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On May 2nd, Geoff Mulgan, Chief Executive of Nesta discussed the opportunities society has to overcome the barriers that fiscal challenges present to innovation. Following the 2008 global financial crisis Geoff laid out the challenges ahead during his 2009 TED Talk: “I think what connects the challenge for business, the challenge for government and the challenge for communities now, is both simple and difficult. We know our societies have to radically change. We know we can’t go back to where we were before."
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Innovation and Austerity A presentation by Geoff Mulgan
Chief Executive, Nesta
Social Innovation Generation presents
In partnership with
Global Leadership Series
May 2nd, 2012
1
Presenta(on to MaRS
Innova(on and Austerity
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3
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SVI FUND BIG SOCIETY FINANCE FUND
RESEARCH & POLICY RECOMMENDATION
S
VENTURE INVESTING IMPACT INVESTMENT FUND
CATALYSING START UP SUPPORT
SUPPORTING A DEVELOPING MARKET
AGEING WELL
LEARNING & EMPLOYABILITY
NEEDS OF YOUNG PEOPLE
RESOURCE EFFICIENCY FOR INDIVIDUALS & COMMUNITIES
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Policy and Research
20.2
32.1
3.5
22.1
14.9
Total 133.4
14.5
26.1
Investment in innova(on, ₤bn, 2007
Training & skills development
“Go-‐to-‐market”
Design
R&D
Other (copyright, etc)
SoSware development
Organisa(onal innova(on
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8
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Innova(on skills
• Core innova7on curriculum • Blended learning materials • Founda7onal layer of ‘free to air’ modules • Face to face training • An eLearning plaIorm/LMS
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0 1 2 3
Contribu(on to produc(vity growth, %, 2000 -‐ 2007
6%
28%
20%
47%
Innova7on investment TFP
Labour quality Capital
investment
2.72
1.27
0.54
0.75
0.17
Total
Total factor produc7vity (wider benefits of
innova7ons)
Investment in innova7on
Capital investment
Labour quality
Source: Innovation Index 11
20.2
32.1
3.5
22.1
14.9
Total 133.4
14.5
26.1
Investment in innova(on, ₤bn, 2007
Training & skills development
“Go-‐to-‐market”
Design
R&D
Other (copyright, etc)
SoSware development
Organisa(onal innova(on
14.1% of private sector output
Source: Innovation Index
Training
Org innov
Design
SoZware GTM
R&D
Other
% of business output
12
Health spend as % GDP versus adult mortality rate
678910111213141516
40 60 80 100 120
Heal
th s
pend
as
% G
DP
Adult mortality rate
Source: OECD Health Data 2010
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0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
% g
row
th in
sha
re o
f GDP
(p.a
.)
% improvement in mortality rate (p.a.)
Change in health spend share of GDP versus % improvement in adult mortality rate
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1. Pure economies – stopping doing things , asset sales 2. Economies of trimming – freezes, efficiency savings, focus on essen7als
3. Economies of delay – to capital, pay rises, recruitment
Traditional
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4. Economies of scale – eg aggrega7ng call centres, back office 5. Economies of scope – eg one stop shops, mul7-‐purpose personal advisers, capital integra7on, administra7ve consolida7on
6. Economies of flow – eg automa7on, hospitals specialising, aggrega7on by condi7on
7.Economies of penetra(on – eg street concierges, u7li7es, energy 8 Circuit economies – reducing failure demand (hospital repeated re-‐admissions)-‐ eg Social Impact Bonds, preven7ve investment models
Organisational
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9 Economies of responsibility – passing responsibility out to ci7zens (eg self-‐tes7ng, new charges, community asset transfer)
10 Economies of visibility – mobilising public eyes (public contracts) and the power of shame (eg surgery rates)
11 Economies of regula(on and risk – adap7ng appe7tes for regula7on, reducing inspec7on, compliance costs etc
12 Economies of commitment – shiZing provision from low to high commitment people and organisa7ons (tapping into eg volunteer labour, social enterprise, mo7va7on…)
Relational
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1. Pure economies – stopping doing things , asset sales 2. Economies of trimming – freezes, efficiency savings, focus on essen7als 3. Economies of delay – to capital, pay rises, recruitment
4. Economies of scale – eg aggrega7ng call centres, back office 5. Economies of scope – eg one stop shops, mul7-‐purpose personal advisers, capital integra7on, administra7ve
consolida7on 6. Economies of flow – eg automa7on, hospitals specialising, aggrega7on by condi7on 7. Economies of penetra(on – eg street concierges, u7li7es, energy 8. Circuit economies – reducing failure demand (hospital repeated re-‐admissions)-‐ eg Social Impact Bonds,
preven7ve investment models
9. Economies of responsibility – passing responsibility out to ci7zens (eg self-‐tes7ng, new charges, community asset transfer)
10. Economies of visibility – mobilising public eyes (public contracts) and the power of shame 11. Eeconomies of regula(on and risk – adap7ng appe7tes for regula7on, reducing inspec7on, compliance costs
etc 12. Economies of commitment – shiZing provision from low to high commitment people and organisa7ons (tapping
into eg volunteer labour, social enterprise, mo7va7on…)
Traditional
Organisational
Relational
Require innova7on methods, usually across
organisa7onal boundaries
Require rethinking the rela7onship between public services and
ci7zens
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19
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1. Prompts for innova(on
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Prompts for innova(on
Problems
Opportuni(es
Crises
Cost escala(on
Campaigns and pe((ons
Failure demand
Poli(cal mandates
User feedback
New perspec(ves and insights
New funding programmes
Gaps in the market
Demand Complaints
New paradigms
New evidence and theories
New technologies
Unmet needs
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How can we systema(cally prompt innova(on?
