In my last post, I discussed the idea of CSR in terms of “creating shared value,” as described by Porter and Kramer (as opposed to the traditional understanding of CSR– corporate social responsibility). Closely related to this, and in fact the goal, I think, of CSR, is achieving positive change in society through social innovation. In the Stanford Social Innovation Review, the authors of the article “Rediscovering Social Innovation” try to give a clear definition of what social innovation actually means and why it’s important.
In their article, James A. Phills Jr., Kriss Deiglmeier, and Dale T. Miller explain how they developed the following definition of social innovation: “A novel solution to a social problem that is more effective, efficient, sustainable, or just than existing solutions and for which the value created accrues primarily to society as a whole rather than private individuals.” One key difference to note between CSR and the concept of social innovation is that, while CSR does aim to provide benefits for those other than just private individuals or companies, I’m not sure that it goes so far as to say it should create value for society as a whole. Instead, the impact is more narrowly focused on the stakeholders of a company. Stakeholders, distinct from just shareholders, refer to any individuals or groups that affect or are effected by a company. Granted, this can be interpreted quite broadly, and could potentially be argued to include society as a whole (everyone could in someway be affected by a company). However, it generally refers to employees, customers, shareholders, government, suppliers, competitors, NGOs, and often, arguably, the environment. These groups encompass a large number of people, but in the case of most companies, not everyone in a society.
Another important comparison Phills, Deiglmeier, and Miller draw is between social innovation and social entrepreneurship and social enterprise. They believe social innovation is the most useful of the three ideas, making a distinction between the object of focus of social entrepreneurship, social enterprise, and social innovation. Respectively, these concepts place an emphasis on “the personal qualities of people who start new organizations,” the organizations themselves, and the actual innovation. Social entrepreneurship and social enterprise are vehicles that deliver innovation. “But ultimately,” the Stanford writers say, “innovation is what creates social value.”
Other then focusing on the actual process or outcome of innovation (rather than the person or organization behind it), Phills et al argue that social innovation has a better research basis and is not limited to any one sector. This cross-sector aspect of social innovation really sets it apart because it means change is not constrained to just non-profit organizations. Instead, social innovation involves collaboration between businesses, government, and non-profits.
When different sectors communicate and work together, they can all do more for social change than any one of them on its own.
When these sectors work together, three key things happen: “exchanges of ideas and values, shifts in roles and relationships, and the integration of private capital with public and philanthropic support.” Each actor brings something to the table, boosting as well as learning from the other parties. For instance, groups can work with government on public policy, non-profits can bring expert knowledge on specific social issues, and businesses can demonstrate efficient operating and management. Dissolving these barriers and increasing communication and interaction between sectors will lead to more, better, and longer-lasting social change.
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