Building

Better
Systems
A Green Paper on
System Innovation

Charles Leadbeater
Jennie Winhall

October 2020

1
 Follow this work at
systeminnovation.org

About the System Innovation Initiative

This initiative of the ROCKWOOL
Foundation’s Intervention Unit connects
knowledge and practice on system innovation
to leaders, innovators and entrepreneurs who
want to have more systemic impact and meet Contents
big, shared societal challenges in new ways.
Over the coming year we will be working with
system innovation experts and practitioners
internationally and in Denmark to turn
systems theory into systems change in action.

About the authors

Charles Leadbeater is a leading author 01. Step Into It 5
and international advisor to governments,
industries and cities on innovation for social 02. Making the case for System Innovation 7
impact and system change. He is senior
advisor to the ROCKWOOL Foundation, co- 03. Seeing the System 15
leading their System Innovation initiative with
Jennie Winhall, who is a system innovation 04. Working on Three Levels 17
expert and the Foundation’s Director of Social
Innovation. 05. Getting into The Washing Machine 20

06. The Keys that Unlock Systems 23

The ROCKWOOL Foundation is an impartial,
financially self-supporting institution. The 07. Be Part of a Movement 29
Foundation’s objective is to strengthen the
sustainability of the welfare state through 08. Closing the System Innovation Gap 33
the creation of new, independent knowledge
about the challenges faced by society and Further reading 35
through the development of solutions
to these challenges. The ROCKWOOL
Foundation Interventions Unit designs,
launches and scales social innovations to
address social issues which affect equality
of opportunity.

Building Better Systems 2 3

 T
his paper lays out a series of renewable systems of production.
steps people can take to create Rising to the challenge of fixing an existing
the new systems we need to meet system and exploring the possibility
shared, public challenges. Systems are of creating a new system are different
ubiquitous and powerful. We rely on them undertakings. The first is about optimising

1
to support our daily lives: every time we what exists, the second is about creating
turn on a tap, flick a switch for electricity, something different and better. We want
drop our child at school, jump on a bus or this project to yield practical insights for
visit a doctor we rely on a wider system. those who want to respond to the systemic

Step Into It
There is a widespread sense, among challenges of today by stepping into the
decision makers and citizens that in the possibilities of the future.
coming decades society will need not
just new products, software and services, Acting to change systems depends on
but new systems for living sustainably in new ways of seeing both challenge and
a socially inclusive society. The need for opportunity: why systems come under
better, different systems will be heightened strain and what unlocks the potential
by the impact and lessons of the Covid-19 for alternatives. It depends on better
pandemic. understanding how new systems form,
and what and who is part of initiating and
Systems are productive precisely because driving the transition to them. In putting
they are more than standalone products. together this paper and the ones that will
A system pulls together all the different follow from it we want to clarify how to
ingredients needed to meet a need or assess the need for, invest in and act on the
to produce an outcome: the shipping process of deliberate system change.
container is a product, containerisation
is a system; a contactless payment card Systems theory and thinking is a well
is a product which only works as part of a established field. There is a growing body
payments system; an operation in a hospital of historical knowledge about how systems
can only take place because it is part of a have changed over time. What is lacking is
wider health system. To understand how a practical knowledge to show how systems
system works it has to be seen as a whole, can be changed deliberately and how
from the macro policy frameworks of social new systems can be brought into being.
security systems right down to how a What we hope to do is to bring a focus on
citizen goes about finding a job. connecting theory to possibility, practice
and people:
Many of the systems we rely on for care
and work, energy and transport, education Possibility: to focus on the opportunity to
and health are under pressure to change. create new, better, different systems, not
Society faces both deeply entrenched and just to optimise existing systems through
growing challenges that are outpacing incremental adjustments.
the systems we have. We also have
opportunities to create new, alternative Practice: to turn historical knowledge of
systems as new knowledge, values and how systems have developed in the past
technologies emerge, from artificial into practical knowledge about how to
intelligence and bitcoin, to circular and make systems change, on purpose.

Building Better Systems 4 5

 People: to show how people working Convenors who are in a position to bring
together can shape systems rather than together the different people involved in
feeling powerless in the face of seemingly acting to change a system. They might in-
complex, impersonal forces which are clude foundations, national intermediaries,
larger than them. innovation labs or industry bodies.

In doing so we want to highlight what is

needed for effective system innovation.
There is a significant gap between the
Commissioners and enablers, such as
political leaders and investors, who want to
bring a new system into being.
2
Making the Case for
systemic innovation that society needs and
the incremental and additive innovation Building Better Systems first addresses the
which is most often produced. One reason nature of the systemic challenges and op-

System Innovation
that many social innovation efforts fail to portunities which make system innovation
have the impact hoped for is that these necessary. We go on to consider how to
innovations are not designed to bring delineate ‘the system’ that needs innova-
about wider systems change: they are like tion and to see it in a wider context. The
individual points of light when they need to paper then explores the way that change
form a new constellation with a shape and at different levels, from the macro to the
structure. micro can affect systems before looking at
the role of purpose, power, relationships
This first paper sets out some broad frame- and resources in systems change. Finally,
works to help people who want to play a we look at the cast of characters involved
role in creating the kinds of systems we in systems change, the roles they play and
need to meet big, shared challenges, from the alliances and coalitions they need to
their different positions. In particular, it form in order to make change happen.
is for people who play four critical roles in
system innovation: This paper also marks the start of our
effort to identify the gaps between the
Entrepreneurs who are developing vi- promise offered by deliberate system
sionary and potentially systems-shifting innovation and the challenges that arise in
activities on the edge of or outside existing practice. It is therefore also an invitation
systems to practitioners, researchers and advisors
to contribute their expertise in different
Insider-Outsiders who are working inside fields of system theory, historical knowl-
the organisations and institutions that are edge and practical experience of system
part of formal systems to open them up to change to better addressing some of the
the new approaches that are developing issues raised in this paper and to setting
outside them.’ the further questions this initiative should
tackle. We set out our initial ideas of what
these might be in the final section.

Building Better Systems 6 7

 nnovation comes in many forms, view on the city’s main streets, unimpeded save lives and keep people safe, she had to Secondly when there are challenges that
from the incremental to the radical, as the people about them shopped. change the city’s culture, and to do it not are new, and growing in a way that current
the disruptive to the sustaining, from within the police force alone but by systems are not designed to deal with, even
commercial to social, creating new products McCluskey says the best she could seem forming a coalition with her many partners if they were expanded. The population
and processes, services and software. Why to hope for was that she might stop the in health, education, housing, employment is ageing, putting different pressures on
and when is system innovation needed? problem getting worse. That was not some- and family support services, as well as families, care providers, health and pensions
thing she could settle for: the trauma she local churches, businesses and communi- systems. Society needs new systems to
System innovation is needed when two witnessed, especially for the mothers of ty groups. Together they created a more enable people to age well, not just more
conditions apply. young men who bled to death on Glasgow’s effective way to intervene early, working day care centres. There is a growing divide
pavements would not let her do so. with families, to prevent young men being between cities, which are rich in resources,
First when society faces a systemic drawn into a culture of violence and then attract young people and create jobs, and
challenge which requires a systemic There were many steps in the journey to provide them with more attractive small towns, which are semi-detached from
response. which McCluskey, her officers, colleagues alternatives: education, training and em- the mainstream economy. That creates
and partners took in the coming months ployment. We think the process that Karyn growing challenges for people to find work,
Second when society has a systemic as she created a coalition across the city McCluskey kicked off in Glasgow is a good support their families and maintain their
opportunity to create a new kind of system. – of public, private, voluntary, religious example of a system innovation designed wellbeing. The consequences might show
and community groups - to create a new to meet a challenge that was systemic. up in higher demand on health and social
Systemic challenges push innovation approach to tackle the problem. But one of services, but the causes of the problem lie
forward; systemic opportunities pull it. the most important came right at the start. Headaches like this will not clear them- in the dynamics of economic and social
The first is about tackling a problem, the She decided to reframe the challenge, to selves up of their own accord; they are development, the kinds of work there is and
second about realising a possibility. see it in a different way. likely to get worse. Public servants, politi- the skills people have.
While linked they are quite different cians and communities that have systemic
activities. McCluskey and her officers were working challenges like these need to be able to More fundamental system innovation is need-
in a criminal justice system designed to step into system innovation to tackle them. ed to meet these systemic challenges, which
Either of these factors on their own can arrest, prosecute and punish criminals. share the following four characteristics.
create the conditions for system innovation, Instead she drew on her original training
but when they are combined the need for as a nurse to see the violence as if it were Characteristics of A systemic challenge is deep rooted. The
system innovation becomes even more a disease: an epidemic which needed tack- Systemic Challenges problems it produces keep coming back
compelling. ling like a public health emergency. despite attempts to fix them from within
Rather than responding to incidents once Society faces plenty of pressing problems, the system. Karyn McCluskey was frustrat-
they had happened, the city needed to many of which could be tackled by incre- ed because she was going through the same
Systemic Challenges prevent the spread of violence in the first mental improvement and piecemeal reform. routines, to deal with the same kind of cas-
place. The criminal justice system treat- What makes a challenge ‘systemic’ and so in es, while having no impact. That produces a
Karyn McCluskey had a headache, a big one ed each crime as the act of an individual, need of system innovation as a response? persistent pattern of failure. The challenge
and so did her city, Glasgow. whereas the epidemic was the product of of knife crime in Glasgow was stuck and
a shared culture of men and communities, We see two situations in which improve- deepening.
McCluskey was the senior police offi- entrenched by economic inequality and by ments to the same system is not enough.
cer tasked with tackling violent crime in domestic violence, drugs and worklessness. Firstly, when there are challenges that are Systemic challenges are connected. A
Glasgow and she seemed to be having no ‘stuck’: there has been no significant change systemic challenge does not affect a single
impact. Glasgow had acquired a reputation That shift in perspective, to see Glasgow’s in outcomes despite investment over time. component, nor even a single sub-system.
as one of the most violent cities in Eu- challenge as a disease of epidemic pro- One example of that is the persistent mi- This makes these challenges difficult to
rope. Scores of young men died from knife portions, enabled McCluskey to show that nority of Danish young people who do not deal with because the response requires
wounds, many more were injured and many the problem was deep rooted and would complete further education or participate in coordination across many government
others went to prison for the crimes they only be addressed with a collective and work. These challenges have defied conven- departments and agencies, as well as the
committed, recorded on CCTV, in plain systemic response. To fulfil her mission, to tional solutions for many years. private sector and civil society. This was

