Building Better Systems: A Green Paper on System Innovation

System innovation is the process of creating fundamentally new ways of meeting societal needs, moving beyond the incremental optimization of existing systems. While traditional innovation often focuses on standalone products or services, system innovation recognizes that these elements only function as part of a wider constellation of institutions, rules, and norms. The authors argue that society faces a 'system innovation gap' where current efforts are too narrow to address deep-rooted, systemic challenges like climate change, aging populations, and social inequality.

To navigate system change, the authors propose the 'Washing Machine' model. Unlike the common narrative of disruptive outsiders displacing incumbents, this model suggests that real change occurs when innovative 'insiders' and entrepreneurial 'outsiders' collide and collaborate within a turbulent, dynamic process. This transition is supported by engaging with three levels: the macro (societal values and trends), the meso (the 'regime' of institutions and rules), and the micro (niche innovations and new practices). Success requires aligning these levels to create a new, more effective system.

Systems are held in place by a reinforcing pattern of purpose, power, resources, and relationships. To unlock a system, innovators must use these four keys. Purpose is identified as the 'master key'; by redefining what a system is for, innovators can shift how power is distributed, how resources flow, and how actors relate to one another. This requires a diverse cast of characters—including visionaries, convenors, scalers, and exiters—who must work together over long periods to move from 'System Now' to 'System Next.'