" The essence of the social enterprise innovation is… finding new market-led approaches to address and solve old problems."
David Brookes, Managing Director, Social Traders
Charles Leadbetter, social innovation thinker and renowned author of ‘The Frugal Innovator – creating change on a shoestring’ and former adviser to UK Prime Minister Tony Blair, says innovation is the recuperation of old ideas mixed with new approaches.
More often than not, the role of technology in innovation is to enable the re-organisation of existing resources and systems to deliver better outcomes.
Citing the now text book examples of AirBnB and Uber as examples, Leadbetter says neither hotels nor taxis were innovations per se but the way both Uber and AirBnB have re-organised the existing system within their respective industry sectors is truly innovative. In both instances, technology facilitates the innovation but is not the innovation itself.
In this way, social enterprise itself also represents innovation since it finds new ways to solve problems. Often in the face of market failure, social enterprises provide employment and access to essential products and services by applying innovative business models.
Healthcare and fresh food are things we all need – they are clearly not new, nor are the myriad of support services that provide access for those in need.
The essence of the social enterprise innovation in both of these examples, is identifying where there are gaps in the traditional models of provision – both the commercial market and welfare – and finding new market-led approaches to address and solve these old problems.
In his article ‘Time for a National Agenda for Social Innovation’, Social Ventures Australia CEO Rob Koczkar calls for greater focus on the issue at a national level, including a move towards innovative approaches to solving social challenges including unemployment, mental illness, homelessness and indigenous disadvantage.
As the intersection between traditional business and welfare, I believe social enterprise needs to be recognised as part of the solution to solving these challenges.
This intersection is well-depicted by social enterprise Thankyou who recently announced a new retail venture – Thankyou Baby – where profits of nappies and baby products will fund maternal health projects in developing countries.
The $A600,000 start-up capital required to launch Thankyou Baby has been sourced through a crowd-funding campaign. Just as with their original bottled water product, Thankyou are demonstrating innovation in their ability to generate capital via crowd funding as well as lead consumers to organise themselves around a product on the basis of understanding what their social impact will be.
By doing this, Thankyou is using successful, well-established retail categories to divert – what would normally be personal profit for shareholders – to address persistent problems in the developing world.
Through Social Traders national research, we know there are over 20,000 social enterprises in Australia operating in all industry sectors from tourism and transport to mining, hospitality and health services.
We estimate social enterprise contributes about 2 per cent to 3 per cent of Australia’s GDP and employs up to 300,000 Australians. These social enterprises are trading businesses which exist to address social problems.
The following two examples come from enterprises within Social Traders’ own Social Investment Portfolio.
MEASURE OF SUCCESS
In Australia there are a number of contemporary examples where social enterprises have demonstrated innovation to solve existing problems.
To address the problem of poor access to healthy food in low socioeconomic communities, 2&5 operates a shop in Norlane, Geelong, one of the most economically marginalised suburbs in Victoria.
2&5 sells fresh, healthy food in an area unable to support a fruit and vegetable shop. To balance this, it grows food on a local plot of land and uses excess stock to make jams, which are then sold at upscale markets in the region.
It measures success by the kilograms of fresh produce sold in its shop – kilograms which translate into affordable and accessible fresh food for a community otherwise struggling to access it.
Through this innovative approach 2&5 are able to keep costs down, minimise waste and provide a market-based solution to address the problem.
In inner Melbourne’s North Fitzroy, The Integrated Medical Centre (TIMC) is a medical practice owned and operated by community health service cohealth. TIMC has been established as a means of generating revenue for cohealth by doing what they do best - providing healthcare.
By providing GPs, psychology, physiotherapy, pathology, podiatry and midwifery at market rates to the more affluent members of the local community, TIMC generates profit to fund community healthcare programs run by cohealth which are essential for those in the community most in need.
By broadening its client base to encompass those more affluent and able to pay for medical services, TIMC has been able to take advantage of a market opportunity for the benefit of their traditional clients – those who can’t afford access to healthcare.
Around 2,000 of these social enterprises are committed to the creation of employment for disadvantaged groups, and collectively exist to address labour market failure; employing those the market deems too difficult to employ. They generate jobs for 35,000 Australians who would otherwise be long-term unemployed or marginalised from the mainstream labour market.
The development of a cohesive strategic policy framework to support the growth of social enterprise in Australia aligns closely with the employment, growth and innovation priorities of our national and state governments.
Social Traders believes strongly the government has a lead role to play in recognising social enterprise as part of its Innovation Agenda and supporting it as a viable, sustainable and innovative solution to our most entrenched social and community challenges.
If governments committed just 1 per cent of their procurement budget per annum to purchasing from social enterprise, this would create 150,000 jobs, with 110,000 going to the long term unemployed and those at risk of unemployment.
We should not confine innovation to technology alone. We need broaden our thinking and policy settings to include new and innovative ways of doing business to meet the challenges of society.
David Brookes is Managing Director at Social Traders
Social Traders is a not for profit company which helps social enterprises with the networks, investment and resources they need to grow and succeed.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
04 Apr 2016
29 Mar 2016
31 Mar 2016