I’m very excited to be joining an inspiring line-up at Web Directions South in a few weeks’ time, presenting on the topic of Creating platforms for social innovation:

People are redefining the relationship they have with the organisations they interact with, empowered by social technologies.  They are seeking:

• Human-ness: as organisations have grown in size and become more and more depersonalised, people are wanting more human interactions and personal response;
• Trust: from greenwashing to the GFC, the market’s trust has been eroded — people are looking for organisations to say what they mean and mean what they say;
• Co-creation: people are taking a more active role in developing the products and services that they use.  And if they don’t find what they’re looking for, they will often create it themselves;
• Responsibility: people want to engage with organisations that are genuinely addressing the complex issues of sustainability and wellbeing.

Building a brand, service or product offering that resonates in this new “economy of meaning” requires a rethinking of an organisation’s relationship to the “market” — their customers, stakeholders and the environment.

In this presentation we will examine how innovative organisations are using social technologies and design methods to create multi-dimensional value — both for the organisational and community — and will explore the themes that underpin the examples with a view to applying them in your context.

Regular readers will note that the session is focused on a number of themes that I’ve been exploring here lately, so I’m really looking forward to connecting with other folks at the conference around these concepts.

I read Let’s hear those ideas at the Economist with great interest, to get a sense of how social innovation might be represented to a business/finance audience.  It is quite a good piece, but one aspect of it stood out for me:

However, so far the enthusiasm for social entrepreneurship has run ahead of its effects. The problem has not been a lack of good ideas… The problem is instead one of speed and scale. Successful innovations have spread only slowly, if at all. In business, entrepreneurial firms that do well grow fast; but social entrepreneurship does not yet have a Microsoft or a Google. Policymakers hope that with encouragement from the state social entrepreneurs’ best ideas can be spread faster and wider.

While I agree that we need to diffuse social innovation more widely (and as rapidly as possible), the idea of scaling, of creating the next “Microsoft or a Google” in social innovation perhaps misses part of the point.

Ezio Manzini has spoken about small, local, open and connected social innovations being an appropriate path forward for diffusing social innovations.  In his recent talk he talked about how such innovations have economies of scope, as opposed to the more traditional view of economies of scale.

Through connecting and synergising, social innovations have the potential to maintain the important local-ness and human scale while replicating the benefits to a wider group.  I’m sure I’ve read in one of his papers (though I can’t seem to find the reference) that in fact trying to increase the scale of social innovation may actually reduce the sustainability of the activity, suggesting that trying to scale such innovations is perhaps looking to solve the wrong problem.

This is not to say that social innovation doesn’t need support.  The Economist article points to some great initiatives in the US and the UK that are allocating funds to support social innovation.  More of that is definitely needed.

Something to consider, though is Ezio’s suggestion that Government needs to consider how to engage with such initiatives, leaving enough room for innovation to occur, while building the frameworks that support the longevity of initiatives.  This is a different way of working for Government agencies and I suspect it will take some adjusting for this transition to occur.

My hope is that funds are directed to create the enabling structures that support more social innovations — e.g. supporting the communities who are already innovating and encouraging further innovation — rather that taking specific ideas and trying to scale them to apply to conditions that are poorly aligned with those that saw the innovation emerge in the first place.  While the latter approach may work in some circumstances, I suspect that it may backfire if not done with care.

(I note that Raul has an alternate take on the article over at the ASIX blog.)

I’ve been having some further thoughts relating to my previous post on value creation, platforms and trust, and the terms “intrinsic” and “extrinsic” value keep coming to mind.

Intrinsic value = “belonging to a thing by its very nature”

The way I’ve been thinking about the concept of “intrinsic value” is the underlying value a business/organisation provides, just by existing.  It’s the value, taken from the community/customer/environmental perspective, that is generated by the business simply existing.  It is the business’ core purpose — the reason that employees will be passionate about coming to work, and customers will be passionate about spreading the word.

In the case of Airbnb, the business exists to support people sharing their spare space.  This provides community value, whether you are a buyer or seller – it enables the community to do things it wouldn’t otherwise be able to do — i.e. afford to travel longer, generate financial return for disused space.  It also has environmental (and one could argue economic) value because it maximally utilises resources.

