2013: A year of creative disruption?

As austerity set in, 2013 became for many a year of creative disruption. Of shedding old practices and trying out new ones. Of discovering new ways to tackle entrenched social problems, rethink public services and renew tired economics. New Start asked five experts to give their verdicts on what good, if any, has come from this period of renewal and change.

Henry Kippin begins with a warning against destruction of the old as an end in itself, while David Boyle finds glimmers of hope and energy in the localism agenda.

Julian Corner explains how philanthropic foundations can move beyond grant-making to play a role in disrupting the dynamics that create entrenched system failure. Dominic Campbell talks through his year of helping local government and public services renew their purpose in changed times, while Neil McInroy argues that without disrupting its practices, local economic development is in danger of becoming irrelevant.

Creative destruction – careful what you wish for?

By Dr Henry Kippin, director of Collaborate

Joseph Schumpeter’s concept of creative destruction has taken on a life of its own.  The economist – who famously described stablised capitalism as ‘a contradiction in terms’ – is now retrospectively (or rather theoretically) looming large over a period of massive flux in public services. What he posited as an observation on the behaviour of markets has been appropriated as a contemporary metaphor for reform. Is this a problem? Yes and no.  Innovation, creativity and change are clearly vital, but we should perhaps be careful what we wish for.

We should be careful firstly because we are prone to misappropriating the idea of creative destruction.  Post-crisis reform in public services has been less about Schumpeter’s ‘incessant gale’ of reinvention, and more about the selective application of ideologically-driven principles to the role and shape of the state.  Examples are myriad and the chancellor’s recent autumn statement arguably makes the direction of travel clearer than ever.

We should be careful because some consider creative destruction as an end in itself; or, worse, as a means to reshape public services in ways that have nothing to do with the citizens they serve.  There is indeed something ‘creative’ about breaking up monopolies and designing new ways to deliver services to the public.  But only if it helps create value in our communities – and as our forthcoming research suggests, when price is king this message can easily get lost.

It is a problem because thirdly, and most importantly, we now are at risk of destroying the very parts of the public realm from which creativity is most likely to arise.  Eye watering efficiency targets are already old news to local authorities and public services.  But when Birmingham’s Sir Albert Bore is quoted for the umpteenth time stating that ‘local government as we know it is dead’, he is talking about destruction that will potentially strip away that ability of localities to act collectively and creatively in the face of escalating social demand.

Yet as many incipient frameworks for ‘what next’

have recognised, the language of markets is not enough

In his 2009 book on public strategy, Geoff Mulgan amusingly quotes a senior civil servant as saying visions are ‘the things you have before you get locked away’. Certainly this government and probably the next, whatever political combination – is less sympathetic than previous incumbents to top-down planning and systematising change.  The language of markets and entrepreneurialism is therefore alluring – it’s less about distributing and delivering (or what Alexander Stevenson has called ‘managing the unmanageable’), and more about creating the conditions for different types of value to emerge.  This is a good thing in a context in which we need to find new ways of working across the board.

Yet as many incipient frameworks for ‘what next’ have recognised, the language of markets is not enough. Most would accept this. The Big Society, the ‘post-bureaucratic state’, the ‘relational’ state and Jon Cruddas’s proposed shift from ‘transactional to transformative’ all point to a more obvious balance between competition and collaboration; and are founded on the notion that value is created through the strength of relationships. The destruction of monopolies and oligopolies is of course part of this narrative.  But stronger relationships based on supporting the livelihoods of citizens must be the cleaving force.

Policymakers have not yet found a language that links relationships and co-production to the harder edged debates about resource allocation and efficiency.  This should be a priority.  We need to recognise that the pressure to innovate in a harsh social and economic context is not a zero sum game.  The creation of sustainable markets for social goods will come in response to collaboration and interdependency as well as competition, and there is a role for all three sectors – and the diversity of organisations within them – to work together and innovate as part of a new post-crisis settlement for the long term.

