Many organisations, platforms and coalitions have reported examples of systems change in action. These include the Finance Innovation Lab, Future of fish and EYElliance. However, these organisations do not fit into the model of for-profit social entrepreneurship. Their approach is cross-disciplinary, with a focus on collaborative action and building coalitions of actors from each system they intend to change.
“While implementing a solution inordinately changes systems, the approach to the programme design and its guiding principles are a key differentiator.”
– Systems thinking educator working with a Foundation, USA
In our last post, we discussed the distinctions and overlaps between shifting systems and scaling a solution. This includes focusing on root cause analysis and shifting a system permanently in the long-term. From these discussions another thread emerged – differences in the principles which underline social entrepreneurship and systems change. Although the terms can overlap, there are a few distinctions to note. These include:
Scaling impact vs. problem solving
As a social entrepreneur, there is a tension between growing an organisation’s impact and working to solve a problem. Our contributors noted a difference in working at the system level and at the enterprise level. One of our contributors emphasised that as a ‘systems entrepreneur’, they spun out of a social venture to not just grow one organisation’s impact but solve the population-level problem. When engaging in systems change, work must be focused on analysing and mapping the system with the intention to create systemic change.
“Should you grow impact or solve a problem in its entirety or both? [We are] bridging the gap between social entrepreneurship and systems change.”
– Social entrepreneur running a multi-sector coalition, USA
Role in the Ecosystem
Social entrepreneurship fulfills a different role in the ecosystem as well. The focus is typically on a specific venture or organization, while systems entrepreneurship is more likely to focus on making connections between different elements of a system to address the target problem.
“…you sit in a different place in the ecosystem. One of the benefits of that is we have very different conversation with institutions like WHO, USAID, Game changing conversations”
– Social entrepreneur working in the technology sector, India
Conflict of Interest
Our contributors noted that there is a tension between creating returns for investors and taking systemic approaches that require collaborative action. This implies that a lot of systemic interventions fall outside the scope of for-profit social enterprises that are in-turn responsible to their shareholders. Spending time away from the business also has a disconnect with funders and investors.
“In the marketplace you are trying to win, building the ecosystem is a tension as afor-profit company.”
– Social entrepreneur working in the technology sector, Zambia
Another driver of systems change is capacity. An organisation has to be structured to achieve systems change and cannot achieve this if it decides to create systems change partway through fragmented approaches and interventions due to the factors listed above.
Our contributors also shared some common principles between system change and social entrepreneurship. These include:
Experimentation: While vision and mission setting are
extremely important to know what change an organisation wants to achieve, the
process is also constantly evolving as approaches and market segments are
tested and flexed. As you engage in both activities, you often encounter
roadblocks that you did not expect, and you create new ways to navigate around
Building on your Expertise: While trying to shift the system in
multiple ways, entrepreneurs identify approaches that are well outside of their
capacity. Instead, they develop a theory of change and target the problem
indirectly with an approach that fits their expertise.
Complexity: The complexity of the system at play
can be different for different businesses and target problems. Some cases
require policy change and collaboration with the public sector, while some are
more focused on changing how information is shared in the system. For each of
these cases, you have to create the right tools fit for the purpose.
As we can see, there are several distinctions and overlaps in the principles defining social entrepreneurship and systems change. For-profit social entrepreneurship traditionally focuses on an organisation and its impact, while a venture that intends to create systems change follows a more collaborative approach to change and holds a different power dynamic with actors in the system.
Author(s): Nikhil Dugal is a systems change consultant with the Skoll Centre for Social Entrepreneurship. He is a Skoll Scholar, having completed his MBA at Saïd Business School in 2018.
Tara Sabre Collier, Social Entrepreneur in Residence at the Skoll Centre for Social Entrepreneurship and Skoll Scholar alumna joins Chris Blues, Programme Manager for Social Ventures at the Skoll Centre, in examining inequalities within the Impact Investment industry.
Inequality is one of the greatest challenges of our time, hampering growth, spurring strife and instability and impeding human development.
Income inequality has been worsening
across countries since the turn of the century and is likely to be tremendously exacerbated by COVID-19. The impact investment sector has been a powerful force for progress towards many SDGs but needs to take a critical look at how, as a sector, it is advancing or exacerbating SDG 10. In most of the world, income and wealth inequality are inextricably tied to race, ethnicity, gender, national/origin migration status but most impact investors have not fully interrogated their roles in fostering equity and inclusion across their organizations and portfolios.