Similarly, GoGet creates a more convenient mode of transport at a lower cost to the customer.  It also reduces demand for resources (space for parking, one car shared among many people) and places the returns for efficiency back to the company, so they are incentivised to improve efficiency of vehicles etc.

Extrinsic value = “being outside a thing; outward or external”

What I conceive “extrinsic value” to mean is the economic value the business derives from its activity — i.e. financial return to the business.  This is the reward to the company/organisation for providing the intrinsic value that is its core purpose.

A strong intrinsic value proposition makes it much easier to generate these type of returns, as well as providing the broader social and environmental returns that might also be possible.

This is a shift in business thinking from extracting value from the market, to how to creating value for and with the market, and a refocusing on intrinsic value proposition —core purpose — to achieve deeper returns.

These terms might mean different things to different people (I know it means something very different in financial markets, for example), so I wonder if using this language makes sense?  But in any case, I hope it’s an useful take on focusing on core purpose to achieve business outcomes.

Just a quick note to say we’re on the lookout for a positive, solutions-focused and creative person to join our team as an Administration Coordinator.  If you are interested, or know someone who might be, further details are available on our jobs page.

Update: this position is now filled.

I came across this post (update 11-Jul-2011: this link now seems to be broken) link see on Airbnb via the Collaborative Consumption email newsletter. This quote in particular struck me:

Airbnb should be a modern day case study for a new kind of 21st Century business–a company that creates immensely more value than it extracts from customers. They are adding value to their users’ lives in multiple dimensions all at the same time.

Business models like Airbnb’s are based on value that is co-created with customers. Airbnb creates “immensely more value” by providing the enabling platform for value to be generated, and is rewarded for its contribution to the community.

Michael’s post goes on to discuss the importance of a clear purpose as the foundation stone to build an organisation culture capable of disruptive innovation. I would go further to suggest that for a business like Airbnb, where there traditional models of value-exchange are blurred, that purpose needs to look beyond the financial bottom line – “adding value to their users’ lives in multiple dimensions” is a great way to express that sentiment.

In addition to a clear purpose, there is also a need for trust, a point that Peter Merholtz picks up in this recent post.

Netflix, Nordstrom, Southwest, Zappos, USAA — these are all companies renowned for great customer experience. And they provide remarkable latitude to both customers and employees, a latitude that suggests trust.

As Peter notes, such trust extends beyond employees, it also requires trust in customers — including not punishing the majority of your customers to avoid problems with the minority (Zappos’ liberal return policy, for example). Airbnb is, of course, also a great example of this kind of trust (as are ventures like Kiva and Zopa).

To my mind, these concepts — Purpose, Trust, Co-created value, Platform — represent keystones for socially innovative business.

Regular readers may recall that Zumio has a quarterly giving program where we donate 1% of net profit to organisations doing good within the community.  I just wanted to take a moment to mention who we’ve supported for the past two quarters.

Given the continued attacks on refugee rights that seem to flare up in response to electoral pressures, we decided to theme our giving for this past few months on initiatives that support refugees in our local community.

Asylum Seekers Centre NSW

The Asylum Seekers Centre supports Sydney-based (and in some cases regionally-based) refugees by “providing a welcoming environment and front-line support for community-based asylum seekers.”  The centre receives no government funding and relies on philanthropic support and public donations.  They recently ran an appeal highlighting a shortfall in funding due to a significant increase in the use of their services — so we are grateful of the opportunity to provide at least a little support to help them achieve their fundraising goal.

The Social Studio (Melbourne)

The Social Studio is “a dynamic space where clothing is created from the style and skills of the young refugee community.  Recycled and excess manufacturing materials are gathered from local industry and re-configured into original clothing.”

We loved the fact that the Studio combines so many positive benefits into one initiative — sustainable garment manufacture, refugee support, promotion of “social inclusion, community and vitality” through their mobile shopping carts — and we’re delighted we can be participating in their community in some small way.

Check out the site, consider donating, or if you’re in Melbourne, keep an eye out for their “pedal powered pop-up shops” to purchase some of the clothes produced by participants in the initiative…