The paradoxical nature of change

By David Boyle, director of the New Weather Institute

‘Men fight and lose the battle,’ wrote William Morris in A Dream of John Ball, ‘and what they fought for comes about in spite of their defeat, and turns out not to be what they wanted and has to be fought for again, under another name.’

This describes the paradoxical nature of change very well.  When you lose, you can sometimes win. But then when you win, actually it turns out to be not quite what you really needed.

The problem is that the political world encourages shifts which tackle the symptoms, or the headlines, if it possibly can, while leaving the rest intact. That is the way you have to manage an unmanageably complex system.

This begins to explain why some of the innovations the coalition has introduced on localism, which have been important, have not quite cut the mustard in terms of creative disruption.

Let’s not dismiss the localism act or city deals.  Both are imaginative and potentially transformative ways in which communities or cities can draw down the powers or the finance they need to launch an innovative project or shift.

We still await the transformative localisation that we were

promised by the coalition, and which I believe they intended to provide.

In practice, I know so many stories where community right- to-buy has been stymied by local officials.  I know how specific city deals have led their progenitors into wading through Whitehall treacle. The truth is that neither has yet been able to transform the system.

They have worked, where they have worked, by bypassing our highly centralised machinery, leaving it largely intact.

We still await the transformative localisation that we were promised by the coalition, and which I believe they intended to provide.  Maybe they still do.

So have there been any examples of creative disruption in services?  Well, don’t let’s get too downhearted because there here are three:

1.  The micro-providers of Nottinghamshire
The micro-provider market in Nottinghamshire has been stimulated by two things: the appointment of a dedicated micro-provider support function, and the growth of personalisation within the county, including the many people who are being offered personal budgets and direct payments. Micro-providers usually have between two and five staff, and offer highly personalised and flexible support, often based around developing low level preventative support, helping people stay independent.

The Nottinghamshire programme has been hugely successful and, over the past two years, working with Community Catalysts, and 45 new micro providers are now up and running, offering over 15 different local services and working with over 600 people who need support to live their life.

Imagine how that could blow apart the dysfunctional pile-it-high-sell-it-cheap care sector if it was replicated everywhere.

2.  The local area co-ordinators of Derby and Middlesborough
Over the last three decades, western Australia has been pioneering a different way of organising social care.  It was the brainchild of their new mental health commissioner Eddie Bartnik, and it flew in the face of conventional methods, which assess needs and try to slot people into existing service packages.

What he came up with instead was not just more flexible and more human, it was also less expensive. It was and is called local area co-ordination.  LAC is now working here too, notably in Middlesborough and Derby, and it is run by a group of local area co-ordinators who are the very opposite of specialists. They are more like coaches than social workers, and they start somewhere different. Rather than asking immediately about needs, they ask what their client wants to achieve in their life – then move on to the personal and social assets at their disposal.  Then they try to see if what they need can be provided informally, from friends or family, or neighbours – it might be regular lifts or other kinds of regular visits.

If the informal approach doesn’t work, then they fall back on conventional care packages. It is the reverse of the usual approach which starts with the care packages, and only if people complain very loudly do they fall back on informal solutions.

3.  The co-operative schools
The network of co-op schools around the UK is growing so fast that it must be disrupting something, even if it is just the prevailing approved model.  There are now 700 schools in the network, ranging from free schools to every other kind of school, all of them moving towards a structure that is owned by parents, teachers and the local community.

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Everywhere you look, there are the signs of something emerging.  They may not always be mutuals, but there is an energy out there – whether it is the Anglican churches in Plymouth delivering befriending services or the west Midlands police working alongside the public.

It is small, but – in the end – the world of creative disruption is inherited by what works better, what is more effective, what solves the intractable problems we need solving.

Rethinking the role of philanthropy

By Julian Corner, chief executive of LankellyChase Foundation 

UK foundations have a reputation for conservatism and risk aversion that is paradoxical given how mostly they fund outside of the mainstream.  Perhaps this is earned by their demeanour of studied neutrality as well as their wariness of acknowledging the full implications of many of the ideas they support.

