Is social entrepreneurship a good bedfellow for systems innovation?

By Anna Moegerlein, Deputy CEO

Can social entrepreneurship serve systems innovation? As we navigate pressing challenges like inequality and environmental degradation, harnessing the strengths of both paradigms becomes imperative in shaping a more equitable and sustainable future.

Social entrepreneurs are excellent at solving complicated problems. They build businesses that create employment for people locked out of the mainstream workforce. They provide products and services to people that couldn’t otherwise afford or access them. They reduce emissions and waste, and they change people’s mindsets and behaviour – the list goes on. Their impact is significant, and the ways in which business can be used for good are vast.

But can social entrepreneurs, and the methods of social entrepreneurship, serve systems change work? And what are the limitations?

Dr Sharon Zivkovic, Adjunct Research Associate at Torrens University Australia, has long been an advocate for understanding what type of problem one is trying to tackle, and ensuring that the approach is fit-for-purpose. She argues that too often social entrepreneurship has tried to solve ‘wicked’ problems, using approaches and tools that are better used in ‘simple’ or ‘complicated’ problems.

In the US, Rob Ricigliano’s ‘Complexity Spectrum’ (2021) maps the range of social impact approaches, starting with complicated challenges on the left that are ‘predictable, controllable, bounded’. These challenges can often be solved through a market-based social enterprise model. On the right however, we move into more complex challenges that are unpredictable, hard to control, endless and evolving. These types of problems – climate change, food systems, women’s economic equality – require a different approach.

The Complexity Spectrum (a range of social impact approaches)

These problems require systems innovation/transformation, which Griffith University’s Centre for Systems Innovation (and co-collaborators TACSI, Collaboration for Impact and others) suggest, includes:

 

  1. Holding a bold ambition to move toward a future state that provides fundamentally better outcomes for people, places, and the planet.
  2. Providing spaces and platforms that enable actors and stakeholders to come together around shared goals, leverage their collective intelligence, and take actions that have the potential for ‘better outcomes,’ often in novel ways.
  3. Contributing to rethinking the fundamentals of how current systems and structures work and supporting cultures that are open to new paradigms and possibilities.
  4. Intentionally using a range of levers to incentivise, enable, and sustain multiple innovations across and within the chosen systems context.
  5. Establishing and maintaining mechanisms that enable coherence, such as networked governance and information flows, and connecting actors and actions in ways that make the whole more productive than the sum of its parts.

“Systems don’t get solved. At best, we hope to shift systems to a healthier state. Systems don’t just need things fixed. They need the healing of relationships, historic inequities, destructive patterns, and the environment. Systems are infinite. There is no finish line that can be crossed in days or even a few years. Maintaining healthy systems is an ongoing task. Damage can be done when we try to fix what needs to be healed or think we can solve that which is unsolvable. Rather we must apply the appropriate approach to the type of problem being addressed.”

— Rob Ricigliano

At TDi we are beginning to work with more social entrepreneurs who would call themselves ‘systems entrepreneurs’. These entrepreneurs are more focused on shifting the conditions of a system than solving an issue using a market-based model or ‘scaling’ their impact. They are less focused on the boundaries of a business model, and more focused on value creation for the system as a whole.

But their work still requires resourcing and a preparedness to work in uncertainty.

 

This is where the tools of entrepreneurship come in:

  • Entrepreneurship teaches us to have a bias towards action and experimentation. Working in systems innovation requires a process of navigating uncertainty, taking risks, building new ways of doing and being, changing tack, and refining our approach. As a result, an entrepreneurial disposition towards action and experimentation, as well as the tools that support running experiments, are very helpful to system innovation work.
  • Entrepreneurship concentrates on building things of value and communicating that value to attract resources. Our friends in systems innovation believe a lot of people in the space don’t necessarily have the skills to build business models and/or get clear on their value proposition(s) to stakeholders. Since systems change work is grossly underfunded, this is a necessary skill from ‘inside’ the system
  • Entrepreneurship teaches us to do the money planning. Systems innovation work often requires a skilful art of layering different funding over long-time horizons, and sequencing the spending well.
  • Entrepreneurship teaches us to identify where there is value creation that could be commercialised, creating valuable exchange and resourcing within the system, and sometimes outside of the system.

