As entrepreneurial innovators hone in on how the merging powers of mobile, big data, cloud and the crowd can be leveraged to build sustainable, social enterprises, authors William D. Eggers and Paul Macmillan make the case for the “The Solution Revolution.”
A burgeoning new economy where players from across the spectrum of business, government, philanthropy, and social enterprise converge to solve big problems and create public value. Over the last decade or so, a dizzying variety of new players has entered the societal problem-solving arena. Acumen and Ashoka, Kiva and Kaggle, Zipcar and Zimride, Recyclebank and Terracycle, SpaceX and M-Pesa, Branson and Bloomberg, Omidyar and Gates—the list is long and growing briskly. Where tough societal problems persist, these new problem solvers are crowd funding, ride-sharing, app-developing or impact-investing to design innovative new solutions for seemingly intractable problems. They operate within what we call a “Solution Economy.”
The solution revolution is the antithesis of how society’s toughest public challenges have traditionally been approached by large institutions. In no other space do we see such diverse resources—volunteer time, crowdfunding, capabilities of multinational corporations, entrepreneurial and social capital, philanthropic funding—aligned around common objectives such as reducing congestion, providing safe drinking water, or promoting healthy living. By erasing public-private sector boundaries, the solution economy has the potential to unlock trillions of dollars in social benefit and commercial value.
Where societal problems arise, markets are forming around them, and incentives are driving a diverse breed of problem solvers including businesses, citizens, social enterprises, and governments too. Instead of trying to patch a market failure, the innovators in the solution economy create a market for the solution. But it’s a different kind of market. They trade solutions instead of dollars to fill the gap between what government can provide and what citizens need. The buyers in these markets purchase impacts or outcomes such as healthier communities or kids who can read. Instead product vendors provide the outcomes for the buyer: they design and sell cheap, solar-powered lights; write the code that tracks salmonella outbreaks using government data; and build the cross-sector networks to fight scourges like human trafficking.
First, you have the wavemakers that are changing conventional beliefs and practices. These social innovators utilize disruptive technologies to develop new business models that scale to enable radically new solutions to old problems. Next are the impact currencies, from open data to carbon credits, which serve as a means of paying for social impacts in ways that go beyond the strictly monetary, enabling a more diverse set of contributors to be part of the problem solving. Public value exchanges such as prizes and challenges provide the platforms that match capital to social need. Lastly, these elements all come together in the form of solution ecosystems where wavemakers team up to solve problems ranging from fighting human trafficking to providing radically low cost housing for the very poor.
In today’s era of fiscal constraints and political gridlock, we can no longer turn to government alone to tackle these and other towering social problems. The massive government projects of the last century from the Hoover Dam to the Great Society’s War on Poverty are no longer feasible financially—nor are such approaches the best way to solve wicked problems in the digital age. Fortunately, government is no longer the only game in town when it comes to societal problem solving. Society is witnessing a step change in how it deals with its own problems—a shift from a government-dominated model to one in which government is just one player among many.
Government is poised to play a powerful role in the solution economy but it’s a very different role than it has today. Instead of sole problem solver, government’s role is to create an environment where problem solvers can flourish. Government’s willingness to forge partnerships (and vet those partners with accurate metrics), to make data more open, to contract for outcomes, to reduce regulatory minefields, and to convene diverse groups of contributors will hold tremendous sway over the scale of the solution economy within its borders.
In the U.S., the Obama administration has introduced a bevy of initiatives to support a growing solution economy, including a $50 million social innovation fund, a new Office of Social Innovation, and a new Presidential Innovation Fellowship to pair top innovators in the business, nonprofit, and academic sectors with top innovators in government. Across the Atlantic, the Cameron government launched a £600 million “Big Society Capital” fund in 2012 to help fund new societal problem solvers.
Wavemakers range from edgy social enterprises growing at a clip of 15 percent a year, to mega-foundations that are eclipsing development aid, to Fortune 500 companies delivering social good on the path to profit. They range from Ashoka, which deploys three thousand citizen changemakers in sixty countries, to the global pharmaceutical giants that annually give away billions of dollars in medicine to low-income citizens anywhere, from Africa to the United States.
