Netflix designed a business model that showed four key characteristics:
Systemic - they changed the entire way business was done and how the market operated, shifting consumer behaviors to a subscription model with maximum consumer choice and freedom and minimum provider overheads. Doing this disappeared the no.1 consumer problem: paying late fees
Sustainable – without retail locations and staff it could use its rapid profitability to offset losses in late fees and drive profitable growth and expansion through digital delivery
Scaleable – wherever there is internet access and a postal system, Netflix can deliver its service with minimal need for new staff and new set up costs
Self-organized - Netflix relies on a smart and informed consumer to use the online system effectively, send their DVDs back in a timely manner, and be honest about losses, damage and postal issues
Let us define social innovation as ‘the leverage of ideas for social or public good’. Then breakthrough or disruptive social innovation becomes ‘the leverage of ideas for social or public good in a manner that can permanently disappear or massively reduce a problem ’. Ideally they show the same 4 key characteristics, slightly repurposed to fit the pro-social and not for-profit agenda. We will return to them when looking at the institutional and cultural barriers to successful breakthrough social innovation.
Systemic. That is, they work at the level of the entire system, shifting it to a new state of equilibrium where pernicious social problems (e.g. wicked problems) no longer exist. By definition this means they are not just treating symptoms, but are targeting the root causes of social problems and looking to eradicate them for good.
Sustainable. Although they might need public or private investment to get started, once up and running the social services or products can sustain themselves without continuous public hand-outs or having to go cap-in-hand to foundations and donors. These activities not only limit expansion but they reduce the ability for long-term strategic planning, operational flexibility and truly radical innovation.
Scaleable. They are designed from scratch to scale. This means that their potential reach is in the millions and billions and not the hundreds or thousands. It is usually extremely hard to up-scale highly labour intensive, centralized and resource-heavy programs, which is where much public and donor money is invested for a number of reasons.
Self-organized. This means they leverage the capacity of grassroots, decentralized, localized and in culture individuals and communities to co-create and co-deliver the services themselves. This requires treating citizens as smart, independent and interdependent participants and contributors.
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