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Processes of social innovation in mutual organisations: the case of social enterprise

spin-outs from the public sector

Fergus Lyon, Ian Vickers, Leandro Sepulveda, with Caitlin McMullin, Dan Gregory

Centre for Enterprise and Economic Development Research

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Introduction

• Mutual spin-outs from the public sector – new spaces for social innovation in public services

• Policy support for social enterprise spin-outs in England• Aims and research questions: – What types of innovations are being developed and

introduced? – What are the processes of innovation involved within the

new organisations? – What are the key external influences and sources of

support?

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Conceptualising social innovation

• Our definition: “the process and outcomes of designing, developing and introducing novel responses to social needs with the objective of collective or public benefits, rather than private profit”.

• Degrees of novelty: completely original, new to a market/area or new to an organisation

• Processes of innovation and systems perspectives – importance of multiple actors and relationships (e.g. Bessant and Tidd 2007; Fagerberg et al. 2005)

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Insights from innovation theory

• Organisational strategy + cultures, values and routines (e.g. Bessant and Tidd 2007; Greenhalgh 2008).

• Competences and dynamic capabilities - individual and group (e.g. Eisenhardt & Martin 2000; Vickers and Lyon 2012).

• Risk taking or aversion - organisational climate and public sector as ‘innovation stifling’ ? (Sorenson and Torfing 2012; Vigoda-Gadot et al. 2005; Windrum and Koch 2008).

• ‘Open innovation’ and ‘co-production’ - interaction between developers, users + others (Gallouj & Weinstein 1997; Leadbeater 2007; Mulgan 2006; Parker and Parker 2007).

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Insights from innovation theory

• Organisational strategy + cultures, values and routines (e.g. Bessant and Tidd 2007; Greenhalgh 2008).

• Competences and dynamic capabilities - individual and group (e.g. Eisenhardt & Martin 2000; Vickers and Lyon 2012).

• Risk taking or aversion - organisational climate and public sector as ‘innovation stifling’ ? (Sorenson and Torfing 2012; Vigoda-Gadot et al. 2005; Windrum and Koch 2008).

• ‘Open innovation’ and ‘co-production’ - interaction between developers, users + others (Gallouj & Weinstein 1997; Leadbeater 2007; Mulgan 2006; Parker and Parker 2007).

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Methodology

• 25 case studies of social enterprise (SE) mutuals in health and social care

• 5 cases in leisure services• 8 cases examined in detail for this paper• Interviews/focus groups with: – chief executives– senior managers– key staff– service users– key external stakeholders (commissioners, partner orgs, TUs

etc)

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Findings Types of innovation

• Organisational - new forms to facilitate democratic governance, decision making and involvement of staff/users

• New treatments and therapeutic work integration – driven by broader conception of health and well-being + more efficient use of resources

• Outreach - new ways of communicating health and well-being messages and services within communities and for particular demographic groups

• Redesign of pre-existing services + other incremental improvements to org. systems/ processes.

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Strategy, culture and engagement

• Entrepreneurial leaders and an ‘open climate’• Innovation from both formal R&D and learning

within everyday practices• Spinning out giving freedom– Opportunities for greater staff involvement“…as shareholders, we’ve actually got a say in what

happens.” (Exec PA )– Although challenges of engaging staff as

shareholders

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Capabilities and competences

• Entrepreneurial capabilities while in the public sector – mavericks and disruptors:

“[Our pre-spin-out innovative service] existed because we didn't ask permission. All the best things I've ever done in the health service, we've done under the radar […]. We haven't explicitly looked for permission.” (CEO Case 6)

• Senior managers enabling staff and users to introduce new ideas

• Bringing ‘new blood’ – from outside the public sector and third sector

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Creating spaces for experimentation, learning and risk

• Social innovation mechanisms – awards, ideas boxes, reviews of all services

• Organisational cultures that allow spaces for experimentation and risk

• Concept of risk different in social enterprise: “The NHS tends to be overly secure for all sorts of right reasons….. The initial response from our IT provider which is the NHS said, ‘You can't do that.’… And we were like, ‘Let's just do it and see what happens’. […] So it was a cultural change that you need to do to change them to say, ‘I can take a risk and do something differently.’” (CEO Case 3)

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Engaging users and other stakeholders

• Greater responsiveness to user needs + more active participation in some cases– One case where board of Adult Care service

provider entirely composed of users with disabilities - “experts by experience”

• Partnership working and open learning – mainly with public and third sector

• Some developing new links with private sector companies

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Funding and resourcing innovation

• Organisations’ own reserves or surpluses • External fund raising – donations and grants• Working with commissioners of public services: – Driven by their interests, particularly cost-cutting– Some cautious and risk averse– Others wanting to fund pilots and develop an

evidence base– Greater involvement when continuity of

commissioner and when less financial pressure

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Conclusions• Innovation faster and easier than in public sector

but some of most innovative elements developed while in the public sector

• New processes of innovation shaped by: – Pre-existing routines and communities of practice – Greater staff/user engagement and ‘new blood’– Public service commissioners and competitive

markets– Tension between co-operation/sharing ideas and

protecting IP in a competitive market – Other actors (public/third/private sector) - emerging

new ‘ecosystems of innovation’?

Thank you – Questions?

Centre for Enterprise and Economic Development Research