Sectors

Three sectors dominate most societies. The public sector, the private sector and the civil sector. Due to changes in society and the arrival of new social needs, a “new sector”, or what is more accurately a number of alternative practices, has emerged as a kind of cross sector between the already existing sectors. A common term for this sector is the fourth sector.

Public sector

The role and responsibilities of the public sector varies greatly from country to country, or based on the community it represents, and the values of the respective governmental institutions it consists of. Its responsibilities can span areas such as the development and maintenance of infrastructure, providing of education, healthcare, and eldercare, and the creation of laws and legislation. The income comes from taxes paid by individuals, the private sector, and often from publicly owned companies.

Private sector

The role of the private sector as a whole could be viewed as the responsibility to ensure economic growth in society as well as to provide jobs, and the production of goods and commodities. The private sector is based on the freedom to engage in commercial activities and trade, and it is influenced by supply and demand in society.

Civil sector

Traditionally the civil sector relies on volunteer work, and on donations from the private sector as well as contributions from individual people that believe the cause to be worthwhile. These organizations are known as non-governmental organizations (NGO), non-profit organizations (NPO), or voluntary organizations.

Initiatives in the civil sector are based on several different foundations, the most usual being dissatisfaction with the actions of the private or the public sector (Green Peace is an example of this) or simply a shared passion for a specific activity (a sailing club). Their overall role and responsibility can be seen as that of defending the rights of the civil society. Read more about this in the section “Non-governmental organizations” in “the Landscape”.

The hybrid

No sectors have, on their own, managed to encompass the complete foundations of a society, and with societies around the world undergoing constant change, the cross- or fourth sector, can be viewed as all the initiatives that arise outside the confounds of the traditional sectors, to address needs and issues that are not covered by the three sectors or could be covered in a more effective way. The last 15 years especially, have seen the emergence of new business areas, and of organizations that work across the sectors. Such organizations within the fourth sector are numerous, and the sheer quantity of names given to them, gives an impression of their scope. They include; high purpose companies, double bottom line business, affirmative business, values driven enterprise, for-benefit organizations, civic entrepreneurs, social purpose ventures, socially responsible business, sustainable business, social enterprise, and social entrepreneurialism.

The connection to social innovation

It is important to know that the defined responsibilities of the three sectors vary from country to country. In the US for example, the private and the civil sectors have a large influence on social initiatives compared to many European countries, where social responsibilities traditionally lie within the public and civil sectors. In China social initiatives are officially only considered a responsibility of the government, and many civil initiatives related to social issues are classified as illegal.

On top of the variations in political systems, and traditions for governing, the sectors also blur together as private companies focus more and more on social issues, NGOs start working more towards generating their own profit, and public institutions start working with volunteer work and management models inspired by private companies.

Social innovation can happen within or across the sectors. In fact SI does not seem to care about sectors, but about ideas, the use of knowledge, networks and competences.

Change?

As food for thought we can note that China is experimenting with ways of governing that all stem from a one party system. And that within this system, certain provinces are encouraged to try out new ways of governing that break with traditional thinking. In the words of the British foreign policy thinker and author Mark Leonard, the leftist political thinkers in the Chinese communist party believe in “a philosophy of perpetual innovation – developing new kinds of companies and social institutions that marry competition and co-operation.”

What few outside China care to consider is that examples like this, of willingness to experiment, along with the inherent nature of social innovation of changing the way we work and think, may make many of our current definitions obsolete.

Travelling together

A way to work with social challenges is to use the competencies of all three sectors: Public (Governments), Private (Businesses) and Civil (NGO/NPO) in order to see perspectives and business models that can solve our current and future social challenges and unmet needs. In Northern America and Europe, there is a lot of talk about cross sector collaboration and initiatives. However, many of the socially innovative projects are not based on a strong collaboration, and we see a potential for this collaboration and shift in mindset to grow to new heights and become more beneficiary for all parties.

NGO

NGOs have the knowledge of social needs and the voluntary labour force that is engaged and committed to act on it, but they often lack the money to carry out their ideas and make them sustainable.

Business

Businesses have the money and the experience within commerce to carry out large projects and ideas, but they often lack knowledge, motivation and experience within the social needs of societies to act on it.

Governments

Governments have the overview of the needs and challenges of the entire country, and they provide stability and a long-term perspective. They often lack efficiency, employee ownership and the ability to make money.

Challenges of travelling together

Very often, when talking about SI, companies, NGOs, and the public sectors move within the grey area where the responsibilities of business and civil society blur. We see new ways of thinking about the relationships and partnerships between the sectors as important. It is not about businesses handing a check to an NGO or the public sector economically supporting business, but about the three sides sitting together around the table to strategically shape projects, specific products, or wider processes.