There is no aggregate global diversity and inclusion data for the impact investment industry.
Data from the UK, one of the world’s leading countries for impact investment, show a clear discrepancy in the ecosystem, with people of colour occupying less than 7% and women outnumbered 2:1 in board directorships. While the UK does not necessarily represent the entire impact investment industry, it is an important global hub. Moreover, there are a number of global commonalities in terms of wealth distribution, private capital markets and philanthropy that indicate other Western impact investment markets will similarly fall short. The impact investment industry hybridises investment, philanthropy, and social enterprise traits; talent, staffing and leadership trends will reflect this DNA. A few global highlights from these sectors (across UK and USA) reveal less than admirable diversity and inclusion track record.
Women are about 56% of US philanthropic foundations CEOs, but people of colour only occupy 11% of said roles, despite a significant philanthropic emphasis on serving communities of colour in the US. There’s now evidence that this disparity is reflected in philanthropic funding for social entrepreneurs of colour, with a recent Bridgespan study showing Black-led social enterprises have 76% smaller net assets than white-led counterparts, mostly attributed to bias.
Just 3% of UK charity CEOs were of non-white backgrounds, despite the fact that a large share of the UK sector’s work likewise addresses communities of colour. On the international front, an older study indicated less than 10% of the largest international NGOs had African board members, despite Africa being the largest market for INGO grant funding and programs. Likewise, despite women comprising 70% of INGO staff, women are still vastly under-represented (i.e. approximately 30%) as CEOs and leaders of these organizations.
These select examples demonstrate a pattern of diversity paucity which contravenes the vision of impact investing.
If the impact investing industry replicates these disparities, there is a risk of reinforcing income inequality, instead of combatting it.
The representation gap also points to a possible market failure whereby impact capital is likely not being efficiently distributed to many promising ventures with potential to solve societal challenges because of a disconnect between primarily Western white male funders and under-represented social enterprise founders, especially in the Global South. Furthermore, the lack of representation in impact investment teams and portfolios would likely detract from the sector’s financial performance, given the proven linkages between gender/racial diversity and financial performance. There’s no dearth of evidence for the commercial benefits of
representation but nevertheless a handful are mentioned below:
Research by McKinsey & Co. found that public companies in the top quartile for racial and ethnic diversity were 35% more likely to have financial returns above national industry medians
A study by Boston Consulting Group found that if investors had invested equally into startups that were founded by women, an additional $85 million would have been generated over the five-year period studied.
While the corporate sector continues to rise to the occasion on diversity and inclusion efforts, the impact investment industry is yet to get on board with really advancing the inclusion agenda beyond gender. In the face of what we are learning from the COVID-19 pandemic, there is no time like now to decidedly develop diversity and inclusion initiatives that will improve financial/social returns. If impact investors are truly serious about the SDGs, including SDG 10, we must fight the hazards of inequality, starting with our own industry.
Authors: Chris Blues, Programme Manager for Social Ventures, Skoll Centre for Social Entrepreneurship
Tara Sabre-Collier, Social Entrepreneur in Residence, Skoll Centre for Social Entrepreneurship
Latest blog update from the Skoll Centre’s main research initiative, the Systems Change Observatory.In this section, we report on a series of ‘positions’ regarding how scaling up links with systems change. What is especially interesting: everyone has a view on this! And the views differ in ways that are both analytically useful and practical for policy and impact.
One recurring theme is funders stating they fund systems change while in practice they support an enterprise scaling the scope of its work or potential a class of enterprises doing so. The discussion on collaborative systems change strategies raised a salient question in the field: does scaling up a solution by one actor create change in a system vs implementing a strategy to change the system itself?
“There is a difference between a scaled solution and systems change. Affecting lots of people is not same thing as systems change.”
– Systems thinking educator working with a Foundation, USA
Members from the initial convening who work directly on designing social ventures stated that large-scale impact generation through the scaling up of a solution was not synonymous with systems change. This is where things become both complex and analytically interesting – and with substantial implications for policy and practice. From our interview process, our respondents stated that the following factors determine whether an intervention qualifies as systems change.