Building Better Systems 8 9

 clearly the case when Covid-19 emerged: and climate change, which are challenging Systemic Opportunity wanted to be the first to introduce a new
what started as a health crisis quickly institutions designed in a different era. technology that might not work. Pan Am
became an economic and social challenge, Institutions that were designed for one set The Bristol Britannia was one of the most broke the cartel of fear by taking the first
which has placed huge stresses on the of problems in another era are now being efficient and comfortable long-haul airliners step into a world of different possibilities.
political system and the social contract. tasked to come up with solutions to quite ever made when it was introduced in 1957 Everyone else would soon follow it. The
The violence in Glasgow was dealt with different challenges in a different context. to fly across what was left of the British Bristol Britannia was one of the unforeseen
directly by the police and health services, Social security systems designed 60 years Empire. It was a prime example of an casualties of that shift.
but it touched work, family life, education, ago are coping with the rise of flexible, innovation aimed at systems optimisation:
housing and communities. In time Karyn independent work and the gig economy; the culmination of years of incremental This shift, from a system organised around
McCluskey would have to work with all mental health services designed for a small improvements to propeller powered the limits of the propeller planes to a
these connected sub-systems to create a minority of the population are dealing with airliners. The tragedy was that the Bristol system unlocked by the potential of jet
more effective way to tackle the challenge. widespread anxiety and depression amongst Britannia arrived just as Pan Am introduced airliners, is a relatively straightforward
Solutions designed in organisational silos do young people. Boeing’s game changing jet-powered 707. example of what we think of as a shift from
not work for challenges which are difficult the current system to the possible system,
to contain. Systemic challenges are deep rooted, Jet airliners were not just a new technology from System Now to System Next.
persistent and connected, and structural. that would extend the reach of the existing
Systemic challenges are characterised by a They make themselves felt in different airline system. They opened up the The Bristol Britannia was a brilliant
structural mismatch between institutions, ways. One of the most powerful is through possibility of entirely new ways of travelling, innovation within System Now. Pan Am’s
the context they work in and the needs they a crisis which threatens to engulf the working and living: a systemic opportunity. introduction of the Boeing 707 opened up
meet. A systemic challenge reveals public systems on which society depends. the path to migrate to System Next without
fundamental issues about the purpose of Covid–19 has been a systemic crisis; so was Jet airliners could fly at higher altitudes it being clear at the outset what that would
a system and how it is organised to serve the financial crisis of 2008. Climate change, which made flying less bumpy, more entail and what it would make possible.
society. food security, competition for water, comfortable and safer. More people could Eventually the entire industry, including
migration all have the potential to generate be taken on a single flight but that required consumers, regulators, airports, hotels and
In Karyn McCluskey’s case the scale of systemic crises. a change in the business model. Flying tourism would make this shift and a new
violence raised fundamental questions went from being an elite, niche activity pattern of relationships and new ways of
about the role the police play in society. Yet often systemic challenges are chronic, to one which attracted a larger market of life would take hold, which in turn led to
The police service saw its job as catching longer-term social conditions which customers paying a lower average price. huge investments in new resources: planes,
criminals and administering justice. But that are getting slowly worse. One challenge And the jets were bigger than the propeller runways, airports and air traffic control
was not making society safe. McCluskey for systems innovators is to persuade planes, so they needed longer, stronger systems. That is why we think the Boeing
got officers to see they had to prevent people that a chronic challenge demands runways, bigger airports, on larger tracts of 707 enabled system innovation. It was not
crime taking place by challenging the urgent attention. Karyn McCluskey got land in new locations with more taxis and a single point of light; it opened up a new
underlying culture which produced the the attention of her partners in Glasgow buses to take people to more hotels. world of possibility, with new constellations
violence. That required the police to work by getting them to see knife crime as an of value that created new markets.
in new ways with partners who could tackle epidemic. The Boeing 707 was not just an innovation
these underlying causes in households in engine technology - it opened up a
and communities. She posed an almost Indeed she did more than that. Karyn systemic opportunity. There was no Characteristics of
philosophical challenge to the policing McCluskey’s metaphor of an epidemic of systemic challenge to address: the economy Systemic Opportunity
system to understand its purpose in a new violence gave people both a way to see the was not failing because people could not fly
way and therefore how it worked. problem and the potential solution as mod- more. Moreover, the technology itself was A systemic opportunity is fundamental,
elled on disease prevention. She gave people not that new: the Boeing 707 was modelled because it is based on a completely
Many systemic challenges trace their roots a way to step into a systemic opportunity. on military bombers. The airline industry different operating model to achieve a
to the big transitions society is making: had been held back from taking this different goal: for example, a health system
ageing, urbanisation, inequality, technology opportunity by a ‘cartel of fear’. No airline designed primarily around homes and

