Innovation blossoms where the sectors converge

The celebration of social entrepreneurs and enterprises - reaching a zenith in 2006, when Muhammad Yunus and the Grameen Bank—the pioneers of microfinance—won the Nobel Peace Prize, tends to obscure the mechanisms that result in positive social change—the innovation itself—according to the authors of Rediscovering Social Innovation, an article in the Stanford Social Innovation Review Social.

They think the advantage of examining the pursuit of positive social change through an innovation lens is that this lens is agnostic about the sources of social value. Unlike the terms social entrepreneurship and social enterprise, social innovation transcends sectors, levels of analysis, and methods to discover the processes—the strategies, tactics, and theories of change—that produce lasting impact. Social innovation will certainly require understanding and fostering the conditions that produce solutions to social problems.

The mechanisms of social innovation—the underlying sequence of interactions and events—change as a society and its institutions evolve. Nonprofits, governments, and businesses have had various roles. These social innovations during the 1930’s were driven by a more expansive and direct role of government. The devolution of public services which began in the 1980’s such as day care, nursing homes, even military services to the private and nonprofit sector continues today. Since the 1960’s, pressure on the private sector to consider the social impact of its conduct has grown tremendously.

The authors believe that we increasingly see the three sectors joining forces to tackle the social problems that affect us all based upon a better appreciation of the complexity of global problems such as climate change and poverty. They do so by exchanging ideas and values, shifting relationships, and the integrating private capital with public and philanthropic support.

An example is socially responsible investing which simultaneously considers the social, environmental, and financial consequences of investments, applying the ethos of the nonprofit sector to the most purely financial of decisions: investment.

In principle, many people accept the trend of dissolving sector boundaries; in practice, however, they continue to toil in silos.

The authors say that to support cross-sector collaborations we have to examine policies and practices that impede the flow of ideas, values, capital, and talent across sector boundaries and constrain the roles and relationships among the sectors.