In order for organization to be successful
it is vital to build strong infrastructures that include financial systems,
skills training, fundraising process and other crucial overhead aspects. Nonprofits and social ventures are no
different yet most nonprofits are not spending enough money on overhead. By sparing on overheard it can result in devastating
effects on the nonprofit or social venture and ultimately reducing their potential
impact. I feel that nonprofits and
social ventures are skimping on overhead in order to meet the unrealistic
expectation of funders. In article published in the Stanford Social Innovation
Review, it speak of a vicious cycle, called the nonprofit starvation cycle,
that starts with funders unrealistic expectation
about costs of running a nonprofit, and results in the nonprofits misrepresenting
their cost while skimping on vital
systems. [1]. The article also suggests taking action at step one of the cycle
funder’s unrealistic exceptions and I
agree. The importance of funding to any
business especially nonprofits and social venture is undeniable however if that
funding comes with unrealistic expectation, it places the focus of the organization
on meeting the needs of the funders instead of making an impact. Thus either the funders’ expectation need to
change or funding needs to be obtained by other means. As suggested in Kimberly Tripp Article “It’s
Not All About Growth for Social Enterprises”,
funders need to be more interest in shared contribution instead of
direct attribution [2]. In
order to change funders’ view to shared contribution organization need to find a
better way to communicate their expenses to donors. Additional, in the article,
In Search of Hybrid Ideal, it examines the rise of hybrid organization that combines
components of profit and nonprofit [3]. If organizations were to utilize this model
it reduce would the dependence on funders, grants, and government subsidies
which would in turn place the focus more on the organizations’ mission.
Tuesday, September 22, 2015
BREAKING THE BoP BARRIER: Challenges faced by entrepreneurs targeting BoP markets for profit in India
With increasing social problems like climate change poverty, population increase, pollution, etc. entrepreneurs
have a plethora of opportunities and an open and diverse market to work on. At some time in the future, the
world might reach a stage where all business will have to converge towards
making a social impact. While it has become
important to come up with breakthrough innovations to tackle the problems faced
by BoP markets, it is surprising to note that many great ideas and innovations in
India have failed to make an impact. Social entrepreneurs are facing challenges
to make people buy their product or use their services. What could be the
reasons behind this?
Let us see this by analyzing the
possible bottlenecks.
Consider the example of cookstove by 'Envirofit International' which aims
to provide efficient food processors to reduce Indoor Air Pollution (IAP) and provide
health benefits to end users. The venture has a great leadership, a well-set
plan, and well-learned engineers. They have spread awareness to a large
audience in south India through a variety of distribution channels. However, even
if people become aware, the product cost overshadows their preferences. It
takes great research and money to come up with a breakthrough product. Hence,
it does not become viable for the producer to sell products at lower marginal
cost.
In a culturally diverse country
like India, various emotional, cultural and linguistic constraints affect the
feasibility, desirability and viability of a product. It is difficult to create
a one-size-fits-all product. Great innovators can take care of the feasibility and
viability aspects. However, the most important factor to consider in India is desirability.
A person may have lots of money but if he/she does not desire to buy, he/she will not buy the
product. Now, once he gets the desire, it is just a matter of breaking the
economic barrier to use the product. The reason why I used the word
"just" is that money is the only aspect that is measurable in the
Triple-Bottom Line approach.
The best strategy to break the
economic constraint is by providing microfinance loans. (Mohammad Yunus
approach) - and give women the central
focus while implementing a strategy to ensure reliability of the model. This
model will take care of both the feasibility and desirability aspects.
Now, a majority section of people
in rural India will not value a product until it becomes a necessity. Therefore,
it is important to disrupt the on-going chain of the old cooking techniques by
creating an impact. High number of IAP related deaths creates a concrete case
to bring about an impactful change.
This requires an efficient
distribution channel. There must be a strong link between producers and end
demand. People in rural India require the product to be marketed by a source that
already has an established credibility. Partnership with Government will help bridge
the gap, because a product marketed by Government will create a sense of trust
among people to buy the product.
