Stephen Goldsmith Daniel Paul Professor of Government Director, Innovations in American Government Program Harvard Kenn

1. Social Innovation in Cities: More Necessary and More Likely Than Ever Stephen Goldsmith Daniel Paul Professor of Government Director, Innovations in American Government Program Harvard Kennedy School

2. Social Innovation Social innovation is the spark that brings government, business, nonprofit, and philanthropy together to help people in their everyday lives. Social innovators (i.e. civic entrepreneurs ) are helping communities to rethink education, housing, health care, and other core safety net programs. They take risks on new or existing ideas to ignite policy change, drive results, and give people real choices. They cut through bureaucracy and eliminate ineffective programs. They demand more of themselves but also of the citizens they serve. What can cities do to drive local innovation?

3. 1 Government can’t solve complex horizontal problems with vertical solutions, nor by simply accomplishing bureaucratic activities better. 2 The role of government is being transformed from direct service provider to generator of public value. 3 We won’t get the results taxpayers deserve nor citizens require until we figure out how to better manage a government that does less itself and more through third parties. Government Is Changing

4. Hierarchical Government No Longer Suffices • It’s vertical in a horizontal world • It’s based on activities, not results • It values compliance over innovation • It’s hierarchical and control and command when we need discretion • Its systems—IT, budget, HR, Procurement, etc. are broken • It extinguishes real community participation • It commoditizes in a personalized world.

5. Activities Confused With Value • The point of all managerial activity is to “Create Public Value”: to transform existing social conditions in collectively desired directions • Demonstrations of public value creation lie in evidence showing changes in social conditions • Problem: Not everyone sees public value in the same way

6. Value- and Outcome-driven Governance Articulate the goal of every activity in terms of the value being created for citizens. For example: Improved public health, not better Medicaid; Education for children, not just better public schools Measure mobility, not new highway lanes or transit lines Determine if the public good sought is a natural by-product of another, more fundamental good (better jobs create affordable housing as a by-product)

7. Example #1: Focus Less on Programs and More on Public Value Before: DC General Hospital After: DC Health Care Networks, From One to Many

8. Example #2: NYC Homelessness • Mission • Founding mission: provide good, decent shelter • Hadn’t moved beyond that goal “ “they served homeless, but they didn’t solve homelessness” • NEW Mission: preventinghomelessness • Vision • Systematic reallocation of resources; money and manpower devoted to ending homelessness

9. Social Outcomes Stagnant or Deteriorating • High School Education Dropout Crisis • Male black graduation rate of 42% compared with 71% whites • 2/3 who don’t graduate end up in prison • Wealth Disparity • In 2008, 39.8 million in poverty nationwide • 17.2 million of these are in our country’s cities—the largest number ever in urban poverty • 17% of the urban population lives in poverty, only 9.8% outside cities • Children in Single Parent Households • 11.9% in 1970 • 26.32% in 2008

10. Not Enough Scale; Not Fast Enough • Government dominates funding • No market for innovation • Iron triangle of funding • Reluctance to hold good organizations accountable • Business leaders on boards not insisting on performance • Politics • Legitimacy does not = performance or accountability *INDIANA NONPROFITS: IMPACT OF COMMUNITY AND POLICY CHANGES, Survey Report #3 June 2004, see http://www.indiana.edu/~nonprof/results/npsurvey/inscom.html

11. Creating the Conditions of Social Change

12. Catalyzing Social Innovation:I. Open Space for Innovation • Set aside risk capital. To stimulate change, the President’s Social Innovation Fund and similar efforts direct public and private capital into new models and hold them accountable. • Identify and support exceptional successes. Incubate innovation by helping grow the best programs already succeeding in their communities. • Import new expertise into an organization or community. • Break apart “iron triangles” between entrenched bureaucracies, incumbent providers and politically-connected funders that protect an underperforming status quo. • Stop social protectionism. Elected officials, particularly legislators, must no longer protect existing programs by earmarking budgets or biasing regulations against new providers.

13. II. Trust in Citizens and Demand Side Change • Replace patronizing systems. Don’t assume those seeking assistance will always be in need– and instead give citizens choices and hold them high expectations. • Ask for feedback on services and take that feedback seriously. • Devolve access to information from “experts” to citizens. • Develop new volunteer and donor goodwill pipelines. Identify an unmet need and unleash people’s energy with activities they find meaningful and productive. • Leverage social media. Make the most of new attention grabbing ways to mobilize fellow citizens.

14. Integrating Two Approaches Public Value • Better Services • Better Outcomes • Better Citizen-Generated Solutions

15. III. Get Performance-Based Results • Trade good intentions for performance. Be less impressed with the ongoing efforts of good-hearted nonprofits and be willing to repurpose dollars to what works. • Repurpose dollars to what works. Create a new market for better services to catalyze system-wide change. • Realign systems. Take on the status quo, create a culture of collaboration, and develop new roles that closely match goals. • Take the first financial risk to help individuals in whom you see potential, even when others see only liabilities.

16. Use Data Analytics and Big Data to Unlock Value • Digital systems are replacing paper-based ones • Breakthroughs in data analytics allow the examination of data in disparate systems • Social networking and social sentiment analysis allows citizens to participate in solving problems in new ways • Handheld devices can provide decision support to field workers and real time supervision to managers • Performance metrics and digital warehouses make up the building blocks of this new model of preemptive government. • Open Data and transparency encourage third party innovation.

17. Using Data Analytics • Predictive Analyses By highlighting common issues before they occur. Question: What factors make a building most at risk for fires? • Root Cause Analyses By providing insights that explain common incidents. Question: Why are there frequent accidents at certain intersections? Which individuals best benefit from job training? • Increased Accountability By monitoring areas for improvement. Question: Which City inspectors are behind schedule? • Improved Operational Management By providing data-driven solutions to promote more effective business processes. Question: What are the best routes for City vehicles to take?

18. Role of Universities • Three main roles: • Knowledge Management: documenting and facilitating information • Evaluation: determining what works • Publish: spreading word about best practices

19. Examples of Social Innovation • Social Innovation Fund (SIF)combines public and private resources to grow promising community-based solutions that have evidence of results in any of three priority areas: economic opportunity, healthy futures, and youth development • The SIF program provides funding to experienced grant-making intermediaries that match federal funds dollar-for-dollar and then select local nonprofits through a competitive process

20. Social Innovation Fund Model • Goal: change the normal course of government contracting where a group of professionals tightly prescribe sought after results and then ask for bids • Similar to venture fund model: • Seeks proposals for how to solve social problem • Contractor chosen must meet performance deliverables stated in proposal • Work with local governments and private and non-profit sectors • Increased local experience • Additional funding

21. Social Impact Bonds • Government pays for outcomes instead of effort • How it works: • Example: New York City and Goldman Sachs “Adolescent Behavioral Learning Experience” recidivism reduction program • Source: New York Times http://www.nytimes.com/2012/08/02/nyregion/goldman-to-invest-in-new-york-city-jail-program.html?_r=0 Government pays back investor , with bonus Program exceeds goal Private investor funds initial years of a social program Program meets goal Government pays back investor Program does not meet goal Government pays nothing

22. The Power of Social Innovation