Frugal innovation sells

Courtney Martin’s latest post on the Stanford Social Innovation Review blog Instagram-Style Innovation in the Public Sector raises one of the most exciting questions for society and the social innovation sector has been grappling with over the past decade, and with increasing vigour since the fallout from the financial crash: “what would happen if we leveraged the ingenuity and resources in Silicon Valley for the improvement and renewal of the rest of the country—starting in D.C., where simple solutions seem all but impossible?”

Martin firstly quotes Annie Leonard, founder of The Story of Stuff (an online video information service), to explain why silicon valley companies such as Apple have had such a competitive advantage in attracting the most talented innovators: “while our “consumer muscles” have gotten a great workout over the last few decades, our “citizen muscles” have grown anemic. We’ve created gods out of entrepreneurs like Steve Jobs, inspiring a fresh batch of the most innovative graduates each fall to aspire to go into the tech industry; all the while, the public and government sectors are starving for their ingenuity and energy.”

Martin goes on to point out that the social innovation sector has failed to sell itself and its rewards to compete with those portrayed by the techies in films such as the social market. Both social innovators in the state and society need to “tell a better story about the rewards of public service and its potential for innovation” and Martin is absolutely right to explain that there is a good story to sell: While helping a dysfunctional state run more smoothly or simply improving the quality of life of the average citizen might not be the kind of innovation that makes you filthy rich, it could make you a game changer, and at the very least, it will make you proud.

Maybe there is a potential lesson for current policy makers – and me! – here. Too often those rapidly-increasing-few of us banging the drum for the mainstreaming of social innovation within the state default to Schumpeter’s theory of innovation: ‘creative destruction’ – a ceaseless cycle of new ideas smashing through previous accepted norms (shibboleths). Energy, enthusiasm and resources all follow lots of new ideas in the hope that a handful will be successfully nurtured, piloted and then scaled up. Lets call this approach the ‘radicals agenda’ You’ll find a lot of radicals fostering excellent partnership working between state institutions and society organisations in order to overcome barriers and ensure their vision (a new idea) becomes a reality. You’ll find a lot of radicals in NYC!

But I’m not so sure if the radicals agenda really is the one to pursue to get the truly creative-minded and technically-gifted people that silicon valley attracts in their truck load. To me – and this is an open question – I suspect most radicals are those disillusioned with the injustices in their society, have an inherent desire to be either politically active or socially active in their community (which is a good thing!) or are just seeking to do social good. If this is the case, then – like the current problem with the political classes being disconnected from the rest of society – social innovation is at risk of being something that is  only for a certain type of person with certain values.

Maybe then state and academic institutions in California keen to promote social innovation to a wider audience should consider pushing an alternative to the east coast agenda. Perhaps we should be looking at the highly successful honey bee network in India whose focus is on ‘Frugal innovation’ – the design of simple solutions to society’s problems. Interestingly the network has a highly diverse membership (many of whom wouldn’t dream of calling themselves inventors, social entrepreneurs or radicals!) and is highly effective at building collaborations through the network (the sort of skills you see being employed in the open-source movement). While not flash, many of the frugal innovations coming out of the network are game changers – perhaps such an approach could connect more effectively with the next generation of creatives and techies that are destined for Apple?

Welfare posturing

‘Welfare dependency’ has been making the headlines on UK media websites over the past couple of weeks. The UK – like the rest of Europe – is falling back into recession and with no light at the end of tunnel (growth) the media, politicians and public’s attention is, it seems, increasingly focused on how the reducing pot of taxpayers money is distributed throughout the country. Calls for the state to spend less (on running itself) are reported on all sides as can be expected (the US economy is actually growing and the calls to slash state spending are equally as strong). The other favourite target is welfare benefits – payments which are far more generous in the UK than they are in the golden state.

The British welfare state has provided a ‘safety net’ for people who can’t work, and can’t generate their own income, for the past sixty plus years. Those who can work subsidise, via state benefit payments, those who can’t. More recently though those who do work have increasingly questioned the validity of those who say they can’t work. This is one of the reasons why the state is currently reassessing people who have been claiming long-term incapacity benefit to see if actually they could return to the labour market (if given some intensive support to get over the barriers created by being out of work for a long time). Job creation in the UK will have to pick up though if such an approach is to work.

