Value-Creating and Value-Destroying Social Innovations

The term “social invention” was first proposed by Stuart Conger in his 1974 book “Saskatchewan Newstart”. It covers new organizations, laws and procedures that satisfy personal, social or market demand. His examples are:

  1. Organizational social inventions: schools, law courts, House of Commons, labour union, jails, YMCA, Children’s Aid Society, Red Cross, he Boy Scouts, etc.
  2. Social inventions in the form of laws: Poor Law of 1388 in UK, Indenture of Children Act of 1601 in UK, English Bill of Rights (1689), Compulsory School Attendance Act in Russia in 1717, Swiss Unemployment Insurance Act of 1789, and an 1875 US law against child abuse.
  3. Procedural social inventions: language, writing, charity, democracy, labor strikes, professional licensing, training, courtroom oath, probation, testing, psychoanalysis, etc.

I have a reservation with Conger’s use of the word “invention.” According to WIPO (World Intellectual Property Organization), an “invention” has only the element of novelty while “innovation” has both elements of novelty and utility. Evidence of utility is market demand or social acceptance (see my blog on D14- Innovation versus Invention). Conger’s examples fit the term “innovation” and therefore I will use the term “social innovation” instead.

Let us apply the Value Creation Scale from the previous blog post to various social innovations. Below are examples of largely value-destroying or simply resource transferring social innovations:


Boxing as a spectator sport is a strange way to create value. When two people fight to hurt each other and no one is watching, this is just 3 in our Value Creation Scale. However, there are many people who will pay to watch people hurt each other — the value proposition of the boxing industry which is 3 and 6 in the Scale. Gladiatorial “fight to the death” in old Rome, Japanese sumo wrestling (an institutionalized, stylized, protocol-bound and milder form of fighting), fee-based hunting/fishing and cockfighting belong to the same category.

Cartels such as OPEC do three things: (a) extract non-renewable natural resources making them no longer available to countless future generations, (b) appropriate proceeds solely to its elite members, and (c) collect rentier profits through oligopolistic supply-fixing or price-fixing. From the perspective of the Scale, burglary, robbery and thievery are better than OPEC! Why? They do not irreversibly deplete natural resources. We tolerate OPEC more than we do burglars, robbers and thieves. Why? Don’t forget “free riders” of OPEC such as the big oil multinationals who earned billions of dollars during the last oil price spike. We grudgingly shell out more of our money for a pricey tankful of gasoline but do we feel the same with bag-snatchers? Why is institutionalized global robbery more acceptable than personalized local robbery? Strange.

Next, examine below various examples of value-creating social innovations. I inserted motherhood for illustrative purposes only although it is not a social innovation:


The corporation is indeed a successful and widely adopted social innovation (creating value for the few or 6 in the Value Creation Scale). It has several variants. Oligarchic capitalism is where a national economy is dominated by a few business elites. “Regulatory capture” is where powerful businessmen (or “crony capitalists”) tilt the rules of the game in their favor through bribery, collusion (“cronyism”) or outright control of government regulatory agencies. An enclave corporation is one that is isolated and has zero interaction with the local communities in or around which it operates.

I sense new social innovations emerging towards 7 and 8 in the Scale. I wrote earlier about corporate social responsibility and new variants towards the “socially-embedded corporation.” I also wrote on the growing practice of “Triple Bottom Line” — introduced by John Elkington in 1994 — which is 6, 7 and 8 in our Value Creation Scale. A Working Group of the Organisation Internationale de Normalisation (ISO) is currently developing a new voluntary standard on Social Responsibility for corporations; it will be released next year as ISO 26000. The Cartagena Agreement and Costa Rica’s Biodiversity Law combine biodiversity conservation with local rights and community development — harbingers of social innovations combining 7 and 8.

Perhaps we are not hopeless; we are still learning and evolving. There are institutions facilitating innovations towards 7 and 8. Peter Spence from Australia alerted me to Mary Parker Follett Foundation whose program areas are: learning democracy, participatory design of social systems and dialogue as community reflection. Thanks Peter!

(PS to my loyal readers: if my recent blogs seem too “Cloud 9” for you, I promise to write something “Ground 0” or very practical for KM in my next two blogs before going to “Cloud 11” in Q26 and Q27 according to my set schedule. Cheers!)

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