The Dynamic Trio: Spin-ins - Profits - Impact
Fortune 500 corporations and for-profit organizations generally have the image that they function for the sake of only making money. Social ventures, non-profits, and charity organizations are pegged as the “do-gooders” who never make profits and care about making an impact on the world.
Contrary to popular belief, non-profits makes lots of profits.
Let that soak in for a second.
An organization is an organization, regardless of its legal tax designation. It takes money to run organizations, to keep the lights on with people working inside. You cannot do that if you don't have money.
There is no harm in making money and doing good for the world, is there?
Collectively, the poorest populations spend over $5 trillion dollars a year paying up to 100 times more for basic accesses and resources than middle and upper class communities (1).
The poor still function in society and purchase goods and services to do so. Social ventures and more recently, Fortune 500 corporations, are paving the way for competition to exist for the poor community to benefit. The more companies offering goods and services will enhance infrastructure development and drive down costs. The concept of “spin-in” is a practice where large corporations are doing “spin offs” of smaller companies that can enhance or supplement their business practices (2). This concept is being done both domestically and internally, depending on the needs of an organization.
Coca-Cola, an $80 billion corporation, recognized around the world. The drink can be found in every corner of the developing world. They are also the largest employer in Africa. Fair to say, they make plenty of profit while investing in regions by location regional supply chain structures. The beverages are sold primarily in kiosks around villages. In 2013, Coca-Cola partnered with solar power venture in Kenya, One Degree Solar. Since the Coke kiosks are primarily in remote villages with little to no access to power, the solar power kits were the ideal solution. Coke would market and sell the kits to kiosk owners at $80 and provide them with safe and reliable power. While also increasing sales (3).
Ikea, the $12 billion Swedish furniture retail company, created a venture called Better Shelter. An organization focused on designing safe and sustainable shelters at a low price for refugees around the world. In mass production the shelters cost less than $1,000 and feature solar powered, rapid assembly, locked doors, windows, UV light, structural strength, insulation, and proper ventilation to ensure safety from inclement weather (4).
In both instances, these large companies are not only turning a profit but also making an impact on developing nations and the poor consumers. Can one fairly negate the value of a social venture because it makes money? Are large corporations less welcomed in providing resources for developing nations?
(1) http://www.fastcoexist.com/1682004/how-misinformed-ideas-about-profit-are-holding-back-the-worlds-poor
(2) http://fortune.com/2015/04/26/startups-inside-giant-companies/
(3) http://www.fastcoexist.com/1682126/why-coke-is-bringing-solar-power-to-rural-kenya
(4) http://inhabitat.com/ikeas-solar-powered-flat-pack-refugee-shelters-offer-easily-deployable-emergency-housing/ikea-refugee-shelter2/
Greed is Good?
The title of this blog, borrowed from famous Hollywood movie
[1] whose story line focused on pursuit of wealth through questionable
practices on Wall Street may seem a bit out of place for a blog on social enterprises.
However, I feel that such conspicuous statements are needed to register
importance of income generation for social enterprises. I would argue that, focus
on income generation should be one of the major considerations of social
enterprise because it is re-investment of income generated by social enterprise
that will fuel future expansion of the enterprise.
In the article “How to take a Social Venture to Scale” [2], author
lists down, 7 organizational capabilities that are required to scale operations
for social enterprises. Not surprisingly, the enterprise’s ability to generate
income is listed as one of the key organizational attributes needed for this. I
feel that income generation is actually the core organizational capability that
in turn supports development of other 6 organizational capabilities listed in
article. A Social enterprise will need money for hiring and retaining staff, for
communication advertising, for alliance building and for lobbying. But where
would this money come from? It could come from venture funding, donations and
social investors. However, these funding sources are likely to support an
enterprise for a limited period only. Furthermore, in developing world where
market for social enterprise funding is virtually non-existent, these short-term
funding opportunities may not be available. Viewed in this context, it becomes
apparent that best bet for social enterprises to attract funds is to generate
income of their own and use that to fuel future growth.