Yesterday, curiosity led me to examine some of the 2010 baseline figures, published by the UK government,  that make up the 2.6m Brits who were claiming either Incapacity Benefit (IB) or Employment Support Allowance (EA). Three figures stood out to me. Firstly, from the data it seems that around 1.1 million were claiming for mental and behavioural episodes (within this nearly half a million are claiming for depression). That is not a positive reflection of UK society today, and the state’s past efforts to strengthen community resilience. Would that figure be so high if the state had invested in strengthening social bonds and community relationships that supported people to connect with themselves, their families and those around them? If not, then the UK has to look to the future and really think how it can enable people to trust and collaborate with each other on a much greater scale.

Secondly, it appears that nearly a third of those claimants have been on these benefits for more than 10 years – that is tragic; that is state institutionalised dependency, regardless of whether people are actually able to participate in the labour market or not. For people who would now be reassessed as being able to work the state should have been given a lump sum of money (equivalent to 3-years benefit payments) on condition that they accept intensive support and mentoring to start their own enterprise: it is surely better to assume people have a talent waiting to be unlocked than to assume people are happy doing nothing? For those that genuinely can’t work then a calculated lifetime benefit payment  lump sum should have been paid directly or invested on their behalf in a community-run mutual, from which they or their carers are responsible for drawing an income themselves. Enhancing the responsibilities of society on welfare could help shield welfare payments from being exposed to the dehumanising knockabout politics on ‘state handouts’, which no genuine welfare recipient should have to tolerate.

Thirdly, back pain seems also to be a key cause of long-term claims, with just shy of 170,000 people claiming IB for this reason, of which 42% had been claiming for more than 10 years (almost 40,000 of the 600,000 ESA claimants also cited back pain). After seeing how most Londoners hunch on the underground trains or slump into their chairs I’m not surprised at this high figure! However I am surprised that the state office for education hasn’t done anything about it. Surely it is in the interest of both the state (future saving to health and welfare budgets) and society (personal well-being) for people to learn good posture techniques when young? Whether it is the parents or the schools responsibility to ensure children have the capability to sit, stand and breathe correctly is a secondary question; the first order priority is to ensure every child has it.

What is more puzzling is that a relatively simple posture programme (the Alexander technique) has been around since the middle of the last century yet no one thought to mainstream this either in schools, or just society more generally? This learning could prevent future back pain by strengthening postural muscles, improving coordination and flexibility, and decompressing the spine. In the last decade the British Medical Journal (an established research publication for UK doctors) published a neat randomised control trial of alexander technique lessons showing a positive impact in reducing levels of back pain. If everybody learnt some good posture habits at an early stage, surely it would be a win-win situation for both state and society? Surely we all want to see our children walking tall, relaxed in themselves portraying a sense of confidence to the world around them?

Library crowdfunding

This month the California State Library, opposite the Capitol in Sacramento, is celebrating the 75th birthday of San Francisco’s fabled Golden Gate Bridge. On May 16, the monthly “A Night at the State Library” program will present the 1968 film Bullitt, starring Steve McQueen as a San Francisco police lieutenant and “showcasing an almost 11-minute car chase in which the Golden Gate Bridge is visible”. Brilliant!

These programs, which enhance access to and engagement with great public institutions such as libraries, are a positive contribution the state can make to help strengthen society. They not only promote greater knowledge and learning but, more importantly, also provide opportunities for people to come together, connect and exchange ideas with each other – the very fabric of a good society. This is why the work of the California State Library Foundation (CSLF) is so important – it provides private support (through membership, donations, grant-bids) to enhance the role of the state library as an active partner within society (i.e. Governors book fund, California research bureau work, Saturday hours program, etc)