Collec(ng and analysing data
Market research Literature reviews
Foresight Academic studies
Genera(ng insights Community researchers
Map assets
System mapping
Reframe problems Map customer journeys
Trend spogng
Scenario planning Horizon scanning
Surveys
Interviews
Focus groups
Ask different ques(ons Observa(on
Social and economic data
Ethnography
Issue trees Map the current system
Challenge assump(ons Understanding problems Iden(fying opportuni(es
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Collec(ng and analysing data...
...and mapping future trends
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...and mapping systems
Breaking issues down ...
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Seeking different perspec(ves
Wild cards
Decision-‐makers
Advisors and experts
Leading edge prac((oners
Professionals and wider workforces
Customers and end users
The challenge
26
Genera(ng new insights
27
The aim of this stage of work?
A well-‐understood and clearly-‐defined problem or opportunity: eg cost
structures
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2. Genera(ng ideas and proposals
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TRIZ
Brainstorms
Aim to generate LOTS of ideas
“The way to get good ideas is to get lots of ideas, and throw the bad ones away.”
Dr Linus Pauling, American chemist and
bio-‐chemist
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Genera(ng ideas and proposals
Compe((ons and prizes
S(mula(ng thinking
Developing ideas
Ideas marketplaces Fes(vals and camps
Design tools
TRIZ
Brainstorms
Ar(sts/thinkers in residence
Crowd-‐sourcing
Networking
Collabora(ve enquiry
User-‐led design
A teams
Skunkworks
Theory of change
Incen(ves
Crea(ve thinking tools
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Crea(ve thinking tools
Design tools
CREATIVE SOCIAL DESIGN TOOLS ™ ^ inversion (peasants become bankers, pa(ents become
doctors)
∫ integra(on (personal advisers, one stop shops, portals, speeding flow)
x extension (extended schools, outreach)
∂
differen(a(on (segmen(ng services by groups, or personalisa(on)
+ addi(on (gegng GPs to do a new test, libraries running speech therapy)
-‐ subtrac(on (no frills, cugng targets, decluuering)
t
transla(on (airport management into hospitals, business planning into families)
g
GraSing an element from one field into another, crea(ng a new fusion (coaching into a secondary school)
∞
crea(ve extremism (pushing ideas and methods to their furthest boundaries)
32
Camps and fes(vals
Design tools
Collabora(ve enquiry
Generate many viable ideas in a short (me frame Bring new teams together around an idea or challenge
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Prizes and incen(ves
Design tools
Collabora(ve enquiry
...to reducing carbon emissions
From measuring longitude...
34
The aim of this stage of work?
An idea or set of ideas to develop and test with clear poten(al for savings
35
3. Prototypes and tes(ng
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Prototypes and tes(ng
Pilots Pathfinders
Beta tes(ng
Experimental zones Simula(ons
Rapid Prototyping Proof of concept
Open tes(ng
Blue-‐prin(ng Co-‐design
Cost benefit modelling
Prototyping
Trials
Market tes(ng
Evalua(on
Business cases
Product/service/process design
Rela(onship mapping Design
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Design tools
Collabora(ve enquiry
Developing products
5 years and 5,172 prototype 38
Developing services
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Design tools
Prototyping methods Barnet anima7on and guide Interviews with Cephus
Nesta has developed tools and processes that anyone can use to develop and test a service idea
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Design tools
Prototyping methods Barnet anima7on and guide Interviews with Cephus
Formal pilots and tests
41
Cost benefit modelling
Cost figure
Activity measure Unit cost =
Step 1: Identify all inputs to the service
Step 2: Identify all outputs to the service
Step 3: Estimate the costs of all the inputs
Step 4: Calculate the unit cost
How is it a beuer use of resource?
