Every innovator is motivated by the desire to create positive impact in the world. But in addition to the positive effects that innovations have on their customers, they often have unintended consequences. This includes being co-opted by their company, their customers, or their competitors that adhere to the Friedman doctrine, which claims maximizing shareholder profits is a company’s only responsibility.

Larry Schmitt Portrait

Larry Schmitt, The Inovo Group

The choices of companies, the innovations they pursue, and the effects on society are all connected. For innovators, the question is: How can we influence the balance between profits and a deeper purpose?

Consider the following:

  1. Businesses operate in a complex environment where the forces of investors, stakeholders, and government interact in unanticipated ways — producing positive and negative outcomes.
  2. A purpose-driven enterprise works to mitigate the negative consequences of both their behavior and business model and the products and services their customers use. But a company cannot control all the effects that its innovations may cause.
  3. One of the key jobs of a purpose-driven innovator is to anticipate and communicate the potential long-term consequences of their work. This provides businesses, society, and government a means to engage earlier.
  4. Promoting purpose-driven innovation in a capitalist system is difficult but possible. In fact, it’s becoming imperative for the innovation profession.

Control Issues

There are two compelling forces that overtake the good intentions of an innovator and result in an innovator’s loss of control.

Within a company, as an innovation is launched and scaled, the locus of influence and decision-making moves away from the innovation team to a broader coalition of decision-makers. Company imperatives of growth and profit drive the need to create organizational infrastructure to support the new business being built. Internal control transfers from inventor to innovator to entrepreneur to manager to executive.

External forces of adoption and adaptation create trajectories for the innovation that are unexpected. External influence, both intentional and unintentional, broadens from the company to their customers to their ecosystem and to society.

The effect is that the locus of making sure the innovation is creating both economic value and social good — the ostensible motivations of a purpose-driven company — becomes widely dispersed and no longer resides solely within the innovator’s or the company’s direct control or influence.

Even within a company, innovators lose control over how their innovation will be scaled. This occurs in organizations when an innovation is taken over by an existing business, or a business executive is put in charge of scaling. If the company answers to the Friedman doctrine, the innovation will be co-opted to generate the maximum possible near-term revenue and profits.

In addition to internal loss of control, innovators and their companies become even further removed once an innovation is out in the world. For example, the unintended consequences of globally adopted social media, facial recognition, and AI are just a few examples playing out now.

The Social Model Canvas

Social Model Canvas

If innovators are to have an influence on purpose-driven outcomes, they need tools to lead a company in its purpose-driven strategy. Among the methods and tools to help with this is an expansion of the Business Model Canvas to turn it into a Social Model Canvas.

The Social Model Canvas is constructed as an enhancement of the Business Model Canvas, with an additional layer that expands the canvas to illuminate the primary, secondary, and tertiary effects of an innovation along four distinct dimensions. It is designed to promote the imagining of alternate futures, both good and bad. It broadens the context for the innovation being considered and extends the timeframe beyond what is normally considered, by guiding the innovator to consider each of the following:

  • Evolution (Organization) — After an innovation is introduced, its evolution involves all the subsequent updates, modifications, releases, and derivative offerings a company does to expand its initial scope. This results in multiple, branching trajectories that, over time, create a dense tree of products, services, and business models. This branching tree can be thoughtfully anticipated, not by figuring out all future paths and possibilities that are predicted, but by looking ahead at plausible trajectories. In this way, an innovator not only gains insight into future business possibilities, but also sees places where the societal outcomes could possibly go awry.
  • Alternative Use (Demand) — Instead of waiting, observing, and being surprised, the innovator can and should anticipate alternative uses and how the company should and could influence them.
  • Appropriation (Design) — It is inevitable that, no matter your IP position, others will appropriate any new innovation introduced into the market to a certain degree — and without the same purpose-driven motivations as the company that introduces the innovation. It is up to the innovator to think about how others will appropriate the new concepts and use them.
  • Reputation & Policy (System) — The triple forces of evolution, alternative use, and appropriation create reactions from societies and governments. The unintended effects of an innovation will eventually garner a reaction, through social reputation and government policy and regulation. This creates an imperative for an innovator to be a social and policy futurist and advocate. It may require the innovator to go against the natural instinct of the company and to advocate for changes that may impact maximum growth and profits in the short-term, but ultimately result in a better outcome for society.

The Social Model Canvas (among other tools) can help the innovator accomplish these goals. However, it will take a change in mindset on the part of the innovator and company to realize that social responsibility extends far beyond the products and services they build.

 

Larry Schmitt is Co-Founder and Managing Partner of The Inovo Group, a management consulting firm specializing in strategic innovation. This is an excerpt from a chapter of an upcoming book by GInI (The Global Innovation Institute). The book is tentatively titled The Other Side of Growth: Questions We Should Be Asking About Innovation Innovation Leader regularly publishes Thought Leadership pieces written by our Strategic Partner firms.

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This piece is a part of the Fall 2020 special issue of IL’s magazine, which collects advice and insights from 25 contributors. Read the full “Innovation Matters More” magazine.