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Social innovation is more than start-up support 8 March 2016

Posted by cooperatoby in EU.
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The BENISI project aimed to identify 300 social innovations and help them to scale up. But faced with the enormity of this task it seems to have fallen back on promoting start-ups, without assessing whether they are either social or innovative.

I’ve just come back from the BENISI final conference and I have to say I am disappointed. I encountered at least two circular arguments, and ended up quite unsure whether the project was promoting social innovation, social enterprises or just start-ups.

A circular notion of growth

Firstly, the presentation of the project’s outcomes was couched in purely economic terms. It measured whether a business had scaled up by whether its revenue hadP1000111 BENISI grown – and then reported that one of the requirements for growth was financial investment. An unsurprising deduction. Even less surprising is that innovations that generate revenue are easier to scale. The only social outcome reported was employment growth, which is a by-product of revenue growth rather than a social outcome in itself. Social impact can grow even without revenue growth – for instance if a better method of delivering social services was replicated. If it was more efficient, revenue might even fall. In fact many ‘social innovations’ rely on using IT to cut the cost of service provision, and along with it cut the jobs they provide.

A circular notion of impact

Then there was the workshop on impact measurement, in which I was astounded to be told that the three factors making for impact are the values of its workers, the corporate culture and the management methods. That’s all very well, but these are not indicators of impact. They are drivers of impact, or as another participant contributed, indicators of a capacity to achieve impact. Impact is what happens in the outside world, and is about improved quality of life for the enterprise’s intended beneficiaries. Intention should not be confused with success.
Regrettably values, culture and management are not enough – witness how many social enterprises run by the best-intentioned value-led people you could possibly imagine nevertheless go bust and fail to achieve any impact.

Where’s the evidence?

Maybe BENISI could not have been expected to prove scaling in a 3-year timeframe. Maybe the project has served its purpose in making social innovation visible to a larger number of people – reportedly 14,000 have been reached.
But there is deep confusion over what the object of the exercise was. The discourse was about social enterprise, but no one is measuring these enterprises’ social impact – or at least the summary report did not attempt to make any sense of what social impacts the 300 projects did report. Surely one must at least one of them must have got some clients into jobs, or taken x tons of poisonous heavy metals out the waste stream, or housed some poor people, or cut its energy consumption, or even just got some letters of appreciation from its clients?
Unless an enterprise has a notion of what it is trying to change, and measures and reports on whether it is achieving that, then it is not a social enterprise. Having an explicit social goal is one of the principles of social enterprise the European Commission set out in the Social Business Initiative.
Social enterprises reportedly measure impact mostly as an internal management tool (“you can’t manage what you can’t measure”), but it’s also useful in building customer loyalty and essential in getting impact investors on board. Also see EVPA guide.
Public funders like the ESF are also keen to fund social innovation – but taxpayers’ money has to been seen to be benefitting somebody. Otherwise the fascination will fade.

Social what?

It seems to me that the Impact Hubs are hard at work promoting start-ups, and that many of these will be innovative in some way, but that doesn’t make it social innovation and it doesn’t make the start-ups social enterprises.
I also missed any explanation of what the different methods for scaling are – are they social franchising or organic growth or new products or new markets or acquisition or what? And then I’d like to have known which of them were tried, and which worked best in the sample of 300 enterprises. I was left wondering whether scaling is any different from good old growth. Maybe it is just that ‘growth’ is a taboo word which is too reminiscent of capitalist economics.
I left when a speaker pronounced that it was a problem that no social enterprise had yet done an IPO. That’s a key feature of a social enterprise – it can’t be floated on the stock market as a financial investment!
So that’s the trouble: social innovation is everything to everybody, and the name of social enterprise is being taken in vain.
To protect the guilty, this report is made under Chatham House rules.

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