higher-risk innovative businesses.
This form of finance is still relatively small but it is growing fast - our report estimated the current size of the equity crowdfunding market in the UK as £84 million, but found that this had grown by 410 per cent in the last two years.
How can big corporates facilitate social innovation?
We are seeing a couple of trends in the UK. One of the biggest trends is that of big corporates actively supporting social entrepreneurs either by providing mentoring and/or pro-bono professional services. For example, EY has a programme called 'Accelerate', which is a training programme for social entrepreneurs. It also provides professional services to social entrepreneurs in partnership with charitable foundation UnLtd.
Another emerging area is corporate social incubators. For example, Telefonica recently partnered with UnLtd to create a new social incubator called Wayra UnLtd. This is an accelerator and incubator programme for social technology ventures, they get workspace and business support for eight months with the aim to help them get investment ready. The interesting thing from a corporate perspective is that Telefonica is really interested in looking at how it can leverage its resources (for example, the skills of people in the company) to help make these ventures successful, and also how it can link these ventures with its own supply chain. It is not just supporting 'any' social venture, but those that are relevant to Telefonica's core business.
SOCIAL INCUBATOR
- Gabriel is currently working on social incubation as part of Nesta's role in the EU transition project and researching issues around scaling social innovation
- Prior to this, Gabriel was head of impact, research and evaluation at UnLtd, where she led its programme of research on social entrepreneurship
- Gabriel has a Bachelors degree in History from the University of Cambridge and an MSc in Public Health with Economics from City University and Queen Mary University of London