Shaukat Khanum Cancer Hospital in Pakistan was set up in
1994 by a not-for-profit trust with an aim to provide cancer treatment to
masses at exceptionally subsidized rates. By 2014, the hospital was able to
scale its operations to the extent that it [3] handled 185,018 outpatients and
performed around 100,000 radiation / chemotherapy treatments in 2014. This
expansion was achieved primarily because the hospital was able to shift to a workable
business model soon after commencement of operations. This business model
centered on charging full fee from patients who could afford the treatment but
continuing to offer heavily subsidized treatment to lower income patients. Hence
by focusing on revenue generation opportunities, and by re-investing this revenue
in the project, hospital was able to expand its operations and multiply its
impact.
Unlike their business counterparts, decision makers within social
enterprises often are reluctant to maximize revenue generation opportunities. A
social enterprise should look into possibility of charging customers provided
that enterprise is able to offer better service at affordable rates to the
customers. Paying for the service is actually a confirmation from customer regarding
his belief in effectiveness of the new service. Similarly social enterprises
have the potential to attract significant advertising investment by partnering
with conventional business entities. Like in the case of Coke [4], Businesses
entities will be eager to leverage services and capabilities of social
enterprises to gain access to potentially new untapped markets.
How B Labs is Promoting the Social Innovation Paradox?
Growing up in India in the 90's and early 00's, it would be safe to say that I was not always the most cognizant kid. However, I'd like to think that I was born with a gift for observation. From the time I was 6 years old, when my rickshaw driver ran over my foot because I was too busy wondering why the traffic policeman was being selective in his greeting of certain pedestrians alone, to when I was 10 and at birthday party where kids thought twice about choosing their flavor of candy (there was only one flavor). Now, before I get too nostalgic about the past, fast forward to the 00's when I could distinguish noble intentions from seemingly apparent ones. Now, I elude to this because, in the article 'The Best Businesses For The World In 2014, According To B Lab', a nonprofit certifying organization - B Lab has been certifying firms since 2012 based on their environmental and social responsibility standards.
How are they different from other certifying organizations? Well, to the naked eye, it would seem that they have devised an algorithm that considers factors beyond self-consumable wealth and the participating firm's profit motives. However, this seems to have given birth to a rather complicated paradox. With the need for public recognition and fine repute being more of a determinant in a firm's survival kit now more than ever before, they are fully cognizant of the importance of a certificate from a 'B Lab' like organization and the benefits it entails. Knowledge of this stems the question of whether they can fully separate themselves and their genuine social impact motives from peering into the dark abyss of money-making. Battling these Yin and Yang like forces would then cease to become a conscious effort and take on a more subconscious interference - one driven by forces far greater than anything within the realms of our control.
Although B Labs seems to use a very robust algorithm in determining a firm's actions, we are yet to establish a clear cut tool for measuring a human's motives (which perhaps, will elude us for ages to come). After all, by definition, social innovation differentiates itself from one that seeks profit, by having a non-profit foundation at it's core. With organizations such as B Labs now starting to give out certifications for such ventures, and this trend on an exponential rise as suggested by the article, we seem to be at the brink of an age where social innovation success is being redefined more disruptively that ever before - and not for the better. Will firms like B Labs truly break the social innovation base and turn it into a flimsy silhouette hiding a profit intended beast or will the noble social warrior fight the darkness and prevail?
Why is the "So What" essential?
So if it’s not about growth, then what really matters for
Social Enterprises? I’ll give you a
couple of clues: it’s not about the amount of money you have in the bank and
it’s not about how many people you have under your staff. Social enterprises are concerned primarily
with the So What? This pithy question forces us to fully
understand an innovation’s purpose in the present time, but also it’s possible
scalable outreach in the future. After
reading, It’s Not About Growth For Social
Enterprises, I gained a better understanding of how challenging the growth
of an innovation’s impact is versus the growth of the organization alone.
