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Principles For Social Innovation In 2012: Follow Emerging Economies

The world economy is rapidly reorienting toward a growing middle class in the global East and South. And social innovators should follow, helping to aggregate consumer and citizen power to create change.

This year marks the fifth anniversary of the beginning of the global financial crisis—a crisis that is changing the global economy just as significantly as the collapse of communism in 1989 and the OPEC oil crisis of 1973.

A major impact of the financial meltdown is that global markets are now being driven by the world’s emerging economies. The economies of the U.S. and Europe have entered a long period of sluggish growth, financial instability, rising debt, and relative decline. They still provide great opportunities for innovators—developed country markets will remain the world’s largest for some years to come. But the furnace of the global economy is now being powered by the white heat of industrialization in the East and South—economies like China, Brazil, Mexico, India, and Nigeria.

That means that the locus of social, economic, and even cultural innovation is shifting as well. This historic shift requires those of us who work at this intersection to re-evaluate priorities, change strategies, and create new types of innovations rooted in this new balance of power. For social innovators, we offer three tactics: focusing on the new middle classes of emerging economies, engaging them with technology, and building new global social movements.

Innovate for the fast-growing global middle classes

The rise of the middle class plays a central role in the historic development of all major economies, whether in 19th-century Europe, 20th-century America or 21st-century China.

We’ve all heard about the rising middle classes of the emerging economies, but few understand the scale of this shift. Consider this: within five years, India’s middle class will be larger than America’s, at over 250 million. Less than two decades from now, the billion in the middle class of industrialized economies will be outnumbered by the three billion in the middle classes of emerging economies, according to new McKinsey research.

Nor will these rising economies be weighed down by the troubling demographic trends afflicting the West. America’s median age is 37; Nigeria’s is 19. As the need for innovation quickens, countries with faster growth and more youthful workforces will prove more dynamic and more adept at change. As their economic power grows, so too will their cultural power. The influence of Nollywood is already being felt in the Middle East, Latin America, and even the remote islands of the Caribbean. The middle classes of these countries will be a driving cultural force across the world, much as American culture shaped globalization in the final decades of the 20th century.

What does that mean as we plan for the year ahead? As a starting point, your organization should ask itself this: where are we looking for our future growth and impact? Are our priorities shaped by the growth patterns of the past, or by the growth trajectories of the future? Understanding the dynamics of this major global change can ensure that our organizations stay relevant.

Specifically, the resource impacts of the fast-growing global middle classes demand an urgent acceleration of innovation. We know the planet cannot sustain an additional four billion people who replicate the current patterns of production and consumption in the West. Right now, much of our innovative energy is spent on coercing people to consume more things they don’t need. Our priorities need to be redirected so that we develop the groundbreaking innovations in technology, business, and society that will make economic growth sustainable. For example, even small innovations in choice architecture—such as changing the size of household recycling bins and trash cans—have large impacts when implemented at scale. In every part of our economy, we urgently need to identify and implement such innovations.

Invest in technology that empowers individuals

Last year began with Tahrir Square and the Arab Spring protests. It saw huge anti-corruption rallies throughout India, and ended with Time magazine awarding its Person of the Year award to "the protestor," while the streets of Moscow were a canvas for the largest anti-government protests since the end of communism. It also brought protestors to the streets of Athens, London, and New York.

We are seeing an awakening of middle classes to their role in change. On major global challenges where the West has failed to lead—like climate change, renewable energy, and modernizing education systems—it’s likely we’ll see citizens in the global South increasingly driving change and innovation. They will use a new suite of technology tools that span from social media infrastructure appropriated from the West, to context-driven technology such as M-PESA, the mobile payment system that already has more than 9 million users in Kenya alone giving many of them access to secure capital exchange for the first time.

The test for innovation will be its success in new global markets. Rather than building tools for developed markets and then retrofitting them to emerging country markets, those at the forefront of social innovation will increasingly invert their design process. Innovations that empower people in those countries and allow them to self-organize—whether by starting a business, starting a school, or organizing their local community—will reward both producers and users.

Extend your entrepreneurialism to building movements, not just products

Many of the social innovations of the past have been about making profits from premium products in developed markets, and redistributing some portion to the developing world (e.g. Product RED, Tom’s Shoes). This model of branded charity support will be overtaken by innovations that focus on aggregating the power of individuals’ choices more directly. Just as companies like Groupon and Gilt have aggregated consumer power for discounts, social innovators will aggregate consumer and citizen power for change. That might involve demanding changes to environmental or commercial practices. It might involve shifting large numbers away from businesses that won’t stop causing harm to the environment or specific communities. It might mean bringing pressure to bear on governments. Whatever its form, it will see the development of a new breed of "movement entrepreneurs," who use mobile and Internet platforms to aggregate and organize action.

We are still in an era when social movements are mostly country-based. But this is changing – just consider how in 2011, the global LGBT rights organization All Out (which was incubated by Purpose) created a community of almost 1 million members in under 12 months. We are entering an era of global movement building. Many of these movements will emerge from the global South, where individuals who have had little say over the conduct of their governments and corporations now have inexpensive new tools to address those issues, tools that are easily aggregated and can cross national boundaries. The political possibility of this has enormous potential. In time, the global mobilization of consumers and citizens could create a countervailing power to global businesses, which until now have mostly been accountable only to national governments.

The sociologist Eric Hoffer once said, "We are usually told that revolutions are set in motion to realize radical changes. Actually, it is drastic change which sets the stage for revolution." We have entered such a period of rapid change. The rules of business and politics are being rewritten, as established economies stumble while emerging economies surge. The expansion of the new global middle classes, the demand for technologies that empower individuals in those markets and the emergence of a new wave of movements with a global identity are three factors that redefine the future of social innovation. Economic and cultural power is shifting from north to south, from corporation to consumer, and from governments to citizens. It’s the time for entrepreneurs and innovators in all spheres of life to seize this moment and shape the revolution.

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