On May 2nd, Geoff Mulgan, Chief Executive of Nesta discussed the opportunities society has to overcome the barriers that fiscal challenges present to innovation. Following the 2008 global financial crisis Geoff laid out the challenges ahead during his 2009 TED Talk: “I think what connects the challenge for business, the challenge for government and the challenge for communities now, is both simple and difficult. We know our societies have to radically change. We know we can’t go back to where we were before."

1. Social Innovation Generation presents
Innovation and Austerity
A presentation by Geoff Mulgan
Chief Executive, Nesta
In partnership with
Global Leadership Series
May 2nd, 2012
1

2. Presenta(on
to
MaRS
Innova(on
and
Austerity
2

3. 3

4. 4

5. 5

6. RESOURCE
LEARNING
&
EFFICIENCY
FOR
EMPLOYABILITY
INDIVIDUALS
&
NEEDS
OF
COMMUNITIES
AGEING
WELL
YOUNG
PEOPLE
IMPACT
INVESTMENT
VENTURE
INVESTING
FUND
CATALYSING
START
UP
SUPPORTING
A
SUPPORT
DEVELOPING
MARKET
RESEARCH
&
POLICY
SVI
FUND
BIG
SOCIETY
RECOMMENDATION
FINANCE
FUND
S
6

7. Policy
and
Research
Investment
in
innova(on,
₤bn,
2007
R&D
14.9
Design
22.1
Organisa(onal
26.1
innova(on
Training
&
32.1
skills
development
SoSware
20.2
development
“Go-­‐to-­‐market”
14.5
Other
(copyright,
etc)
3.5
Total
133.4
7

8. 8

9. 9

10. Innova(on
skills
• Core
innova7on
curriculum
• Blended
learning
materials
• Founda7onal
layer
of
‘free
to
air’
modules
• Face
to
face
training
• An
eLearning
plaIorm/LMS
10

11. Contribu(on
to
produc(vity
growth,
%,
2000
-­‐
2007
Total
2.72
Labour
quality
Capital
Total
factor
produc7vity
investment
6%
(wider
benefits
of
1.27
innova7ons)
28%
Investment
in
0.54
47%
innova7on
20%
Capital
investment
0.75
Innova7on
investment
TFP
0.17
Labour
quality
0 1 2 3
Source: Innovation Index
11

12. Investment
in
innova(on,
₤bn,
2007
R&D
14.9
%
of
business
output
Design
22.1 Training
Org
innov
Organisa(onal
26.1
innova(on
Design
SoZware
Training
&
GTM
32.1
skills
development
R&D
SoSware
Other
20.2
development
“Go-­‐to-­‐market”
14.5
Other
(copyright,
etc)
3.5
14.1%
of
private
Total
133.4
sector
output
Source: Innovation Index
12

13. Health spend as % GDP
versus adult mortality rate
16
15
Health spend as % GDP
14
13
12
11
10
9
8
7
6
40 60 80 100 120
Adult mortality rate
Source: OECD Health Data 2010
13

14. Change in health spend share of GDP
versus % improvement in adult mortality rate
3.0%
% growth in share of GDP (p.a.)
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
% improvement in mortality rate (p.a.)
14

15. Traditional
1. Pure
economies
–
stopping
doing
things
,
asset
sales
2. Economies
of
trimming
–
freezes,
efficiency
savings,
focus
on
essen7als
3. Economies
of
delay
–
to
capital,
pay
rises,
recruitment
15

16. Organisational
4.
Economies
of
scale
–
eg
aggrega7ng
call
centres,
back
office
5.
Economies
of
scope
–
eg
one
stop
shops,
mul7-­‐purpose
personal
advisers,
capital
integra7on,
administra7ve
consolida7on
6.
Economies
of
flow
–
eg
automa7on,
hospitals
specialising,
aggrega7on
by
condi7on
7.Economies
of
penetra(on
–
eg
street
concierges,
u7li7es,
energy
8
Circuit
economies
–
reducing
failure
demand
(hospital
repeated
re-­‐
admissions)-­‐
eg
Social
Impact
Bonds,
preven7ve
investment
models
16