For scholars of social innovation though, there is surely a huge opportunity here to work with the Foundation to expand entrepreneurial support for those using the library to develop their innovative ideas. Many potential entrepreneurs (regardless of whether they realise they are one yet) do spend time thinking, researching and meeting in Californian state libraries. Some of these may have some outstandingly good ideas, but most of which will never get off the ground for various reasons (i.e. not realising potential market, lack connections to angel investors in the Bay Area, lack critical mass support, etc)

How can the California State Library Foundation help? Well, it could provide an on-line platform for a Californian state library user with an idea to pitch it to the whole membership (all users) of state libraries. The platform would allow members, if they like the idea, to collaborate virtually and provide start-up capital for idea to become a social venture. For example 1000 members could all like a pitch they read about, and the first 500 to sign up $10 each to support the new social venture could each be given 0.1% equity share in the venture (it would be an open question what dividends they are investing for: could be financial or social impact returns).

Obviously such investment platforms are not new – we know them as ‘crowdfunding’ – but they are rapidly becoming more credible with new technological innovation. State institutions – such as libraries – which are in the fortunate position of already possessing access to both potential innovators as well as a critical mass of potential investors should look to exploit this institutional advantage to catalyse more connections, for the benefit of society. This is especially the case given the recent passing of the JOBS Act that now allows crowdfunders to receive equity in small companies

For entrepreneurs using the State library, an in-house crowdfunding platform has three extremely powerful advantages. Firstly, in an era when credit and institutional VC is more risk-averse, the platform provides a much needed alternative to raise seed capital and – given risk will be dispersed across a collaboration of micro-investors rather than concentrated in the hands of a couple of big ones – ideas with greater social returns (but bigger financial risks) are more likely to be funded. Secondly, it provides an instant feedback mechanism for aspiring entrepreneurs and their ideas: if people don’t think it will work they won’t invest – this is invaluable information for entrepreneurs as it signals a sharp return to the drawing board before any more resource is wasted pursuing an unsustainable idea. Finally, it connects the idea with a potential market: the mass of people who see it and invest in it may also provide the first wave of customers / participants for any new product / service.

The CSLF could also move beyond simply facilitating the crowdfunding platform to being an active player in it to. In the UK Adrian Hon, the founder of the online games company Six to Start, has written recently about potential hybrid crowd and public funding models. Essentially the CSLF could take an initial stake in ideas that it thinks would benefit the work of the California State Library and the Foundation’s mission. This would firstly provide an incentive to entrepreneurs to come forward with ideas that could have direct relevance to the library and the Foundation’s mission (as they are more likely to secure funding – individual funders will be more likely to sign up if they see an insitutional investor has taken an equity stake). Secondly it could encourage both the state library and its users to work in greater active partnership as they all have a mutual interest in ensuring their investment is successful.

I think this is something the CSLF should seriously consider – it could have huge benefits for itself, the libraries users, and most importantly Californian society.

Gaming the technocrats

Last week the special advisors network in Westminster (all of the UK governing politicians personal spin-doctors) were having a collective belly-laugh at the expense of the non-partisan permanent bureaucrats who are responsible for the everyday smooth running of UK major offices of state. The extent to how efficiently they run them and execute their political masters orders – not least the spending of large amounts of taxpayer bucks – is a question a powerful independent parliamentary committee called the Public Accounts Committee (PAC) is constantly trying to get to the bottom of. Unfortunately the head of the Ministry of Defence, Ursula Brennan, failed to provide any convincing answers last week triggering much deeper questions in the UK about the competency of permanent officials (something the political special advisers have been making jokes about since day one of the new UK coalition government: “…the engine of a lawn mower, and the breaks of a rolls royce”)

The entertainingly aggressive chair and deputy chair of the committee (Margaret Hodge and Richard Bacon) seem determined to make the permanent officials more publicly accountable for the spending of their departments. While this is somewhat of a challenge for traditionally anonymous public officials in the Westminster government model, it is ultimately a good thing for both the state and society. Firstly greater transparency of state spending should lead to more efficient use of public funds; through both a greater incentive to prove efficient practices as well as greater opportunities for outsiders to point out inefficiencies to address. Secondly, society should have greater faith in state institutions spending its tax money if it knows how the money is being spent.

