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Article Article October 14th, 2015

Transformation from the grass-roots

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Government alone cannot solve every problem

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Making government more innovative needs greater collaboration

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Social innovation is about changing the system

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Perhaps it should come as little surprise that a president twice elected on the strength of his grass-roots organisation would want to support community solutions once in government. After all, good ideas do not exist only within the Beltway - they exist across the country and around the world. Looking outwards for innovation offers a wider perspective: older, more traditional methods are changing and evolving, while fresh ideas are being tested, evaluated and, if successful,  implemented.

Leading the charge for social innovation and civic engagement in President Obama's first term was Sonal Shah. A veteran of a diverse array of organisations, ranging from the US Department of Treasury to Google, from the Center for Global Development to Goldman Sachs, Shah was appointed founding director of the Office of Social Innovation and Civic Participation (SICP) in 2009. She was tasked with engaging the social sector - citizens, non-profits and philanthropic foundations - with business and government to identify new approaches to solving deep-rooted social challenges.

But why was this emphasis on the role of social innovation in government needed in the first place? How can government lead the efforts to systemically effect social change? Shah believes that, as the largest funder of social services in the world, the US government can and should affect the levers of change. First, it should finance solutions differently. Rather than pay for ‘inputs' such as the number of people served, or who received a service, government should pay for ‘outcomes' or the results achieved.

“Defining the outcome is the key,” she says. “It allows for innovative approaches to be identified, creates opportunities for the public and private sectors to participate, and leads to results. We need to allocate capital to achieve results. And we must leverage data and technology to help us better understand what works, and give citizens a voice in affecting government policy.   Technology can help create greater inclusion, and better data can help governments provide better and more effective services. Government needs to change the way it does business - it needs to be more innovative and adaptive in a rapidly changing world. Defined outcomes, better data and evidence, plus civic engagement lead to a more dynamic, rather than static, government.”

Time to team

President Obama has long been clear that the greatest national challenges cannot be solved by any single organisation or sector. With this in mind, SICP serves as a hub for efforts to drive bottom-up solutions, helping analyse what is working and measuring the latest trends and data to identify best practice. “If you're allocating capital and leveraging technology, then use the data to tell you when it's working or not working,” says Shah. “Technology allows us access to real-time data analysis today that we didn't have before. Long-term studies allow government to better understand causation trends, and the combination of data and evaluation can help us achieve real impact.”

A good example is in the state of Tennessee, which has successfully reformed its child welfare services. “Policymakers saw data that showed that placing a foster child in a permanent home gives that child better outcomes in life - improving children's futures, from increased higher graduation rates to better adolescent development and everything else that leads from that,” explains Shah. “And the state actually implemented that policy, working with stakeholders to align to the shared goal of expediting permanent placements. This shift has had an impact on children's lives. The reform was driven by the fact that the courts had become involved. A number of lawsuits were saying the state was not effectively helping enough children in the foster care system, so they had to change the whole way they operated because they were legally bound to come up with a solution.”

Highlighting such stories, providing capital in order to scale community solutions, and developing partnerships with philanthropy and business were integral to SICP's approach. Historically, scaling the successful results of local innovations has not been a well-known strength of government. “Once we find successes, we need to learn why they succeeded and then be more vocal - spread the knowledge.  If we can sell more toothpaste, why can't we sell good outcomes! We need to be able to tell those stories more effectively,” she admits. “This means not only spotlighting what happened, but also how they achieved success.”

“Setting the right incentives is important,” continues Shah. She believes that outcomes-based policymaking requires government to alter the way it finances programmes. “It shouldn't be about the number of services provided or following the compliance methodology we do now,” she says. “Instead, agree to pay for the outcome - ‘if you achieve it, you'll get the money for it'. Changing the incentive structure is risky; we need to change the whole system, and that doesn't always come naturally. But if we really want to see progress and more evidence-based policy, then we have to change the incentive structure.”

The recognition that government alone cannot solve every problem means that it must inevitably partner with the private sector, non-profits and philanthropic organisations to achieve results.  So what are good partnerships? “The challenge for government is that it has treated the private sector as a transaction - where a bid goes out and they pay for the contract,” says Shah. “But partnerships require building trust. That takes time but, again, everyone first needs to agree on the outcome, so there is not ambiguity and everyone has a clear role to play.”

Making government more innovative is more than just a box-ticking exercise. It demands a fundamental reassessment of how to collaborate across sectors. “It has to be a way of thinking about how do we achieve an outcome together. The private sector has a very important role to play and, frankly, they can scale faster,” she says. “For example, there is no non-profit that can scale its business model the way Walmart can. If Walmart knows how to stock its shelves with healthier foods in its stores in low-income communities, the company can do it far better than anything I could ever do. It's about creating a partnership for an outcome that everyone agrees they want to achieve.”

Tipping point?

Six years after SICP's creation, it seems fair to assess its progress so far. Shah - from her current vantage point as Executive Director of the Beeck Center for Social Impact & Innovation at Georgetown University - is pleased with how this new approach to government has progressed, but admits there is more work to do.

“There is great progress taking place from across government. Many governments around the world are looking at Pay for Success, technology has become a hallmark of government, and data has been integrated into almost every policy discussion. I don't think we are at a tipping point yet, but the momentum is certainly growing,” she says. “There are now a lot more high-level conversations about impact investing, social impact, and so on - certainly more than we were hearing four years ago. Corporations are also thinking about their roles in addressing social challenges and how they can do so more effectively. No longer can they just leave these issues to government, as corporations are being held accountable, too - both globally and locally.”

“Innovation units are now flourishing across several government agencies,” she continues. “One of the things we did at the White House was bring together the teams focusing on technology and those concentrating on social innovation to talk about what they were doing and how they were doing it,” she recalls. “State governors and mayors are also introducing social innovation offices, and internationally we are seeing the same thing - Mexico, Colombia, Rwanda are all creating social innovation units in their governments.”

Shah served as director of SICP for two years. From her position outside the Federal system, she says that an external viewpoint does hold some advantages. “Being in the White House means you're in the conversations in real time, as they are happening,” she says. “But the biggest advantage of being outside is that you have time to assess what is happening, what is real, and what is whitewash, and you can honestly call out the problems.” Having worked in government, business and civil society, she can interpret the conversations between different parties and what is and is not being said. “Half the battle is getting the conversations started and building the trust. Sometimes in government, you can talk past each other.”

So, if she were to find herself in conversation with the incoming chief of staff of the next presidential administration, what would she say? “To all parties, I would say the same thing, which is, keep an office that is thinking critically about social innovation and make sure they are at the table for every conversation,” she replies. “Social innovation is not just about one project or policy goal, it is about changing the system. We need to allocate money differently, we need to rethink the role of data and technology, and we need better partnerships to scale what works. We can transform the sector but it needs vision and a will to get it done. And money, as it so often is, remains a factor. Putting money behind these ideas is going to show you are serious about them. It doesn't have to be every agency, but when you start doing this the outside world starts to notice.”

Dollars are not the most important factor, but if you start changing how you spend those dollars the market changes. In the social sector, the government is the market maker. Finally, the role of the President should not be overlooked. “Have him or her talk about these issues on a constant basis,” advises Shah. “Be vocal about it - it needs to be the Monday morning announcement, not just the Friday evening announcement.  This is what a flexible and proactive government looks like.”

Whether or not the Obama administration has achieved this vision will be one for historians to judge. What is clear, however, is that government is changing. Technology, data, and cross-sector partnerships will make its future approach very different to what has gone before. Let's hope the desired impacts will follow as a result.



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