Building Better Systems 10 11

 innovations. Systemic opportunities open up possibilities: “Designing policy
are hard to grasp because they require without an imaginative sense of where you
investment in lots of complementary are going means your best efforts will land
innovations. you toward the front of the status quo, but
not ahead of it. Imagination enlightens
Now Next Systemic opportunities are fundamental, strategy, policy and programming and
unfolding and collaborative. Spotting and helps you break free of institutional
then taking such an opportunity however thinking that leads you to piecemeal
requires both imagination and courage. reform. The imaginative question isn’t
That requires radical leaps, not just small ‘what needs to be changed about our
steps. A mass of innovation is always going existing social safety net,’ but ‘what kind of
on within a system to prolong its life, raise caring society do we want?’”
productivity, improve quality and reduce
Innovation within Innovation to create waste. This kind of system change often However, knowledge is not enough
the current system the new system goes under the name of modernisation or to create a breakthrough. A systemic
public service reform. opportunity may exist only in theory until
someone is prepared to take the step
communities to create wellbeing rather in complementary innovations. A good For a system to change in fundamental Pan Am took to break the ‘cartel of fear’
than one designed around hospitals to example is the rise of containerisation as a ways innovation needs to make possible through an act of radical innovation.
treat illness. A systemic opportunity is system. For the first decade after the first radical leaps so that a society can not just
never just a different way to achieve an containers were introduced in 1956 little adopt a new technology but create a new, This is why entrepreneurial ventures
existing goal: it makes new goals, and ways changed in the shipping industry. It was better, different way of life. Incremental play such a vital role in systems change,
of life, possible. only in the 1970s with the introduction of innovations like the Bristol Britannia build whether they come from start-ups or from
specially built container ports and ships on the existing knowledge base for a field; inside an existing business or organisation.
A systemic opportunity is more than a flash that wholesale change in freight systems system innovations like the Boeing 707 They take the first step into a future
in the pan: it takes time to unfold because came about and it was only in the 1980s, invariably involve connecting previously system without knowing for sure where
it is generative, it creates a mass of new with the rise of just-in-time supply chains unrelated knowledge. That might involve the next stepping stones might be. Taking
value, economically and socially. The scale linking manufacturers, suppliers, retailers bringing together previously unconnected a systemic opportunity requires a mixture
of that opportunity is rarely apparent to and customers that the full value of the fields of practice and vantage points. of patience and timeliness on the part of
the initial innovators who may open it system was realised. The combination of Karyn McCluskey made Glasgow’s big leap system changing entrepreneurs, to turn a
up. When Douglas Watson launched the climate change with the Covid-19 crisis possible by linking knowledge of criminal niche into the base camp for a new system.
Vegan Society in 1944 to promote plant may create a systemic opportunity to justice with epidemiology: it was the
based diets he could not have foreseen the reconfigure these global just-in-time combination of these two unrelated fields These frameworks for understanding
vegan disruption of the hamburger, which supply chains to create more sustainable, of expertise that generated the innovation systemic challenge and opportunity help to
in December 2019 led to International resilient systems. that reduced knife crime in the city. The explain why social innovation efforts often
Flavors and Fragrances’ $26.2bn deal to systems theorist Frances Westley argues fail to reshape entire systems. They do not
buy DuPont’s nutrition and biosciences Systemic opportunities require that important social innovations resolve go deep enough, to touch the fundamental
business. The merged company hopes collaborative innovation because they apparent paradoxes by bringing together purpose of the system; they run out of
to shape the future market for meatless require new connections to be made. what seems incompatible. That is what stamina and patience to tackle persistent
burgers. That is likely to be just one of The shipping container only came into Karyn McCluskey did. challenges or to explore opportunities
several waves of investment in alternative its own as containerisation, the system, which take years to unfold; they fail to
food systems. with ports, cranes, lorries and ships, but The Canadian social entrepreneur Al mobilise the collaboration needed for
also specialist logistics systems and even Etmanski argues that those fundamentally complementary innovations.
A systemic opportunity can only be opened legal innovations. Building out the entire different models come when we ‘privilege
up fully through waves of investment system required a mass of complementary the imagination’, and ask questions which

Building Better Systems 12 13

 System
PUSH PULL
Innovation

Systemic Challenge
Systemic Opportunity

When Challenge Meets Opportunity to be seen as obvious in the context of a young adults with learning disabilities, The first step in systems change is always
crisis: witness the way that the Covid-19 where Canada has been among the leaders. to be clear about the challenge and the
System innovation can start from the crisis has pushed many governments The systemic challenge stemmed from opportunity. We think the opportunity is
challenge or the opportunity. It does not to experiment with new forms of social a care system with its roots in the 19th more important than the challenge.
need both. However, the case for system security support for people who are self- century that was out of kilter with the A systemic challenge may push people
innovation becomes much more powerful employed and in insecure work. During a aspirations of its modern users. There towards system innovation but it is only
when the challenge and the opportunity crisis we may take the first steps toward was something fundamentally awry with a when a systemic opportunity develops,
work together. A pressing systemic more lasting system change. system that treated its clients as incapable to open up a new possible way of life and
challenge makes the search for systemic of agency. The systemic opportunity was culture that system innovation gains real
opportunities more urgent; the emergence Creative social movements can play an to use individual budgets to create a new momentum. The combination of challenge
of an alternative system makes it easier to important role by both campaigning system organised around the right of the and opportunity are where to start from in
relax our reliance on the existing approach. against the shortcomings of existing young people to shape their own care. That understanding how to see the system that
Systems innovators step into this dynamic systems and creating early models for created amongst other things a new work- needs changing.
of challenge and opportunity: their role is alternatives. Climate change activists are force of independent carers commissioned
to show how one can feed the other. both challenging existing business models by young people to work with them.
and consumer habits and promoting
Crisis is one extreme setting for that. A alternatives based on circular, renewable System innovators articulate both the
crisis like Covid-19 has an important role and regenerative models of energy, and systemic challenges society faces and
in system innovation because it exposes production. the systemic opportunities available to
underlying strains in current systems, create better outcomes. We may see this
accelerates change and creates the An example of a movement which used a combination of challenge and opportunity
urgency for collaborative effort to find systemic challenge to justify the search for emerging in domains such food production,
better solutions. Solutions that might a systemic opportunity is the campaign energy, welfare, mental health and ageing.
once have seemed outlandish can come to shift in social care systems supporting

Building Better Systems 14 15

 D
efining the space for systems professional side to how they work com-
change is like drawing out the mands more attention than the informal,
field of play for a game. It sets hidden and social aspects. Systems innova-
the boundaries to the action. It also raises tors need to be able to
questions about whose vantage point mat- see both.

3
ters to define the system.
Take health as an example. Hospitals are
The question you ask determines the kind at the core of modern health systems.
of answer you get. The question: “How do Yet the health of the population also

Seeing the System

we improve current mental health services critically depends on lifestyle factors,
for young people” will lead you to a slightly their diet, exercise and mental wellbe-
better version of the services that already ing, the kinds of homes and communities
exist. The question: “Why is there a seem- they live in; the air they breathe, the food
ing epidemic of poor mental health among they eat and the places where they work.
young people, and what kinds of systems Hospitals are the most visible features of
do we need to turn the tide?” raises both a system that promotes health; yet the
more fundamental questions and greater most powerful long-term determinants
possibilities. The answer is not just to im- of good health are largely social and often
prove current services to treat diagnosed informal. An excessive focus on the formal,
mental health disorders but to address how professional systems at the expense of the
society generates mental wellbeing among informal social systems will lead to acute,
its citizens. System innovation thrives on clinical medicine taking precedence over
asking more open questions. long-term public health. The opportu-
nities for impact from social innovations
The first question invites people to address which affect lifestyle and behaviour will
a known, bounded, system of formal be neglected in favour of the technical and
services. The second invites people to see clinical innovations that work in hospitals
those services within a much wider setting and other formal settings.
of the position of young people in society,
navigating the pressures of education and
changing social norms in a world over- Setting Boundaries
shadowed by climate change and a future
that looks highly uncertain. That invites a Systems are themselves interconnected.
response which draws on initiatives and They overlap and work together but can
resources across society. also be at odds with one another.

The system you end up addressing is Take the pensions system as an example.
determined by the question you ask at the The pension system is a foundation of the
outset. welfare state, serving social security and
equity. Yet to achieve that end it is also a
part of the global financial system, of banks
Formal and Informal and investment funds, which is run to make
profits for shareholders. The money that
Systems have a dual aspect, a formal and goes into the pensions system comes from
an informal side. Often the formal, visible what people earn at work: so the pensions

Building Better Systems 16 17

 system overlaps with systems of employ- This boundary setting question is never en-
ment and the labour market. Meanwhile tirely settled in systems change initiatives: it
from another vantage point the pension keeps coming back in new forms. Being able
system is part of a social care system for to shift perspectives - to look at the formal
elderly people: it provides them with a flow system from different vantage points - is
of financial resources. Yet that is not the an important part of being able to open up
only determinant of how well people live in avenues for change.
older age: the relationships they have, the
communities they live in, the activities they
engage in, the contributions they make to Political
wider society all have a bearing on their system
quality of life.

These connections impose constraints

upon systems: a change in pension
entitlements may have an effect on how
people work and what social care they can
provide. Coordinating across different
systems is hard work: even different Welfare
systems within the public sector can system
seem at odds with one another. Yet these Financial
connections between systems can also system
open up opportunities for combined
impact: for example, when new approaches Pensions
to elder care open up new possibilities for system
social care work.

If the boundary to a system is drawn too

narrowly then the wider influences upon
it and opportunities to change it will
be missed. Important social challenges
usually cross the boundaries of public,
private and social systems. Yet if the
boundary is drawn too widely then the Social
range of factors that need to be taken into system
account will be too broad and change will
seem an impossibly huge undertaking. So Work and
a first step is to draw the boundaries of income
the system in a way which makes system
change a viable activity.