This article and this week’s topic area of venture
development and growth relate by revealing the challenges an organization and
an investor would face at a given point during an org’s lifetime. To really crank up an organization and prove
to investors that their product or service is worth the business relationship
and money, they have to be able to bring significant evidence that addresses
not only their goal/mission but more importantly, it answers the So What?
The answer (backed up by the proof) is a serious consideration for
investors, but what is also needed from investor to org is their belief in your
core functions and what you are setting out to do with your innovation is of
good quality. If they don’t necessarily
agree with your core values, then it’s not worth it for you or them to continue
this relationship. At the end of the day you want an
investor who will support your organization’s ways of functioning. Touching back on good quality innovations;
an organization would be wise to formulate models and measurables to assist
themselves as well as investors and potential adopters of the ecosystem how
easy the model is to recreate and easy to understand.
Speaking of ecosystems, cultivating it so an org can have a
successful innovation may mean a range of different actions. In the case study, Environfit International: Cracking the BoP Market, the cookstoves
did not reach their desired scales and sales due to a small but significant
gap: the husbands of the wives who liked the infomercials. The men had the final say whether or not they
would purchase the cookstove on what little disposable income the family had. This gap wasn’t known until Mr. Anchan went
from retailer to retailer to discover this overlooked factor.
Identifying these
gaps ahead of time and providing the evidence in order for the
husbands to agree that IAP is linked to biomass stoves their wives use, would make much more of a successful impact! Cookstove sales would increase and cases of
IAP/illnesses in women and children would decrease.
What I find fascinating, challenging, and possibly
frustrating are these gaps! Try putting a puzzle together without using the picture on the box. But this missing puzzle piece can determine
whether an innovation will be more likely to succeed or not. And in the case of Environfit, time is
ticking to figure out a cost-effective way to raise their sales without it
impeding on the long term sustainability of the organization.
Do you think Enironfit will ultimately fail for missing to
address the Indian husbands or do you think they will recover and prove their
innovation is worth it?
Using the Chain of Impact to Measure Success
As we have learned in class, in order for something to
qualify as social innovation, it must be a novelty, an improvement to
something, and sustainable. We have also
learned about the factors that lead to good design and successful
diffusion. These are excellent metrics
for measuring whether or not we think an idea will be successful, but what
about once the venture is launched. How
do we measure the success of the impact of the venture? Measuring the success of a social venture is
not quite as clear-cut as measuring the success of a business venture. Business ventures are often about the
numbers, is the business financially successful? If yes, then the future growth for that
venture looks rather optimistic. Success
attracts more backers and quality staff which in turn produces more
results. It’s a perpetual cycle that
every business owner hopes to achieve.
We cannot measure social ventures in the same way. In the Tripp article, “It’s Not All About
Growth for Social Enterprises,” she explains just that. Growth is a deceptive metric. Yes, it shows that the venture is getting
broadband, but is it effective in its mission?
In addition, organizations also focus on the number of lives reached or
touched as a tell-tale sign of impact, but is this metric an accurate picture
of success? The people reached, the
dollars spent, the staff putting forth the effort: these are all outputs of the
organization. Yes, important, but what
they need to do is find ways to measure the impacts that these outputs are
providing.
In the article, “When Measuring Social Impact, We Need To
Move Beyond Counting,” Mike McCreless explains the Chain of Impact and how organizations
can use it to determine success. First
it starts with analyzing the context of the community where impact is
needed. Next, they analyze the practices
or the activities that the organization is taking to meet these needs. Then they look at the outputs that they are
providing, both products and services.
After that, they have to determine the outcomes of those outputs - are
they being used? Are we seeing
results? And finally, they can use all
of this information to determine the impact, which means that they must decide
if the outcomes were truly a result of the outputs or if there was some other
influential factor at play. Kimberly
Tripp provided an example of this in her article when she discussed the
mothers2mothers initiative in Africa.
The organization had grown to impressive size, but they still wanted to
makes sure that their outputs (the Mentor Mothers) were genuinely influencing
the outcomes that they were witnessing (prevention of mother-to-child
transmission of HIV). Through several
stages of analysis, they were able to confirm that yes, this was the case –
transmission rates declined from 27% to 9% when Mentor Mothers were present.
