Clayton Christensen, who has written extensively on a number of strategic ideas, recently opined in The Huffington Post about the potential role the White House Office of Social Innovation could play. (The article was co-authored by Vanessa Kirsch who founded New Profit – an interesting organization itself espousing a venture philanthropy model)
In the article they highlight four areas where the White House can help in the social sector. They are to
- Demonstrate a new way to solve social problems where government serves as an investor in innovations that are developed and identified by citizens outside of government.
- Guide more social innovators towards “bottom-up” initiatives, in preference to “trickle-down” philanthropy.
- Use the convening power of the White House to initiate a focus on impact and metrics.
- Use its convening power to break down an antiquated assumption that all social innovation is the province of the non-profit sector.
Taking these suggestions to a logical conclusion, an ideal future state would be one where social investors – whether they be organizations applying public monies, like the Social Innovation Fund, private philanthropists or individual investors – would have a set of social impact metrics to help them measure an organization’s social effectiveness and to make rational “investment” decisions. The culmination could be the creation of a “Social Stock Market” as envisioned by Prof. Yunus in his book “Creating a World without Poverty”. Social organizations (or Social Businesses as Prof. Yunus calls them) would be rated by independent rating agencies much as S&P and Moody’s rate current firms. The role of government would be to facilitate this future state and then get out of the way.
It is here that the first two Christensen /Kirsch suggestions fall apart. Without agreed upon metrics, it is futile for the government to inject itself as an investor, as suggested in the first point. It implies either that the government knows something about social investing that private philanthropists and individual investors don’t or that the investment criteria are going to be totally arbitrary or politically influenced.
In addition, the Office of Social Innovation – a top-down initiative itself – can perhaps lead by example to encourage “bottom up” innovation. However the real issue is not “bottom up” initiatives but a complete lack of a supporting social ecosystem to encourage radical innovation and nurture young social entrepreneurs. More than just a mind set change in large non-profits and foundations, young social entrepreneurs need the help of the same supporting systems that encourage successful for-profit tech visionaries.
Today, any young tech visionary can go out and start a for-profit company and avail of a complete set of services from angel and early stage funding, mentoring and incubated space. The venture funded model is well known and there are many players at different stages in the model. Such a social ecosystem is completely missing to support young social entrepreneurs. There are some innovative investors, like Ms. Kirsch’s New Profit, Echoing Green and others, but a socially focused startup has to survive several years of futility before they even get on the radar screens of a handful of these organizations.
More young students are turning to social entrepreneurship in America than ever before. With the right policies in place, there is an opportunity to channel these energies and grow the next set of Hewlett Packards and Intels of the social entrepreneurial sector.