Building Better Systems 18 19

 O
ne of the most thoroughly and ways of life. These niche innovators
researched models for are not necessarily trying to change an
understanding the dynamics of entire system; they might be responding to
large-scale system transition has been local needs and opportunities. Eventually
developed by Professor Frank Geels, at these niche innovations start to coalesce,
the University of Manchester. His multi- forming the kernel of an alternative

4
level perspective shows how change system.
comes about through a combination of
developments at three system levels: the The first mountain bikes, for example,
micro, the meso and the macro. Innovating were known as clunkers. They started off

Working on
across a system or creating a new system as homemade, improvised bikes made in
means engaging with each of these levels the garages of avid mountain bikers. It
at the same time. To understand what was only ten years after the first clunkers

Three Levels
drives this process of transition it helps to were ridden that commercial mountain
see how actions at these three levels work bikes came into production, made by
together. Marin in northern California. By then these
niche innovations in mountain biking had
led not just to the creation of new bikes
Three levels of system change but also clothing, accessories and travel
businesses as well as trails to be ridden.
Changes at the micro level start through The kernel for the now massive global
innovation, entrepreneurship and market for mountain biking was created
creativity in ‘niches’ where people start by the coming together of these niche
to develop radical new solutions, habits innovations.

Three Levels

Macro
The ‘landscape’: values, ideologies,
demographics and economic context

Meso
The ‘regime’: frameworks, rules and
norms embedded in infrastructure,
institutions and markets

Micro
‘Niche’ innovations: new practices,
technologies and lifestyles

Building Better Systems 20 21

 Timing is vital to all of this. Entrepreneurial
ventures, creating these niche innovations,
are critical to the process of forming a new Alignment Disalignment Realignment
system, marking out the new territory for
others to follow. However, they are more
likely to take off when they give concrete
expression to big shifts in values and needs:
that is when they can catch a wave of

Macro
change to take them forward.

That happens when they connect to broad

changes at the macro level: in the ‘land-
scape’ of societal values and political ideol-
ogies, demographic trends and economic
patterns which shape the context in which
a system operates. For example, shifting
attitudes, especially among younger people,
towards the links between food, energy and
climate change are shaping the landscape in
which the food industry operates.

New developments at the micro and mac-

ro level are not enough to change entire
systems, however. They create the context
Meso

in which change becomes possible at the

meso level.

In the middle meso level sits what Geels

calls the ‘regime’: the combination of insti-
tutions, technologies, markets and organi-
sations that give a system its structure. This
is the engine room of the system. System
transitions happen when one regime gives
way to the emergence of the next. To de-
velop a different, better system it is never
enough for there to be change at the macro
Micro

and the micro, there needs to be change at

this meso level as well. There may be prom-
ising ideas and interesting experiments
but without a new regime there is no new
system.

Time

Building Better Systems 22 23

 System transitions System innovation has to engage with
all three levels, at the same time: that is
System transitions take place as a result of one reason why it can seem daunting. By
complementary developments happening adopting this perspective we think it is
at all three levels. Innovations at the micro easier for systems innovators operating

5
level start to gain momentum, at the same at one level to understand how to work
time as changes at the macro landscape with allies working at the other levels.
level create pressure on the regime to Entrepreneurs working in new niches have
change, which in turn creates windows to be alert to changes in the landscape as

Getting into The

of opportunity at the meso level for those new demographics, values, demands and
innovations to take hold. An example of possibilities take shape. They need to work
that process unfolding now might be the with policy-makers and regulators who

Washing Machine
rise of vegetarian, vegan and flexitarian might help to open up the market for their
food. solutions while at the same time finding
ways to collaborate with innovators inside
Veganism was a niche lifestyle until quite the ‘regime’ who want it to adapt to the
recently when it was taken up more widely changes going on around it.
through social trends such as ‘clean eating’.
The philosophy of veganism, which first
emerged in Europe in the wake of World
War II as a niche lifestyle gained a much
wider salience in the context of changes
in the landscape - a growing awareness of
the links between food production, animal
rights and climate change. That macro shift
in values helped encourage innovations in
food production, retailing, and lifestyles:
new products, like oat milk became widely
available. Eventually developments such
as this started to coalesce to provide
the kernel for alternative, plant-based
food production systems. Veganism
and its many flexitarian and vegetarian
offshoots is now reshaping mainstream
food systems: in the UK vegan options are
now available in most supermarkets and
restaurant chains and Greggs, the largest
high street baker, makes a vegan version of
its iconic sausage roll. This is an example
of how change at the landscape level
(values and context) and the micro level
(entrepreneurship and behaviour) creates
the conditions for change in what Geels
calls ‘the regime’.

Building Better Systems 24 25

 The Washing Machine

Dominant
‘regime’

Many new
systems are
possible

Hybrid
solutions form

Developing
entrepreneurial
alternatives

S
ystems change is a dynamic The now conventional account of how In conventional accounts, the dynamics We think that is not the story of how most
process, in which long periods of radical change happens in industries is the of change are presented as if they were a systems change, especially public systems.
relative stasis can suddenly give way tale of disruptive innovation: disruptive battle between insiders in the incumbent The story is more nuanced.
to a disruptive vortex which releases a lot of challengers displace tired incumbents. ‘regime’ (on the blue line which goes into
energy. That energy will be both destructive We think this is at best a partial and often decline) and outsider challengers (entre- In many industries the incumbent ‘regime’
and constructive. There will be resistance a misleading way to think about systems preneurial alternatives which are on the proves much more difficult to dislodge than
and momentum. Some things will be flying change. Rather than outside challengers rising orange line). Change happens as the might be expected. Many industries in the
off in all directions, others will be com- attacking and displacing insider incum- challengers displace and replace the incum- US for example have become more concen-
ing together. It is disorienting to be in the bents we think change in systems usually bents. In many private sector industries, trated in the last two decades with fewer
middle of this but that is where the change comes about by innovative insiders work- for example banking, retailing, media and companies accounting for a larger share of
happens. We think it is like stepping into ing with entrepreneurial outsiders. That is communications, new challengers - Spotify, the market. Barriers to entry have grown.
a washing machine on the spin cycle. The what happens in The Washing Machine. WhatsApp, Uber, Airbnb and their ilk - are One reason for that is that incumbent com-
model below is a simplified way of under- continually disrupting incumbent industry panies are rarely static: there is usually a lot
standing the dynamics of change: we call it leaders, using digital technologies to do so. more innovation going on within them than
The Washing Machine model. might first meet the eye.

Building Better Systems 26 27

 These factors may be particularly true of That is what happens in The Washing Carmel California. Organic food is now one Coming out of the Washing Machine,
public sector dominated systems, with their Machine. This is where people inside the of the fastest growing food segments in on the right-hand side of the diagram,
dense interconnections, because there may system, often struggling with deep seated the US. Earthbound and other small niche new processes come into play to realise
also be limited room for new entry. There challenges meet and combine with people organic producers provided the kernel to the opportunities it creates. New viable
may also be a mass of adaptive innova- from outside the system pursuing ambitious this alternative food system. solutions have to be scaled by mobilising
tion going on within them to optimise and new possibilities. Out of the spin cycle of resources and opening up new markets,
strengthen the current system. The Washing Machine many hybrids, vari- Convenors of space where insiders and which raises new questions for investors
ants and combinations can emerge (on the outsiders, new and old, challenge and about what it means to invest
The other side of the equation is that start- right-hand side of the diagram.). possibility can come together to find new, in the development of systems as opposed
up ventures often find it hard to reach scale collaborative solutions. to discrete solutions. Outmoded systems
unless they team up with large incumbents Our hypothesis is that system change be- have to be wound down to make way
who have capital and market reach. This comes more likely when more people step A variety of organisations might make that for new ones, which creates important
is particularly true of social ventures for into The Washing Machine in this way. We possible, from dedicated systems change considerations for insiders about how to
whom the most obvious route to scale is to need more: programmes to national intermediaries disinvest from old, unproductive activities,
become part of the system they set out to and industry associations, to collabora- which is vital to open the space in which
change. On their own they are less chal- Insider-outsiders who work inside systems tions between far-sighted funders who new systems can grow.
lenging than might be thought. The failure but see their shortcomings, and act as con- want to stimulate systems change.
rate among new ventures is dishearteningly duits, connecting changes in their strategy Increasing the capacity of people and
high. and activities to new ideas and alternative The Washing Machine is both a dynamic organisations to play the roles of creative
ways of operating that are forming outside. and uncomfortable position to step into. convenors, insider-outsiders and system
Our view is that real change in public sys- This focus requires further shifts in how shifting entrepreneurs, and to take on the
tems much more often comes about when Karyn McCluskey was an insider-outsider. we think about and support the people and further roles we outline in section seven,
the old and the new combine and clash, She had the credibility that came from organisations playing these roles. will increase the likelihood of effective
collaborate and compete in the circle in the working within the system; she could see systems change.
middle – The Washing Machine. The new its strengths and its failings; to be the Entrepreneurs with a mission to change
does indeed represent a challenge to the old conduit to bring in new ideas from outside. a system often have to live a double life:
but can often combine with it to create new This combination of insider knowledge and finding a way to make their livings in
hybrids that are combinations of the old and outsider perspectives creates new hybrid System Now while promoting the shift
the new. That process involves innovative approaches. to System Next. To be successful in their
insiders finding ways to work with entre- system-shifting endeavour, they need to
preneurial outsiders to form these new Entrepreneurial ventures with system be recognised and supported differently
constellations. changing potential, which do not just seek compared to traditional start-ups.
to scale a new solution but embody the op- Achieving scale is not a reliable measure
The story of disruptive innovation is one of erating philosophy of a new system, wheth- of system shift, for example: often new
a clash which pits entrepreneurial outsiders er they are social innovations or businesses ventures reach scale by playing within the
against incumbents. Our story of system spawned by new social movements. rules of an existing market, and a venture
innovation is one of combination as entre- might disrupt an existing industry without
preneurial outsiders find new opportunities These potentially transformative ventures really creating an alternative system.
to work with the energy of innovative forces often start their life in marginal markets System-shifting ventures are particularly
coming from inside the incumbent system and promote not just products but new powerful when they come together with
who want to take it in a new direction. Mak- social philosophies. The world’s largest others with complementary approaches,
ing that connection productive is the task producer of organic lettuce and greens, meaning that the focus for investors might
of creative convenors who can orchestrate Earthbound Farms, started as a niche be on their collaborative, rather than
this process. producer on a 25-acre plot of land near competitive advantage.

