Why is now the perfect moment for social innovation in our economy

For years, social issues and corresponding departments in companies received only stepmotherly attention. With regard to corporate strategy, corporate responsibility, corporate (social) responsibility, business ethics and sustainability have always fought for recognition and appreciation and for being placed on the board agenda. Fortunately, something has changed in recent times and, nowadays, precisely these social and sustainable issues are coming to the fore of many companies' agendas. At the moment, there is a great demand for these issues and an opportunity for differentiation.

Why did this happen? What has changed? And what are we talking about?

Raising the curtain on social innovation

Social innovations mean to us new and sustainable ways of solving social, cultural, economic and ecological challenges – in favor of people. In the best case, financial sustainability of the innovation is aimed at, but profit is not the primary goal. So it's all about new approaches and ideas that intelligently address social needs - and ideally combine them with a profitable business. Business models should address the most important and pressing needs within a society and, above all, focus on people.

Three reasons why it is currently the best time:

Some social innovations have actually been central to our society for a long time and are therefore anything but new: Social security, introduced in 1883 by Reich Chancellor Bismarck, was intended to provide basic security for everybody’s living. This includes insurance in the event of illness or accidents, but also pension and unemployment insurance. The social consequences for the protection of society only came about as a result of this innovation.

The Open Source movement aims to share knowledge and experience and to rely on the intelligence of many. This allows us to officially take a look at product contents, source codes of products and their API and to consistently improve them together. Thus, knowledge is made available free of charge to the mainstream. Wikipedia is certainly the most famous example in this context, but there are also many other initiatives: The Khan Academy is a kind of virtual classroom where students from all over the world can get free education in mathematics, science, computer programming, history or economics and learn at their own pace. Thousands of learning videos are available - all free of charge. More and more universities are making their teaching materials available free of charge.

Volunteering has always been an important part of our social society. And digitization allows more and more new forms and trends to come into existence. For example, "Be my Eyes". The app connects blind and visually impaired people with a global community of volunteers who are connected via video chat. This makes it easy to ask questions: e.g. Are the colors of the clothes color coordinated to match?  What is printed on the packaging or is the light on? A free app makes this help possible. The World Food Programme's ShareTheMeal program uses an app to donate food to children in need with a single click. With a donation of 0.40€, a child can already be fed for one day and due to the high transparency, it can be checked where the donation is used.

In the corporate context, social innovations are also conceivable with a profit orientation. Social efforts and sustainable management can be combined with the company's core business. In other words, an approach that makes an important contribution to both aspects, socially and entrepreneurially, and thus, makes the company more profitable at the same time. In this context, the key questions are: How can solutions for unsolved problems in society be found? And does a combination of these topics also lead to higher sales of products and services?

The Volkswagen Group has set again and again guidelines for social innovation in its human resources strategy. In 1994, in times of deep crisis, the Board of Management and Works Council introduced the four-day week with a reduction in working hours and payment in order to prevent the dismissal of 30,000 employees and to guarantee employment for all employees. This solution was celebrated as the "Miracle of Wolfsburg" throughout Germany. 

Paul Polman, former CEO of Unilever, has long been recognized as a do-gooder and, already back in 2010, he has focused the consumer goods group on the issues of climate change, food security and water and sanitary provision with the help of the "Unilever Sustainable Living Plan". With campaigns on the subjects of handwashing, drinking water treatment and improvement of oral hygiene, they have already sensitized millions of people to the issues - and have drawn their attention to suitable products. The fact that, at the same time, sales had increased proves that social and financial goals can be combined. 

But also well-known German companies are turning their core business upside down: after the great success of its Parley shoe with a 95% share of recycled plastic from the ocean, Adidas has now announced that it intends to carry out a complete product change by 2024. This would mean that only recycled plastics would be used for running shoes and clothing. A huge effect considering that about half of the yearly 920 million articles manufactured by the company are made of plastic. 

In recent years, Saori Dubourg, a board member at BASF and one of the few female DAX30 board members, has made a name for herself as a critic of capitalism and questions existing economic models. She wants to redefine corporate growth and focus on social and ecological activities as well as a new value orientation. She is therefore working on an innovative evaluation system for companies that rethinks business objectives and rewards social and ecological activities in the long term (value-to-society approach).

Right now, we have a very high public awareness of social and ecological issues of our society.

At global level, agreement was reached on the United Nations' Agenda 2030 for Sustainable Development with the very well-known 17 global Sustainable Development Goals (SDGs). These 17 SDGs summarize the most important fields of action in terms of sustainable development at economic, social and ecological levels and were adopted by all member states at a United Nations summit in September 2015. They apply not only to industrialized countries but also to emerging and developing countries and are becoming more and more important: in the political agenda, in the programs of NGOs and companies. 

"We can be the first generation to succeed in poverty eradicating, just as we could be the last to have the chance to save our planet." (Ban-Ki Moon, UN Secretary-General 2007 - 2016)

#FridaysForFuture: Even the youngest environmental movement of the next generation is certainly one of the most important social innovations of our society. What began as a student strike has now turned into a worldwide movement with parallel strikes in over 1,600 cities worldwide. The goal: to draw the attention to the challenges of climate change. The movement is gradually being supported by teachers, entrepreneurs and politicians - even though it is also receiving a lot of criticism.

But perhaps, we, as a society, will simply become more thoughtful. We think about the fact how the financial crisis has occurred and what conclusions we have to draw from it for our economy - and also about possible limits of capitalism and growth. How great the social responsibility of corporations in view of global supply chains is. How we can maintain jobs despite the potential of automation through digitization.. What kind of world we would like to leave to future generations. How we would like to redefine justice in today's world, also in view of the climate and refugee crises. 

Social innovations already exist. And they are highly relevant to the society and companies. Social innovations are able to achieve several goals at the same time that cannot be tackled by traditional innovations. They respond to the megatrends of our society and address future challenges such as globalization, sustainability, digitization, demographic change and health. As a society, we must promote social innovation and social innovation thinkers. Companies must inevitably deal with these issues in order to survive in the long term and remain attractive to employees and customers.

Social innovations can be an opportunity to combine financial and market-oriented interests with long-term sustainable interests through the interaction of sustainable and, where appropriate, financial goals. This means that they have the potential to revolutionize the traditional way of doing business. And they bridge a gap between traditional business innovations, public innovations and innovations for society. That is why it is clear to me that we need many more social innovations at the board levels of our companies as soon as possible.

• The European Commission's Employment and Social Innovation Programme promotes innovative social approaches to employment, social protection, poverty reduction and improved working conditions. In its European Social Innovation Competition, it is therefore always looking for impressive social innovations in the European context.
• The Volkswagen Group's xStarters competition for young people also focuses on social innovations based on the 17 sustainability goals - always in conjunction with digital tools. Young people of the #FridaysForFuture generation should be inspired to think about their own social innovations on an early a stage.
• By the way, I am very much looking forward to this year's Social Innovation Summit from 20-21 September 2019 in Stuttgart. Who else will be there?

For further reading:

• The Social Innovation Atlas has published many different social innovations world wide.