42
Design tools
Brainstorms
Collabora(ve enquiry
Support for development Incubators provide a suppor(ve environment to develop ideas into business proposi(ons
Accelerators create a fast-‐track to market for promising enterprises
They usually offer a combina(on of funding, mentoring, resources and connec(ons
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4. Sustaining and embedding
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Design tools
Brainstorms
Collabora(ve enquiry
Sustaining and embedding
Policy commitment
Business models Loans, equity and quasi-‐equity
Programme funding Grants for growth
Organisa(on and management models
Leadership and governance
Designing teams Skill and capacity development
Venture finance
Public regula(on
Crowd funding
Social Impact Bonds 46
More systema(c measurement, assessment, evalua(on
47
Slide 48
Implementa(on involves...
• Building opera(onal systems and processes to
deliver for customers
• Evalua(on • Quality assurance • Building brand profile • Marke(ng
• Organisa(onal structure • Governance structure
• Legal forms • Recruitment
• Skill development
• Loans • Equity • Quasi-‐equity • Crowd-‐funding
Business models and
finance People and governance
Intellectual capital
Reputa(ons and
effec(veness
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50
5. Growing and scaling
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Design tools
Brainstorms
Collabora(ve enquiry
Growing and scaling
Growing an organisa(on or venture
Changing behaviour Campaigning
Storytelling
Networking Coaching
Training
Broadcas(ng Dissemina(on Networking
Adver(sing Incen(ves
Franchising
Open source
Licensing
Federa(ons and chains
Mergers and acquisi(ons
Copying Adop(ng
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DATA
Finance for growing social innova(ons
Founda7ons
Government
Crowdfunding
Social impact bonds
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Doubling level of academic results in 2 years
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Different ways to scale v.2
Business growth
Franchising Licensing
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6. Systemic change
57
Systemic change
To get from here... ...to here...
...many things need to change in tandem 58
Transforming a system
New technologies, products and services
New policies and regula(ons
Recalibrated markets
Behavioural change
59
Transforming a system
New technologies, products and services
New policies and regula(ons
Recalibrated markets
Behavioural change
Age Unlimited Scotland
People Powered Health
!
60
open
GOALS strategic
internal PARTICIPANTS external
Idea Factory
Strategy Units
Prizes
accelerators
Skunk works
Collaboratives
61
Slide 62
Fast (<1) Speed Slow (3+)
Smal
l
Im
pact
La
rge
Improvement, price pressure, performance management tools
Well established
methods, clear authority
Slide 63
Fast (<1) Speed Slow (3+)
Smal
l
Im
pact
La
rge
Improvement, price pressure, performance management tools
Faster adoption of proven practice
Easy in principle – but weak ins7tu7ons
Slide 64
Fast (<1) Speed Slow (3+)
Smal
l
Im
pact
La
rge
More radical innovation
Improvement, price pressure, performance management tools
Faster adoption Hard for most
public services – lack of
ins7tu7ons, methods,
financing models
Slide 65
Cost
Time
Boomerang; early savings, higher long-term costs
dynamic savings
66
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Stages of innova(on
Understanding problems, opportuni(es
Idea(on, genera(ng op(ons
Pilots, prototypes, tests
Sustaining, embedding
Scaling
Evidence required
Exploratory, comprehensiveformal and emerging knowledge
Drawing on evidence but not overly constrained; hybrids; assemblies; user engagement
Plausible account of how impact could be achieved using evidence, prac77oner knowledge etc
Clear evidence of impact, data genera7on, valida7on
Strong evidence, confirmed through mul7ple research tools inc. RCT
Finance required
Very low, grants, open
Small sums; grants, conver7ble
Moderate; grants; conver7ble; stage-‐gate
Significant: programme, equity, loans
Large: programme, equity, loans, PBR, SIBs
Risk handling
n/a High risk appe7te, and likely failure rate
High risk, but measures to de-‐risk: implementa7on capacity etc
Medium risk appe7te; scope for adapta7on; reversibility; choice
Low risk appe7te; strong capacity; fidelity
68