A new book written by Paul Macmillan and William D. Eggers, The Solution Revolution: How Business, Government and Social Enterprises are Teaming up to Solve Society’s Toughest Problems, puts forward some provocative ideas about the role of other sectors in solving social problems. Editor-in-chief Toby Fyfe wanted to explore the implications of the concept on public servants, and began by asking Paul Macmillan to define the term “solution revolution.”
The solution revolution is a global trend and phenomenon which relates to the coming together of non-governmental players in trying to address and overcome some of society’s toughest problems.
Why should this trend matter to public servants?
Well, it should matter to public servants because governments should presumably be interested in trying to leverage the interests and abilities of non-governmental players who are interested and committed to addressing public problems.
In the book, you refer to the “mutual advantage” that brings players other than government to the table as problem-solvers in the social sphere. Can you elaborate?
Well, we were quite fascinated at this notion of the erosion of the borders between the public service and what might be civil society or private sector interests. And initially, we were thinking about it this way: as the austerity movement was taking hold, what would fill the gap between what citizens need and expect and what governments were able to provide? We felt very much that in today’s age, citizens feel empowered with respect to getting engaged in social challenges, and also there’s an increasing sense of accountability by business with respect to their contribution to society. So we wanted to look at how new entrants would come into domains that might traditionally have been thought of as public sector space.
What’s the value proposition for governments of the solution revolution?
Governments are faced with a constant struggle of not just trying to do more with less, but trying to satisfy the almost insatiable appetite on the part of citizens for social progress. So our thinking was that it was no longer feasible to put a solid line around what might be a public sector responsibility, or what might be something that citizens would be actively engaged in trying to address, or that businesses might have a role in trying to solve. So from that perspective, it’s a resource that governments should be attempting to leverage. It’s also something which governments should be attempting to facilitate or accelerate with respect to encouraging new entrants into these areas.
What’s in it for the other sectors?
A very good question. As we started to study this further, it became more and more apparent to us that there is a business objective associated on the part of businesses which are entering into this space. But there’s also, especially in emerging markets, evidence that businesses also see it as an opportunity to open markets that have been previously “unserved.” So part of what we’re seeing is this idea of markets forming around social outcomes or social objectives.
There’s often an explicit objective when trying to address a social problem, but at the same time, increasingly there’s an expectation that there needs to be a financial return as well. That financial return tends to take shape with respect to new markets that are opening up that might not have been open to business before, or that business might not have seen as being serviceable before. What we’re seeing is governments starting to look a little bit more at what foundations, not-for-profits and “social investors” are looking at with respect to how you might invest in an outcome, how you might measure an outcome reward.
You say in the book that public servants need to “change their lens” to look at things differently. How should they do that?
The reason we said “change the lens” is because we started to see that there were all sorts of players, all sorts of incentives, all sorts of new business models, lightweight technologies, ways to exchange public value, which had emerged rapidly in the past half decade. So as a result of that, as you’re looking at addressing a social problem, you really need to change the lens.
It’s like night-vision goggles. All of a sudden, you have a different way of looking at the landscape, because the landscape has changed in a way which hasn’t necessarily been that noticeable until you look at it more closely and realize that, if we’re trying to introduce a social program as a government planner or policymaker, increasingly I can think about how citizens want to be engaged in those activities, and how there might be opportunities to incent business to play a bigger role. And ultimately, if I have a better outcome for the citizen, but still have to consider substantial fiscal implications as well, it’s not just one government program or one initiative that’s going to make the difference. It’s a whole ecosystem that’s going to come together to make a difference. And that’s what we’re trying to highlight in terms of how government views the opportunity to leverage what we call the solution economy.
My guess is the average public servant reading this is going to say, “Yeah, but it means I give up control and therefore the risk factor goes through the roof,” something governments don’t like.
Exactly, and I definitely have heard some of that. Yet the empirical evidence as to what actually works with respect to government programs, what we invest public funds into, is really not that strong. I find there can be a tendency to want to defend the status quo under an assumption that the current approach is risk-free or highly effective. And when you dig into it a bit more and start to understand how outcomes are being measured, who’s currently going unserved, there is a need to recognize the opportunity for some innovation. That’s not to suggest that what we’re doing isn’t good or should all be thrown away; it just means that there needs to be some recognition that innovation, even if it’s only happening at the margins, can have a significant impact with respect to return on public investment.
With reference to other sectors contributing to social outcomes, you refer to “payment for results.” Can you elaborate on the concept?
As I look at what the solution revolution might mean for Canada and other western industrial countries, I think there’s an analogy to the infrastructure space, where governments recognized an infrastructure deficit and started to think about how that deficit might be addressed by encouraging industry to take on risk with respect to project completion, to finance projects with respect to how they might be done and maintained over a multi-year time period.
We think that the social assistance space, which in Canada is anywhere from $200-$300 billion a year, might go through a similar type of transformation, as governments start to think about this idea of getting more for what’s being invested by way of an outcome. And this idea of paying for performance, which we’re seeing come out of the U.K., is increasingly getting interest from the U.S.: there’s something like 20 local governments in U.S. states that are currently exploring the idea of impact investing, which would be a payment for results type scheme.
So why hasn’t it caught on in Canada?
That’s exactly the question we’re wondering. We’re seeing some very tentative steps on the part of HRSDC and some of the provinces are starting to look at it. We think we’re going to see more. It goes back to my earlier comment: government’s got to figure out what role it is playing and what incentives it wants to put in place. The solution revolution will ultimately lead to a new way of thinking about how to get more of non-governmental players in areas like social assistance and social services, and pay-for-performance is going to take hold in Canada, as it’s starting to take hold in other markets.