For many, systems change is understood to involve a permanent shift in outcomes generated by the system’s configuration. When scaling up a solution, the long-term impact of the intervention may be intended but is not always explicitly considered. What outcomes occur across the system when the intervention is completed? The more complex a system is, the more complex the outcomes of any specific intervention and its long-term impact.
“Inherently, [Systems Change] is a long-term effort, highly adaptive, no finish line, there is no point at which you say it’s done. Going from broken to fixed is not something we can answer objectively.”
– Academic and Venture Partner in the Social Entrepreneurship space, USA
Root Cause Analysis
Another starting is considering a solution that does not affect the root cause of a problem – it would not be considered a systems change intervention. This position opens up many intriguing and tough questions.
“[As] an example, suppose we used a boat to clean plastic from ocean gyres and collected millions of tons of plastic from the sea. This could create a lot of positive environmental impact. However, if the intervention fails to address the root cause of the problem, which is plastic entering the ocean from land, it would not qualify as systems change no matter how much we scale up the solution. Similarly, there are a lot of projects around the world that create a lot of positive social and environmental impact, but they do not necessarily have to be considered systems change.”
– Systems thinking educator working with a Foundation, USA
Large-scale Programmes vs. Systems Change
Respondents also points out a key issue: how the scale of the system that we want to address is shaped in important ways by boundary judgments by the funder and other stakeholders. The intervention itself can address the same problem at varying levels of scale, such as optimising the collection of food waste in a single housing unit versus implementing a national food waste collection programme. Simply undertaking an intervention at a large scale does not qualify it as systems change.
“There is a difference between a scaled solution and systems change. Affecting lots of people is not the same thing as systems change. That’s where things get muddy. [An] example would be giving people a mobile banking app. You could deploy that to address the need but it does nothing to exit poverty or stop more people from becoming poor. Even though it could affect people, it is not systems change.”
– Systems thinking educator working with a Foundation, USA
The issues and complex behaviours that need to be addressed in systems change require an approach that is quite different from quickly scaling a solution. It requires an implementer to be fully embedded in that system to understand the barriers to change and act accordingly. At the McConnell Foundation, this is referred to as “scaling deep”, which focuses more on long-term understanding the culture than creating an innovation that emerges from that context and that can be diffused elsewhere (Riddell et al. 2015).
‘Day to day systems change is about building lasting relationships in the system and that requires time, sense of self awareness, influencing skills. Scaling fast doesn’t work because you are not building relationships in the system.’
– Social Innovation Expert, UK
In summary, while scaling a solution and systems change can be concurrent and linked activities, this is not always the case. We can scale a solution without creating a permanent shift in the system or addressing the root cause of a problem. We can also create systems change at a small, local scale and focus on embedding people and solutions in the system to gain a deep understanding of the local context, something that is much more challenging at scale. These differences are essential and critical to understand types of systems change.
The Systems Change Observatory (SCO) is one of several recent efforts to discuss how to map, understand, and potentially steer systems change practice to achieve positive social and environmental impact.
Here, we report comments and vignettes from our initial discussions with academics, practitioners, and other stakeholders associated with the SCO. They speak to core challenges including ways to understand systems change and then how to shape and promote systems change. We present their varied experiences and practical understanding of systems change.
Please note that comments from our participants are anonymous and represent only their roles and the sector they work in.
Understanding Systems Change
There is a plurality of definitions for the term systems
change reported in literature and our initial respondents mirrored this
multiplicity. It is important to note that the term can mean different things
in different cultural contexts.
One prominent understanding focused on the objective of systems
change – to shift the state of a system that is generating negative outcomes
for its participants into a more desirable state.
“Systems change is
about studying problems as an existing equilibrium that isn’t working, which
has a negative environmental or social impact and then imagining an end state
that would not have that negative impact as an outcome of the system’s
configuration.” – Academic and Venture Partner in the Social Entrepreneurship
framed systems change as a new paradigm of social entrepreneurship.
