Definition and Comparison: Innovation and Social Innovation

This essay will define the terms innovation and social innovation and will establish the differences by contrasting the two terms. Social innovation will be discussed further using case studies of Merck and Cos creation of the river blindness medicine and Muhammad Yunus’ Grameen Bank.

SOCIAL INNOVATION – DEFINITION

The idea of social innovation has been discussed in the literature for several decades. Taylor (1970) described social innovation as the solution of social needs through new configurations of how things are done. For Gabor (1970, cited in Quandt et al., 2017), social innovations are seen as a tool to solve problems that are largely related to territory. Other studies have emerged due to the call for policies and practices that target the needs of individuals and society. According to Dees (1998, cited in Peng and Lin, 2016) social innovation involves finding social issues and addressing entrepreneurial principles to create, develop and manage social projects to affect social change and Zahraa et al., (2009) identified that social innovation could significantly contribute to communities and societies. Another view is that social innovation is concerned with the generation of new ideas that simultaneously meet social needs, more effectively than alternatives, and create new social relationships or collaborations (Combe and Mendez Navia, 2014). Another view of social innovation is that it is ideas, thoughts and organisations that meet social needs of numerous types from working conditions and education to wellbeing and community development. Social innovation for the most part happens inside governments, larger organisations or within the not for profit sector. Consequently, the underlying drive for social innovation is the creation of social value as opposed to personal or shareholder wealth. (Salim Saji and Ellingstad, 2016). Social innovations are needed when the everyday market fails, and there is a vast need for creating social value, rather than creating personal value for entrepreneurs, investors and ordinary consumers. (Grønhaug, 1988). Unceta, Castro-Spila, and García Fronti (2016) can back up some of these definitions with their understanding of social innovation which is that social innovations are regarded as new products, ideas and thoughts that, in an original and sustainable manner, offer a better solution to one or more social demands. By doing this, social innovations imply changes in social practices of how things are usually done.

Examples of social innovation medical company Merck and Cos creation of the river blindness drug and Muhammad Yunus’ Grameen Bank. These examples will be discussed further later in the essay.

Social innovation for this essay can be defined as new ideas that resolve existing cultural, environmental, social and economic challenges for the benefit of people and the environment. A social innovation must work for the public good by creating and delivering a social value and may not create private value for the innovator. The stakeholders involved in a social innovation seek to address a social issue. Social needs are better met when social innovations are more effective than pre-existing solutions.

RIVER BLINDNESS

Merck & Co. is an American medication organisation and are an example of social innovation. In 1977, a specialist who worked for the organisation discovered that an animal drug known as Ivermectin, might destroy the parasites that cause river blindness in humans. The company had to decide if they were going to work develop, create and deliver the medicine for humans with the possibility to cure river blindness. River blindness, is a serious disease that afflicts around 80 million people in areas of Africa, the Middle East and South America. The disease is caused by a parasitic roundworm which is transmitted through the bite of a black fly. The worm grows inside a human’s skin and can reproduce by releasing bacteria that cause cuts and itching and finally blindness. (J. Ims and Zsolnai, 2014). The people who are affected by this disease usually live in underdeveloped areas and are very poor making their ability to purchase medication very low. There is, therefore, no prospect for Merck and Co. to make a profit from developing and producing this medication as the people who require it have little or no money. This goes back to the definition of social innovation where the innovators are working for the public good but have no way of making a profit for themselves.

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Merck and Co. were faced with several issues when deciding whether to fund and develop this medicine. Scientist William Cambell appealed that they should not go ahead. The issues they discovered were that the cost of researching and developing would cost more than 100 million dollars causing problems because the prospect of gaining profit from this was minimal down to the poorness of the victims. The distribution of the drug would be difficult as investment would be required for distribution channels. Merck and Co. faced the problem of gaining a negative reputation if the medicine didn’t have the intended effect and therefore possibly lowering their future profit. (J. Ims and Zsolnai, 2014) Despite the unfavourable conditions put forward to the company Merck’s Chairman decided that the project should be funded due to the moral obligation to the affected people despite the costs and the little chance of making a profit. (Metivier, 2012). For Merck and Co., the potential benefits of a drug for river blindness were too significant to ignore. The main argument to support the project was Merck’s principle: “Medicine is for the people. It is not for the profits. The profits follow”. (Walsh, 1987). After years of research and trails Merck and Co. had developed a medicine that could eliminate the river blindness. Merck and Co. worked with the World Health Organisation, the US government and the governments of affected nations to have compensation to produce the medicine. Merck and Co. made the decision that the medicine should be free for those affected by the disease. In cooperation with the World Health Organisation, Merck and Co. financed the necessary structure for distributing the medicine to the people affected.