The scale of austerity may well start to nudge some foundations towards showing their hand a bit more. I don’t necessarily mean they will feel moved to comment directly on injustice, because foundations tend to worry about the legitimacy of their own voice. Rather they may have to become more explicit about how they think change will actually happen, given that grant-making as a single tool is looking increasingly inadequate in the face of current challenges.

At LankellyChase Foundation we have tried to rethink our role in tackling social disadvantage from first principles. We know that even when the going was good many of the issues on which we focused didn’t shift discernibly. Many of the projects we funded failed to make the margins to mainstream journey. Many of the organisations with whom we worked remained beleaguered and powerless.

In facing the brutal facts, we chose to shift our strategy to focus on the underlying drivers of such intractability. A strong case for such a shift could be made in any fiscal environment, but the austerity made it compelling for us. Put crudely, the market for the ideas we have typically supported is shrinking rapidly. But what we believe is opening up, albeit painfully, is an opportunity to disrupt the dynamics that create entrenched system failure and so start to reach for new possibilities.

We view our context something like this. Charities often emerge at the faultlines of public systems, and they either seek to prevent people falling through, or they try to catch them when they do. This role has largely been endorsed by successive governments, who have found the voluntary sector a willing helper in the rapid alleviation of whichever social ills were politically important to them. Human beings have a strong instinct towards self-perpetuation, so charities have naturally sought to claim a permanent place as bridgers and rescuers on the faultlines.

If we can no longer afford charities to perform this role at sufficient scale, what does an alternative model look like and how do we achieve it? Our tentative answer to this is guided by two ‘insights’. First, charities’ radical connection with the lives of disadvantaged citizens reveals systemic dysfunction and unintended consequences that are hidden from the view of most system leaders. By standing on the faultlines, charities have a unique vantage point on what drives failure. Our hypothesis is that charities could exploit this position to act as agents of system change. Indeed this is a catalytic role that many charities themselves desperately want, but they lack the evidence and voice that would lend their analysis credibility and power with decision-makers. This, in itself, is part of the process of exclusion.

In the critical yet dispersed mass of such organisations,

there is an emergent sense of an alternative way of doing things,

one that challenges the transactional and process-driven norm.

A good example, in the work we are now funding, of an attempt to use charitable insight to drive change is Advice UK. They are working with local advice providers to understand the nature of the demands on their services. The request for advice becomes an indicator that something may have gone awry elsewhere in the system. By aggregating and analysing this data, Advice UK are able to discern patterns which indicate where ‘failure demand’ is being generated, and by taking this evidence to wider services they hope to stem the demand at source. This sets in train a virtuous service improvement loop between advice providers and wider services which in time should limit but not eliminate the need for the former.

Our second insight has been to view some charities as ‘positive deviants’ who have resisted the pull of conformity and found a way of doing the right thing despite, rather than because of, the system. The lessons to learn from positive deviance are, again, less about scaling a model and much more about understanding the conditions of success that gave rise to that deviance. We are convinced that there are small charities holding insights that represent a profound challenge to the dominant paradigm from which they are excluded (like their disadvantaged clients) but whose influence on the wider system, if properly understood and supported, could be transformational.

For example, we have recently started supporting Wandsworth community empowerment network to improve mental health among black and minority ethnic communities. After years of working in their community, with very little resource, they had understood that many local people were far more likely to trust and seek support from faith leaders than from public services. Yet faith leaders knew little or nothing about the public services being delivered in their communities, and public services were wholly ignorant of the role of faith leaders. The solutions that they have developed, such as an IAPT (Improving access to psychological therapy) service in a mosque, and systemic family therapy delivered by pastors from black majority churches, could never have come from a standard commissioning model. They have arisen out of a co-production process made possible by pre-existing conditions of deep community knowledge and trust.