17. Relational
9 Economies
of
responsibility
–
passing
responsibility
out
to
ci7zens
(eg
self-­‐tes7ng,
new
charges,
community
asset
transfer)
10 Economies
of
visibility
–
mobilising
public
eyes
(public
contracts)
and
the
power
of
shame
(eg
surgery
rates)
11 Economies
of
regula(on
and
risk
–
adap7ng
appe7tes
for
regula7on,
reducing
inspec7on,
compliance
costs
etc
12 Economies
of
commitment
–
shiZing
provision
from
low
to
high
commitment
people
and
organisa7ons
(tapping
into
eg
volunteer
labour,
social
enterprise,
mo7va7on…)
17

18. Traditional
1. Pure
economies
–
stopping
doing
things
,
asset
sales
2. Economies
of
trimming
–
freezes,
efficiency
savings,
focus
on
essen7als
3. Economies
of
delay
–
to
capital,
pay
rises,
recruitment
Require
innova7on
methods,
usually
across
Organisational organisa7onal
boundaries
4. Economies
of
scale
–
eg
aggrega7ng
call
centres,
back
office
5. Economies
of
scope
–
eg
one
stop
shops,
mul7-­‐purpose
personal
advisers,
capital
integra7on,
administra7ve
consolida7on
6. Economies
of
flow
–
eg
automa7on,
hospitals
specialising,
aggrega7on
by
condi7on
7. Economies
of
penetra(on
–
eg
street
concierges,
u7li7es,
energy
8. Circuit
economies
–
reducing
failure
demand
(hospital
repeated
re-­‐admissions)-­‐
eg
Social
Impact
Bonds,
preven7ve
investment
models
Relational
Require
rethinking
the
rela7onship
between
9. Economies
of
responsibility
–
passing
responsibility
out
to
ci7zens
(eg
self-­‐tes7ng,
new
charges,
cnd
public
services
a ommunity
asset
transfer)
10. Economies
of
visibility
–
mobilising
public
eyes
(public
contracts)
and
the
power
of
sci7zens
hame
11. Eeconomies
of
regula(on
and
risk
–
adap7ng
appe7tes
for
regula7on,
reducing
inspec7on,
compliance
costs
etc
12. Economies
of
commitment
–
shiZing
provision
from
low
to
high
commitment
people
and
organisa7ons
(tapping
into
eg
volunteer
labour,
social
enterprise,
mo7va7on…)
18

19. 19

20. 20

21. 1.
Prompts
for
innova(on
21

22. Prompts
for
innova(on
Cost
escala(on
New
perspec(ves
and
insights
Failure
demand
Crises
New
evidence
and
theories
Problems
User
feedback
Poli(cal
mandates
Gaps
in
the
market
Campaigns
and
pe((ons
New
technologies
New
funding
programmes
Complaints
Demand
Unmet
needs
Opportuni(es
New
paradigms
22

23. How
can
we
systema(cally
prompt
innova(on?
Literature
reviews
Market
research
Interviews
Trend
spogng
Collec(ng
and
Academic
studies
analysing
data
Surveys
Foresight
Horizon
scanning
Social
and
economic
data
Scenario
planning
Focus
groups
Map
assets
Iden(fying
opportuni(es
Understanding
problems
Challenge
assump(ons
Observa(on
Ask
different
ques(ons
Ethnography
Community researchers System
mapping
Map
the
current
system
Genera(ng
insights
Map
customer
journeys
Issue
trees
Reframe
problems
23

24. Collec(ng
and
analysing
data...
...and
mapping
future
trends
24

25. Breaking
issues
down
...
...and
mapping
systems
25

26. Seeking
different
perspec(ves
Wild
cards
Professionals
Customers
and
and
wider
end
users
workforces
The
challenge
Advisors
and
experts
Leading
edge
prac((oners
Decision-­‐makers
26

27. Genera(ng
new
insights
27

28. The
aim
of
this
stage
of
work?
A
well-­‐understood
and
clearly-­‐defined
problem
or
opportunity:
eg
cost
structures
28

