Interdependence, innovation and interventions for impact
COVID-19 has brought many new social challenges into all of our lives. However, the decline in both philanthropic and governmental capital makes it much more difficult to strategically tackle those areas. A new approach must be adopted through which we view our new global economy more as a conductor rather than as an orchestra of different instruments that often result in global cacophony.
I came up with this idea several years ago – when going to the opera was still possible. I had the pleasure of attending the opera Nabucco by Giuseppe Verdi performed at the Israeli Opera house. I was sitting in a mesmerized audience as we experienced opera magic when the brilliant conductor, Maestro Daniel Oren led the chorus and orchestra in their performance of the “Hebrew Slaves Chorus” twice. Once, it was performed by the professional cast, led by the orchestra and conducted by Oren. The second time, it was “performed” together with the audience, led by the orchestra (the performing cast) and meticulously conducted by Oren.
The power of an engaging conductor who truly acknowledges all the different actors in his environment based on a professional methodology is transcendent. It transforms the opera house into a multi-stakeholder environment where all moving parts are interdependent and – together – they can live up to their full potential, methodically forming a whole greater than the sum of its parts.
In a post-COVID era, previous silos of a social nonprofit sector and a private for-profit sector are irrelevant in our new global reality. Impact innovation and impact investing is the way to marry the two worlds.
Impact investing seeks to address the world’s most wicked problems by unlocking private capital, thus combining positive social and environmental change with financial return on investment. Impact ecosystem builders must think and act like the conductors of partnerships and methodologically create sustainable, long-lasting, interdependent and mutually beneficial multi-stakeholder environments.
To do so, best practices from conflict resolution, from the innovation world and from behavioral economics can be leveraged. This idea is based on three theoretical concepts: 1) On the strategic level using the Capitalist Peace Theory, 2) On the operational level taking the Business Model Generation approach and 3) On the tactical level applying best practices from Behavioral Economics.
In brief, Capitalist Peace Theory claims that democracies with developed economies and globalized capital can solve the wicked problem of interstate violent conflict. This can serve as an allegory for public-private partnerships.
The theoretical framework highlights the potential for mutually beneficial – including both financial and non-financial gains – ways to motivate actors to work in unison when there is a clear definition of the joint benefit to be realized. This premise matches impact innovation perfectly.
IMPACT INNOVATION, by definition, creates public sector goods (social change) alongside private sector gains (financial return on investment). Thereby, it combines previously separate and, at times, seemingly discordant concepts (social ROI and financial ROI).
The key behind such ambitious missions is through identifying the target markets and value propositions for each actor. All can be aware of how and in what ways – from both tangible and intangible viewpoints – they could benefit. This can create intertwining harmonious polyphonic actions based on canvasing methodology such as the Business Model Canvas.
Knowing on the operational level how to methodically and methodologically facilitate matches between nonprofit and for-profit actors, public and private sectors, and local and global needs may be made “simple,” when using one overarching framework to create and communicate positive interdependency. Terms like target markets, value proposition, high-level concept, distribution channels and other tools – commonly used in the spheres of systematic innovation – can build practical bridges between multiple stakeholders.
To make sure that the human element of each problem is not overlooked, lessons learned from applied behavioral economics can be adopted. Specifically, finding measurements for potential biases and evaluating them – key concepts in behavioral economics as well as impact entrepreneurship– may curtail those effects.
New data-driven, human-centered experiments must be crafted, executed locally and researched to make sure that the theory meets the practice. This should be the case for each multi-stakeholder environment. Meanwhile, undertaking to establishing clear benchmarks will further advance goals by accounting for behavioral biases and discrepancies from short vs long-term effects, etc.
This approach is already being implemented at the Edmond de Rothschild Foundation in Israel. The foundation’s impact strategy is to leverage philanthropic capital to grow supply and demand for impact innovation and investments, this by strategically donating to ecosystem-building organizations and curating challenge-oriented multi-stakeholder environments by using collaborative frameworks to transform Israel into an impact economy.
In conclusion, conductors who adopt a partnership-oriented approach with their orchestra understand “The conductor doesn’t make a sound. He depends, for his power, on his ability to make other people powerful.” ( – Maestro Benjamin Zander, the conductor of the Boston Philharmonic Orchestra). Its time to look through the opera glasses and see that ecosystem conductors would do well to also adopt this attitude.