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Social Innovation – Can Social Sector Learn from Tech Startups?

by Randall on April 3, 2012 · 2 comments

Posted in: Arts,Business Strategy,Entrepreneurism,Environment,Investing,Randall Howard,Social Enterprise,Social Innovation,Society,Startups

It is notable that much of the recent trend towards Social Innovation has come from people who began their careers in technology startups, in Silicon Valley or other technology clusters. Some notable examples include:

Bill Gates, partly at the instigation of Warren Buffet who added his personal fortune to that of Gates, left Microsoft, the company he built, to dedicate his life to innovative solutions to large world issues such as global health and world literacy through the Bill and Melinda Gates Foundation

Started by Paul Brainerd, Seattle-based Social Venture Partners International  is innovating at the intersection of technology and venture capital, with Venture Philanthropy. Paul sold Aldus Corporation (an innovator in desktop publishing applications, including Pagemaker) to Adobe  in the mid 1990s.  In his mid-40’s at the time of the Adobe acquisition, he was young enough to seek a significant and active social purpose in his life.

Jeffrey Skoll, a Canadian-born billionaire living in Los Angeles and an early employee of eBay, has numerous activities aimed at Social Innovation including Skoll Foundation, Skoll World Forum on Social Entrepreneurship and Skoll Award for Social Entrepreneurship. Most of his initiatives are aimed at empowering the individual Social Entrepreneurs  who are fuelling a new generation of Social Innovation.

Waterloo’s own Mike Lazaridis aims to transform our understanding of the universe itself by investing hundreds of millions of dollars into Perimeter Institute for Theoretical Physics and Institute for Quantum Computing, effectively innovating a new mechanism of education and discovery. Notable is that this area of investment is one that may well take years, possibly decades, to show what breakthroughs, if any, are discovered.

Whether or not always attributtable to this connection with technology entrepreneurs, increasingly Social Sector organizations are starting to become much more like the entrepreneurial startups so familiar in the world of high technology. I’ve personally witnessed some of this change, and would like to suggest, that while there remain big differences, the parallels are strengthening over time. The following concepts represent just a small sampling of the key areas of similarity:

1. Founders Versus Artists

Stories are legion of smart, brash (and even mercurial) technology company founders who transform a business sector through the sheer strength of their wills. Many of these founders are “control freaks” and might find employment in conventional jobs a difficult proposition. Venture capital and angel investors have learned to be wary of such founders, citing numerous examples of founderitis – in which uncoachable founders, in a case of “my way or the highway” would rather maintain control than bend to ideas from often more experienced mentors, board members and investors.

Such personalities also exist in the Social Sector. For example, many arts organizations are founded by bright and innovative artistic directors. And yet, many of these same organizations come unravelled by the same mercurial nature that prevents the organization from being properly governed and accountable to funders (investors). With my background on both sides of this divide, the parallels are hauntingly striking.

Since such founders strengths can also be their undoing (or that of their organization), a conscious Board level assessment of such situations is always wise.

2. Running on Empty

Notwithstanding the media coverage of a few lucky technology startups such as Facebook or Google, most technology startups run of little or no significant funding. Many seek to change the world with very small amounts of capital, sometimes no more than several million dollars. The recent trend towards building such small capitalization organizations is called the Lean Startup movement. The challenges inherent in their undercapitalization is often the top complaint of such startups. However, Sergy Brin, the Google co-founder has insightfully observed that “constraints breed creativity” to describe how an underfunded state has led to the discovery of innovative ways to build companies and deliver their products.

Likewise, from my experience the vast majority of charities and nonprofits complain about being undercapitalized, and the reality is that most are. It is a fact of life in the social sector. Only now are we starting to see the emergence of social ventures, which by stealing a page from underfunded technology startups are exploring new business models and ways to deliver social change, often leveraging IT or a different process to vastly reduce costs of program delivery.

3. Technology Changes Everything

We’ve seen the emergence of a world where all information is stored in digital form and people are connected, even while mobile, the role of the web and technology can’t be underestimated. Technology-based startups, because they are small and start from scratch, often approach traditional problems in very non-traditional ways. Revenue and funding models change, as do fundamental ways to organize a business or social enterprise. Social media allows ideas to spread in a viral fashion. We have already seen how organizations like Avaaz can mobilize hundreds of thousands or even millions of supporters globally for both local and international issues of social injustices and poverty. This is a direct analogue to how many people now rely on Twitter or Facebook, rather than a printed newspaper, for much of their news and information.

4. Mission Creep – or the path forward

Technology startups have come to learn that success depends on laser sharp focus, attention to detail and execution of a “pure play” strategy (ie. only do one thing well). Thatparticular discipline has time and time again proven to be effective in a sector where technology change is moving rapidly and most startups are generally considered to be underfunded.