29. 2.
Genera(ng
ideas
and
proposals
29

30. Aim
to
generate
LOTS
of
ideas
“The
way
to
get
good
ideas
is
to
get
lots
of
ideas,
and
Brainstorms
throw
the
bad
ones
away.”
TRIZ
Dr
Linus
Pauling,
American
chemist
and
bio-­‐chemist
30

31. Genera(ng
ideas
and
proposals
Ideas
marketplaces
Fes(vals
and
camps
Compe((ons
and
prizes
Crowd-­‐sourcing
Incen(ves
Skunkworks
Collabora(ve
enquiry
S(mula(ng
thinking
Crea(ve
thinking
tools
Networking
Brainstorms
Ar(sts/thinkers
in
residence
Developing
ideas
TRIZ
User-­‐led
design
Theory
of
change
A
teams
Design
tools
31

32. Crea(ve
thinking
tools
CREATIVE
SOCIAL
DESIGN
TOOLS
™
^
inversion
(peasants
become
bankers,
pa(ents
become
doctors)
∫
integra(on
(personal
advisers,
one
stop
shops,
portals,
speeding
flow)
x
extension
(extended
schools,
outreach)
∂
differen(a(on
(segmen(ng
services
by
groups,
or
personalisa(on)
+
addi(on
(gegng
GPs
to
do
a
new
test,
libraries
running
speech
therapy)
-­‐
subtrac(on
(no
frills,
cugng
targets,
decluuering)
t
transla(on
(airport
management
into
hospitals,
business
planning
into
families)
g GraSing
an
element
from
one
field
into
another,
crea(ng
a
new
fusion
(coaching
into
a
secondary
school)
Design
tools
∞ crea(ve
extremism
(pushing
ideas
and
methods
to
t32
heir

33. Camps
and
fes(vals
Generate
many
viable
ideas
in
a
short
(me
frame
Bring
new
teams
Collabora(ve
together
around
an
enquiry
idea
or
challenge
Design
tools
33

34. Prizes
and
incen(ves
...to
reducing
carbon
emissions
Collabora(ve
enquiry
From
measuring
longitude...
Design
tools
34

35. The
aim
of
this
stage
of
work?
An
idea
or
set
of
ideas
to
develop
and
test
with
clear
poten(al
for
savings
35

36. 3.
Prototypes
and
tes(ng
36

37. Prototypes
and
tes(ng
Product/service/process
design
Cost
benefit
modelling
Design
Rela(onship
mapping
Co-­‐design
Blue-­‐prin(ng
Prototyping
Rapid
Prototyping
Proof
of
concept
Market
tes(ng
Simula(ons
Business
cases
Trials
Experimental
zones
Pathfinders
Open
tes(ng
Beta
tes(ng
Pilots
Evalua(on
37

38. Developing
products
Collabora(ve
enquiry
Design
tools
5
years
and
5,172
prototype
38

39. Developing
services
39

40. Nesta
has
developed
tools
and
processes
that
anyone
can
use
to
develop
and
test
a
service
idea
Design
tools
40

41. Formal
pilots
and
tests
Design
tools
41

42. Cost
benefit
modelling
Step 1: Identify all Step 3: Estimate the
inputs to the service costs of all the inputs
Cost figure
= Unit cost
Activity measure
Step 4: Calculate the
Step 2: Identify all unit cost
outputs to the service
How
is
it
a
beuer
use
of
resource?
42

43. Support
for
development
Incubators
provide
a
suppor(ve
environment
to
develop
ideas
into
business
proposi(ons
They
usually
offer
a
combina(on
of
funding,
Collabora(ve
mentoring,
resources
and
connec(ons
enquiry
Brainstorms
Accelerators
create
a
fast-­‐
track
to
market
for
promising
enterprises
Design
tools
43

44. 44

45. 4.
Sustaining
and
embedding
45

46.
Sustaining
and
embedding
Leadership
and
governance
Public
regula(on
Organisa(on
and
Policy
management
models
commitment
Collabora(ve
Skill
and
capacity
development
enquiry
Designing
teams
Brainstorms
Venture
finance
Business
models
Loans,
equity
and
quasi-­‐equity
Crowd
funding
Grants
for
growth
Programme
funding
Design
tools
Social
Impact
Bonds
46

