Why Reinvention is Important for the Social Sector

There is a new buzzword in town – reinvention.  Capitalism is being reinvented, so is management, and it has the Westpac Group's Kerry Graham wondering – should we reinvent the social sector? This article is taken from the CSI Blog.

There’s a new buzz word in town – reinvention. I knew something was afoot when a respected colleague said: “I’m so over hearing about things being reinvented!” So, I took a look at the big ticket items that are getting reinvention I was intrigued by what I saw. The things being reinvented are very important to the social sector. For a start, the change they represent would create significant social impact. But, more importantly, there is an underlying narrative to the reinventions which has application to the social sector. I was left with the question “should we reinvent the social sector?”

Reinventing capitalism

Over in the corporate world, Michael Porter and Mark Kramer have been busy reinventing capitalism. In their Harvard Business Review article – Creating Shared Value – the authors describe the next evolution of capitalism as one that moves away from the narrow focus of shareholder value to the creation of shared value. At its core, creating shared value is making profit and positive social impact. The authors assert that companies that focus on the connections between societal and economic progress will ‘unleash a wave of innovation and growth’.

Porter and Kramer propose three ways that companies can create shared value. The first is by reconceiving products and markets. Here, they compellingly assert that better health, housing, nutrition, support for aging, financial security and less environmental damage are the greatest unmet needs in the global economy, and that capitalism is an unparalleled vehicle for meeting those needs. Companies that strive to meet those needs will experience innovation in products, services, new market entry and distribution, all of which will lead to greater profits.

Second, companies can create shared value through redefining productivity in the value chain. Opportunities to create shared value arise when a company incurs economic costs in its value chain as a result of societal problems. Companies can create shared value by reducing their use of energy, logistics and resources; investing in socially positive procurement and distribution practices; focusing on employee wellbeing; and establishing deep roots in the communities in which they operate. All these things, the authors argue, will unlock economic value most companies have missed.

Lastly, Porter and Kramer propose that shared value is created when companies develop local ‘clusters’, being the web of related businesses, suppliers, service providers, and logistical infrastructure that the company relies upon to operate. Building the strength and capacity of clusters improves company productivity while amplifying the connection between the success of the company and the success of the community. The compelling example here is fair trade coffee vs cluster development. Fair trade can increase farmer income by 10%, but developing the cluster to increase farmers’ efficiency, yields, product quality and sustainability can increase their income by 300%.

Reinventing management

Meanwhile, the folk over at MIX – the Management Innovation Exchange – have been busy reinventing management. MIX is an open innovation platform for management innovators and entrepreneurs. To channel the passion and energies of these people, MIX developed a list of ‘moonshots’ – make-or-break challenges to which they want innovators to create solutions. Moonshots include calls to action such as:

• Focus the work of management on a higher purpose
• Embed the ethos of community and citizenship
• Make direction setting bottom-up and outside-in
• De-politicize decision making
• Develop holistic performance measures

And the list goes on – all up, there are 25 moonshots. In response, management ‘mavericks’ delivered solutions such as:

• Deliberative collaboration so as to build trust, knowledge, political and social capital, and, most importantly, make better decisions
• Scaling your idea or business without losing your engaging, entrepreneurial and experimental culture
• Motivating people to perform by giving them a sense of purpose, mastery and autonomy (now accepted as more motivating than financial incentives)

The narrative of reinvention

These two frontiers of reinvention share similar narratives. The first narrative is: the current system is no longer ‘fit for purpose’. Porter and Kramer assert that ‘capitalism is under siege’ because it is ‘trapped in an outdated approach to value creation’– one that largely sees profit and positive impact as mutually exclusive. It is worth noting that the authors count corporate social responsibility as part of this outdated model as it positions societal issues at the periphery of a company, not the core. Similarly, the premise of MIX is: “while ‘modern’ management is one of humankind’s most important inventions it is now a mature technology that must be reinvented for a new age”. MIX’s founder, Gary Hamel, asserts that current management practices emphasize control, discipline and efficiency above all else – and that’s the problem. The burning ambition of both these reinventions to evolve the current outdated systems into ones that are fit for the 21^st century.

The second shared narrative is their underpinning value set. Porter and Kramer’s reinvention is based on companies adopting values such as mutuality, connection and collaboration. Hamel’s reinvention is rooted in the belief that management 2.0 must adopt values of openness, meritocracy, flexibility and collaboration.

What does it mean for the social sector?

I believe the narrative of reinvention has powerful application to the social sector. What would the sector become if we intentionally evolved ourselves into a system that was fit for 21^st century challenges and opportunities? Would that galvanizing question be enough to force us to shed our mind-set of ‘survivorship’ and embrace one of ‘reinvention’?

How would the values of mutuality, connection, flexibility, openness, meritocracy and collaboration shape the reinvented social sector? Would it enable us to develop our own ‘moonshots’? And, if so, might they include:

• A social sector that sits at the table as equals with Government to develop our national values and social policy?
• The bottom up, outside-in setting approach to the sector setting goals we can collectively achieve?
• Models and tools for effective collaborations that align our substantial shared resources and assets to community identified challenges and opportunities?
• Services centered only on the needs of citizens?
• The development the next generation of social leadership?
• A ‘learning’ sector with a DNA of evidence-based practice, innovation and evaluation?

I think there is something in this reinvention thing. What do you think?

Kerry Graham has worked with Indigenous Australians, children and young people, as well as homeless, mentally unwell and dually diagnosed people. Her experience includes working as a solicitor with Aboriginal Legal Services and she was the founding lawyer of the NSW Youth Drug and Alcohol Court for which she received the National Children's and Youth Law Centre award.

Recently CEO of Inspire Foundation, a national non-profit organisation creating opportunities for young people, Kerry is Lead Mentor, Indigenous Partnerships, Group Sustainability and Community, for The Westpac Group.

The Centre for Social Impact (CSI) at the University of New South Wales brings together the business, government, philanthropic and third (Not for Profit) sectors, in a collaborative effort to build community capacity and facilitate social innovation.

The CSI blog aims to provide a forum for discussion and debate on topics related to social impact. The blog features regular posts by CSI staff, as well as pieces by guest bloggers. Selected blog posts are re-published by Pro Bono Australia News – to visit the CSI blog visit www.csi.edu.au/site/Home/Blog.aspx