In this blog, Mark Swift argues that public sector transformation is no longer driven solely from within institutions. Increasingly, the most valuable insights are emerging from the spaces between systems, communities, and lived experience.
This blog discusses the findings in Mark’s recent report – The Outside-In: The Role of Social Entrepreneurs in Public Sector Transformation.
Setting the context
Some of the most important learnings about public sector transformation are happening outside the public sector itself.
Not entirely outside, of course. The boundaries are far more blurred than that. Increasingly, many of the ideas reshaping conversations around prevention, neighbourhood health, relational practice, community wellbeing, and social innovation are emerging from people and organisations operating at the edges of formal systems rather than from their centres.
That matters because public institutions are being asked to respond to challenges that are becoming more interconnected, more unpredictable, and more socially complex. Health inequalities, loneliness, mental ill-health, digital exclusion, insecure work, and community fragmentation rarely exist in isolation from one another. They overlap, reinforce one another, and play out differently across places and communities.
Across health and local government, there is already widespread recognition that these challenges cannot be solved through isolated interventions or organisational silos alone. The language of prevention, integration, neighbourhood working, and place-based approaches has become increasingly prominent in recent years for precisely this reason.
Yet despite this growing awareness, deep transformation often remains frustratingly difficult to sustain in practice.
The role of social entrepreneurs
These questions sit at the heart of a new LPIP Hub policy paper I have written: The Outside-In: The Role of Social Entrepreneurs in Public Sector Transformation.
The paper explores the role that social entrepreneurs can play as boundary actors within periods of institutional and social transition. Not simply as innovators or alternative providers, but as people capable of generating practical insight from positions that sit between formal systems and lived experience.
The argument is not that public institutions are failing, nor that social entrepreneurs possess some unique ability to solve problems others cannot. Public systems remain fundamental to democratic accountability, universal provision, and social protection. They carry responsibilities and constraints that external organisations do not.
But systems can sometimes become constrained by the very structures designed to make them stable and accountable.
Over recent decades, public management reforms have understandably placed strong emphasis on governance, performance, assurance, and measurable outcomes. These mechanisms matter enormously. They exist to protect public value, maintain standards, and ensure accountability for public resources.
At the same time, however, they can create environments where adaptation becomes difficult. Innovation may be encouraged rhetorically while uncertainty remains difficult for institutions to tolerate. Experimentation becomes harder when systems are under constant pressure to demonstrate control, minimise risk, and evidence short-term impact.
As a result, public institutions can become highly effective at improving existing models while finding it harder to create space for fundamentally different ways of thinking and working.
This is where social entrepreneurs become particularly important.
Social entrepreneurs often operate in the spaces between sectors, organisations, and communities. They work close to lived experience while also engaging with formal systems. Because of this position, they are frequently able to identify unmet needs, test relational approaches, and generate practical insight in ways that are difficult to replicate within more formal institutional settings.
In many cases, they are responding to social realities long before those realities become fully visible within policy frameworks or organisational structures. Their value often lies not simply in delivering services differently, but in helping systems see differently. Because they operate close to lived experience, social entrepreneurs can identify emerging needs, build trust in overlooked communities, and test relational approaches that larger institutions may struggle to develop or sustain.
Across the country, this is already happening in countless ways. Community organisations developing neighbourhood-based approaches to wellbeing. Social enterprises are building trusted relationships with groups who rarely engage with statutory services. Practitioner-led innovations emerging from frontline experience. Partnerships creating new approaches to prevention, digital inclusion, or mental health support that cut across traditional institutional boundaries.
Some of the most creative work addressing complex social challenges is now emerging through these boundary spaces.
The challenge for public systems
The challenge is that institutions do not always know how to absorb the learning emerging from these spaces.
Too often, valuable ideas remain confined to pilots or isolated programmes. Relational work becomes squeezed into transactional commissioning models. Community insight is consulted, but not always integrated into strategic decision-making. Innovation is recognised, but not always allowed to reshape institutional assumptions or wider governance cultures.
The issue, therefore, is not simply whether innovation exists. It is whether systems possess the capacity to genuinely learn from it.
This becomes even more important as devolution and neighbourhood health reforms continue to evolve across England. Structural reform alone does not automatically create adaptive systems. Simply moving power closer to places will not necessarily change how institutions understand risk, learning, evidence, or collaboration.
The deeper question is cultural.
Can public systems create environments where experimentation is possible without immediately becoming reputationally threatening? Can institutions become more confident in working with forms of knowledge that emerge through lived experience, relationships, and practice rather than through formal hierarchies alone? Can governance systems value reflection and adaptation alongside assurance and performance?
These questions are not peripheral to reform. They are becoming central to whether public systems can adapt to the realities now unfolding around them.
One of the strongest themes emerging from this work is that transformation depends as much on learning cultures as it does on organisational structures. Systems that create space for curiosity, collaboration, and practical experimentation are often better able to respond during periods of uncertainty and transition. Systems that become overly defensive or performative can struggle to adapt even when the need for change is widely recognised.
This is partly why the concept of “outside-in” capacity matters.
The phrase captures the idea that systems often need challenge, practical insight, and learning from beyond their own boundaries to renew themselves. Not because institutions are incapable of change, but because adaptation frequently emerges through interaction with people and organisations working differently, seeing different things, and remaining close to social realities that formal systems can sometimes struggle to fully perceive.
Ultimately, the question is not whether innovation exists outside public institutions.
It is whether institutions are willing – and able – to genuinely learn from it.
This article accompanies the launch of the LPIP Hub policy paper:
This blog was written by Mark Swift, Founder and CEO of Wellbeing Enterprises CIC.
Find out more about the Local Policy Innovation Partnership Hub.
Disclaimer:
The views expressed in this post are those of the author and not necessarily those of City-REDI or the University of Birmingham.