Social Innovation Won’t Save the World

David Bornstein in the NY Times Fixes column recently referred to social innovation as part of a “breakthrough – maybe even a new Enlightenment.” He believes it is creating new and lasting change that is unprecedented in the social sector.

But, social innovation faces an undeniable limitation: it is merely a tool. And, like any tool, its impact is determined by the vision of those who use it. Great architecture isn’t created by hammers. It’s created by architects and carpenters with highly developed vision.

For the past few years, much of the investment in the social sector has been in building better social change tools and teaching people about them. It’s assumed that if we build just the right model of micro-finance or social entrepreneurship, we’ll end poverty, empower women, and create environmental sustainability.

Sadly, this isn’t true. Until we invest in developing social sector leaders with exceptional vision, we will not see the more just and equitable society that supporters of social innovation claim is on the horizon.

Social Innovation Is Just a Tool

To be fair, social innovation is a remarkable tool. Actually, it’s a set of tools built on the idea that business principles and social missions can be merged. This merger can create self-sustaining ventures with high social impact. It’s revolutionary because it alleviates barriers for social sector organizations. It reduces dependency on donations. It incentivizes businesses to meet the needs of the “bottom of the pyramid” by creating profit for those that do. It empowers the “poor” as consumers who determine which products and services meet their needs best. You’ve probably heard of micro-finance, micro-enterprise, impact investing, and social entrepreneurship — all are social innovations.

Yunus Clinton Social InnovationHow does this play out in the real world? Proponents of social innovation often point to micro-finance. Muhammad Yunus and the Grameen Bank pioneered micro-finance to bring financial tools and opportunities to the fiscally destitute. Grameen’s monthly report from August 2012 shows over $12 billion borrowed by 8.3 million clients since the bank’s founding. Of those clients, 96% are women. Plus, Grameen turns a healthy profit. It’s 2010 audit shows over $9.2 million in annual profit. Clearly, Grameen has seen organizational success.

In 2006, Professor Yunus was awarded the Nobel Peace Prize for this work. With various studies showing positive impact on childhood mortality, empowerment of women, and poverty alleviation, Grameen’s success at solving societal ills and meeting critical needs is often used as the benchmark of how social innovation changes the world.

Sadly, it’s not true.

Social innovation is not the cause of those gains. It’s a tool used in the process of creating those gains. The real cause of Grameen’s positive social impact is Professor Yunus.

The Vision and Intent of Social Change Leaders

Social Innovation and Muhammad YunusIn Banker to the Poor, Yunus’ book chronicling the development of micro-finance and Grameen, it is clear that he is not simply a banker meeting women’s need for financial products. His impact was the result of his highly developed vision as a social change leader, not his exceptional economic prowess. His vision included carefully developed values that define a more just and equitable society. It included an ethical and effective path to creating meaningful impact. His vision also included a critical understanding of his role in reshaping society, acknowledging his strengths and limitations. It was this vision that guided his work developing and implementing micro-finance as a social change leader.

Professor Yunus’ vision defined his approach in key ways. He was humble, leading him, as a college professor, to enter slums with the understanding that the inhabitants knew more about their needs than he did. He exhibited grace, allowing him to collaborate with women in a male dominated society and develop a tool that was respectful of their values, culture, and desires. He relied on trust in the human dignity of the “destitute,” leading to the creation of self-regulating lending circles with repayment rates unmatched in the banking community. It was Professor Yunus’ highly developed vision that created impact worthy of a Nobel Peace Prize, not the tool of micro-finance.

Not convinced? Consider the slew of micro-finance institutions noted for causing harm to their borrowers here and here. Wielding the same social innovation tool as Yunus, lenders around the world have hurt those who micro-finance was designed to help. Some have created profits for the lenders but no positive, lasting social impact. Abhijit Banerjee and Esther Duflo expound upon the failings of lenders in Poor Economics, pointing to the poor vision of some social innovators leading to usurious practices which further impoverished borrowers.

Without social change leaders with highly developed vision, tools like social innovation can cause more harm than good. If we want to create impact in our society that moves the needle significantly toward justice and equity, we must invest in the development of social change leaders with the vision to wield tools effectively.