Likewise, Social Enterprises must adopt similar approaches to deal with underfunding and change. Even in today’s more fluid and fast-changing environment, to avoid deadly Mission Creep, Board and management must have developed a complete Theory of Change roadmap to enable Manage to Outcomes.

About Randall

Randall Howard is a serial entrepreneur and long term technologist with a passion for social innovation.

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  • Spherical Phil

    Randall,

     

    I would like to offer a couple of thoughts on your blog as you have asked
    for feedback on your posts and we had the opportunity to talk recently.

     

    I have read similar posts by others before, usually written by financially
    successful business people who feel they can now bring their expertise to the
    ‘social’ worlds and improve things, assuming that running an organization is
    simply ‘running an organization.’

     

    Having spent more than a decade in social change, living in areas of
    great poverty, prejudice, bigotry and abuse I have a bit of experience on the social
    side. I also lived and worked in Hollywood as a photographer and multimedia
    producer, then later represented the art of more than 400 artist/photographers
    around the world. I have run several companies and designed five technology
    applications that have gone to market. So I have a bit of a broader perspective
    than the pure tech guys, which might be of value in this discussion.

     

    First, you seem to be lumping “art” and “social” activities/organizations
    together with no clear distinction between objectives or the size/scope of an
    organization. I gather this is primarily because they are both largely
    non-profit activities and you suggest they can learn from Tech Startups.

     

    Artist and art orgs have a very different purpose/goal than social or
    profit orgs. Many artists see their role in humanity to stimulate, awaken, and
    even provoke people to see the world anew – to shake people out of their complacency,
    safety bubbles and prejudices. To get people to think and hopefully act
    differently. If an artist or art org can effect such a change they are very
    rare and a great success, even if they ‘go out of business’ or fail as a
    financial entity. Success in art is not financial or about sustainability, it
    is facilitating change. Entertainment is something different.

     

    There are many types of social orgs and some of the examples you give
    of founders of some ‘social’ orgs shows this and why it is difficult to put
    them all together in one box. But many underfunded social orgs deal with the face-to-face
    daily messy life/death struggle of our fellow humans; the poor, the abused, the
    marginalized, the mentally or physically ill.

     

    Underfunded or non-funded is a simple reality of existence in these
    worlds, but that is not the whole story. Overwhelmed is a bigger issue.
    The social needs are far greater than any resources they can ever dream of
    having (or lessons they might learn from tech start-ups can give). This is the life
    and death reality that you face every minute of every hour of every day as you
    literally watch families come apart, people become homeless, children are taken
    by government agencies, people lose their minds, and you end up burying far too
    many. These situations are extremely complex as they are about humans and the
    human condition which do not work on the rules of rationality and logic.

     

    Unlike your tech stars you mentioned, the people running these
    social orgs are not only grossly underpaid and under appreciated, they work for
    years with no stock options to cash out in the future for their ‘retirement.’ Many times living in great personal danger to fulfill their job. They live daily with the knowledge that if the social organization cannot
    fulfill its purpose, the real needs of the people they were working night and
    day 7-days a week to serve are not wiped out by bankruptcy court. Failure for them can literally mean life and death to those they serve, to those they know personally and care about. 

     

    It should be stated that all organizations can learn, social orgs can
    learn from tech companies and tech companies can and should learn much from
    ‘social’ organizations. One key lesson for profit businesses can learn is that
    profit is not the only goal. Tech orgs and all businesses must both be aware of
    and engaged in activities which promote sustainability for humans and the planet. As we have
    seen over and over again, successful business people’s “pure play”
    strategy and focus on profits has not done our planetary air, water, land and
    other natural resources much good, (or our global economy) which is a great
    understatement of the situation. And the ultimate irony is that many businesses
    leave the clean up to overwhelmed ‘social’ organizations.

     

    What is required is a new way to see the whole of these situations and
    organizations so we can all come together to see through the complexity they/we
    face and then collaborate by bringing all of our talents and resources to bear to address the
    challenges of the world today.

     

    Spherical,

    Phil

  • Phil, thanks for taking the time to provide such fulsome thoughts where you share your wisdom and perspective.

    I think that they speak for themselves, but might address a couple of things:
     – while I understand you’ve worked in the segment of social services, it is common usage (not to mention the focus of my work on Social Innovation) to cover the Social Sector broadly and that includes social services, arts & culture, education, children & youth, environment, etc. It is with purpose that I cast a broad brush on this, but I do recognize and agree that the nuances and models are vastly different in the various “verticals” of the Social Sector.
     – I also recognize that I hit a nerve around business people telling the Social Sector what to do. Modern business, and in particular technology businesses, have been a huge source of innovation, models not to mention funding for this space. That said, one could also write a post on what the Social Sector is teaching the regular business world. I’m not the one to write that, but perhaps you could. What is important to me is balance and the airing of lots of points of view, more so than the particular source for new trends of Social Innovation.

    Perhaps you’d like to write a “guest post” under Social Innovation from your perspective with a particular focus on the social issues?

    Randall

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