Sadly though the PAC seems to be banging its head against oak-panelled committee room walls at the moment in an effort to show incompetence is rife amongst Westminster bureaucrats. It is not. Recently, as an advisor in the thick of it at Westminster, I met many capable public servants whose talents and drive were more often than not frustrated by a system which intrinsically defaults to inertia. So if the PAC really wants to enhance scrutiny it needs to find a smarter mechanism that both incentivises more open information and rewards those who give it competent and credible answers. A mechanism that enables parliamentarians to get even, rather than get mad, so to speak

A former head of the UK civil service often presented his own ‘capability reviews’ to the British Prime Minister as evidence that the permanent bureaucracy were driving their own “improvements”. From what I could understand, relative to how a good business would review itself, these were all about ticking organisational process boxes rather than focusing on the achievement of outcomes. Still, there did seem to be something in the relative rankings; especially how the heads of department defensively reacted when you pointed out their ‘league placing’ compared to another department. Permanent officials, it seems, are highly competitive animals when judged against each other. While of course in public they can all agree on the wine list, in truth nobody would want to be left drinking the merlot!

So, could this point to some innovation for Hodge and Bacon to exploit in their quest to enhance transparency and improve bureaucratic efficiency? Rather than simply grandstanding their frustration with permanent officials (which is certainly not good for your health or long term career prospects in the old fashioned Westminster model!) the PAC could more systematically rank the performance given by each permanent official it cross examines, and keep an updated league table on its website. One doesn’t have to think too hard about the different criteria each committee member could score the permanent accounting officers (who are responsible for value for money in their department) on:

  • Provided clear spending data to the auditors / committee in advance (max 5 points)
  • Answers committee questions clearly and fully (max 5 points)
  • Committee has confidence official is on top of department expenditure (max 5 points)
  • Able to to present evidence to show spending is maximising value-for-money, within the ministerial decisions taken (max 10 points)
  • Demonstrates a credible understanding of future threats and challenges to current spending projections (max 5 points)

So the idea is an ‘accounting officers premier league’. For sure it wouldn’t get much notice beyond the Westminster bubble, but the PAC could be sure that when the heads of department sit round the table together each wednesday morning they will all know who is at the top and who is at the bottom! Could this incentivise senior bureaucrats to up their game in front of Hodge and Bacon, resulting in a more transparent state having to explain more competently the spending taken on behalf of society? You betcha! Will Hodge and Bacon have the courage to try such an innovation when the new parliamentary term starts next week? Well, they are a breath of fresh air providing a much needed kick to the system, but doubt you will see this sort of innovation anytime soon.

A market society

Rob Reich’s review of Harvard political philosopher Michael Sandel’s new book, What money can’t buy: The moral limits of markets, on the Stanford Social Innovation Review website is well worth a read. I love Michael Sandel’s work and by the sounds of Reich’s review it should be a good read with plenty of real-world case studies to stimulate thinking around the big question he is essentially raising: What shouldn’t money buy? A very poignant question for both state and society, especially if Sandel is right to suggest that we have “drifted from having a market economy to being a market society”

Reich writes that Sandel is not arguing against markets per se: “Rather, he proposes that markets should have limits. He identifies two moral concerns. First, when markets exist everywhere, he argues, we need to worry more about inequality. If money can buy more and more, including political influence and better health care and education, then having money matters more and more. Second, making certain goods into commodities can corrupt the very value of these goods; market norms can crowd out valuable non-market behavior.”

With regards the first argument few would disagree with a serious concern about markets and fairness. There was open (nervous) talk at Davos about the future consequences, for both state legitimacy and society well-being, of global wealth monopolised in the hands of the global winners. However the second argument about commodification is a bit more contentious.