In the critical yet dispersed mass of such organisations, there is an emergent sense of an alternative way of doing things, one that challenges the transactional and process-driven norm. This alternative is highly relational, it seeks to multiply resource by drawing in social capital, and it stands for a radically different way of valuing people’s capabilities. These ideas are increasingly posited by think tanks, but our contention is that they are embodied in the work many charities are already doing under the national radar.

In turn, this is fuelling a growing expectation among our grantees that we, as their common funder, will help them piece together a new vision that can reframe the problem and so legitimise radically different solutions. This is starting to require a very different mindset from us:  far less programmatic, far more adaptive to what we are learning, far more attentive to the unexpected, and far more engaged as a fellow traveller. It is a more exposed role for a foundation, not least because we aren’t able to see where it will take us. But if foundations won’t take the risk of modelling the new behaviours needed to promote change, then we can hardly expect them of others.

Our year of creative disruption

By Dominic Campbell, founder and director at FutureGov

Through 2013, organisations across the UK have started to turn to creative disruption – such as crowdsourcing, collaboration, sharing and transparency – to bring new ideas and innovation into their organisation.

Creative disruption events can play a central part in bringing an idea or organisation to life. They attract a range of people submitting ideas, from thinkers and makers through to social innovators and local people interested in solving some of society’s key problems.

From running creative disruption events throughout 2013, we’ve picked up some knowledge about how they can work. We thought we’d share a few examples of our own to show what goods come out of creative disruption and how it can be used to address real social problems.

We’ve seen our own success from creative disruption, as two of our most developed projects, Casserole Club and Patchwork, came about this way.

Casserole Club helps people share extra portions of home-cooked food with others in their area who might not always be able to cook for themselves. The project began as a serendipitous convergence of ideas between our project lead Murtz and FutureGov. Murtz had been working on his MSc, developing an idea for community-led social care, while FutureGov had been pondering concepts for a new type of meals on wheels service. From that point forward, we have spent our time researching, piloting, building local networks, and developing Casserole into what it is today.

Simpl opens up the innovation process by seeking ideas from

inside and outside the organisations. This openness and transparency

means councils have a stronger desire to deliver on ideas generated

Patchwork is our simple and secure web application that uses social technology to join up professionals across public services. The inspiration for Patchwork came out of the Baby P tragedy. In 2009, FutureGov’s founder Dominic Campbell had been watching a documentary about the death two years earlier of Peter Connelly, a toddler who had been on the child protection register in Haringey, north London. Angry and frustrated at how the clumsy, bureaucratic safeguarding systems appeared to have failed Peter, we posted an article on the FutureGov blog asking how child protection might be reimagined in the age of the internet and calling a meeting to thrash out ideas. Twenty-five people turned up and the project was built from there. This wasn’t the end of the open innovation process and Patchwork is now a fully fledged app working in the UK and Australia.

Here at FutureGov, we’ve even created a bespoke platform to drive creative disruption for companies interested in developing their own products and services in this way.

Simpl Challenges is a platform designed to improve public services by connecting social innovators to local government and organisations through focused, event-based challenges.

Simpl opens up the innovation process for organisations in the UK by seeking ideas from inside and outside the organisations. This openness and transparency means councils have a stronger desire to deliver on ideas generated through Simpl, as the ideas submitted to the platform are public, visible and co-owned by the people behind the ideas.

In 2013, we used Simpl Challenges in our first FutureGov Hack Week: three days of hard-core hacking on a range of ideas. Fuelled by mountains of yummy food and pots of the finest freshly-brewed coffee, 24 FutureGov-ers split up into teams to build the hacks and change the world. You can see the results of the three projects over on the FutureGov blog.

There are just a few examples, but you can see that creative disruption comes with lots of opportunity to bring tangible examples of social change to life.

