Europe is facing big challenges: an ageing society, mass migration, rapid changes in family structures, shrinking share of global GDP. Social cohesion is eroding daily. When people’s do no longer trust in the ability of institutions to build a fair and flourishing society, those institutions need to step up and act. They need to regain their position into the hearts and minds of the people they lead and be the point of reference for a better future.

The European Union has proven itself forward-thinking in the last decade in the field of social policies. But is now time for a further step forward.

This is why the European Commission (DG Research and Innovation) tasked us, PlusValue.org, a London based research and consultancy firm specializing in new models for designing, financing and delivering public goods, to identify solutions and make recommendations for a revived social innovation agenda of the Union. The study Vision and Trends of Social Innovation for Europe is the outcome of the research undertaken by Filippo Addarii and Fiorenza Lipparini and recently published by the European Commission.

Europe needs a comprehensive strategy hat tackles social problems embedded in industrial policy for innovation and growth. This is social innovation.

Social innovation is not new.  The European Union initiated social innovation policy in 2010, and it has been on the rise rooted in a new generation of society activists, techno-positivists and researchers trying to renew Western democracy. In Europe 2020 Strategy, the European Commission committed to investing in new ways to meet social needs and tackle societal challenges through social innovations which “empower people and create new social relationships and models of collaboration.” Furthermore, presenting social innovation as an official policy triggered a cascade of regulatory and non-regulatory initiatives: social entrepreneurship, Digital Social Innovation, enhancing relationships with RDI activities, introducing the “societal impact assessment” into the Juncker Investment Plan, among others.

There have been important achievements since this policy epiphany: explicit recognition to the nonprofit sector, social economy and civic participation, creation of some space for radical experiments in multiple domains – from alternative e-currency systems to ICT-powered public transparency interventions. It triggered a wave of social innovation projects, methods and practices, and legitimised a new field of research.

But what is social innovation in plain English?

Several definitions of social innovation have been proposed over time. Due to its multi-disciplinary and practical vocation, social innovation is a “fuzzy” concept and it is precisely because of its characteristics of multi-disciplinarity and cross-sectorality that it is of particular interest as a bridge between theory and practice, which also explains why it is often very effective in informing policy-making.

Social innovation is generally intended as a collaborative process where organizations (from different sectors) and individuals (including service users and providers), come together to address new social issues or improve ways of addressing old ones, thereby creating public value.

If innovation is successful, it can be scaled up – either by being mainstreamed within the public sector or replicated/rolled out in the market. In time, innovation leads to systemic change. However, the shortcoming of this established conceptualization of social innovation is that it fails to account for the complexity and interconnectedness of the social challenges that social innovation in its systemic dimension is called to answer.

But what exactly is the systemic dimension of social innovation and why is it important?

If we acknowledge that we cannot intervene on a single problem or target a specific person or group, without intervening at the same time on interrelated problems and groups, we are taking a systemic approach. So, for instance, if we want to address youth unemployment, we will need to intervene not only within the educational system, from early education and child care to tertiary education, but also on health promotion, nutrition, safety, developing social capital, supporting parents with appropriate work-life balance policies and so on.

On top of this, we need to remember that context matters, and complexity is never the same across geographies or over time, which is the reason why so many efforts to duplicate successful social innovations in different contexts fail or face unexpected challenges. On another level, current institutional infrastructures, the Welfare State in particular, are not adequate to cater for our hyper-technological, increasingly globalized and rapidly ageing society.

Therefore, a growing number of people and new organizations are filling the gaps – often in collaboration with public institutions – redefining with a bottom-up approach the role of public institutions and the relationship with society.

The rise of impact investing, the growth of social enterprises, the professionalization of third sector organizations, the spread of peer-to-peer networks and a growing community of new and traditional businesses are all galvanized efforts of multiple stakeholders and individuals to drive positive socio-economic change.

The current interpretation of social innovation is inadequate to address this level of complexity. Moreover, it does not consider the importance of values as a plurality, and the importance of politics and power relations in determining the creation, uptake and spread of social innovation.

Indeed, if we consider welfare systems as complex systems, we will be able to re-interpret social innovation as strategies to change these systems in line with the needs and aspirations of people and their communities – thereby firmly putting communities in the driving seat of change. Europe in the 21st century demands a renewal of the social contract – especially for new generations, vulnerable and marginalized groups.

Yet, the path to social progress is not a pleasant stroll into the future. Complex, unpredictable and all-encompassing, it brings a high degree of social disruption. Holding back and putting up barriers is not a solution. We must go forward and get gain from the pain of disruption. The goal is the “happy ending” in which everyone benefits, but we must be clear about it and committed to it together. This is the basis for a new social contract – a shared commitment to public value – that provides the strength to endure the pain.

Here is our proposal in a nutshell. The new European Social Innovation is Human-centered, System focused and unwaveringly political. Above all, it requires a great deal of ambition and political capital to challenge the status quo – especially vested interests in current institutional arrangements – to build a new generation of institutions and diffused capacity to catalyze and coordinate the action of diverse peoples, companies and public bodies, balancing top-down and bottom-up approaches, and combining effective action with public accountability.

People must be at the centre of the strategy. The astonishing ability and will of people – shorthand for entrepreneurship – to develop new means to overcome challenges in pursuit of their aspirations and respect of their values must be recognized and nurtured. Indeed, investing in these people to reach their full potential is the best investment Europe can make. This is a simple principle to be reaffirmed at a time when technological innovation is raising questions about what being human means.

Cooperation is the driver of innovation in society: complex forms of collaboration and interdependency are the foundations of the most successful economies. A system perspective recognizes the agency of individual innovators, enterprises and organizations and focuses on building an enabling environment for innovation. The priority is to build the infrastructure that enables new interactions and facilitates the consolidation of partnerships to achieve shared societal outcomes. A system focus approach will allow for a shift from top-down, fixed planning to more flexible approaches based on developing capabilities and resilience. Digital technologies are the key enabler.

A renewed vision for social innovation must be at the core of policy-making and the political agenda of the European Union and its member States. It must be firmly anchored in European policy-making to address the social dimension of the Union, starting with the debate on transformation of the institutional infrastructure and legal basis of welfare systems. It must not just be small-scale, unsustainable projects ring-fenced from the political arena where decision making of social policy is taking place. Translating social innovation into a vision for social progress has two major implications: first, embedding formally and finally social innovation within the EU and its institutional arrangements; and second, getting the framework right for public and private sector partnerships. Bringing the private sector’s capital and expertise is a necessary way forward, but raises new issues that must be treated with great care as it touches the core role of the State as guarantor of preserving public good.

We face unchartered waters.

There are also soft measures that European policy has yet to take into consideration. A shared vision for change requires a collective narrative that raises public awareness, catalyzing spontaneous individual behavior – without stumbling into social engineering – and nurture public debate. Moreover, impact assessment must be part of the plan as a form of accountability on achieved results and to justify adjustments and change of course.

We also recommend flagship initiatives as symbols and testimonies of this ambition. In the study, we called for the creation of 1 billion EUR Outcome Payment Fund to address current EU social challenges. As a joint effort between the EC, EIB, EIF, national promotional banks, institutional and impact investors, this would be the largest cross-sectoral initiative to channel capital towards innovative solutions for European social challenges such as migration, reskilling/upskilling of the unemployed/under-employed or misinformation and civic disengagement.

If the European Union is serious about the future wellbeing of citizens and its own legitimacy, nothing less can be expected.