Reich makes an interesting point about this: “Sandel could have conveyed a more sophisticated view about markets. Not all markets and marketplace exchanges are alike, or have the potential to corrupt valuable non-market norms. Take for instance the simple distinction, familiar to any reader of SSIR, between goods offered for sale by for-profit versus nonprofit organizations. Commodification looks different if the marketplace is populated by nonprofit organizations, but this distinction is lost in Sandel’s undifferentiated treatment of markets”

Building on this, one can also make an argument that markets which encourage greater physical connections, interactions and exchanges – regardless of whether profit is the underlining motive – can in itself strengthen society. Remember a stronger society is created by increasing the quantity and quality of social bonds and relationships within communities. Surely it is better for a person to turn off the TV and walk down to the local mall where they will interact with people in stores who are selling their goods for profit, rather than remain sitting isolated in front of the TV for the day in order to abstain from rampant market consumerism? Note, I pose this as a provocative question rather than a statement of fact!

Political cannon-fodder

Today the UK population are going to the polls to vote in the annual local elections. These elections decide which political party (Labour, Conservatives or Liberals) get to hold power in many of the UK’s local administrations. Each local area elects local politicians (‘councillors’) to run the local authority and make local tax, spend as well as key local services and planning decisions on behalf of the local electorate. There is one big problem though: most people don’t know who their local councillor is, or for that matter what they do. These elections – like many of the US federal mid-terms – are too often simply a referendum on the governing executive of the day.

In most regions of the UK, less than one-in-three could name the local politician representing them at the local authority. Hence why, every year when there are local elections the national media use results – with some justification – as a barometer of the national political party leaders prospects at the next general election. However, if you stop and think about this current system you would realise this is complete madness! These local politicians are decision-makers in their own right, they have important decisions to take and should in their own right have to earn the trust of their local electorate on what they will do (not what the national leader has done). It’s surely pure madness that a high performing local councillor could simply find themselves collateral damage to a system which sees local elections first and foremost as a national opinion poll.

The UK are now slowly catching up with some of the American innovations in local democracy such as directly elected city-mayors and police commissioners. In London, where the mayoralty is now becoming firmly established since its introduction well over a decade ago, there is an increasing decoupling between the drivers of voter choice (i.e. mayoral personality) and the national picture (i.e. government popularity) meaning a greater electoral focus on local issues (i.e. transport fares, housing and crime). Yet the national media will no doubt analyse the London Mayor election in the same way it will local election results: what it means for national political party prospects rather than what it means for local voters.

So the introduction of more localised television media broadcasters and coverage in some parts of the UK may start to tackle the national sate bias, but for the foreseeable future the impact is likely to be very marginal. We know disconnects between state decision-makers and society matters hugely, regardless of whether it is at the national or local level, as it results in a breakdown of legitimacy (collective trust) and deters potential active citizens from participating in partnership with the state to strengthen society.

If politicians were serious about a transformational form of localism in the UK they would surely need to consider not just devolving power (“from Westminster to the City Hall”) but de-nationalising party politics. To create a stronger physical and psychological link between local society and local state, local administrations need their own political identities. One of the most radical ways of doing this would be for national state to ban the local candidates standing under national party names (in the UK this would include Labour, Conservative and Liberal Democrats)

The immediate result would be that each local party would have to find a new and distinctive name for their candidates to fight a local election under. Who knows, maybe new local parties emerge (and decline) based around new grouping that more accurately reflect local needs rather than national tribal politics? Of course though local politicians of new local parities could still be active grassroot-members of their national political party and no doubt still keen to campaign for them at the UK general election. Additionally, if there are concerns that the British electorate would lose its ability each year to “give the westminster government a bloody nose” or to “issue a protest vote” in between general elections, then an annual national plebiscite could be held! Something along the lines of ‘on a scale of 1 to 10, how happy are you with the government’s performance to date’ and ‘on a scale of 1 to 10, how happy are you with the opposition’s performance to date’

However, one final word on this. There is more chance of hell freezing over than the de-nationalisation of party politics in the UK. Firstly party politics is highly tribal and like British soccer teams the fans show irrational levels of loyalty and passion for their star players. Secondly the star players themselves would never want to tell their fans to diversify their focus away from tribal party loyalties – for a start there is a big risk the fans wouldn’t come back at general election time and they are seen as their troops who help win general elections.

In short the path dependency of the current UK party political system prevents innovative transformational change to enhance local democracy. Still, it’s a neat idea for any radicals out there!

