While companies around the world practice social corporate responsibility, the World Economic Forum (WEF) has identified a more impactful and mutually beneficial philanthropic model called social innovation. The WEF’s Global Agenda Council on Social Innovation describes social innovation as the use of sustainable, innovative, practical, and market-based methods to help society, especially populations that have been underserved. According to the WEF, social innovation is different from traditional corporate philanthropy because it works to address social challenges while also producing perceptible business benefits.
The WEF asserts that social innovation has the power to yield financial returns for companies and increase a company’s competitiveness. For example, businesses that participate in social innovation are better able to adapt, earn stakeholders’ trust, and attract and retain talent. These companies are also more competitive because they focus on environmental sustainability and develop products or services that meet the needs of emerging markets.
A long-term business strategy, social innovation boosts local economies, builds brand loyalty, and promotes enterprise sustainability. Companies interested in implementing a social innovation strategy can follow the WEF’s five-step plan outlined below:
Developing a socially innovative business starts with efforts to identify social innovation opportunities that support a corporation’s strategic objectives and capabilities. The WEF states that ideas for potential opportunities can come from a wide range of internal and external sources, including senior leadership, employees, and stakeholders in operating markets.
As decision makers, senior leadership personnel have a particularly significant role in implementing social innovation. Business leaders are able to establish a long-term plan for how a social innovation opportunity can align with their company’s strategic objectives and then support that plan by creating goals that encourage team members to pursue opportunities. On the opposite end of the spectrum, employees and business units that operate on a local level have unique interactions and perspectives, giving them the ability to identify high-quality social innovation opportunities that are applicable to routine business operations.
During the identification process, socially innovative businesses consider how existing assets could be applied to societal issues and determine if existing formats, such as innovation budgets or awards, can help business units isolate social innovation opportunities.
With a flexible and strong design process, companies can transform social innovation ideas into practical business models, concepts, or prototypes. Socially innovative businesses find that it’s most effective to create new internal structures or refine existing ones, rather than using established processes to support and implement social innovation opportunities.
For maximum efficacy, companies shouldn’t stray too far from existing procedures because it makes the execution process more difficult for managers. The WEF points out that social innovation is most successful when internal supporters with functional expertise and authority collaborate to advance ideas.
Throughout the design process, companies will also want to determine how well they understand their new stakeholders and how well the stakeholders will be served with new business models or existing capabilities. Companies should also quickly identify the in-house talent that will best serve the change management process.
Companies that want to become socially innovative must be willing and able to learn through field testing, performance tracking, and outcome-based analysis. In many cases, companies can use small pilots to test a collection of new ideas. Pilots should be regularly evaluated to determine which programs should be scaled or eliminated based on outcomes. For instance, the best program might offer the greatest supply chain resilience and deliver the most social impact.
Over the course of the pilot process, robust learning loops will allows companies to gain valuable insights on ways to make business models and products more dynamic. Socially innovative businesses have even found that serving emerging market consumers has enabled them to identify more sustainable materials and cost-effective processes.
Scaling promising social innovation pilots or prototypes can be one of the hardest steps for companies, especially since social innovation is a relatively new approach and there are few longstanding programs to reference.
At the start of the scaling process, companies should determine if the business model can be applied in different contexts, and clarify the role technology will play. It’s also necessary to decide which program components should be frequently evaluated and adapted to ensure relevancy. By approaching social innovation as a continually evolving process, companies can both create social value and drive business growth.
The WEF also recommends generating a “center of excellence” or a dedicated business unit that focuses on implementing best practices and measuring results to support growth.
Social innovation pioneers consistently highlight the importance of partnerships as a way to foster success. Whereas a company can offer resources like technology and human capital, a partner organization might be able to more effectively accommodate low-income consumers and measure social impact on a local scale. Socially innovative businesses often look to partner with civil society groups and specialized social enterprises that have trust-based relationships with underserved communities and proven business models that work in emerging markets.
A successful partnership will unite organizations that offer complementary resources, expertise, and skills. With this approach, companies are less likely to repeat others’ mistakes and more likely to design scalable solutions.