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Design for Social Innovation
Sarah Rich, 14 Mar 07
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The current issue of BusinessWeek features a section on design, entrepreneurship and innovation for social progress and community service. Much of it is territory we've covered before, including the design of the One Laptop Per Child machine, the bright green Bank of America Tower, and the automotive X Prize.

The primary focus of the section is the Acumen Fund, the New York-based venture philanthropy enterprise whose work has had a profound impact on social entrepreneurs in Africa and Asia. We've talked about Acumen (and WC ally Jacqueline Novogratz) before when discussing their malaria-fighting bed nets and other on-the-ground healthcare projects. They were also involved with the low-cost drip irrigation units we mentioned last month. BusinessWeek looks at some of their specific projects, too, but focuses more on Acumen's business and philanthropic models.

By working closely with Acumen entrepreneurs, donors, corporate partners, and governments, Novogratz and her team are creating a laboratory to design new business models and funding mechanisms. Much of the philosophy is drawn from the University of Michigan's Ross School of Business economics professor C.K. Prahalad, whose bottom-of-the-pyramid theory holds that there's great untapped market potential among the 4 billion people who make less than $2 a day.
Acumen eschews giving money away. Instead, the fund leverages its charitable dollars through equity and debt. Its donors are labeled "investors." They receive semiannual statements tracking the social and financial progress of portfolio companies. Acumen has brought in $667,000 in repayments and interest to date. It made a $600,000 investment in WaterHealth International to help the startup expand its franchise model for delivering safe, affordable water to Indian customers. It's creating Pakistan's first home ownership market for the poor by putting up $1.25 million to generate a $3.75 million guarantee by OPIC, Washington's Overseas Private Investment Corp. That money will release $50 million in mortgages from the National Bank of Pakistan.

The BusinessWeek piece also includes some excerpts from Novogratz's travel diary, which she apparently keeps vigilantly when she's visiting the communities with whom Acumen works. And they featured a slideshow of the current group of Acumen Fund Fellows -- eight young business professionals with specific missions towards innovating for social change.

The icing on the section is a short "backlash" piece discussing the possibility that the term "innovation" has really passed a tipping point of overuse and lost some of its poignancy.

A backlash against "innovation" (and "design") is now under way. The constant incantation of the I-word in advertising, marketing, and conferences threatens to undermine a key business movement.

But the article points out that there is a distinction between throwing the word around and achieving real, measurable improvement through forward-thinking design. It's not so much that consumers don't want innovation in their products as they don't want to be told something is "innovative" when it's really just retooled or modified for a change in user perception.

I often have the same concern about the word "sustainability," which is now so commonly splattered across pages and screens in the public's view that it's hard to know if anybody sees the words "sustain" and "ability" inside the buzzword. No doubt we use both innovation and sustainability all day long at Worldchanging, but hopefully that key distinction is there. It's possible to hold a buzzword to the integrity which initially brought it into common usage, but the more it becomes a tool for selling product and roping in followers, the more caution must be employed. You can't coin a new term every time a useful word starts to lose its meaning. While plenty of jargon exists in the green sphere, the reality is that we are looking for ways to keep ourselves going, to empower ourselves and each other, and to find inventive ways to create conditions that foster longevity for the planet.

Acumen is certainly a great example of a company that has used innovative strategy to see how people in the developing world can gain the ability to sustain themselves, and what measures must be taken to scale those small, locally-appropriate actions in order to carry innovation across cultural and geographic boundaries. They are an ideal model for the kind of trailblazing efforts that can make a real change for millions around the world.

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This is exactly the reason we've been looking at the Hexayurt as a commercial product from Day 1 - we give away the IP to make it easier for people to start businesses. Almost all of the traction we have with the American Red Cross and the Department of Defense comes from them being able to simply say "ok, now we know how to do this, we can." The price of putting a lawyer in that loop would be that the technology could not be used.

BW is doing stuff on the Open Architecture Network soon, btw.

Posted by: Vinay Gupta on 15 Mar 07

no worries about "innovation". it died in the microsoft anti-trust trial and rose from its own ashes. so long as people are making crazy tools useful it will work. mind that it will suffer hugely if it becomes attached to something that takes credit for general human inventiveness...

Posted by: hibiscus on 15 Mar 07



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