At its heart, doing good for society is what social innovation – the latest buzzword in sustainability – is all about. But is social innovation just corporate social responsibility dressed up in trendy new clothes, or is there something truly innovative about it that could put business on a radically new path?
As a recent Guardian Sustainable Business Quarterly workshop on social innovation heard, there is no commonly accepted definition for social innovation. The World Economic Forum describes it “as the application of innovative, practical, sustainable, business-like approaches that achieve positive social and/or environmental change.”
Some see social innovation as developing products to serve society better. Others argue business shouldn’t be dabbling in social innovation at all, because market-based approaches are about profits, not people.
Paul Ellingstad, who leads social innovation programmes at IT giant Hewlett-Packard, was one of the speakers at the Guardian workshop. He says social innovation isn’t about products, but putting innovative new systems in place so companies can rise to growing social and environmental challenges. “Increasingly we are seeing that buyers, consumers, even business-to-business customers are demanding that companies do business in a more ethical way,” Ellingstad says.
It involves turning today’s prevailing business model of maximising short-term profits for shareholders on its head and returning to the way companies operated a few decades ago, when they were more rooted in the physical communities in which they operated, and there was greater accountability, Ellingstad said. “Companies used to look at their role as being part of a community, and the impact they had on society was integral to how they did business.”
The rise of social media and the power this has given consumers is one driver for change: companies are being forced to think about creating more value for them as well as their shareholders.
Hans Daems, group public affairs officer for Hitachi Europe, which sponsored last week’s event, says his company is so serious about social innovation that it set up a separate division, and launched an ad campaign this year with the tagline “Social innovation – it’s our future”. “Those companies that can do social innovation in the best way have the best chance to remain successful in the future,” Daems said.
Another driver is the growing realisation that resource scarcity poses a material threat to business. The World Economic Council’s annual global risks report highlighted access to water as one of the highest risk factors for companies over the next 10 years. Even in booming Texas, the Texas Economic Development Council is having to guarantee access to water in order to attract business to the state.
Charmian Love, co-founder and director of sustainability consultancy Volans, who chaired the GSBQ session, said social innovation is a big step up from corporate social responsibility.
It requires a much deeper engagement across the company than CSR. “It’s on the agenda of the C-suite [the top-level executives] as well as legal, marketing and human resources,” she said. “I am most excited when the principles of social innovation bubble up in strategy groups, and R&D groups. That’s when the rubber hits the road, even though they may not even call it social innovation.”
Participants in the workshop emphasised that social innovation succeeds best when done in concert with others. Companies do not operate in a vacuum, but as part of a system including competitors, non-governmental organisations, customers, investors and policy-makers. “Like throwing a stone in a pond, there’s a ripple effect [to any particular action],” Ellingstad said. “So companies need to engage other critical actors in the system.”
Daems agreed: “The issues confronting society are so complex and difficult no one should be under any illusion that they can do it on their own.”
Love sees social innovation as preparing the ground for a bigger revolution in how companies do business. “Ultimately, what we will need to see happen in business is a recognition of the need for system-level change. Social innovation has an important role to play in getting us to a place where breakthroughs can happen at a systems level.”
Alan Knight, who has a 25-year track record working on sustainability, including helping to develop the Forestry Stewardship Certification scheme, agrees that social innovation is an advance in the sustainability movement. But he worries that the debate is becoming too focused on defining social innovation, rather than putting it into practice.
“Big ideas that are granular, that involve a coalition of like-minded people – for me that’s social innovation. Let’s not over-analyse it. Just do it. The question should be: what is the role of social innovation in making sure that something like [the factory collapse in] Bangladesh doesn’t happen again.”
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