Building Better Systems 28 29

 S
ystem shifts are unlocked by
working with four keys: purpose,
power, resources and relationships.
These four keys provide a way to unlock a
system which are far more powerful than

6
thinking about technology and buildings,
Purpose services
Resource and software.
flows Power Relationships

The Keys that Four Keys

Unlock Systems
Purpose Purpose Resource flows Resource flows Power Power Relationships Relationship

Power

Purpose Resource flows

Resource flows Relationships

Purpose

Building Better Systems 30 31

 Purpose Resource flows Power Relationships

about the right to live independently. One sign that a system is shifting is the as Australia, Canada and the UK introduced
The innovation of individual budgets was emergence of conflict over priorities, personal budgets so that young people
enacting a different social philosophy, business models, working practices and were given money directly to commission
based on what young people had the hierarchies. Soft power, hidden in culture, the services they wanted, power to shape
capability and the right to do. is brought into the open through these services shifted from social workers to the
pressures. Growing traffic congestion clients and their loved ones. The shift in
System innovation cannot succeed merely in cities, rising levels of air pollution and power created a much more decentralised,
Purpose through the application of a new set of the risks of climate change are factors diverse and personalised system of care.
innovation tools, methods and processes. characterising the systemic challenge we Families could make arrangements which
The most powerful way to shift a system The entire process needs to be animated face in urban mobility. Who should have suited them within an overall framework
is to change what it is for, the philosophy by this deeper reimagining of purpose: not priority, the demands of pedestrians and set by the policy (which puts some limits
underpinning it and therefore what its just a different goal to be reached but a cyclists or drivers and businesses? The on what they could spend their money on.)
purpose is. different philosophy to be enacted. We will streets of many 20th century cities were Shifts in power are inextricably connected
Purpose Resource flows
return to the significance
Power
of this at the endRelationships shaped by the power of the carPurpose
and the to changes to key relationships
Resource flows and the way Power
System innovators shift systems by of this section. industries that made it. The streets of that resources flow through a system.
developing solutions based on this very 21st century cities will only look and feel
different operating philosophy that different through a challenge to the power
demonstrate a new system purpose, of the traditional car industry.
around which further activity can be
organised. Systems inevitably build up structures
of power over time: professional
The purpose should provide the point constituencies and physical communities
around which people, activities and that resist change which threatens their
resources are organised. Creating a interests. This defence of the status quo
new system invariably involves framing Power is rarely just economic. Many people - Resource flows
a new purpose. That process involves both workers and consumers - feel more
argument, challenge and dispute as well as It is almost impossible to shift the purpose comfortable with systems with which they A system only shifts when the resources
imagination, vision and inspiration. of a system unless there is also a shift are familiar. It is hard for people schooled flowing through it change in a fundamental
in who has the power to determine how in one system to imagine themselves way.
Karyn McCluskey asked a question about resources flow, what takes priority, who adapting to another. The gillet jaunes
the system’s purpose: how best to make matters and what is counted as a good protests in France, sparked by a rise in Radical change can happen when the
Glasgow safe because it was a place where outcome. diesel prices as part of an environmental resources a system relies upon are
young men did not grow up in a culture sustainability programme, are an example suddenly heavily constrained, for example
of violence. The need and opportunity for Power works within systems in complex of the kind of conflict a system transition as a result of a crisis. Current operating
system wide change was opened up by ways which those embarking on systems can set off. Conflict is an inevitable and models are rendered untenable. Innovators
repeatedly asking a question about what change need to think about carefully. important part of transition, and system have to find a new way to meet needs
the system should be for rather than how Power can be both hard and soft; innovators will not succeed if they are without the resources they normally rely
it worked. embedded in culture and observable in naive about the need to work with the on. The Covid-19 crisis created a sudden
explicit instructions; for good and for bad, resistance these efforts at change provoke. systemic challenge because physical, face
New systems often develop in response for public benefit and private gain. System to face work was largely suspended. The
to a new purpose arising from a shift in innovators develop solutions that challenge A good example of a system that shifted public sector is under constant pressure
societal values. The system change in and change the distribution of power when power shifted is the commissioning to use its (mostly human) resources
support for young adults with learning within a system. of support services for young adults with more efficiently to keep pace with the
disabilities stemmed from a debate learning disabilities. When countries such private sector, a phenomenon known as

Building Better Systems 32 33

 the Baumol effect, which as the limits how they could be combined for greater A system shifting venture usually forms
to optimisation are reached will play a value, allowing families to find new ways to new patterns to these relationships: new
large part in the drive to shift to radically marry publicly funded services with their systems are usually new social models.
different operating models. All future own voluntary efforts. The M Pesa mobile payments system in
Resource flows
systems will operate within tighter Power Relationships
Kenya, for example, allows for direct,
constraints imposed by the need to peer-to-peer money transfers without
tackle climate change. going through the intermediaries of a
banking system. It achieves this by turning
On the other hand, a new system can local shops and kiosks into the local delivery
be made possible when resources of a point of a payments system. Millions of
new kind – such as digital technologies - Kenyans use a service which reconfigures
become available at low cost which allow existing physical and social resources - the
a system to be reconfigured. Uber, Airbnb, local shop - by incorporating them into a
Amazon and Netflix have all created digital digital service - mobile money transfers -
platforms which allow traditional services to allow borrowers and lenders to interact
to be reconfigured. Michael Bloomberg Relationships in ways that were not possible before.
revolutionised financial markets by Low-cost airlines took away many of the
making available dedicated digital desktop A system is a collection of parts which come traditional relational aspects of booking and
terminals which allowed information to together repeatedly to achieve an outcome, taking a flight to create their model.
flow more freely and quickly to many a constellation rather than individual points
more people. As a result a closed industry of light. Each part on its own has limited Buurtzorg, the inspirational Dutch care
in which insiders often had privileged significance; it is when they are brought collective is a good example of how a
information was opened up to much together that they form a system. The way different model of social care can emerge
greater competition but also to reach they are brought together - the pattern from a reorganisation of relationships.
greater scale. to the relationships - gives the system its As Buurtzorg is a cooperative, staff are
character. All systems are fundamentally invested with considerable autonomy to
The resources available to a system relational in this sense but this is especially make decisions about where to invest their
include not just money and technologies true of social systems which are formed time and effort with clients according to
but knowledge and reputation. Systems around a key relationship: landlord to their needs.
innovators find new ways to unlock and tenant, doctor to patient, case worker
mobilise resources, inside and outside the to client, teacher to pupil, employee to System innovators do not just create
system to create better outcomes. Karyn employer. services that extend and elaborate the
McCluskey found a more effective solution current system model. Their solutions
to the challenge of violence in Glasgow One sign that a systemic challenge is facilitate a fundamental change in the
by pulling together community resources building up is growing strain within the constellation of actors that enables a
existing outside the traditional boundaries system as frustration mounts with how it system to generate new value.
of the police force to work with the police is working. That can affect the quality of
in new ways. One unusual example is the relationships within a system. One example New systems emerge when actors are
collaboration with veterinary practices of that is the way that efforts at public brought together in new patterns of
who can often spot signs of domestic service reform driven by the centre have relationships: centralised might become
violence when it is also inflicted on provoked a combination of resistance, decentralised; indirect becomes direct;
household pets. Individual budgets for demoralisation and apathy among front-line consumers become participants and
people with disabilities not only changed staff. producers as well; systems with rigid
how resources were distributed but also hierarchical structures become more
fluid, networked and cooperative.

