Making social innovation work inside a company is not easy. Where do you start? How do you identify a specific opportunity and design a business model around it? How do you build capacity from the ground up, test approaches, measure outcomes and refine models? How can you get initiatives to scale?
Drawing from interviews with over 30 companies, we outline below key steps to build socially innovative businesses. The four steps – identify, design, learn and scale – are analogous to traditional business development processes and thus will be familiar. However, when they are applied to a social innovation opportunity, important differences often emerge.
In the “identify” step, for example, interview subjects highlighted the critical importance of tapping into a wide network to unearth strategic opportunities – including social entrepreneurs and civil society organizations. In the “design” step, executives emphasized that existing structures can create significant inertia – therefore social innovation initiatives often benefit from separate structures, such as incubators and ring-fenced funding. Once an idea has been demonstrated as viable and has started to scale in one market or business unit, companies are faced with the question of how to scale or replicate this success in other markets. As several of the cases in the “scale” section demonstrate, a centre of excellence that is tasked with knowledge transfer and replication can significantly aid and accelerate the scaling process.
Identify
A social innovation journey starts with unearthing opportunities with the potential to contribute to a company’s strategic objectives. These ideas may come from numerous sources within the company – employees, the leadership, and from front-line business operations. Significantly, ideas can also be generated from beyond the company, including supply chain partners, civil society actors and other key stakeholders in operating markets.
MasterCard, Centrica and SABMiller offer three differing experiences of identifying social innovation opportunities aligned with business strategy and capabilities. MasterCard’s experience shows how senior leadership can highlight social innovation opportunities within a company’s vision for the future. Centrica provides a good illustration of engaging mid-level employees in identifying and pursuing such opportunities. The SABMiller case demonstrates the value of empowering and supporting front-line teams to spot opportunities in their local markets as they emerge.
Design
Companies need a robust yet flexible design process to convert ideas into feasible concepts, prototypes or business models. Social innovation opportunities almost invariably demand collaborations with external stakeholders and business models that differ from business as usual. They will also often take longer to get to market and to reach profitability. Hence, opportunities may need design and incubation support that sits outside of established structures. However, a balance must be struck – going too far outside of existing processes can make it harder for managers to endorse and execute, hindering implementation.
Experiences of Phillips, Barclays and Royal DSM offer guidance on how to manage this balance when designing socially innovative business cases. The experience of Philips highlights the need to be cognizant of barriers that existing structures may create. The Barclays example shares insights on providing the catalysing incubatory support while still ensuring relevance to front-line businesses. The Royal DSM experience shows how multiple teams from across an organization need to be involved in a change management process to make this happen.
Learn
Field testing and rapid prototyping are essential, as are an open mindset and willingness to rethink assumptions in the face of contradictory information; learning loops baked into the development process from the outset; and tailored yet flexible metrics to track performance and measure outcomes. Only if what is learned is measured can it be communicated and adjusted accordingly.
Marks & Spencer provides an example of the value of rapid experimentation to identify the winners and kill the losers. RB serves as a reminder of how important it is to challenge assumptions and use learnings to improve the offering. The Pearson case illustrates just how ambitious a company can be in adopting outcome-based measurement and metrics.
Scale
In some ways, getting started is the easy part. Often where things get stuck is in scaling successful prototypes or pilots across business units or regional offices. Unless the value to the firm is transformational in the longer term, however, such efforts will always be viewed as little more than side projects or “good-hearted efforts”. And transformational value is ultimately about scale.
Most of the examples showcased in this report are relatively new undertakings. The proliferation of corporate social innovation in recent years is good news and is surely a trend that will only accelerate in the decade following the launch of the Sustainable Development Goals. However, it also means most companies are still feeling their way when it comes to achieving meaningful increases in their efforts and interventions.
CISCO, Novartis and ITC offer useful guidance. Cisco’s experience demonstrates how to build for growth from the start, while continually reassessing design elements along the way. The Novartis case illustrates the value of explicitly mandating someone to extract lessons from one market and facilitate adoption by other markets. Finally, the ITC example proves that pursuing social innovation is far more valuable than a “one-off” effort and, if harnessed to its full potential, can be a continuous source of business value.