47. More
systema(c
measurement,
assessment,
evalua(on
47

48. Slide 48

49. Implementa(on
involves...
• Loans
• Organisa(onal
structure
• Equity
• Governance
structure
• Quasi-­‐equity
• Legal
forms
• Crowd-­‐funding
• Recruitment
Business
• Skill
development
People
and
models
and
governance
finance
Reputa(ons
and
Intellectual
effec(veness
capital
• Evalua(on
• Quality
assurance
• Building
opera(onal
• Building
brand
profile
systems
and
processes
to
• Marke(ng
deliver
for
customers
49

50. 50

51. 5.
Growing
and
scaling
51

52.
Growing
and
scaling
Growing
an
organisa(on
Licensing
or
venture
Mergers
and
acquisi(ons
Federa(ons
and
chains
Copying
Collabora(ve
Franchising
Adop(ng
enquiry
Dissemina(on
Storytelling
Brainstorms
Broadcas(ng
Campaigning
Networking
Training
Changing
behaviour
Incen(ves
Coaching
Adver(sing
Open
source
Networking
Design
tools
52

53. DATA
53

54. Finance
for
growing
social
innova(ons
Founda7ons
Government
Social impact bonds
Crowdfunding
54

55. Doubling level of academic
results in 2 years
55

56. Different
ways
to
scale
v.2
Business
Franchising
Licensing
growth
56

57. 6.
Systemic
change
57

58. Systemic
change
To
get
from
here...
...to
here...
...many
things
need
to
change
in
tandem
58

59. Transforming
a
system
New
technologies,
Recalibrated
products
and
markets
services
New
policies
and
Behavioural
regula(ons
change
59

60. Transforming
a
system
New
technologies,
products
and
Recalibrated
markets
services
Age Unlimited Scotland
People Powered
Health
!
New
policies
and
regula(ons
Behavioural
change
60

61. GOALS
strategic
Strategy Units
Prizes Skunk works
PARTICIPANTS internal
external
accelerators
Idea Factory
Collaboratives
61
open

62. Large
Well
established
methods,
clear
authority
Impact
Improvement, price
pressure, performance
management tools
Small
Fast (<1) Speed Slow (3+)
Slide 62

63. Large
Easy
in
principle
–
but
weak
ins7tu7ons
Impact
Faster adoption of
proven practice
Improvement, price
pressure, performance
management tools
Small
Fast (<1) Speed Slow (3+)
Slide 63

64. Large
More radical innovation
Impact
Faster adoption
Hard
for
most
public
services
–
lack
of
Improvement, price ins7tu7ons,
pressure, performance methods,
financing
models
management tools
Small
Fast (<1) Speed Slow (3+)
Slide 64

65. Cost Boomerang; early
savings, higher
long-term costs
dynamic savings
Slide 65
Time

66. 66

67. 67

68. Stages
of
Understanding
Idea(on,
Pilots,
Sustaining,
Scaling
innova(on
problems,
genera(ng
prototypes,
embedding
opportuni(es
op(ons
tests
Evidence
Exploratory,
Drawing
on
Plausible
Clear
Strong
required
comprehensive evidence
but
account
of
evidence
of
evidence,
formal
and
not
overly
how
impact
impact,
data
confirmed
emerging
constrained;
could
be
genera7on,
through
knowledge
hybrids;
achieved
valida7on
mul7ple
assemblies;
using
research
tools
user
evidence,
inc.
RCT
engagement
prac77oner
knowledge
etc
Finance
Very
low,
Small
sums;
Moderate;
Significant:
Large:
required
grants,
open
grants,
grants;
programme,
programme,
conver7ble
conver7ble;
equity,
loans
equity,
loans,
stage-­‐gate
PBR,
SIBs
Risk
n/a
High
risk
High
risk,
but
Medium
risk
Low
risk
handling
appe7te,
and
measures
to
appe7te;
appe7te;
likely
failure
de-­‐risk:
scope
for
strong
rate
implementa7 adapta7on;
capacity;
on
capacity
reversibility;
fidelity
68
etc
choice