Society stabilizers

Both the Metropolitan Transportation Commission and the Association of Bay Area Governments are currently taking feedback on the Plan Bay Area proposal to reduce the speed limit to 55mph on Bay Area freeways. Dropping the maximum limit by 10 mph could reduce emissions 6% by 2035 — the equivalent of taking 300,000 cars off the road. Under state Senate Bill 375, passed in 2008, the Bay Area must reduce its greenhouse gases 7% by 2020 and 15% by 2035.

On the face of it this seems like a plausible idea, and for me it stimulates additional ideas for state policy makers. For example, most commuters want to travel faster than 55mph nearly as much as they want good air quality to enjoy. So the speed limit, rather than being fixed, could become actively conditional on real-time carbon emissions: the higher the emissions each hour on the freeway the lower the set speed limit becomes, and vice versa. This idea would create a sustainable equilibrium between polluters and environment, as well as potentially creating a further (collective) demand for the advancement of low-carbon technology.

For those of us passionate about not just a sustainable environment but also a stronger society, there is a fundamental idea worth looking further at here. It’s the idea of a positive equilibrium between society and the economy. Imagine for a second your annual energy costs divided equally over the 12 months of the year – in the winter months you’ll be using more energy than in the summer months but rather than your personal finances being exposed to the peaks and troughs of seasonal needs they are stable throughout the year because thanks to your fixed monthly payments smoothing out potential debit, as well as credit.

A strong society requires high levels of interaction and social bonds, yet we know that during times of economic growth the temptation for individuals to withdraw from social interaction and community collaboration peaks (“why share when I can buy my own”). Consequentially this weakens levels of community capital required for a strong society – decreasing social bonds and relationship building. Ironically though, in the economic good times people cope by compensating for the trough in social bonds through evermore individual consumption fueled by increased debt. Society then has a false sense of security that both economic and community well-being are both peaking. They are not: individual economic prosperity is simply displacing community collaboration.

So, the catastrophic impacts of reduced community capital in society are most acutely felt  during times of economic downtown. Individuals suffering economic hardship look to society (their communities, their networks, their relationships) for mutual support yet, as demonstrated by the sub-prime housing crash, many of those societal bonds and ties had been dramatically weakened if not smashed during the good times. Many families were left with far fewer options of support within society than they should have had.

Now that California is slowly emerging from recession, and once again we look to the light at the end of the tunnel that is economic growth, perhaps policy makers might want to think more about how they can ensure social bonds in society are stabilised relative to economic growth (think back to the energy consumption peaks and troughs example above). A very tricky area, but the state has a legitimate active role here given what we know is an inherent market failure of the economy to price in long term future shocks to society.

A good first principle value for policy makers would be to identify that isolationism weakens society, while collaboration strengthens it. So in a growing economy, society would benefit from ‘stabilisers’ that reward community consumption over individual consumption. For example, two people in the same neighbourhood could buy the latest flatscreen television and premium cable channels with their increased disposable income. One person may simply want to enjoy it in isolation, which is their choice but does little to strengthen the neighbourhood bonds society needs. The other person once a week opens his TV room up for all the neighbours on his street to come and enjoy a movie together – everybody brings their own food and drink to share and over time the community relationships society needs blossoms.

Now, policy makers should be understanding firstly how they can enable all those people who do want to share with others (the most recent ideas suggested by the leading innovators in this field have involved new ‘platforms’ – think ebay –  which enable strangers to connect and collaborate). Secondly policy makers want to be thinking how to ‘price in’ the difference between those that actively participate for the good of society versus those that prefer to opt-out of community responsibilities (the most recent ideas again suggested by the leading innovators in this field have ranged from ‘community dividends’ – think tax rebates – through to ‘state award ceremonies’ – think medal of valor – and enhanced personal ‘reputation ratings’ – think ebay again)

The challenge to maintain strong social bonds, in spite of economic growth and increasing individual consumption of goods and services, is very hard and innovation like that described above is even harder (given current path dependencies) – there is a huge amount of learning to be done. The potential rewards though for both the state and society – in good and bad economic times – are huge, which is why such bold state innovation should be pursued with both courage and vigour.