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The solution economy

Doing well by doing good

Solution Revolution

By Paul Macmillan

A Conversation with Paul Macmillan, co-author of The Solution Revolution: How Business, Government and Social Enterprises are Teaming up to Solve Society’s Toughest Problems

What is the “Solution Revolution"?

We have seen a big shift in how social problems are being tackled. It’s not just happening here in North America, but around the world. New players are coming together — from business, non-profit, social enterprise and government — and designing innovative solutions to our toughest social problems. Too many cars on the road? Ride-sharing problems are cropping up to help ease congestion. Too many homeless people? Innovators have found a way to build a $300 house.

Why is this a “revolution"?

We call it a revolution because it’s breaking down silos and changing the way we’ve done things for centuries. In the West, we’ve relied on governments to fix social problems. But that’s not working anymore. It’s revolutionary because we’ve never seen so many diverse groups come together to find solutions to things like safe drinking water and promoting healthy living. This revolution has given way to what we and others call the “solution economy.”

What is the “solution economy"? In what ways is this “an economy"?

It’s not an economy in the traditional sense. This new group of innovators is rallying around problems and solving them. In doing so, they’re giving rise to new markets. But these markets trade in outcomes instead of dollars. The buyers might purchase healthier communities or kids who can read. The vendor might be selling cheap solar-powered lights, or a code that tracks salmonella outbreaks.

Instead of trying to fix a market failure, the innovators in the solution economy create a market for the solution.

What are the main elements of the solution economy?

  • Wavemakers: They are challenging and changing conventional beliefs and practices.
  • Disruptive technologies: These wavemakers are using disruptive technologies to develop new business models that scale to enable radically new solutions to old problems.
  • Impact currencies: from open data to carbon credits, these impact currencies serve as a means of paying for social impacts in ways that go beyond the strictly monetary.
  • Public value exchanges: such as prizes and challenges provide the platforms that match capital to social need.
  • Solution ecosystems: these elements all come together in the form of solution ecosystems where wavemakers team up to solve problems ranging from fighting human trafficking to providing radically low cost housing for the very poor.

Isn’t it government’s job to solve societal problems like poverty, crumbling infrastructure and climate change?

Governments around the world are in debt. There’s also a lot of political gridlock. The big projects government tackled in the last century are no longer feasible.  Fortunately, government is no longer the only game in town when it comes to societal problem solving. Society is witnessing a steep change in how it deals with its own problems — a shift from a government-dominated model to one in which government is just one player among many.

So what is the role of government in the solution economy?

Government has a big role to play. But it’s a very different role than it has been historically. Government needs to build new partnerships, make data more open so potential partners can use it to help tackle problems. And government has to demand a return-on-investment for solutions.

Who are the “wavemakers"?

Wavemakers range from edgy social enterprises to large foundations and Fortune 500 companies that want to do good and make money. They range from Ashoka, which deploys three thousand citizen changemakers in sixty countries, to the global pharmaceutical giants that annually give away billions of dollars in medicine to low-income citizens anywhere, from Africa to the United States.

Their influence shouldn’t be underestimated. Private philanthropy to the developing world surpasses all governments monies combined. And socially responsible investing has grown into a $1 trillion industry. Tweet this

Paul Macmillan

Paul Macmillan is a Toronto-based partner and is Deloitte’s Global Public Sector Leader. He is a co-author of the book The Solution Revolution, published by Harvard Business Review Press.

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