Toward an Impact Economy
by Dr Ingrid Burkett and Alex Hannant
Foundations of an impact economy
Around the world and in Australia, governments are seeking to deliver a broader range of positive societal outcomes through innovation and economic development strategies. This is in response to confounding issues including growing levels of inequality, precarious employment, environmental degradation, climate change, and exponential technological disruption. It also reflects the increasing prominence, and uneasy convergence, of multiple progressive movements such as: ‘New Economics’, ‘Circular Economy’, ‘Regenerative Business’, ‘Impact Investment’, ‘Social Entrepreneurship’, ‘Just Transition’, ‘Localism’, and ‘Shared Value’.
While these various movements are still forming, may have different ideological origins, and are not necessarily compatible, collectively they reflect a growing aspiration for new economic models that prioritise impact and inclusion. This aspiration is being incorporated into the design of policies, strategies, and innovation ecosystems at all levels of scale — from regional development strategies and smart cities agendas all the way to the United Nations Sustainable Development Goals. Taken as a whole, we believe these developments represent the emergence of a paradigm shift toward an ‘impact economy’.
The recently released draft strategy for Advance Queensland 2.0 (AQ2.0) aligns with this pathway to impact, and offers a compelling and coherent vision to foster an inclusive and sustainable economy across Queensland. Within it, there are clear objectives to:
- Unlock innovation and collaboration to address the big challenges facing Queensland — this includes delivering on a holistic set of economic, social, and environmental goals.
- Broaden the base of innovation — strengthening innovation capacity in the regions, and also equipping a broader base of Queenslanders with the skills to create jobs, embrace the future and positively impact their communities.
- Deepen and expand Queensland’s innovation ecoystem — enabling productive partnerships between sectors, and harnessing emerging forms of innovation such as social enterprise and impact investment.
- Establish Queensland as a destination for talent and investment, and a launchpad for entrepreneurs serving an interconnected global economy.
We applaud this ambition. However, we also appreciate that transformative agendas are conceptually and practically challenging to implement. To support the success of AQ2.0 (and similar strategies) we suggest incorporating the following considerations into its design and execution.
Pathway to impact
Transformation requires new capabilities
AQ2.0’s emphasis on encouraging ‘missions that matter’, and achieving a broader range of outcomes (social, environmental, and cultural, alongside economic), requires an accompanying broadening of skills and capabilities. These include:
- The capacity to think, innovate, and collaborate in a systems context,
- Mission-led approaches to leadership, innovation, and entrepreneurship,
- The design, development, and scaling of hybrid business models, including distributed ownership structures,
- Measurement, demonstration, and evaluation of a broader range of outcomes, including public value creation and externalities not traditionally included in economic assessment
- Impact-centric and outcomes-based approaches to investment, procurement, commissioning, accounting, and governance,
- Appreciation of the labour and value creation that is not accounted for in current measures of economic output, such as: care-giving, volunteering, community building, and creative and cultural arts.
In an impact economy, developing this capability set is relevant across all sectors and professions. However, it also needs to be accessible to marginalised and underserved groups, expanding the number of people who are empowered to play active, productive, and creative roles in our communities and economies.
We must equip citizens not only to participate in the economy and society but to transform it
For AQ2.0, capability development in an ‘impact economy’ aligns with key aspects of creating jobs in a strong economy through the New skills and jobs Building innovation in our regions and Scale-up innovation agendas. As the impact is broader than just financial growth, developing these capabilities will also contribute to the Big Challenges agenda of healthcare and the environment.
Business as (un)usual
By seeking to achieve a broader range of outcomes, AQ2.0 creates the opportunity to welcome new and non-traditional actors into the innovation ecosystem. Pursuing social and environmental impact alongside economic development, brings the emerging impact investment market into play, and with it significant new pools of capital for mission-led business. This can come from both domestic and international sources.
In 2016, JBWere estimated that a domestic asset base of $15bn was available to the impact investment market from structured philanthropy and charity balance sheets2. In 2019, GIIN estimated the global impact investment market to be $500bn.
However, the rapid growth in supply is immaterial unless it is able to be deployed in organisations working on the most urgent challenges and for the greatest potential impact. It is, therefore, critical that the supply of impact capital fits the requirements of a diverse and dynamic demand side. It is essential too that there is ongoing exploration by market builders, and through action research, to find the most effective intermediation models for connecting supply and demand.
Policies such as the National Disabilities Insurance Scheme (NDIS), results-based contracting, and new market mechanisms for natural capitals (such as water and carbon), are bringing organisations that have traditionally been state or charitably funded into more commercial marketplaces. This runs alongside the proliferation of social entrepreneurs, work integrated social enterprises, trading NGOs, Indigenous businesses, and community enterprises — who all form distinct parts of the emerging impact economy, but until now, have been on the periphery of the innovation ecosystem, and underserved by mainstream capital markets. Maximising public value (and mitigating risks) from this emerging demand-side means evolving and expanding the innovation ecosystem to ensure that these new innovators have the opportunities to transition, grow, and thrive.