The second in this series of posts explores the factors that shape the vision that defines exceptional social change leadership. The final post in the series examines Thinking Beyond Borders’ international education programs as models for developing those leaders. Stay tuned…

Subscribe to this blog to receive upcoming posts in this series. This blog is authored by Robin Pendoley, Founder & CEO of Thinking Beyond Borders, a non-profit offering gap year programs that create social change leaders.

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16 thoughts on “Social Innovation Won’t Save the World

  1. Totally agree to the point of view. Just like to add that a Manager + Leader combination is more helpful and successful. There are many examples of such combinations. One of them is the famous AMUL cooperative in India (Guajarat). Sometime this combination of manager and leader can be found in one person. However this is very true that tools are limited by the vision and dedication of the user.

    An ideal combination shall be a leader from the community for whose benefit the intervention is designed for and a manager from outside having understanding of the sector in which the intervention is designed, equipped with appropriate tools to re-engineer the sector for profit redistribution & role/responsibility and commitment to give time for the intervention.

  2. I agree microfinance is a tool. Does that really mean social innovation itself is a tool; the blending of investing for mission in a new way? maybe. but maybe not if unintended consequences, social impact of the microfinance tool, is added to the tool, and it becomes an enlightened tool. otoh, impact investing itself is just a tool.

  3. Unintended consequences can occur with any model, idea, or mindset. I believe social innovation is a mindset not a tool. My frustration is that it takes too long to share the lessons of social innovation, what works and what doesn’t. This idea of the lone charismatic leader simply doesn’t accomplish enough. We need smart, caring people at all levels continually innovating and that requires smart, caring people supporting them. If we built a culture where mentoring was the norm, where change-agents and leaders received free access to experience and insights, we could accelerate innovation for the common good. The traditional nonprofit board model clearly isn’t enough. Having a trusted mentor with experience to champion leaders and change-agents at all levels, well, we might actually take more informed risks in all types of social innovation. I was so impressed with the Singularity U business accelerator model. I wish we could use that in other fields, other change-agent models.

  4. The importance of having a CEO who leads the organization with strong moral values is important, whether you are an investment bank or a micro-credit bank. I think your opinion holds not as a social innovation framework, but a general leadership principal, and we need strong, honest, leadership in our businesses, governments, and social enterprises alike! (Which really means, we need to make sure Kindergarten teachers are getting the support they need to do their jobs well in helping to build the values of our next leaders!)

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  6. Words of wisdom….well said!

    Over the past few years I have been traveling extensively in Africa and Latin America. I have been to many communities that are off the map (practically) where Official Aid and other programs do not exist. On the other hand…I also see so many rusted signs of projects that became obsolete because they were no longer the flavor of the month.

    I am here meeting with various local organizations that know practically nothing about all of the international efforts coming in various forms with various intentions, and little knowledge or trust in local capacities to deliver on programs.There has been some efforts by “aid” delivery actors to understand and evaluate programs but again with little transparency. Social innovation sounds great but it might end up a little bit of the “same old” with a different flavor.

    It’s almost crazy to see how many new programs are created every day…but again when I am abroad and meet with communities and government officials…they have no knowledge of this private flow for development that is also …at the same time…taking precious resources out of the public system.

    I think that there is an increasing interest for people to collaborate ..to look at at their collective impact but let’s start this with the right tools…to understand the impact. I think that the world needs to have a “people’s option” to development outside of government and or quasi-governments like Gates Foundation and the likes. Met with a Minister of Social Development in one of those countries who needed funding for kitchens is school….far more important than many other priorities set by these quasi-governments…..but no help is available to her because kitchen in school ain’t sexy!

    We are bringing together a wealth of individuals who see the potential for change and collaborate for the development of collaborative tools that empower people.

    Meanwhile the UN has recently appointed 26 illuminates that will decide the faith of development. The process…online consultations, many NGO’s will be lobbying for their own silos…health, micro credit, education, etc…it took 25 years to get us to a somewhat failure with MDGs. Are there successes? absolutely…and there are success stories in plane crash as well….doesn’t mean we have to send more planes to the ground.

    Lucas…desde Bogota!

  7. First of all, I would ask where this is coming from – are you a student, a grad student, a sustainability professional, an employee of an NGO/social innovation organization? Any of those perspectives would give you (the author) a significantly different perspective on what is currently going on in the sustainability/social innovation world.