“ [Systems Change is]
at a very macro level doing away with the need for a term that says social
entrepreneurship. Social enterprises are evolving into businesses that cause
social impact and [are] changing in a way that they don’t have to do something
special, or feel like you have to make some sort of concessions because you are
an entrepreneur. The core value doesn’t budge.” – Social Entrepreneur in the
A critical focus of these discussions is what kinds of changes are in fact changing systems. They stated that system change tends to be located at the intersection of an institutional shift in regulations, economic configurations and cultural assumptions that better enable and equip the capabilities of individuals.
Along these lines, one contributor referred to the capability approach developed by Nobel Awardee Amartya Sen: “Poverty is not just lack of money; it is not having the capability to realize one’s full potential as human being” to explain the expectations of systems change. According to this participant, a system is only changed if social, political and economic configurations are transformed in a way that preserves individual autonomy and empowers people to flourish.
How to shape, promote systems change
In context of how to create systems change, two key views emerged in the comments of our participants:
1. Collaborative action: Interviewees emphasised that multi-sector coalitions can pursue pathways to build the field and solve identified problems instead of focusing solely on scaling the impact of a single organisation. The focus here, therefore, shifts from a single organisation to a collaborative network.
“Systems change is the first
step of convening, not just one organisation, usually an alliance or a process
of bringing different actors from different sectors together”. – Professor and Academic Director,
Entrepreneurship Centre, university-based business school, UK
One of our contributors runs a collaborative coalition trying to solve a problem that affects over a billion people. The technology used to address the problem has existed for a long time, but the sector was not deemed investible. They started by bringing the public sector in as a delivery platform, influencing policy at the government level for distribution. They also worked to make the sector more investible and to prioritise the problem area as an issue in global development. This approach requires one to be a good listener and open to experimenting with multiple solutions to tackle the problem. Illustrating key skills necessary for systems leadership.
2. Evaluation and design: Interviewees suggested an approach which identifies an existing system generating negative social or environmental change and an end state that does not generate this negative impact as an outcome of the system’s configuration.
Based on this, an intervention must be designed in a way
that perennially changes the dynamic of the system. This intervention is then
expanded, with the objective of achieving a permanent shift in the
configuration of the system.
“Day to day systems change is about building lasting
relationships in the system and that requires time, a sense of self awareness
and influencing skills.” – Social
Innovation Expert, UK
For example, if we identify a lack of information flow between coordinating agencies as a hindrance to the effective functioning of a system, we could design an intervention to change how information flows between different actors and change the dynamic of the system itself, leaving a self-sustaining legacy.
SCO Initial observations and further questions
In our work and the early moments of the SCO, we have
already come to understand that people draw from a range of definitions for
systems change. This plurality is not surprising and may well be a
resource. This initial insight is
shaping our research and pointing at directions that are worth exploring
further. What are the available
conceptions of systems change evident in the work and support of global
funders? How are social ventures pursuing systems change on-the-ground? How do
their approaches, vary depending on the nature of the challenges they try to
tackle? What strategies should be prioritised by stakeholders in different
locations in the system space? How to best connect their efforts and explore
These questions open possibilities for both research and engagement with the field of change-makers committed to tackle the world’s most pressing issues.
Author(s): Nikhil Dugal is a systems change consultant with the Skoll Centre for Social Entrepreneurship. He is a Skoll Scholar, having completed his MBA from the Saïd Business School in 2018.
Carlos Blanco is a 2019-20 Oxford MBA student and participant on our co-curricular programme, Impact Lab. He reflects on one of the Impact Lab Masterclasses taught in Michaelmas term, an ever growing and popular discussion by social entrepreneurs, systems change.
An organisation in Pakistan that enables smallholder rural, off-grid farming communities to meet their farming and household needs using livestock as currency. A network of entrepreneurs built up in the favelas of Brazil. An NGO skirting anti-abortion laws by providing access to safe procedures in international waters. A private company building a new business model that monetises fuel efficiency while introducing more sustainable fuel sources. What do all these examples have in common? According to Dr Paulo Savaget and Professor Steve Evans they represent different ways to achieve Systems Change.
Systems change is hot stuff right now. Across organisations trying to create sustainable impact the new holy grail is to affect large-scale systemic change. But what is a systemic problem? What is Systems Change? And how do we affect Systems Change? On Tuesday 12 November Paulo and Steve provided a masterclass on Systems Change through the Skoll Centre for Entrepreneurship that touched on each of these questions.
