For starters, the validation of goods and services in the free market lies in the demand for them. The more a service is purchased, and the more purchases are sustained over time, the more that service is validated. In the social economy, because the government is the customer and not the end user, there are different market implications and effects:
1. The needs of service recipients do not completely align with those of governments and service providers, and yet those receiving services are excluded from the transaction. This bizarre omission in the demand and supply chain presents a material aberration from what occurs in the free market economy. The intended customer—those accessing services—are disempowered rather than empowered, and the experience is often one of humiliation as there is no reciprocal exchange of something of value.
2. It becomes trivial to say that services are validated because there is a paying customer (government). A social return on investment is different than a financial one and consists of different validation criteria. What are the outcomes? What is the impact? And yet, program evaluation is notoriously inadequate. The things that usually get counted are things that don’t really get at effectiveness or impact at all—things like satisfaction surveys, number of hours of service, number of consumer touch points with a service, etc. Outputs and efficiencies tend to be the measurements of social service systems, while a better life is the hope of users. It is no wonder that existing solutions don’t respond to user needs and yet still persist.
3. The urgency of the problem is confused with a demand for existing services. It is a confusion that occurs frequently in the minds of service providers and funders. The desperate need for solutions, even when paired with capital flow, is not a validation of the solutions already in place.
4. Demand is artificial because end users are driven to only a handful of solutions (versus nothing at all). The volume of people in services produces a false sense of service validation—something that is only exacerbated and exaggerated when there are waitlists.
5. An extensive and uninterrupted flow of capital into the social sector diminishes the imperative to innovate—especially when an ecosystem is developed and consolidated around this capital flow (policy, procurement, delivery, accountability, messaging, etc.). What is the urgency to innovate when the taps are always on? During periods of budgetary contractions, agencies tend to apply political pressure to get funds to preserve the status quo, rather than re-imagining solutions. Concerns over system sustainability begin with the assumption that the system is working; it just lacks sufficient funding. Rarely, if ever, is the generative question asked: “ought the current system be sustained?”
The absence of a social R&D function means that the imperative to innovate is unlikely to come from within. Irrespective of where that imperative comes from, there is little or no in-house competency to deliver it. These are key reasons why there are so many static programs and services within the social sector.
These conditions in the social economy can make the scaling of solutions particularly hazardous. This is because they are more likely to be adapted to the needs of existing institutions and their interconnected systems, which will all have a role in shaping them, rather than to end-users. They are more likely to be appropriated and adapted to the very system(s) they are supposedly disrupting.
Further, when a solution is scaled-out, it needs to be codified for the purposes of replication—purposes, policies, procedures, employee roles and training, and so on. This codification only hastens it along the conservation continuum and, without any capacity or competency within the host organization to meaningfully iterate, evaluate or embed innovative solutions, it will quickly come to resemble the sorts of familiar offerings we see in our social institutions—offerings that are rigid, unresponsive and requiring reform. Scaled solutions in the social services are at risk of ossifying quickly, which means they will more quickly become part of the problem rather than being part of the solution.
The secondary operating system
Unless an organization is prepared to firewall the new solution, and develop a secondary operating culture and system (organizational policies, processes and roles) —one that is designed to specifically support and iterate the new solution—then it is likely to be ground down within the machine of the system until it resembles every other sort of program or service. Creating that secondary operating system is a Herculean task because not only do organizations have an imperative to achieve consistency and continuity, but they exist within a giant ecosystem where funders, regulators, licensors, labour agreements and accreditors are invested in achieving some form of collective stasis or equilibrium, to become collectively coordinated and coherent. Attempts to shake up the status quo bump up against countless systems and sub-systems such that, after decades of consolidation, there is very little room left to support genuine creativity or novelty. It is in this context that we are contemplating scale. It should be no surprise that those who try to be creative within complicated systems typically must do so “under the radar,” because it requires non-compliance with one or more sets of rules.
In sum, the conditions that legitimate scale in the free market economy may not be in force in the social economy, and the conditions in which scale is achieved in the social economy may actually neutralize the effectiveness of the solution.