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Supporting Social Innovations in Finland

Antti KarjalainenTeiderahoitus

If one wants to support Social Innovation, then what should one do? It may sound trivial but the best way to increase social innovations is to create an environment in which they can flourish.

Until recent years, the welfare state has largely taken care of our public services and many innovations have taken place either in the public sector or in organisations that operate very close to it. A good example of this is, of course, Finland’s highly regarded comprehensive school system, which is a result of a number of social innovations--one of the strongest is early intervention when learning difficulties are detected. As a result the distance between top and bottom cohort stays narrow.

The current tendency is towards increasingly market driven developments where the customer is more in focus. There are some great examples of this where people are forming communities and building or renovating houses together to live more communally. Some very interesting and innovative ways of tackling youth alienation based on personal and long-lasting small group mentoring are being invented in small social enterprises and some big ones are very good at experimenting on new ways to treat substance abuse and related problems. The non-prejudiced and pragmatic ways of engaging with difficult social problems can best be found in the quickly emerging group of social enterprises.

But what do we mean by ’social innovation’? As a working definition we may agree that ’innovation’ denotes an idea that has been successfully commercialised. By that definition, the word ’social’ qualifies innovation as an idea that has been successfully commercialised, and in addition to financial value, also generates some value to communities or society as a whole.  The term 'commercialised' needs to be understood in a wide sense in this context. That is, an innovation is commercialised when someone somewhere is willing to purchase it. Social innovations are born in circumstances similar to other innovations, i.e. where there is a mixture of different conditions: people, values, resources, needs, demand, etc. Although we are living in a rapidly changing circumstances we are justified in thinking that past social innovations can indicate what sort of conditions are needed for future innovations – thus finding out the conditions for social innovations is largely an empirical question.

For example, another great social innovation in Finland is an assembled pack for new parents, which contains all kinds of necessities for looking after a newborn. This pack was first introduced by an NGO focusing on children’s protection and supporting families. The aim behind introducing the pack was to create equal conditions for all families get off to a good start with a new baby. These days the pack is distributed by the state.

We can draw a few lessons from this example.  One is that this social innovation, like many others, was born in an NGO - an organisation with small resources but direct access to people. When we look at the way public services are developing in Finland, these type of organisations – NGO’s, co-operatives, small and medium sized businesses – are becoming increasingly important in bringing new thinking to the frontier of public services. At the same time, the field where they operate is becoming increasingly competitive. Large international businesses are winning many contracts and the smaller players need to be very quick on their feet to keep up.

Another lesson is that in the example above the innovation was driven by strong notion of equality for all families. Indeed, we feel that especially at the beginning of small person’s life all families should be provided with same opportunities to take care of their children.

In order to seriously increase the social innovations and support them in financially sustainable way, two things come to my mind. One, and the most important one, is to create conditions in which social innovators can operate. All businesses ultimately need customers and there is absolutely no point in experimenting or developing without having demand for their services. Thus, there needs to be interventions where the right market conditions are being created and nourished. There are three key parties in these markets: one is the organisation that provides the service to customers and they need advice and support in order to become better at running their businesses. Two, customers need awareness about what services are available and how they can influence and co-design those services. Three, the bill is usually being paid by municipalities or the state and they need to understand what they are buying and how, and for whom and why. When the markets are being developed it needs to happen not just from the resource providers' point of view but involving all three parties.

The second thing in my mind is a financial resource that goes into the beginning of the innovation process and helps to tackle the financial risk involved. Probably the most efficient here is a grant and other instruments that encourage the service developer to take risks. Grants should be distributed by local agents who understand customers and businesses that are developing services, for example social entrepreneurs. This funding should also be available to all types of organisations independently of their legal status , i.e. to co-ops, NGO’s, charities and businesses. In terms of loan based instruments, for example an overdraft, which helps the organisation to maintain a cash flow can be justified.

Finally, I would like to emphasise that audacity is required in being open about the variety innovators in the field and from the financing point of view the customer or the end user of the service need to be lifted, and kept, in focus.