Building Better Systems 34 35

 A Set of Keys

These four keys make up a set. Systems Unlocking system shifts

are often hard to change because power,
relationships, and resources are locked
together in a reinforcing pattern according
to the current purpose. Systems start to
change when this pattern is disrupted and Power
opened up. Then a new configuration can Purpose
emerge. Purpose

Take care services for young adults with

learning disabilities once more. The shift
to individual budgets (a resource shift)
Resource Relationships
allowed the young people to commission Relationships Resource flows Relationships
their own care packages and so create flows
new relationships with their carers (who
became employees of the client rather Resource
flows
than professionals in charge of them.) That
change in the relationships and resources
flowing through the care system only came
Power Power
about however with a shift in power, from
Purpose
social workers to clients and their families,
which stemmed from a challenge to the
purpose of the system: how it promoted
the dignity and rights of the young people
involved. A new purpose (independent
living) led to a shift in power, resources and
relationships.

Purpose is the master key especially in like diabetes, and those that come A simple way to think of how these four The process of system innovation has
public systems. We think innovation in with ageing. Tackling that challenge keys work together is set out above. Often to use these four keys to disrupt these
systems for public good should realign requires a more preventative, social and the systems involved in producing public settled, taken for granted relationships
resources, relationships and power around community-based system, to change good are held in place by power (the power which embody conventional power. But out
a new conception of what a system should people’s lifestyles. At the same time many of politicians, professionals, trade unions, of that can emerge a new configuration
be for, the outcomes it seeks to create for more people are now engaged in activities regulations and laws). That creates the in which a renewed sense of purpose
society. A good example is the debate over which promote physical and mental setting in which structured and often can determine how resources flow, how
the future of healthcare. Modern health wellbeing, whether through fitness, diet hierarchical relationships determine how relationships are structured and where
care systems were created to cure people or practices such as mindfulness, at home resources are distributed to citizens. The power lies. Again, to put it crudely, power
suffering from infectious diseases. The and at work. A health system designed way power, relationships and resources and resources should follow purpose.
Covid-19 pandemic reminds us that curing to promote wellness would look quite work together defines the purpose of the
the sick is still a vital goal. Yet increasingly different to one designed to cure illness. system. To put it crudely in many well
the health challenge in contemporary developed public systems, purpose seems
society revolves around chronic conditions, to follow power and resources.

Building Better Systems 36 37

 These four keys create a set of questions which systems innovators can ask:

How and where is a new purpose emerging to guide the system?

How should power shift to embody this new purpose?

7
How do resources and relationships need to change to make real these shifts in purpose
and power?

These four keys can help to unlock both systemic challenge and opportunity.

Be Part of
a Movement
Where do we see indications Where do we see indications
of a Systemic Challenge? of a Systemic Opportunity?

Purpose Resource flows Power Relationships

Purpose
flows Power Relationships

Power
Power Relationships

Relationships
e Resource flows Power Relationships

Resource flows

Building Better Systems 38 39

 Entrepreneurs Inside-outsiders Convenors Commissioners Historians Visionaries

T
he impetus for successful system system. They are the pioneers marking out usage while growing its businesses. Am- but they could also be people who have
innovation does not rely on a the territory of the new system. sterdam council is working with the radical worked in the system for a long time who
single organisation nor individual. economist Kate Raworth to reimagine the carry its institutional memory or people
The basic unit for systems change has to Inside-outsiders who recognise the city economy in the terms of her doughnut with long lived experience of being served
be larger even than a team: it has to be a challenge to the existing system they are model of sustainable development. The by the system. There are many different
creative community animated by a cause to part of and so open it up to new ideas, from power to shift a system can also come from ways to know the history of a system and
bring about change. outsiders, to help a new, different system outside these traditional hierarchies, from so to see that it can be reconfigured.
emerge from within the shell of the old. the new power of social movements which
System innovation involves a much wider These people who span the boundaries of put governments and companies under Visionaries are the counterparts to his-
cast of more diverse characters than the the current system play a critical role. pressure to respond to new demands. torians. They articulate a picture of future
more traditional innovation programmes The sustainable energy, food and waste possibility, one which could be radically
run within organisations. New systems are Convenors who bring together insiders, systems of the future will likely be created different. They make it possible to imagine
made by a diverse constellation of people outsiders and other collaborators to create by a combination of old and new power stepping into a quite different world, in
whether they are investors, politicians, in- a shared agenda for change. Organisa- working together as social movements, of- which systems work in quite different
novators, regulators, suppliers or consum- tions that seek to play this role must be ten led by young people, that put pressure ways. Often systemic innovation is initiated
ers, working inside or outside the system. committed to changing a system and also on governments to respond to the climate by people with a radical vision: Margaret
System innovation poses continual chal- command the credibility to bring together emergency. Sanger envisioned the contraceptive pill
lenges of orchestrating creative, collective actors from every level of the system, from and the social changes it would unleash de-
action, over a prolonged period. the grassroots to senior politicians. Uni- These are four leading roles in systems cades before she managed to help make it
versities, foundations, public agencies such change. But they need a supporting cast to a reality; Donald Watson started the Vegan
Leadership of a system transition is as the Danish Design Centre and interme- take on the challenge. These support roles society 60 years before veganism reached a
distributed, with people playing import- diary bodies might play this role. include the following eight: mainstream audience; Greta Thunberg may
ant roles across all levels of a system at be playing such a role in climate change
different moments in time. Job titles are Commissioners who commission the Historians open up the history of why the now; Nicolas Colin, the venture investor,
not necessarily a good guide to the roles system of the future, to bring it into being. system takes the form it does. They show paints a compelling picture of the future
that people might play in the process nor People playing this role are where power the system is not a fact of nature but the social safety net for modern workers;
the contributions they can make regard- and resources come together. accumulation of a long chain of collective, Hilary Cottam, the social entrepreneur, has
less of where they sit in an organisational creative, political and design decisions, a bold vision for a more relational welfare
hierarchy. The decisions they take can redirect re- taken in context, which shaped its forma- system. Visionaries are easy to dismiss as
sources to create a new system and create tion and evolution. Opening up the history utopian dreamers in part because they are.
As we set out at the beginning of this paper the authorising environment in which it of the system allows people to see how it However, the task of providing the vision
there are four roles we think are critical to can grow to become legitimate. That power could have developed in different ways and for a future system is something many
the process: can be conventional and derived from tra- so also helps to open up its future possi- people can contribute to if they are given
ditional hierarchies yet directed to a new bilities. Seeing oneself as part of this long the space, time and stimulation to do so.
Entrepreneurs who create transforma- purpose: for example, when Paul Polman, lineage of people making change can both A system does not just need visionaries,
tive ventures which challenge the existing the then chief executive of the Unilever increase our sense of agency and our com- it needs ways for a new vision to emerge
system and open the way to a new different group set it radical goals to reduce carbon mitment to longer term outcomes. These which many people can contribute to.
historians might be academic researchers Between them historians and visionaries