Though their impacts translate only tenuously into dollar terms, even a rough estimate suggests trillions of dollars in impact. Consider just a few data points. Private philanthropy to the developing world surpasses the monetary contributions of all governments combined. And socially responsible investing has grown into a $1 trillion industry.
The ripples of business decisions across ecosystems, cultural and environmental, are too wide to ignore. If a company ignores the social impacts—both positive and negative—of its mainline operations, it does so at its own long-term peril. For this reason, a business must increasingly consider multiple factors, both internal and external, in its decisions. The societal impacts of a decision weigh into where and with whom a company does business, the makeup of what it sells, and how it reaches consumers. Hence the term multirational multinational.
Multirational multinationals go beyond CSR and corporate philanthropy by applying their core competitive capabilities and expertise to societal challenges that governments and nonprofit organizations have struggled with for decades. Procter & Gamble, for example, is partnering with UNICEF to wipe out tetanus in Africa by 2015. Profits from the sales of Pampers diapers contribute to free vaccines for expectant mothers and newborn babies, through a program that has immunized over 300 million to date and raised widespread awareness about the issue.
Disruptive technologies like analytics, social media, mobile phones and cloud computing enable the rapid mobilization of massive resources around big challenges. The challenge of organizing talent to tackle big problems is no longer the burden of bureaucracies, but today a consequence of systems. Today, distributed, technology-enabled systems, when designed well, can divide up big problems and spread the labor among millions. As technologies evolve, we are seeing a dramatic spike in the number of organizations and citizens engaged in societal problem solving, while costs plummet.
Public-value exchanges, enabled by web technologies, drive public value by connecting capital of all types to societal problems and to those who wish to solve them. These exchanges range from crowdfunding platforms like Kiva that enable socially conscious citizens to invest in social entrepreneurs to prizes and pay-for-success systems that connect large funders to problem solvers.
Two-sided markets, a kind of peer-to-peer exchange, connect individuals to each other directly in order to solve larger problems. Ridesharing app companies like Lyft and Reward Ride benefit city governments and residents alike by creating exchanges for citizens to trade unused car seats as assets. Meanwhile, learning companies, including Skillshare, School of Everything, and TeachersPayTeachers, provide peer-to-peer exchanges with the understanding that the best person to teach a lesson is often someone who has just mastered it.
Close to 21 million people worldwide are trapped in contemporary forms of slavery collectively called “human trafficking,” a growing share of them children. Just as human trafficking involves many participants in the crime; so too does fighting it successfully require an integrated ecosystem.
Coordinated, multi-sector attempts to fight trafficking are growing at the national and international level, such as the Global Business Coalition Against Human Trafficking. Private companies like Coca-Cola are joining the fight, and in ways that go beyond feel-good CSR campaigns such as increasing vigilance across their global supply chains. Numerous large hotel chains have committed to “The Code,” a pledge to take extra steps to recognize and report instances of trafficking in their hotels. Technology companies like Palantir bring technical expertise to tracing networks of traffickers. Consumers also have joined the fight, demanding reliable sourcing information and scanning QR codes to see an item’s provenance and care instructions, and perhaps even watch videos of the people who made it. Rendering issues of slavery and trafficking obsolete requires persistent action from all sides—something that’s now possible in the solution economy.
Citizens are the cornerstone of the solution economy. Never before have individuals been able to converge around common objectives with such speed and effectiveness, catapulting social issues into global recognition in a matter of hours. By drawing on advances in technology, individuals can now contribute to the public good from anywhere. Citizens who start initiatives themselves can raise money for their causes on sites such as Network for Good or Crowdrise. They can match volunteer requests to their skills on the website Sparked. They are empowered to act, whether through apps built from government data, policy input derived from their own analysis, or online campaigns used to advocate for issues they care about. Such knowledge enables greater influence over what services are provided and how they are delivered, signaling a shift in power.
The city of Boston employs the eyes and ears of thousands of citizens to enhance its awareness of public works problems that need attention. Boston Citizen’s Connect, a cell phone app, allows residents to take a photograph of potholes, graffiti and other problems and send it to the city. The app automatically collects GPS information and allows the city instantaneously to generate a work order for a public works crew. It even notifies citizens when the work has been completed. Boston City officials call this approach urban micro-volunteerism: empowering citizens to make small commitments to the public good, with a huge aggregate impact.