Measuring impact may appear to be an abstract concept on the
surface, but there are tangible ways of doing it, so why aren’t more
organizations doing so?
Importance of a Business Model to a Social Enterprise
Importance of a Business Model to a Social Enterprise
Absence of a business model for the largest volunteer ambulance service
for the world
The topic of this week’s course is a topic I
hold very close to my heart, probably one of the reasons why I left a career
employment for pursuing graduate studies.
Coming from a developing country on top of formerly
being a social sector worker and having witnessed many social initiatives funded
by the government and international development agencies at all phases of
project life cycle. My learning output has always been on the lack of
sustainability. At a time when Pakistan is witnessing a steady increase in per
capita income and growing commercialization, it becomes very difficult to keep
social initiatives solely on the shoulders of the state.
At the same time, I have been a part of uncountable
discussions over whether or not social
initiatives should make profits or not. I have mostly inclined with the
side that’s forbids profit from the poor. I think my grounding of this concept
is because of an inspiring personality known by the name of Abdul Sattar Edhi, the founder and
chairman of the largest volunteer
ambulance service in the world, EDHI Foundation. The foundation has
expanded its operations in numerous areas over the years including shelter
homes, air ambulances, burial services, welfare centers, disaster relief,
international community centers etc. I have read a lot about him including his
biography and numerous interviews.
He is often faced with the question concerning the
sustainability of a complete charity / donations backed operations and his
reply has always been emotional but not rational. His argument ends with his emotional
statement that the foundation started with one ambulance in 1950s and now covers
numerous countries with the same model. He is also adamant to make the
foundation make profit margins for sustainable operations.
Taking this class and familiarizing myself with
the social ventures, I feel that Mr. Edhi has done a marvelous job in operating
his organization and bringing it to where it stands right now. He has been
instrumental in leading through example and his personal charisma. But the
foundation really needs to adopt a better business model than the one which it
has followed till now. The plight of perceiving revenue sources from social
good nearly as immoral is something
that should be confronted in our society and people be made aware of. A clear vision
for making Edhi foundation adopt this philosophy is going to benefit all the
people who are being served by them. I cannot imagine the magnitude of problems
that will pop-up for the millions of beneficiaries of Edhi foundation if the operational
sustainability of the foundation dives.
I have always curious inquires wherever I have travelled on similar
business models or some public-private partnership model so that I can somehow
communicate to the foundation. I feel that my capacity to answer such is
getting better.
Social Impact through Profit
The consequence of corporations and for-profit ventures
daring to step into a market traditionally reserved for non-profits and
charities has the power to generate far-reaching social impacts.
The article, “How Misinformed Ideas about Profit Are Holding
Back the World’s Poor”, makes and excellent point—for-profit companies are not
taking advantage of those in poverty but actually lending them a hand to carve
a new path [1]. Dealing with the poor is often thought to be the realm of nonprofits
and charities, but corporations can often do an even better job at instigating social
impact while simultaneously generating revenue. The case of Cola-Cola
partnering with One Degree Solar is an excellent example of this synergy at
work [2]. Cola-Cola saw an excellent business opportunity in marketing One
Degree’s solar power kits to kiosk owners, and in doing so, all parties
involved benefitted. Coca-Cola and One Degree Solar both successfully expanded
into the Kenyan market, and Kenyans were able to earn more while getting access
to electricity. Coca-Cola and One Degree Solar, both for-profit companies, were
able to accomplish what the Kenyan government could not—that is, bring power to
rural Kenyans and raise their standard of living.
No one would claim that Coca-Cola had altruistic intentions
when entering the African market, but their unique partnership strategy with
One Degree Solar resulted in a positive social impact on millions. This
illustrates the principle that for-profit companies who do business with poor
communities can positively affect them.
But why were Coca-Cola and One Degree Solar so successful?