If implemented in a joined-up way, AQ2.0 and other cross-agency strategies can harness the emergence of the ‘new innovators’, and facilitate greater collaboration between them and the more established parts of the innovation ecosystem. Government agencies can also make a difference through smarter commissioning (such as outcomes-based payments), and incorporating social and environmental clauses into their procurement processes, requiring suppliers to compete on impact alongside price and quality. Further public value can be unlocked by improving market access for impact-led enterprises, regional businesses, and Aboriginal and Torres Strait Islander businesses, across the economy. And as supply chain impact and diversity becomes normalised in corporate strategy, it is vital that Queensland doesn’t undermine its position of comparative (demand-side) advantage by failing to foster an efficient marketplace, or effective market development.
Innovation for all
Broadening access to innovation requires more than expanding the provision of supports, programs, and financing facilities that work for high-growth businesses in an urban context. The objectives of building viable business models, establishing markets, and accessing capital remain in hybrid, regional, and non-traditional contexts, but the methods and approaches used to achieve successful outcomes are likely to be different. This may extend to:
- Decentralised, contextualised, and locally-owned models of innovation support,
- Funding / finance that caters to a broader range of legal structures, ownership models and (blended) returns,
- Facilitating ‘impact clusters’ that unlock cross-sector collaboration, multi-dimensional value chains, and systems innovation.
To achieve real diversification in the innovation ecosystem, we need to narrow the gap between those at the leading edge of technology and those groups on the periphery. These groups — such as SMEs operating in remote geographies, community-based organisations new to commercial practice, and businesses operating in cultural contexts that differ from dominant norms and perspectives — need support to identify and assimilate appropriate technologies that can increase their connectivity and productivity.
A ‘movement of movements’
From the UN Sustainable Development Goals to social entrepreneurship, we are seeing the emergence of a multitude of movements, concepts, and identities that are all seeking to shape the future economy in ways that better serve both people and planet. How do these various, often global, movements align and make sense in, and for Queensland?
While it is healthy to have diversity, specificity, and experimentation, we should seek to avoid unnecessary fragmentation, confusion, and duplication of effort. How do we engage more people with a coherent vision for a fair, bright, safe, and sustainable future, and enable them to feel part of it? How can AQ2.0 foster connection between emerging progressive movements, and facilitate a powerful ‘movement of movements’ that is grounded in the history, culture, and identity of Queensland?
Framing AQ2.0 around a mission-oriented innovation agenda (see the work of Mariana Mazzucato and colleagues in the UK 2019, 2018, 2017) around Queensland’s challenges can help draw these movements together in a tangible way, potentially through mechanisms such as Challenge Prizes that incentivise cross-sector and interdisciplinary innovation. Anchor institutions, such as universities, can also play a more pro-active role in convening, facilitating, and aligning leaders from different progressive movements, and support the conceptual clarity and alignment that will help foster political and public appetite for transformation.
What works?
We are living in a time of unprecedented acceleration, connectivity, opportunity, and risk. As a result, the deployment of innovation policies and ecosystems are perhaps the most powerful tools governments have in shaping the future. But they face a major constraint. Despite the growing importance of policy in this area, there is a lack of systematic evidence about what works. Without good evidence, it is impossible to consistently allocate resources to the interventions that will have the greatest impact. In addition, much of what we are trying to do is novel, and requires an experimental approach, with the capture and interpretation of results being a pre-condition of successful replication and scale.
Consistent with good innovation practice, we believe that real-time cycles of learning and improvement should be embedded in AQ2.0 (and all innovation strategies), moving beyond ponderous and after-the-fact approaches to evaluation and reporting. This will also include addressing the constraints and limitations of current innovation ecosystem investment models, programs, and governance models, and challenging the status quo management and leadership practices in large corporate and public sector entities. We believe that AQ2.0 can demonstrate leadership and innovation practice by putting learning, agility, and improvement at the heart of its strategy and implementation.
A pro-active impact agenda for universities
Below we outline five snapshots of how the Yunus Centre, and Griffith University more broadly, could contribute to the implementation of AQ2.0. These are also representative of how other universities can, and do, support the implementation of innovation strategies and ecosystems that are starting to prioritise impact and inclusion.
1. Developing capability for the impact economy.
The Yunus Centre will create a suite of degree-level, executive, entrepreneur, and community-based education offers that are highly applied and meet the skills and capability requirements of the impact economy, including:
- Navigating impact-led innovation: understanding the conditions, context, and interdependencies of innovation for impact and the new economy,
- Developing impact literacy: improving capabilities for designing, measuring, and demonstrating impact and a broader range of outcomes,
- Building innovation infrastructure: designing and developing new investment structures, market mechanisms, and approaches to procurement and commissioning that account for externalities, holistic outcomes, and the relationships (spillovers) between private and public benefit,
- Fostering impact-led entrepreneurship: capacity-building for innovation and new business models, including hybrids, distributed ownership models, and cluster collaborations.
These courses and programs will be designed and delivered with leading industry and community partners, and, where appropriate, delivered through existing innovation programs and facilities.