Building Better Systems 40 41

 Consumer Framework Setter Exiter Investor Evaluator

help to open up the identity of the system, frameworks is only turned into widespread This whole process, from the inception of We think these twelve roles are central to
both where it has come from and what it access to the products, services and general a new idea through the testing of a system system innovation because they together
could become. They open up the possibility benefits of a new system through the work on a small scale through to its development open up the possibility of system change
space into which innovators and entrepre- of Scalers who excel at simplifying and at scale, of course needs investment to and bring it to fruition. They are however
neurs can move. standardising a solution so it can reach a back it. Investment in system innovation uncommon bedfellows. The people who play
mass market. Scalers engage in the second poses special challenges: the timescale is these roles are unlikely to be immediately
Consumer innovators play a vital role in and third waves of innovation needed to often protracted, involving collaboration known to each other and come into play
making a vision a lived reality. They are the create a new system. They are the structur- among many different players. Investors at different times. Making these roles
early adopters and adapters who show how al engineers of the new system. For example in systems change will rarely be part of the recognisable may make it possible for new
an innovation can be made to work in prac- the company that turned the container whole story all of the time. Different kinds connections between otherwise distant
tice and become an aspirational part of daily into a mass product was not the contain- of investors, philanthropic, public, venture players to form and in the process generate
life. Michael Bloomberg’s first prototypes er’s original, iconoclastic inventor Malcolm capital and corporate, may play different new energy for change.
for his new system for distributing financial McLean but a follow-on innovator, Matson, roles at different times. The creation of the
information were developed with his first a company based in Hawaii. contraceptive pill, for example, started with Many others might contribute to systems
customer JP Morgan. Matson standardised the container’s size, small philanthropic research grants, before change, for example researchers who
weight and fixings to allow it to be used at mobilising both commercial and public introduce new knowledge into systems and
While consumer innovators may show scale, as well as introducing many of the research funds before deploying private critics who challenge the existing system’s
the potential for change at the grassroots logistics tools that made the new system capital to make the pill available at scale. performance without having a clear idea of
level, system-wide change depends on the work effectively. Further waves of innova- how to replace it.
creation of new frameworks for policy and tion came from companies such as Maersk Auditors and Evaluators play two roles.
regulations. The people and organisations which entered the industry later. McLean Because they help to hold the current System innovation is a cumulative,
who do this are Framework Setters. They invented the container; Matson and Maersk system to account for its performance, collaborative process which gathers its
might be civil servants and policy makers, created containerisation, the system. the case for change often comes through momentum from the degree of cooperation
but also think tanks and advocacy groups. the data that evaluators provide. They also between many different players across all
They create the general frameworks that Exiters complement the scalers. They create the new metrics needed to measure three levels of the system set out in section
allow an innovation to spread and become wind down outmoded systems to clear the impact of the new system. It is hard four, over an extended period. One of the
widely adopted, for example the UK’s shift the way for a new system to emerge. to create entirely new systems, aligned key challenges is how this cooperation can
to providing individual budgets to young Decommissioning existing systems is to a new purpose without creating new be made more effective, more quickly, to
adults with learning difficulties. The con- essential to free up resources and space measures of value and impact. It is hard for accelerate deliberate systems transition.
traceptive pill was licensed for widespread in which new systems can grow. Just as those involved in systems change to know
use only as a result of innovations in Food natural systems go through cycles of whether they are having an impact unless That work is the leadership of system
and Drug Administration regulations which creation and destruction, where resources they have tools to help measure that impact. innovation. One of our priorities is to show
allowed the approval of a drug that was not are released again, well managed creative Evaluators are all those who help provide many more people that they can make a
designed to cure a disease. All system tran- destruction is part and parcel of systems the data the system needs to adapt and contribution to systems change from any
sition involves innovation in regulations, change. reorient itself. one of these different positions.
protocols and standards to allow new prod-
ucts and services to create a new market.
The possibility space created by these new

Building Better Systems 42 43

 Twelve roles

8
Entrepreneur Inside-Outsider Convenor Closing the
System Innovation Gap

Commissioner Historian Visionary

Consumer Scaler Investor

Exiter Framework setter Evaluator

Building Better Systems 44 45

 3 Levels 4 Keys 12 Roles

Power

X Relationships Resource
flows =

Purpose

S
ociety needs system innovation to One simple way to sum this up as a rule of This paper marks the start of our effort • To show how people can shape systems,
tackle deep seated social challeng- thumb is to remember that 3 x 4 = 12. to create practical frameworks, methods not just be shaped by them.
es, meet emerging, growing needs and tools for system innovation. We want
and to open up systemic opportunities • System innovation involves work across to establish a firm knowledge base for the There is still too big a gap between the
to support new ways of life. While a lot of three levels, the macro, meso and micro; application of these tools in practice. In the theoretical knowledge embodied in systems
innovation is going on in public and social process we are keen to share what we learn thinking, the historical knowledge of how
fields, it usually falls short of innovating • Change is unlocked using the four keys: and to learn from others in turn. actual systems have changed in the past and
new systems. That means there is a huge purpose, power resources and relation- the practical knowledge needed to make
gap between the kind of innovation society ships; As we set out at the start, we want to focus systems change happen in the real world.
needs and the kind that is produced. our contribution on these three areas: We hope to contribute to bridging that
• System innovation involves people playing practice, possibility and people: gap by developing the frameworks set out
To act more deliberately and effectively to twelve roles, with different vantage points, in this paper. However, closing the system
change systems the people involved need knowledge and contributions. • To turn knowledge about how systems innovation gap will require solutions to other
to see and think about systems in different have changed into practical knowledge of challenges this paper has touched on, such
ways: to understand both the depth of the The 3 x 4 = 12 rule helps to keep the focus how to make systems change on purpose. as how to:
challenge and the scale of the opportunity; on changing the system rather than merely
as well as the dynamic, collaborative pro- adapting within it. • To create new, better and different systems • Make the case for system innovation, with
cesses of system innovation. not just to improve existing systems. tools that assess systemic opportunity.

Building Better Systems 46 47

 • Support entrepreneurs to design ventures • Connect to other practices that can
and interventions with greater system contribute to system innovation (for example
shifting potential. place-based innovation, collective impact
and service design).
• Invest in whole systems rather than in

Further reading
single solutions or organisations. • Define the characteristics of future
systems, in the context of the Covid-19
• Evaluate system change so the people aftermath, and likely further impacts of
involved can know they are having an impact. technological advances, climate change
and migration.
• Lead system innovation from different
positions across the three levels of a system. • Create the programmes and vehicles
needed to enable deliberate system
innovation.

We end with two invitations:

The first is to you, the reader, to use the ideas, models and frameworks in this paper in
your own work. We hope this will help you to see how you can step into systems change,
through one of the twelve critical roles we identify; by using the keys of purpose and
power, resources and relationships; working with all three levels of a system.

The second is to contribute by bringing your expertise and experience to help close these
gaps, to add to the material here and to link to others to make system innovation a more
practical undertaking. We want to help people make the changes that will bring into being
the better, different systems of the future. You are very welcome to join us in this effort
and to show us how we can contribute to your own efforts in this field.

Building Better Systems 48 49

 This is not a bibliography but a collection of some of the books, papers
and resources we have drawn on in developing this initiative which we Santos, Filipe and Eisenhardt, Filipe M. (2009), ‘Constructing Markets and Shaping
recommend for those interested in further research and reading. This Boundaries: Entrepreneurial Power in Nascent Fields’, AMJ, 52, 643-671, https://doi.
collection will evolve as the project progresses.  org/10.5465/amj.2009.43669892

Hussein, Taz; Plummer, Matt and Breen, Bill (2018), ‘How Field Catalysts Galvanize Social
Change’ Stanford Social Innovation Review, Winter 2018

On how systems change This paper builds on earlier work we have done in this field including: 

We have been heavily influenced by the work of Frank Geels, Professor of System Mulgan, Geoff and Leadbeater, Charles (2013), ‘Systems Innovation Discussion Paper’,
Innovation at the University of Manchester and in particular his multi-level perspective on NESTA. Available at: https://www.nesta.org.uk/report/systems-innovation-discussion-
systems transitions.  paper/
 
A wide array of his papers are available through: Other good primers are : 
https://www.research.manchester.ac.uk/portal/en/researchers/frank-geels(1125eeac-
f45f-4c21-9ea9-4de886cf5fbf)/publications.html Chapman, Jake (2004), System Failure: Why Governments Must Learn to Think Differently,
Demos 
We have drawn on the foundational thinking in this field done by
Donella Meadows, in: Homer Dixon, Thomas (2008), The Upside of Down: Catastrophe, Creativity and the
Renewal of Civilisation, Island Press - explores the role of crisis in spurring systemic
Meadows, Donella (1997), ‘Places to Intervene in a System’, Whole Earth Review, Winter change.
1997
Stroh, David Peter (2015) Systems Thinking for Social Change,  
Meadows, Donella (1999), ‘Leverage Points: Places to Intervene in a System’, Chelsea Green Publishing 
The Sustainability Institute. Available at:
http://donellameadows.org/wp-content/userfiles/Leverage_Points.pdf 
On systems innovation as an innovation strategy we have drawn upon:
Meadows, Donella (2008), Thinking in Systems: A Primer, Chelsea Green Publishing
Adner, Ron (2012), The Wide Lens: A New Strategy for Innovation, Portfolio Penguin.
Meadows’ work is continued by the Academy for Systems Change at
http://donellameadows.org  Baldwin, Carliss and Clark, Kim B. (2000) Design Rules: The Power of Modularity, The MIT
Press
We have also been influenced over a long period by Carlota Perez, Honorary Professor,
Institute of Innovation and Public Purpose, University College London. A wide range of her Gawer, Annabella and Cusumano, Michael (2002) Platform Leadership: How Intel,
works on the dynamics of technological and social change are available through: Microsoft and Cisco Drive Industry Innovation, Harvard Business School Press
http://www.carlotaperez.org
pubs?s=tf&l=en&a=technologicalrevolutionsandfinancialcapital Hargrave, Timothy and Van de Ven, Andrew (2005) ‘A Collective Action Model of
Institutional Innovation’, Academy of Management Review Vol. 31, No 4
On the role of entrepreneurship and system change we have found invaluable our
discussions and practical collaborations with Marc Ventresca, Associate Professor of Reynolds, Martin and Holwell, Sue (2010), ‘Introducing systems approaches’, in: Reynolds,
Strategic Management at the Saïd Business School, Oxford University. A range of his M. and Holwell,S. Eds, Systems Approaches to Managing Change: A Practical Guide,
papers on how entrepreneurs shape markets and systems can be found here: Springer, Pp. 1-23. 
https://www.sbs.ox.ac.uk/about-us/people/marc-ventresca
Some of the themes of Marc Ventresca’s work are echoed in: 