Jamii Bora states that “The poor don’t need charity”, rather they need us to
show them a better way of making money [2]. It is this principle that empowered
the rural kiosk owners of Kenya—when they were shown how owning a Brightbox
could help them increase revenue, they clamored for the product. If One Degree
Solar had given their Brightboxes away for free, perhaps Kenyans would not have
valued them as much. It is human nature to only value what we have worked hard
for.
The positive impacts of allowing people to fight their
way out of poverty through their own efforts instead of relying on charity are
again demonstrated in the video “Fighting Poverty in Kenya by Selling Water
Pumps to Poor Farmers” [3]. Spencer
Michels states that he was previously a socialist and believed in change
through charity, but after many failed attempts, he switched over a for-profit
model. By not giving away water pumps, aptly named Super Money Maker, he has
been able to convince Kenyan farmers of its value. The pumps are not cheap and
the farmers save for months to be able to afford one. However, once they are finally able to buy and use
the Super Money Maker, they commit to changing how they handle irrigation their
small plot of land. Through selling
this product, Spencer Michels has spread positive social change and helped many
Kenyan farmers raise themselves out of poverty.
[1] How Misinformed Ideas About Profit Are
Holding Back The World’s Poor (Whalan,
Fast Company, May
8, 2013)
[2] Why Coke Is Bringing Solar Power To Rural Kenya (Fast Company,
June 14,
2013)
[3] Fighting Poverty in Kenya by Selling Water Pumps to Poor Farmers
(PBS Newshour,
July 13, 2010)
Growing together: BoP and the private sector in Latin America
The BoP in Latin America and the
Caribbean live on less than $10 a day. That description matches 70% of the
population in Latin America (1). But if you happen to visit a random country of
that region, you will find that the mentioned 70% is not what we would traditionally
imagine as people who live in the bottom of the pyramid. You actually see many of
them carrying smartphones, branded clothing, having soda, buying cosmetics,
going to clubs - typical consumers, as a matter of speaking. That is certainly
unexpected…or not?
To understand this phenomenon, the
BoP can be divided in two groups: people living with $4 a day or less (2) and the
ones living with $4 to $10 a day, also called vulnerable population. Both lack certain
basic services, some of them emphasized by the IDB (Inter-American Development
Bank): financial services, health, transportation, housing, education and sanitation.
However, the second category has been growing while the first one has been
shrinking. This is a sector of the population that demands quality services, and
that is currently underserved. And that, for businesses, means one word:
opportunities. Opportunities that could move over $500 billion (3). Opportunities
that will benefit both the private sector and the population.
Those raw numbers do sound very
appealing. In order to sound even more compelling, I will present a fact I find
very interesting: the richest person in Peru is the owner of a company where
the majority of the sales force comes from and serves the BoP, among other
customers. Belcorp, the company that made this businessman one of Forbes 1000
richest men on earth in 2014 (4), is a direct sales beauty company whose vision
is to empower women. They achieve so by their sales model: according to them, “direct
sales is an opportunity for thousands of women to achieve their goals,
transforming their lives and their environment” (5).
It does make a difference when
big companies invest and work on the BoP market. However, Latin America’s main
source of employment are not big companies, but small and medium businesses. To
be more accurate, 99% of the companies in the region are SMBs (locally known as
PYMES), businesses that hire 67% of the population (6). What if governments provided
incentives to make SMBs serve the BoP? Just imagine the variety of services and
products they would be able to offer them. Furthermore, this companies could
both sell to and employ people from the BoP. SMBs would have a very interesting
challenge too, as those customers are looking for quality, risk-free solutions
over than cheap products (7). This dynamic would create a win-win scenario for
everybody. SMBs would exploit a new market, generating more revenue; people in
the BoP would have access to more and better quality products and services;
governments would benefit for a decrease in poverty, an increase on the country’s
GDP, and more competitive local employers and employees. There are already
initiatives that pursue motivating companies and entrepreneurs to invest on
this market, Opportunities for the Majority (from the IDB) being an important
example. Capitalizing them will not generate only money: it will spark the
growth of a subcontinent and impact the lives of millions of people.
