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What is Social Innovation?

Social innovation, or innovating for social change, is the process of developing and implementing solutions to address difficult societal challenges.

Currently, the public and social sectors are leading the charge for social innovation. They exchange ideas, share resources and networks, and coordinate their activities around a common objective—such as addressing one of the United Nations’ Sustainable Development Goals. Concrete metrics serve to assess and maintain progress.

Social innovation, however, is not complete without involvement from businesses. Innovation must come from the social, public, and private sectors. To reduce childhood malnutrition, for example, Smart Simplicity can help organize and target resources for impoverished mothers. Social innovators have made progress by cutting through the complexity of competing programs and boosting collaboration between the social sector and local government officials, but businesses can bring a unique approach to help reduce complexity and drive accelerated change. 

The Private Sector’s Role in Social Innovation

The public and social sectors are increasingly drawing on for-profit companies for capital, technical advice, and connections. When combined with philanthropic and public initiatives, these resources can make a substantial difference in the world. Companies are increasingly using their existing business models to address societal challenges, or even creating social businesses—special subsidiaries that emphasize social impact over commercial success. These operations can often achieve what nonprofits and governments cannot. For example, Danone, a multinational food-products company, developed flavoring for fortified yogurt to mask the harsh taste of added iron to help malnourished Bangladeshi children.

Over the long run, social innovation further benefits companies by:

  • Providing arenas for learning and experimenting
  • Boosting the company’s reputation
  • Giving employees a greater sense of purpose
  • Connecting the company to potential future markets
  • Improving relationships with regulators and other stakeholders

Most importantly, social innovation improves a company’s aggregate total societal impact (TSI).

Companies are sometimes reluctant to engage in social innovation, assuming it requires them to drop their commercial mindset and metrics to focus on intrinsic social benefit, but that is not always the case. Our research indicates that companies focused on societal impact—those with higher environmental, social, and governance scores—actually outperform their peers financially. A company-wide focus on TSI can help leaders drive business innovation with a social-innovation lens.

Learn More About Social Innovation

The Value of Social Business

Social businesses, which bridge the business and social sectors, offer lessons in delivering social impact alongside commercial benefits.

Why Nonprofits Must Innovate

BCG research revealed distinct differences between organizations that innovate successfully and those that struggle to make progress. Seven guidelines provide a way forward.

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Sanitation Solutions for Urban Growth

In emerging economies, sanitation services are indispensable to a city’s development and competitive advantage. Given the high cost of traditional sewage systems, a mix of solutions is needed.

How Tech Entrepreneurs Are Disrupting Philanthropy

A revolution in philanthropy is brewing, driven by Silicon Valley’s young tech billionaires. Their approach—which emphasizes data, transparency, speed, and impact—could mark a new chapter in philanthropic giving.

Meet BCG’s Social Innovation Experts

  • Leads BCG's total societal impact and sustainability topic globally
  • Organizational transformation and large-scale change
  • Emergency response and humanitarian action
  • Impact investing
  • Leads BCG's Consumer, Retail, and Travel and Tourism practice in the UK
  • Retail transformation
  • All aspects of grocery and nonfood retail
  • Fast-moving-consumer-goods (FMCG) strategy, digital, productivity, transformation
  • Social impact and development
  • Public sector
  • Education
  • Telecommunications
  • Co-chairs BCG’s Centre for Canada’s Future
  • Shareholder activism
  • Commercial banking
  • Personal banking
Social Impact
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