Christensen, Clayton M., and Baumann, Heiner, et al, “Disruptive Innovation for Social Change,” Harvard Business Review December 2006: 94-101.

The concept of disruptive innovation is widely cited as a way for private sector organizations to seek above-average returns over time by overturning industrial stagnation or lock-in.  Yet its potential as a guide to direct resources to social sector issues to overcome analogous stagnation has not sufficiently been explored.

Professor Clayton Christensen and New Profit Inc. have been working together to bridge this gap.  In the summer of 2004, they assembled two dozen social entrepreneurs, investors, nonprofit leaders, academics, and business experts to work on these ideas.  Based on progress made during that event and since, Christensen and New Profit have adapted business-based theory on disruptive innovation to the world of social change. 

In December 2006, Harvard Business Review published “Disruptive Innovation for Social Change,” which makes the case for using the principles of disruptive innovation to identify and support those organizations that have the best chance of creating new solutions to some of the world’s toughest social challenges.  

Not all New Profit investments are catalytic innovations and not all catalytic innovations that exist are members of New Profit’s portfolio.  New Profit selection criteria go beyond the criteria of the catalytic innovation, but three New Profit portfolio organizations also fulfill the criteria of a catalytic innovation: KickStart, RARE, and Working Today-Freelancers Union. As New Profit continues research into catalytic innovations, we seek to identify additional organizations that might fit the catalytic innovation criteria, as highlighted in the article, and summarized below.

The Five Qualities of Catalytic Innovators They create systemic social change through scaling and replication. They meet a need that is either overserved (because the existing solution is more complex than many people require) or not served at all. They offer products and services that are simpler and less costly than existing alternatives and may be perceived as having a lower level of performance, but users consider them to be good enough. They generate resources, such as donations, grants, volunteer manpower, or intellectual capital, in ways that are initially unattractive to incumbent competitors. They are often ignored, disparaged, or even encouraged by existing players for whom the business model is unprofitable or otherwise unattractive and who therefore avoid or retreat from the market segment. Source: Christensen, Clayton M., et al, “Disruptive Innovation for Social Change,” Harvard Business Review December 2006: 94-101.