    Secondly, I think you have a great point about the need for humble, adaptive, educated leadership to accompany social innovation and, in this regard, Dr. Yunus is an obvious but quite relevant choice.

    However, it seems that your view of “social innovation” is extremely limited. Of course, this is a brief article but microfinance is an overly examined and semi-antiquated form of ‘social innovation’ – what you point out is nothing new, the Kiva/Grameen model has been both criticized and exalted endless times over the past 10-12 years.

    The fact that microfinance, and specifically MFIs have often be harmful and exploitative has also been exhaustively covered. As a whole though, it almost certainly represents a step in the right direction. I have spoken personally with the founder of Kiva about the hardships of having to work with MFIs that will only loan at exorbitant interest rates simply because they are the only banks in those areas – this was deeply frustrating to him, but what is the option? A small organization such as Kiva or Grameen bank completely lacks the capacity to set up their own banks with their own interest rate and access to capital in 160 countries…so, accepting this unfortunate fact as a necessary evil is, as I understand it, quite well known within that field.

    However, microfinance is one of an ever-expanding number of initiatives that are changing the way global business, money access and international development work is carried out. This isn’t 2005, microfinance is not some new exciting, ready to change the world trend – it has had it’s infancy and has assumed its place in the world – in 2012 it is probably not microfinance but sustainable global business in concert with social organizations/global innovations that is most rapidly and readily impacting global change.

    Finally, of course you are right when you say that social innovation in and of itself won’t “…save the world” though I have to admit I am struck by the inflammatory and generalizing nature of such a statement. Might you have a better suggestion of what might “…save the world?” Perhaps we should return to the old mix of relying on transnational governance, charity and aid dollars to solve global problems? If not, what else CAN save the world but this constantly changing notion of social innovation and social progress?

    As a hopeful word for what social innovation IS doing, I work in corporate sustainability and I know some things are changing rapidly, for the better – the most powerful businesses on earth are slowly but surely transitioning from “Whats” and “Whys” to the “Hows”, moving from seeing CSR and sustainability as a PR stunt to appease stakeholders to it being a very necessary and potentially profitable part of their core business strategy. Do we have a long way to go, absolutely…will this new integration of business and the social sector “save the world”? perhaps not, but if not that…what?

  8. I AGREE! one good example would the ilusion of Microfinance in Morocco. Consider this: Microcredits started with Grameen Bank in Bangladesh (1976). In Morocco, with Zakoura Association (1995) it was launched by an Association and not by a bank. The minimum amount Mohammed Yunus started with is 27$. Yet, now that this strategy is shifted to banks in Morocco where the minimum microcredit is 3000 MAD = almost 300$; which is still not accessible to poor in Morocco. Morocco needs Mohammed Yunus!

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  10. I partially agree, but partially disagree. As someone who has worked in the social sector for 9 years, I have witnessed both the positive and the negative affects of the rather messianic treatment of social leaders. Leader worship, while magnetic and inspiring, unfortunately fails to recognize the other “99 percent” of the equation that made their movement happen: their staff and supporters.

    Yunus is incredible, and his model is incredible, but it’s also incredible that the market accepted him, and consumers (mostly low-income women) purchased his financial products. It’s also incredible that his staff facilitated those transactions, and made this alternative financial sub-structure that he envisioned real.

    Social innovations are, at their best, supposed to be about SYSTEMS affect. Not just about individuals.

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  14. Certainly these are tools. I offer an extract from a strategy proposal which advocates two of these tool in conjunction, a community funding enterprise AKA social business with a microcredit union. It is the innovator, who then proposes their use to empower a a peaceful Muslim community, weighing the cost against an equivalent spend on cruise missiles:

    “In efforts to deal with communities in or near poverty, it will be useful to target progressive, peace-oriented communities just as aggressively as has been done in targeting terrorist cells. Both types of communities are quite similar, but, one has attempted a peaceful path whereas the other has not. Toward this end, the most promising and deserving communities must be “hit” with equal force as is brought to terrorist cells – the difference being delivery of resources rather than ordinance. The point is to grow the best, most promising communities with the same focus and passion brought to destroying terrorists.”

    http://economics4humanity.wordpress.com/2012/09/22/creating-shared-value-mk1/

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