Social Innovation (TM): Good business?

It is not difficult to find examples of businesses that are embracing the language of social innovation.  It’s a no-brainer.  Who wouldn’t want to be associated with novel solutions that have social benefits. It’s simply good business.  In many ways it is an outworking of the “triple bottom-line” movement where a company not only recognizes its “social responsibilities” but then goes the extra mile.  This is no longer about ameloriating the negative effects of doing business; it’s about using the firm’s resources to tackle a social problem.  What could be better than companies with vast experiences of innovation and management using this energy to generate novel solutions to change the world?

Well, it depends.  For starters, businesses are generally interested in things that generate profits.  No inherent problem there but it tends to narrow the type of social problems that come onto their radar.  The most common approach is to focus on a problem where a new technology can be applied cheaply and simply. I was reminded this week of a great example by Sasha Dichter of Aravind.  This organization found a way to revolutionize eye care in India by selling lenses at $3 (down from $200).  It has reached over 3 million people, and made a profit.  But it is much harder for businesses to deal with those social problems that don’t lend themselves to a single solution and where the rewards are uncertain. As Michael Edwards points out:

“New loans, seeds and vaccines are certainly important, but there is no vaccine against the racism that denies land to “dalits” (or so-called “untouchables”) in India, no technology that can deliver the public health infrastructure required to combat HIV, and no market that can re-order the dysfunctional relationships between different religions and other social groups that underpin violence and insecurity”.

And then there is the business propensity to maximize the opportunity in ways that miss the point.  Micro-credit – the poster child of the social innovation moment – was a great idea to provide funds to some of the poorest but it seems to be experiencing some troubles.  A recent article in the New York Times points to annual interest rates of up to 125% when the whole idea was to give people a chance in life not saddle them in debt.

It would be easy to swing the other way and be cynical of any business involvement in social change.  But this would overlook the role of business in delivering massive social change. In the area of unemployment and job creation the “contribution of Wal-Mart stores and McDonald’s Corporation dwarf those of a dozen Grameen banks” (Auerswald, 2009, p. 55). And entrepreneurship, not just social entrepreneurship, may need more attention(see Carl Schramm’s recent article in the Stanford Social Innovation Review).

I think Beth Kanter (1999) may have a way forward. She carved out a distinctive space to explore how businesses seek to tackle social problems.  Her term “corporate social innovation” recognizes the market orientation implicit in these solutions and their mixed motivation of doing good and doing well. In doing so, she affirms its importance as well as opens up the space for other types of social innovation. The implication is that all organizations, even business, can be involved in social innovation but that the type of organizing really matters.

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