By 1996, though the help of voluntary organisations and governments, the drug was successfully distributed to millions of affected people across developing countries at no charge. (J. Ims and Zsolnai, 2014). The company’s decision to produce and distribute the medicine was grounded in its core values: to preserve and improve human life and to be ethical and integral. (Metivier, 2012).

Merck and Co. is an example of a social innovation as they developed a medicine that benefited people that could not afford assistance. The medicine worked for the public good as it created and delivered a social value. The production and distribution of this drug did not create personal value for the innovator as the company’s primary goal was to address a social issue and help the affected citizens. They created a drug by developing one that already existed and therefore proving that social needs are better met when the social innovation is more effective than the pre-existing solution.

BANK

Social innovations lead to new or modified services which improve the quality of life of individuals and communities. Microfinance is the quintessential example. It is the provision of loans, savings, insurance and other financial services to poor people who lack access to the conventional financial system. Other examples include new patient-centred approached to the treatment of chronic diseases, new pedagogic techniques in education, smart cities initiatives, new rural tourism initiatives, and, increasingly, new solutions for tackling sustainability. (Windrum et al., 2016)

INNOVATION – DEFINITION AND EXAMPLES

As marketplaces become more dynamic, awareness in innovation, its procedures and management has escalated. Innovation is an important corporate strategy. Many scholars have defined it as the adoption of new concepts or behaviour. Innovation can be can be a new product, service, technology, or management approach. Organisations, especially when they have tough competition in a changing environment, must value innovation to survive and grow. Organisations must be able to develop unique innovation strategies and actions to sustain competitive advantage and improve its business performance, so that it can continue to be successful even when faced with market competition. (Wu and Lin, 2011). This point is backed up by Hilman and Kaliappen (2015) who stated that innovation is designed due to rival activities, and fluctuations in the external environment. Shah and Chattopadhyay (2014, cited in Hilman and Kaliappen, 2015) stated innovation is a process where organisations will not reinvent the whole service or product, instead they think of innovative ways to satisfy customer needs that are neglected by their competitors. Organisations need to innovate in accordance with changing customer needs and lifestyles to capitalise on opportunities presented by technological know-how and changing marketplaces and dynamics. Innovation can be defined as the effective application of processes, products and services that are new to the organisation and are designed to benefit it and its stakeholders. (Baregheh, Rowley, and Sambrook, 2009). Zahra and Covin (1994, cited in Baregheh, Rowley, and Sambrook, 2009) suggest that innovation is an essential component of corporate survival and growth. Innovation is known to play a vital role in creating value and supporting competitive advantage. Bessant et al. (2005) describes innovation as the core renewal process in any organisation and states that unless an organisation changes what it offers and how it creates and delivers those offerings it risks potential growth prospects and its survival in the marketplace. Innovation can be defined as an important corporate strategy. However, Lee, Chien and Chang, (2010) suggest that successful and continuous innovation can present challenges which can come from technological uncertainty, unclear market signals and competition which require successful management and thus, successful innovation is highly dependent on how the process is managed.

CDs replacing vinyl records and now digital streaming replacing CDs is an example of innovation. This type of innovation is not life changing but can be defined as a miraculous innovation as it has changed the way in which people purchase and listen to music and essentially makes it easier to store and music. The telephone is another example of an innovation. The first telephone, created in 1876 by Alexander Graham Bell, transformed communication, making it possible to maintain connections and reach people all over the world. The way that technology has advanced means that phones have advanced as now millions of people have their own personal mobile phones, especially the iPhone which was a breakthrough in technological innovation. Apple created new demand for a fundamentally new product changing the way in which we see and use phones. Dyson is an example of innovation. The world’s first bag-less vacuum cleaner is based on an existing model but the company harnessed new technology to significantly improve the offering.

Innovation for this essay will be denied as a process that involves more than just the development of a new product, process or service, but a way to generate profit to benefit an organisation and its stakeholders. Innovation can add value to an organisation and its products, differentiating it, even briefly, in the competitive environment.

CONTRAST AND CONCLUSION

Often social innovations can be viewed as an investment in activities that deliver social value. Whereas interest payments or economic rents are rewards derived from financial investments, social investment derives a social benefit. social innovation may be viewed as a broadening of the innovation concept to include social change produced by social action.

Definition and Comparison: Innovation and Social Innovation

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