Initiative: Institutional Innovation

Institutional Innovation Initiative (I3)

1) Setting the Stage: Institutional Innovation for Flourishing

The goal of the Institutional Innovation Initiative is to enable transformational service innovation on an individual, organizational, and societal level. Its focus is on institutional innovation, meaning "novel, useful and legitimate change that disrupts [...] the cognitive, normative, or regulative mainstays of an organizational field" (Raffaelli, Glynn, 2015).

Facilitating Flourishing by changing detrimental ways of perceiving the world and organizing behavior

When new products, services, or policies are designed, the challenge of the innovator is to mediate between innovations and established institutional fields as entrepreneurs attempt to introduce change (Hargadon, Douglas, 2001). Such established institutions come in many shapes and forms, and can be regulative, normative or cognitive in nature. It is their "stickiness", and the fact that they shape the perception and actions of entire systems of actors, which make institutions so powerful - and dangerous. 

An outdated economic paradigm prevents personal wellbeing, societal justice, and planetary health

Our dominant economic paradigm (as a mighty set of ideas and models which penetrates deep into the fabric of society) constrains the genuine efforts of innovators to create value. Key economic concepts, such as the separation of the economy from societal and planetary systems, a striving for infinite growth, rational and narrowly self-interested economic man, competition as the basis of social exchange, and a goods-dominant logic of value creation, continue to be reproduced over and over despite having been rendered insufficient by natural and social sciences alike. 

Moreover, the perpetuation of such ideas arguably lies at the heart of various crises we witness on a daily basis: climate change, growing social inequalities and divisions, and loss of biodiversity, to name just a few. Due to its pervasive institutional nature, however, the influence of the economic paradigm is hard to dismantle even for the most well-intentioned change-makers. 

The goal of I3 is to uncover detrimental institutions and to pave the way for Flourishing institutional innovation

The Institutional Innovation Initiative aims to support the transformation towards a new economic paradigm by:

- Identifying the various institutions by which the profit-first economic paradigm is reinforced
- Providing methods and tools for innovators to identify, prioritize and transform those institutions that present risks and opportunities
- Raising awareness about outdated institutions and their detrimental effects on value creation

2) Value Creation at the Heart of I3

Opportunities for Institutional Innovation arise when basic assumptions of an existing paradigm don't align with new worldviews, or when new assumptions provide better solutions for an established worldview. The Institutional Innovation Initiative anchors on the idea that the mainstream value creation paradigm checks both boxes: it is suboptimal for creating value in the current economic paradigm, and all but sabotages genuine aspirations of achieving flourishing. Based on service-dominant logic (SDL) (Vargo, Lusch, 2004, 2008, 2016), institutional innovation opportunities emerge around the following propositions:

- Value is co-created by systems of actors, including individuals, organizations, society, and nature -> There is not one "producer" of value
- Value is multidimensional -> Value can be emotional, functional, social, etc...
- Value is experiential -> Value can't be repeated, every experience of e.g. a service is different and creates different value
- Value is actor-specific -> Everyone experiences differently, no two actors will experience the same value 
- Value is contextual -> Value always depends on the entirety of an actor's experience, not just the service itself
- Value emerges in-use -> The value e.g. of a product or service is determined throughout its entire lifetime, and emerges dynamically 

Contrary to these characteristics, current economic institutions portray value as something that's produced by one actor (ideally a business). After completion of the production process, value can be measured in monetary terms. Following a transaction, value of the good is destroyed by a consumer or another organization. In this logic, there is no systemic interconnection to other actors, society, or nature. There is also no conception of value which emerges over time and in context, and which can't be measured in monetary terms. Long-term consequences on actors (including the producers) are ignored unless they have a direct impact on "value" (i.e. profit generation. 

Consequently, actions based on this logic are at best indifferent to the short-term impact on any human and non-human actor which doesn't pay the producer. Moreover, they are also indifferent to the long-term impact on any actor - including the producer and the customer - as long as no immediate profit implications can be detected.  


Hargadon, Andrew B., and Yellowlees Douglas. "When innovations meet institutions: Edison and the design of the electric light." Administrative science quarterly 46.3 (2001): 476-501.
Raffaelli, Ryan, and Mary Ann Glynn. "Institutional Innovation: Novel, Useful." The Oxford Handbook of Creativity, Innovation, and Entrepreneurship. Oxford Library of Psychology, 2015. 407-420.
Vargo, Stephen L., and Robert F. Lusch. "Evolving to a new dominant logic for marketing." Journal of marketing 68.1 (2004): 1-17.
Vargo, Stephen L., and Robert F. Lusch. "Service-dominant logic: continuing the evolution." Journal of the Academy of marketing Science 36.1 (2008): 1-10.
Vargo, Stephen L., and Robert F. Lusch. "Institutions and axioms: an extension and update of service-dominant logic." Journal of the Academy of marketing Science 44.1 (2016): 5-23.