Building Better Systems 50 51

 For case studies of industries going through systemic change see: Also full of useful material are: 

Davies, Andrew; Gann, David and Douglas, Tony (2009), ‘Innovation in Megaprojects: Cahill, Geraldine and Spitz, Keely (2017) ‘Social Innovation Generation: fostering a
Systems Integration at London Heathrow Terminal 5’, California Management Review, Canadian ecosystem for systems change’, Social Innovation Generation. Available from:
Vol. 51, No.2. https://static1.squarespace.com/static/5a0ef016cd39c3446456ab56/t/5e45b48281c87071
298f6348/1581626520462/SocialInnovationGeneration_DigitalBook.pdf
Dobbie, Will & Fryer, Jr. (2009), ‘Are High-Quality Schools Enough to Close the
Achievement Gap? Evidence from a Bold Social Experiment in Harlem’, National Bureau An archive of the knowledge produced by the Social Innovation Generation initiative can
of Economic Research, Inc, NBER Working Papers be found at: 
http://sigknowledgehub.com
Eig, Jonathan (2014), The Birth of the Pill, WW Norton https://uwaterloo.ca/waterloo-institute-for-social-innovation-and-resilience/
education/learning-modules/social-innovation-and-system-entrepreneurship 
France, David (2017), How to Survive a Plague, Penguin Random House
Mulgan, Geoff and Murray, Robin (2010) on Systemic Innovation in The Open Book of
Henkin, David (2007), The Postal Age: The Emergence of Modern Communications in Social Innovation, NESTA and the Young Foundation, which explores the role of social
Nineteenth Century America, University of Chicago Press innovation in systems change. 

Hughes, Thomas, P (1983), Networks of Power: Electrification in Western Society, Schwab Foundation for Social Entrepreneurship (2017), ‘Beyond Organizational Scale: How
1880-1930, Johns Hopkins University Press Social Entrepreneurs Create Systems Change’, available at:
http://reports.weforum.org/schwab-foundation-beyond-organizational-scale/?doing_
Levinson, Marc (2008), The Box: How the Shipping Container Made the World Smaller and wp_cron=1595241970.7173180580139160156250
The World Economic Bigger, Princeton University Press

Pacheco, Desirée; York, Jeffrey and Hargrave, Timothy (2014), ‘The Coevolution of Leading 
Industries, Social Movements, and Institutions: Wind Power in the United States’,
Organization Science. 25. 1609-1632  On learning to lead systems change in practice we recommend taking a look at the work of
Anna Birney and The School for Systems Change at Forum for the Future:
Tuomi, Ilka (2002), Networks of Innovation: Change and Meaning in the Age of the
Internet, Oxford University Press Birney, Anna (2014), Cultivating System Change, DoSustainability, 2014

See also: 
Social Innovation and System Innovation 
Senge, Peter; Hamilton, Hal; Kania, John (2015), ‘The Dawn of System Leadership’, Stanford
On the links between social innovation and system innovation we have learned a lot Social Innovation Review Winter 2015
from the work of Canadian scholar Frances Westley, J.W. McConnell Professor of Social
Innovation at the University of Waterloo; in particular: Leicester, Graham and O’Hara, Maureen (2016), Transformative Innovation: A Guide to
Practice and Policy for System Transition, Triarchy Press
Westley, Frances (2013), ‘Social Innovation and Resilience: How One Enhances the Other’,
Stanford Social Innovation Review These two academic papers provide useful frameworks for thinking about the challenges
  of leading systems change:
Westley, Frances & Tjornbo, Ola & Schultz, Lisen & Olsson, Per & Folke, Carl & Crona,
Beatrice & Bodin, Örjan. 2013. ‘A Theory of Transformative Agency in Linked Social- Foster-Fishman, Pennie; Nowell, Branda & Yang, Huilan (2007) ‘Putting the system back
Ecological Systems’, Ecology and Society. 18. art27.  into systems change: a framework for understanding and changing organizational and
community systems’, Am J Community Psychol. 39, 197-215 
Westley, Frances; McGowan, Katharine; Tjornbo, Ola (eds), (2017), The Evolution of Social
Innovation: Building Resilience Through Transitions, Edward Elgar Publishing

Building Better Systems 52 53

 Ferraro, Fabrizio; Etzion, Dror, & Gehman, Joel (2015), ‘Tackling Grand Challenges Also interesting are: 
Pragmatically: Robust Action Revisited’, Organization Studies, 36(3), 363-390. 
Cundill, Georgina; Cumming, Graeme S. et al. (2011), ‘Soft Systems Thinking and Social
Learning for Adaptive Management’, Conservation Biology 26(1): 13-20.
Philanthropy
Forum for the Future (2011), ‘Six Steps to Significant Change.’ Available at: http://www.
The Australian Centre for Social Innovation has reviewed philanthropic engagement with forumforthefuture.org/blog/introducing-forum%E2%80%99s-six-steps-significant-
systems change in:  change
TACSI (2019), ‘Philanthropy, Systems and Change’. Available at: https://www.tacsi.org.au/
wp-content/uploads/2019/10/Philanthropy-systems-and-change.pdf Forum for the Future 2011 ‘What is system innovation.’ Video, available at: http://www.
forumforthefuture.org/blog/what-system-innovation
The Lankelly Chase Foundation has been at the forefront of developing foundation funded
initiatives for systems change: Ison, Ray. 2010 ‘Introduction and Rationale: Thinking and Acting Differently.’ 
https://lankellychase.org.uk/our-approach/system-behaviours/ Chapter 1 in Systems Practice: How to Act in a Climate-Change World, Springer

The Omidyar Group has published practical guides to applying system thinking to social On the links between design and systems change:
challenges:
The Omidyar Group, ‘Systems Practice Workbook’, available at: Banathy, B.H. (1996), Designing Social Systems in a Changing World, Springer US
https://docs.kumu.io/content/Workbook-012617.pdf
The Systemic Design Association publishes proceedings from its annual conference,
On investing in impact networks to address systemic challenges: including links to a range of articles in peer-reviewed journals by its members, at:
Muoio, A. and Flower, N.R., (2016), ‘The power of involving business in social impact https://systemic-design.net/publications/
networks’, Rockefeller Foundation, available at:
https://www.rockefellerfoundation.org/wp-content/uploads/Participate.pdf The forthcoming Transition Design Institute will build on Terry’s Irwin’s work at Carnegie
Mellon:

Innovation in urban systems: Irwin, Terry (2015), ‘Transition Design: A Proposal for a New Area of Design Practice,
Study, and Research’, Design and Culture, 7. 229-246. 
Here we have drawn on: 
The School of Design at Carnegie Mellon University, Schumacher College and the New
Gehl, Jan (2010), Cities for People, Island Press Weather Institute (2016), ‘Can Design Catalyse the Great Transition? Papers from the
Transition Design Symposium 2016’, available at:
Leadbeater, Charles (2014), ‘The London Recipe: How systems and empathy make the city’, https://www.schumachercollege.org.uk/sites/default/files//dissertations/Transition_
Centre for London. Available at: Papers.pdf
https://www.centreforlondon.org/publication/london-recipe/
Bason, Christian (2017), Leading Public Design - Discovering Human-Centred Governance,
Hall, Peter, ed (2013), Good Cities Better Lives, Routledge Policy Press

Hill, Dan (2012), Dark Matter & Trojan Horses: A Strategic Design Vocabulary, Strelka Conway, Rowan, et al (2017) ‘From Design Thinking to Systems Change’, Royal Society of
Press. Arts, available at: 
https://www.thersa.org/globalassets/pdfs/reports/rsa_from-design-thinking-to-
system-change-report.pdf
On sustainability and systems change:

Raworth, Kate (2018), Doughnut Economics: seven ways to think like a 21st century
economist, Cornerstone

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