What is holding back innovation in the current system and where are the gaps? The 'Open Book of Social Innovation' describes six stages of innovation that take ideas from inception to impact.
Work in other policy areas has shown that, to work effectively, innovation needs to incorporate all of the stages shown in this model (although stages are not always sequential, feedback loops exist between stages and stages can also be thought of as overlapping spaces). The model confirms that, in the world of worklessness, there is little effective use of innovation: even at the prompts stage (diagnosing what the problems are and where innovation can help), there is no clear consensus.
The use of proposals/ideas (stage 2) is haphazard and there is very little at all happening in stages 3-6. Given this, some effort needs to put into building up the early stages before moving forward to think about sustaining and scaling innovation and changing the system. Our report on worklessness will be an attempt to start this process, by trying to clarify the diagnosis, by identifying some ideas and proposals and by suggesting some ways of testing these in future.
Following this model through its stages, we can see how innovation inside the system is lacking.
1) Prompts, inspirations and diagnoses. This stage includes all the factors which highlight the need for innovation as well as the inspirations which spark it. This stage involves diagnosing the problem and framing the question in such a way that the root causes of the problem, not just its symptoms, will be tackled.
In terms of diagnosing the problem of worklessness there has not been consensus on the nature of the problem, and indeed whether there is a problem at all. Many commentators argue that the problem of worklessness is cyclical and will resolve itself with the economic cycle, in contrast to others who argue that structural problems exist.
Other responses are that all problems will be solved by the introduction of the Work Programme and Universal Credit. Part of the purpose of this paper is to try to add some clarity as to the nature of the problems that exist, and to identify how innovation can help.
2) Proposals and ideas. This is the stage of idea generation. This can involve formal methods - such as design or creativity methods to widen the menu of options available. Many of the methods help to draw in insights and experiences from a wide range of sources.
In terms of idea generation, the welfare-to-work market can suffer from a view that it has "all been done before". There is a lack of new ideas, and idea generation methods have not been applied at a strategic level to examining the system as a whole. Idea generation has to some extent been devolved to welfare-to-work contractors and it is not clear what, if any, new ideas are being generated by them.
As discussed above, there have been a limited number of new entrants into the market who have brought new ideas and new models.
3) Prototyping and pilots. This is where ideas get tested in practice. This can be done through simply trying things out, or through more formal pilots, prototypes and randomised controlled trials. It's through these processes that measures of success come to be agreed upon.
This should be happening within the 'black box' provision of the Work Programme. However, the financial model with its slim financial margins is likely to increase risk adversity in what is tested, and lead to a lack of different models being tried out.
Public scrutiny could also inhibit some types of innovation (with a fear of being too generous or too harsh towards workless people). Prototyping and piloting may be happening, but a lack of transparency across different contract package areas (CPAs) in the Work Programme means it is unclear the extent to which it is.
There is a real opportunity for prime providers in the Work Programme to conduct experiments to see which interventions within their black boxes are most effective. There is also an opportunity here for data mining - using the data being collected to analyse and assess what is working.
4) Sustaining. This is when the idea becomes everyday practice. It involves sharpening ideas (and often streamlining them), and identifying income streams to ensure the long term financial sustainability, that will carry the innovation forward.
5) Scaling and diffusion. At this stage there are a range of strategies for growing and spreading an innovation - from organisational growth, through licensing and franchising to federations and looser diffusion. Emulation and inspiration also play a critical role in spreading an idea or practice and demand matters as much as supply.
In terms of sustaining, scaling and diffusion, there are a number of barriers to these stages of innovation. Before ideas in how best to get people into sustained work become everyday practice, we need to know what works.
The ability to rapidly diffuse successful innovations can be constrained by commercial sensitivities between those delivering services, as market innovators attempt to hold on to competitive advantage for as long as possible and are highly reluctant to share their market advantage.
There is also a lack of evaluation in existing pilots and models that can identify what works and what can be developed more widely. There is also high turnover amongst people working in the market, which can mean not enough people have a rich and deep enough understanding of the evidence of what works.
There is also a lack of mechanisms to exchange and diffuse good ideas so that successful practices can be observed from global welfare markets. Whilst a number of information exchanges do exist (for example the annual Welfare-to-Work Convention in the UK, the Welfare Reform Evaluation Conference in the US, and the National Employment Services Association (NESA) annual conference in Australia) there is no international forum for exchanging and diffusing innovations.
6) Systemic change. This is the ultimate goal of social innovation. Systemic innovation commonly involves changes in the public sector, private sector, grant economy and household sector, usually over long periods of time.
Given the gaps and problems highlighted above, it is clear that when it comes to applying innovative thinking to worklessness, we are still in the early stages of the innovation process and are a long way from achieving systemic change.
Our report on innovation in worklessness that we are publishing next week will highlight a number of examples of innovative approaches to tackling worklessness and make suggestions on a number of things that could happen that could lead to a step-change in innovation to tackle worklessness.
 Murray, R; Caulier-Grice, J and Mulgan, G (2010) The Open Book of Social Innovation. NESTA