Rethinking national economic development through social innovation

To begin with our work was initiated as a project that developed into a program focused on work integrating social enterprises. Today, still operating on quite a limited budget it must be admitted, the program covers grants and support to individual organisations, access to finance, training of SME advisors as well as the collection of statistic data with the objective to better understand and develop the “industry” as such.

In parallel with the increasing scope of the program, we have seen a growing interest from the political side. The last few years social innovation has been recognized as an integral part of the national strategy for innovation and a national knowledge center for social innovation has been established at the Malmö University.

The interest is growing, and this may just seem reasonable in the light of the ongoing financial crisis. As the number of societal and environmental challenges keeps piling up, the amount of money available and the public capacity to find solutions and address these issues seem to be ever dwindling.

This is not saying that desperate times call for desperate measures… Indeed, social innovation is about finding new solutions, and turning these into new business opportunities. However, social innovation also helps us challenge and develop the economy itself.

As mentioned, the ever increasing social and environmental challenges lead to an increasing demand for solutions to these challenges. This is not only about the needs or demands of the public sector though.

In a recent meeting, 25 of the biggest companies operating in Sweden expressed the need to find, meet and interact with social entrepreneurs. The simple reason was that these companies had identified social entrepreneurs and innovators as having something they themselves lacked. That is, an ability to find solutions and business opportunities in the modern world’s challenges that would help these companies develop their business offer.

In this sense, social innovation constitutes a strategy and potential growth area in itself. However, we also see that social innovation helps us develop our agency itself and not the least the area we are working within. Growth, that is.

These days, there is more or less a general consensus that we need to widen our perspective on growth. UN, OECD, EU and the Swedish Committee on the Future have all pointed at the limitations of GDP as a mean to measure and understand sustainable development. Scientists, researchers, and expert groups have long been busy working on developing alternatives to GDP.

However, while we are trying to figure out to what extent different measures and indexes can complement our understanding of the economic system and be integrated into decision making processes, many social entrepreneurs are already operating within such alternative frameworks.

Instead of for profit driven companies, social entrepreneurs aim at impact and social change, focusing on social return of investment rather than traditional ROI, using terms as members rather than shareholders.

Social entrepreneurs have taught us that growth may just as well be a question about the number of beehives that have been placed on the roof tops around Stockholm and Malmö, the number of students being tutored in math, or the ability of immigrant women in the suburb to find an income.

Social innovators and entrepreneurs help driving the development of new financial tools. As we all know, we tend to get what we pay for… Through social innovations and social entrepreneurs we now know what we really should be looking for: impact that is.

Accordingly, a local authority wanting old people cared for in a way that they live well and happy should demand nothing less but exactly that: wellbeing and happiness.  Impact investment and financial instruments such as social bonds are helping us to move away from margins and best-price policies, and as a result, help us widening our view on how the economy works, where future investment and growth opportunities are, and how they come about.

Obviously, these new ways of understanding growth challenge the way an organization like our own is organized, and it leads us to question the demands we put on projects and companies. For example, is increased turnover and the number of jobs created the only relevant indicators for granting funding or not? This is how we understand growth today, but does it help us spot the opportunities of tomorrow?

To sum up, social innovation is about finding new solutions to the modern world’s challenges. It is a matter of turning these challenges into new business opportunities. But it is also about challenging some of the fundamental drivers of the economy, not least our concept and understanding of growth.

Social innovation is not so much about rebooting our economy. It is rather about redefining our understanding of the economy. In this sense, social innovation and the new business models, business opportunities and financial instruments it brings with it may be seen as nothing more and nothing less than concrete examples of how the economy is actually already changing, right before our eyes.

With that being said, I hope that this afternoon will bring us new insights into just how the economy is changing, and what we as an agency need to consider in order to stay relevant and play an active part in this transformation.

Written by Johanna Giorgi
Sustainable Growth, Tillväxtverket

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