There are many ways to conceptualise systems change
Paulo started by highlighting the characteristics
of systemic problems. They can’t be solved by a single organisation, have no
single solution, are bound within a system that is greater than the sum of its
parts, are poorly specified, are self-reinforced and are interconnected.
Paulo then outlined early insights from the Skoll Centre’s System Change Observatory that identified seven ways Systems Change is conceptualised:
Disrupting the status quo
Influencing chains of cause-and-effect
Coordinating agents better
Scaling change in numbers or scope
Scaling institutional or cultural change
Scaling an organizational model
There are three pathways to action
According to Paulo and Steve there are three pathways to affect systems change.
Intervening in the configuration and features of a system
Paulo highlighted from his research (Sustainability Hacking: conceptual development and empirical exploration) on sustainability hacking to bring this pathway to life.
A sustainability hack is an unconventional solution that deviates from embedded institutions, i.e. the rules of the game, to address a systemic problem. Sustainability hacks work around the ‘rules of the game’ to accomplish ‘good-enough’ results promptly. Paulo went on to present the five ways sustainability hacks intervene in the configuration and features of a system: emulating value flows; repairing missed value; exploiting a loophole; mirroring feedback loops; reformulating the logic.
Getting the best out of interdependencies
Steve outlined that this pathway requires systems thinkers to first search for connections within a system, particularly those connections that are not obvious or seem illogical. If you can’t find those connections, you then need to expand the boundaries of the system and make the problem bigger to find the variables in the system people ignore.
Looking beyond the organisational-level
The final pathway involves understanding the four failed value exchanges among multiple stakeholders (e.g. investors, employees, suppliers, customers, the environment or society) across a business network:
Systems thinkers and leaders need to reframe systemic problems and recognise their limits
Steve challenged the room to change how each one of us thinks about systemic problems. Instead of setting targets and objectives, he challenged us to influence the systems around us by reframing systemic problems with ambitious visions for the future.
Paulo then reminded us that systems thinkers need to recognise their limits and understand that in complexity, we can’t find a solution, only ‘manage messes’. Most importantly, systems thinkers and leaders need to be humble and recognise the extent of their ignorance to affect Systems Change.
Author bio: Carlos Blanco is an Oxford MBA 2019-20 student. For the past five years he has worked with the not-for-profit, government and private sector in Australia to drive systems change. He is increasingly interested in building broad coalitions of government, not-for-profit and private sector organisations to address humanities most pressing systemic problems.
In March 2019, we had a daylong session that integrated in-person attendance with contributions from participants around the world. This meeting incorporated opinions from previously conducted unstructured interviews to identify the most relevant issues and concerns regarding systems change among this first round of Observatory contributors.
The discussions raised were far from exhaustive. The value of this study lies in starting an exploration of topics that have not yet been systematically studied and understood with practitioners who, despite sharing similar concerns, are approaching problems differently.
From our discussions, four key themes emerged:
Definitions and conceptions of systems change
The intersections of systems change, social entrepreneurship, and scaling solutions
Implementing systems change
Measurement and evaluation of systems change interventions.
The first two refer to the connections between systems change, social entrepreneurship and scaling-up an intervention in the social impact space.
The last two themes consider the principles for designing and implementing systems change activities and the challenges in setting up measurement and evaluation instruments for system change interventions. Given the diverse experiences of our interviewees, our findings highlight different mechanisms, challenges and prospects to positively drive and evaluate system change. We will share snapshots on these themes to map relevant issues and spark deeper conversations.
One of the salient issues in systems change work is the relative lack of over-time data on ventures that pursue a systems approach to social innovation. This limits our understanding of how system change is conceived and pursued to address a wide range of challenges. Beyond this initial study, the SCO intends to explore what happens in the life-course of these ventures, shedding light on aggregate patterns across ventures and over time.
The SCO can contribute by providing key outputs on systems change in action. This includes identifying the skills required to engage in systems change, approaches and pathways to change that organisations follow over time and their experience with implementation. This can help entrepreneurs identify what skills to build and activities in which to engage.
The ambition of the SCO is to add value to the field by keeping in mind the relevance of our research for our stakeholders. We intend to offer value by leveraging our academic skills to undertake translational research in order to produce, compile, and disseminate knowledge that can be useful for academics and practitioners in the field of systems change.