“The key was to remove as many barriers to social entrepreneurship as possible, and to provide some of the enablers where they were absent: finance, networks, support, and development, so that the other invisible hand could do its work.”
– Geoff Mulgan (Young Foundation)
Government plays multiple roles in education and in other areas, adding a level of complexity to reform. It can be an operator, as is usually the case in K–12, or it can be a purchaser of services, as in charter schools, mental health, drug treatment, homelessness, and more.
Government also acts as standard setter in these areas. Achieving the right standards, without allowing the process to be exploited by groups that may benefit from high barriers to entry or adding undue costs, is a challenge. The tension between what government must do to guarantee health, safety, and performance and what government actually does—in terms of prescribing activities and limiting entrepreneurship—provides the backdrop to this chapter.
Open and competitive sourcing of service provision and innovation requires incentives from both the supply side and the demand side. By “demand” we refer to those funders who configure the market by essentially purchasing social services for others and who could give clients more choices by forcing providers to respond to real client interests. Promoting innovation through the demand side involves complex challenges, because no leader controls all the parts or sufficient resources. Thus creating space for breakthrough change requires a leader whose credentials and rhetoric inspire a community around an important social goal and then, through the right combination of persuasion and forcefulness, cause it to occur…
In social services, barriers to success come in all shapes and sizes. The most egregious of them are over-regulation and bias toward government and a tendency to maintain the status quo. By committing to a range of client options among providers, innovative public officials have the power to mitigate policymakers’ and government funders’ practice of protecting incumbent providers and their associations. This calcification generally arises not from nefarious political plots but from relationships that develop over time and then serve to bar new entrants…

One sure way to limit innovation and choice is to set up a process biased against it. Not even hard-core trade protectionists would advocate allowing GM to decide how many cars Honda can sell or letting a North Carolina textile manufacturer decide how many shirts China can ship to the United States. Yet this is exactly the process often used in [social] services…

So how might community leaders open up space for breakthrough civic accomplishments? They can do so by promoting a culture of innovation, providing information and forcing transparency, sponsoring events that create opportunities for social discoveries, and offering protection for those whose efforts, whether successful or not, challenge the status quo.

In addition to these critical steps, public and private policy actors can catalyze innovation by strategically injecting new sources of funding. Such is the plan of President Obama and his Social Innovation Fund. Even after institutional, cultural, and legal barriers are removed, growth and impact require funding. What we might call catalytic capital helps fertilize new ideas that can in turn leverage other resources for better results. This catalytic capital can be private or public, from local or outside sources.

Excerpted from "The Power of Social Innovation: How Civic Entrepreneurs Ignite Community Networks for Good" by Stephen Goldsmith