We can’t wait to see what creative disruption 2014 brings…

It’s time for a disruptive local economic development

By Neil McInroy, chief executive of CLES

We are in a new era of ongoing economic turbulence, environmental, social and public service change.  Local economic development must not ignore these challenges or assume the principles of the past will see us through.  They won’t.  The practice must respond.  Covering planning, economics and geography, at its best, local economic development is responsive to context and assured in its interventions, improving the broad economic conditions and the quality of life for all.  At its worst, it narrows in focus, follows generic pathways to growth with an over reliance on ‘trickle down’ for social gain.

Local economic development (LED) is in need of some creative disruption. At its heart is a practice which is too often blind to a truth: even the pre-crash ‘good times’ of growth were not that good for many communities, where poverty and disadvantage persisted. Economic development too often worked for the few, not the many.  Furthermore, it is failing in any significant rebalancing of the economy. Public investment remains skewed, and an economic culture of thinking which is too often dominated around the narrow confines of the City remain unchallenged. As a result, many areas remain investment-ready, but are underinvested in.

As a result, the wider economic outlook in many localities is not so good, and we face a series of problems which are becoming more and more pressing, which means we surely need to disrupt how we think about economies and explore new development paths.

In this, it is worth thinking about the wider economic picture.  Joseph Schumpeter – one of the twentieth century’s great economic and political thinkers – said in his book, Capitalism, Socialism and Democracy, that capitalism ‘is by nature a form or method of economic change and not only never is, but never can be, stationary’.  ‘Creative destruction’, as opposed to creative disruption, is used to depict capitalism as a dynamic process, capable of continual reinvention and renewal. Schumpeter highlighted how this perpetual renewal is forged through the positive destructive forces of entrepreneurialism and innovation.

However, Schumpeter also made a key point, which is important for local economic development today. He believed that capitalism’s success would inevitably lead to a form of global corporatism featuring values which were either hostile or unresponsive to entrepreneurial capitalism and change.

The key question here is whether our local economies contain enough

entrepreneurial and innovative disruptive seeds

for their own creative reinvention

If we think about economic challenges today: UK bank lending to business remains low; rebalancing from financial services to manufacturing is not strong; wages continue to be suppressed; inequality and poverty is on the rise and targets for carbon reduction are not being met.  The key question here is whether our local economies contain enough entrepreneurial and innovative disruptive seeds for their own creative reinvention and ability to tackle these issues?  Or are global forms of corporatism and vested interests fettering a local economic renewal process?

Local economic development practice needs to assume, at the very least, that some elements of those corporate and vested interests, are dampening an ability to tackle these issues. As such it must act to ensure that new levels of local social innovation and local entrepreneurialism are unleashed.  It’s the core job of economic development to focus on and help innovation and entrepreneurialism along.

If we look at the key economic development vehicle in the UK – the business-led local enterprise partnerships (Leps) – it is apparent that many are traditional economic development vehicles, fuelled with ideas which have been around for decades. As the recent paper by Pike et al highlights, many Leps inherited their strategy from pre-crash economic strategies framed by the now abolished regional development agencies. Indeed, some in economic development, including consultants who advised the RDAs then, are possibly merely dusting down their conventions written for very different economic times.

Of course, local economic development must still do the traditional. This includes consciously and deliberately forming and working towards policies which support local economies, business growth and private gain. However, they must simultaneously erode notions that the economy is separate from social life and places, but instead promote ideas which show how it is intrinsically connected to it. At the core of a more disruptive local economic development is a practice which creates conditions for local entrepreneurship which nurtures human and social capital, as its source.  It is folly to not have full social sector involvement in Leps for instance. Leps must get social.

Local economic development must:

• Think about how we get local authorities and Leps involved in intrapreneurship – altering the way the organisations work and think about economic development
• Promote the role of the social sector as an input to economic success
• Become an advocate for small and micro enterprise
• Embrace risk and learn from failure
• Start the transition to a low carbon economy
• Consider ideas around local steady state

These approaches to local economic development and many other experiments are starting and bringing new successes every day. However, they need accelerating. Local economic development practice has reached a critical point. Failure to make this shift and embrace these ideas may well render it irrelevant. To stay relevant, it needs to creatively disrupt its practices.