We have worked with several systems innovators in the last few years to help strengthen their entrepreneurial capability. A good example is the work we did with health system initiative, Health Justice Australia (HJA). We helped HJA to review their business model and launch several new products that provide value to actors in the system AND create alternative revenue streams. We also helped Pacific Island Food Revolution, a systems initiative in food across the Pacific, to develop a ‘non-traditional’ business model which layered funding from different sources to fund short-term, mid-term, and longer-term goals. For each of these the question was, “how can we build a business model to resource our systems innovation work?”

The other way that entrepreneurship methods can be helpful to systems innovation work is by taking people from different backgrounds and sectors through an incubation process focused on a particular thematic or challenge. The incubation process can help the group of participants better understand the system they’re in, create lots of opportunities for ideas to collide and entangle, and then help people to actualise new innovations

 

The limitations of social entrepreneurship?

There are a few and they are important to name. These are the ones we’ve grappled with ourselves:

 

  • Master vs servant – If social entrepreneurship, and entrepreneurship methods, become the leading methodologies in systems innovation, we will end up with new products, services, and organisations, but very little systems innovation. We believe that the tools of entrepreneurship are valuable in supporting systems innovation, but they must be the servant of systems innovation, not the master. At times our tools might need to be re-designed to better reflect the ways in which we’re thinking, relating, and organising.
  • Mechanical mindset – As entrepreneurs, we often have a bias towards a mechanical worldview. A mechanical world view is where the world is viewed as a machine, with causes and effects. Using business tools (and for that matter impact tools like program logic) introduces and cements this thinking. Traditional business tools can also often emphasise competition, scarcity, and the importance of money over other resources. A systems entrepreneur needs to be able to draw from the pool of business thinking but without sinking into, or succumbing to, the mechanical world view. They also need to be able to look at the world as a living, interdependent system. This requires a lot of unlearning, curiosity, vulnerability, and creativity.
  • Bias towards speed – The desire for speed over slower, high-context, relationship building, is the antithesis to good systems work. That’s not to say that all systems work is slow, but when the gear stick is stuck in ‘fast’ relationships are quickly over-run.
  • Bias towards independence and control – Systems innovation work is highly inter-dependent work. By contrast, in entrepreneurship, not having control over key resources, customer relationships, money flows, and many other components is seen as a major risk in business. Relaxing into inter-dependence is a new kind of vulnerability and skill!
  • Conflicts of interest – Selling to those who you are collaborating with can create conflicts of interest. Are you a client today? Or a collaborator? Being clear on what role you’re playing and what hat you’re wearing is key in systems innovation work. And sometimes it’s not possible to provide more commercial services and products, because it compromises neutrality.
  • Resourcing and role of government – Systems innovators are sometimes told by funders that they need to build a more sustainable model, but in reality: One, such a model is very difficult to build and two, the systems innovation they are working on addresses a market failure which is traditionally the role of government. As a result, we need to be careful that entrepreneurship isn’t falsely sold as a ‘silver bullet’ to resourcing problems that should be the responsibility of government. Some initiatives can be more efficiently and effectively achieved through government funding, or changes to regulation and policy.

So, is social entrepreneurship a good bedfellow for systems innovation?

We believe that social entrepreneurship methods are valuable in supporting systems innovation. Methods of entrepreneurship can be useful for driving towards action and unlocking resources. Entrepreneurship also concentrates on building things of value and communicating that value to attract resources, which is a skill we need ‘inside’ the system. And entrepreneurship also teaches us to do the money planning, which is needed for clever sequencing of activity and resourcing.

However, fundamentally social entrepreneurship methods must serve systems innovation, not the other way around. We also need to be aware of the limitations of social entrepreneurship, including mindsets and biases, the potential for conflicts of interest, and the risk that the ‘promise’ of entrepreneurship facilitates the abdication of government’s responsibility to address market failures.

 

At a time when inequality is rising and our ecological window is closing, now more than ever, we need to be looking at drawing on the best of both these worlds to shift the conditions that keep our world ‘stuck’ in the status quo.

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