2. Convening an Impact Alliance
Building on current partnerships, and leveraging the University’s research platforms, we propose convening, and then working alongside, an alliance of leading ecosystem actors (capability builders, networks, influencers, impact investors etc) around the ‘big challenges’, and the wider impact agenda. This group could support AQ2.0 to design appropriate supports, programs, and financing facilities for the ‘new innovators’ (including all aspects of the emerging impact enterprise sector), and assist in both capital raising, and the implementation of strategies and programs. This would also include facilitating dialogue between various mission-led actors, and progressive movements, to improve understanding, connectivity, and alignment between them.
3. Enabling local ecosystems
A centralised innovation ecosystem faces limitations in achieving scale, penetration, and relevance to local context. Ideally, an innovation strategy should stimulate a network of regional, cultural, and industry ecosystems that deploy common building blocks and resources in a calibrated way to meet the specific requirements of any given place, group, or community. We could work with AQ2.0, and others, to develop and roll out a DIY innovation ecosystem facility for regional groups, councils, and community anchor organisations. This would combine providing a tool-box (or menu) of innovation supports, facilities, and programs, with a facilitated design and implementation process in partnership with local leadership. These local ecosystems would combine centralised investment, insights, and connectivity, with local co-investment, ownership, and focus. From a regional development perspective, this approach could lead to a greater distribution of economic power and enable communities to harness their existing capital to shape their own economies and foster a broader base of impact-led innovation and production.
4. Establishing a ‘What Works Observatory’
We could work with AQ2.0, and other universities, to establish a ‘What Works Observatory’. This would be an applied and active research lab, that would track AQ2.0’s implementation (particularly experimental activities) and build a living evidence base of ‘what works’ in innovation, translating the findings back to practitioners and policy makers in usable ways and in real time.
The Observatory would also synthesise emerging national and international research, and be connected to leading global innovation research centres such as the Innovation Growth Lab. The Observatory would provide AQ2.0 with an embedded, critical, and independent learning function, and inform the iterative design and deployment of its programs and facilities. It would also improve understanding of innovation across the public, private, and community sectors by projecting its insights, and promote Queensland as a leader in innovation knowledge, as well as practice. The Observatory could also play a role in making public data more accessible and usable by entrepreneurs and other innovators, and undertake agenda-setting research for the identified ‘Big Challenges’.
5. Further activating the University as an anchor institution
Universities are unique anchor institutions for social and economic development, but their role can be further activated to contribute to the innovation ecosystem and enable material impact. Beyond what they deliver in terms of education, research, and direct employment, universities can be:
- Market makers for impact through their procurement policies and practices,
- Providers of spaces and places for community organising, demonstration projects, and startups,
- Facilitators of collaboration, investment, and market opportunities through their extensive industry, community, and alumni networks.
- Providers of flexible capacity through work-integrated learning programs, student internships, and PhD scholarships,
- Convenors and influencers of decision-makers and other influential actors in society.
As a point of activation, and building on existing endeavours, the Yunus Centre will seek to channel the capabilities and assets of Griffith University through these approaches, and accelerate innovation towards an impact economy.
The Yunus Centre leads Griffith University’s applied learning, research, and engagement in the field of impact-led innovation. Our purpose is to equip people with the know-how to navigate change and create positive impact.
This article was prompted by reviewing the Advance Queensland 2.0 draft strategy, but it responds to a wider and ongoing paradigm shift in government-driven innovation strategies that seek greater societal impact. It also articulates the potential for universities to be more proactive in this work.
ABOUT THE AUTHORS
Ingrid Burkett
Dr Ingrid Burkett is a social designer, designing processes, products and knowledge that deepen social impact and facilitate social innovation. She is passionate about how we can grow social impact, and particularly about how we can develop more effective ways to foster ‘the business of social impact’.
Ingrid has worked in the community sector, government and with the private sector and believes that each of these sectors has a valuable role to play in social innovation. She is a Past President of the International Association for Community Development and was the Inaugural Social Design Fellow at the Centre for Social Impact at UNSW and UWA.
Ingrid has qualifications in Graphic Design, Social Work (B.SocWk, first class honours); Business (Masters in Business); and Community Economic Development (PhD).
Alex Hannant
Alex is a Co-Director of Yunus Social Business Centre at Griffith University. The Centre leads the University’s research, teaching, and engagement in the field of social innovation, entrepreneurship, and enterprise.
Alex also leads a number of other projects supporting innovation and enterprise for social impact, and currently serves on the Boards of B Lab Australia and New Zealand, the New Zealand Advisory Board for Impact Investment, and Pomegranate Kitchen — a social enterprise focused on supporting former refugees.
Previously, Alex was CEO at the Ākina Foundation, New Zealand’s primary development organisation for social enterprise. Before that, based in the UK, he was Director of Programmes at LEAD — a global network focused on leadership and sustainable development, and also Head of Partnerships at the Climate and Development Knowledge Network (CDKN).
He holds a Master of Development with distinction from Victoria University of Wellington, where he also guest lectures on social enterprise.
