Innovation & Austerity

Innovation and Austerity A presentation by Geoff Mulgan

Chief Executive, Nesta

Social Innovation Generation presents

In partnership with

Global Leadership Series

May 2nd, 2012

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Presenta(on to MaRS

Innova(on and Austerity

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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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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

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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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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

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Genera(ng new insights

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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)

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Camps and fes(vals

Design tools


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


...to reducing carbon emissions

From measuring longitude...

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The aim of this stage of work?

An idea or set of ideas to develop and test with clear poten(al for savings

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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


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

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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?

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Design tools

Brainstorms


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


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

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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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5. Growing and scaling

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Design tools

Brainstorms


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

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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

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Transforming a system

New technologies, products and services

New policies and regula(ons

Recalibrated markets

Behavioural change

Age Unlimited Scotland

People Powered Health

!

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open

GOALS strategic

internal PARTICIPANTS external

Idea Factory

Strategy Units

Prizes

accelerators

Skunk works

Collaboratives

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Fast (<1) Speed Slow (3+)

Smal

l

Im

pact

La

rge

Improvement, price pressure, performance management tools

Well established

methods, clear authority


Smal

l

Im

pact

La

rge


Faster adoption of proven practice

Easy in principle – but weak ins7tu7ons


Smal

l

Im

pact

La

rge

More radical innovation


Faster adoption Hard for most

public services – lack of

ins7tu7ons, methods,

financing models

Cost

Time

Boomerang; early savings, higher long-term costs

dynamic savings

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

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Innovation & Austerity

Education

Transcript of Innovation & Austerity