(1) theguardian.com: The
evolution of the BoP market in Latin America and the Caribbean. http://www.theguardian.com/sustainable-business/2015/may/12/the-evolution-of-the-bop-market-in-latin-america-and-the-caribbean.
Visited on September 21st, 2015
(2)
eluniversal.com.mx: Poblacion vulnerable,
una oportunidad: BID. http://www.eluniversal.com.mx/articulo/cartera/economia/2015/07/1/poblacion-vulnerable-una-oportunidad-bid.
Visited on September 21st, 2015
(3) Inter-American Development
Bank: Opportunities for the Majority Frequently Asked Questions. http://www.iadb.org/en/topics/opportunities-for-the-majority/om-frequently-asked-questions-faqs,1475.html.
Visited on September 21st, 2015.
(4) Forbes profile: Eduardo
Belmont. http://www.forbes.com/profile/eduardo-belmont-anderson/.
Visited on September 20th, 2015
(5)
Belcorp: Nuestro Modelo de Negocio. https://www.belcorp.biz/somosbelcorp/modelodenegocio.html,
visited on September 20th, 2015.
(6)
El Heraldo.co: El crecimiento de América Latina pasa por las pymes.
http://www.elheraldo.co/economia/el-crecimiento-de-america-latina-pasa-por-las-pymes-197398.
Colombia, May 31st 2015.
Monday, September 21, 2015
Growing Together
There are so many non-profits and companies aimed at social good that are very specific to different regions of the world. Some may even compete with one another even if their aim is the same: to improve the lives of others. There are probably so many inefficiencies in which the non-profit, do-good company operates, including repeating things that have already been tried and have failed. There are probably even more inefficiencies in the way each company targets consumers. Maybe a platform for "best-practices" or for collaboration on social innovation between organizations would decrease the inefficiencies present that prevent socially innovative companies to reach their potential.
Leaders in any form should strive to bring the people around them up with them. By this same token, leaders in social innovation should strive to bring those companies with similar values and intentions up with them. I wholeheartedly agree with Hugh Whalan's sentiment that "the worst thing that can happen for the poorest people is that the next generation of superstar entrepreneurs ends up in Silicon Valley." Even companies that are not aimed at improving conditions in the developing world, they should still strive to bring those who are with them. This goes back to the article about the best businesses for the world. Maybe in this case the answer is in policy that requires companies to give back in a way that will create value rather than simply donating. How do you think this would be received by larger, for-profit organizations. Is there a way to quantify the social gains like there is to quantify environmental savings like with carbon credits?
Leaders in any form should strive to bring the people around them up with them. By this same token, leaders in social innovation should strive to bring those companies with similar values and intentions up with them. I wholeheartedly agree with Hugh Whalan's sentiment that "the worst thing that can happen for the poorest people is that the next generation of superstar entrepreneurs ends up in Silicon Valley." Even companies that are not aimed at improving conditions in the developing world, they should still strive to bring those who are with them. This goes back to the article about the best businesses for the world. Maybe in this case the answer is in policy that requires companies to give back in a way that will create value rather than simply donating. How do you think this would be received by larger, for-profit organizations. Is there a way to quantify the social gains like there is to quantify environmental savings like with carbon credits?
Is One for One the best way?
Walk around any college campus, neighborhood, or city and you’re bound to encounter more than one person wearing TOMS. At this point, I’ve even had friend get married wearing customized white TOMS. They’ve become mainstream and can be found at stores like Nordstrom, Urban Outfitters, and Whole Foods.
For many people, TOMS might be the first thing they think of when asked to name a social venture, their “One for One” model gives one pair of shoes to a child in need for each pair bought. Despite their incredible success, TOMS has been criticized over the past few years for the fact that giving away shoes might be doing more harm than good. Some of these criticisms include disruptions to the local economy by taking away from local cobblers and from failing to address some of the main issues that lead to children not having basic items like shoes[i]. To their credit, TOMS has responded to these criticisms and has worked to expand their philanthropy to include providing eye care, clean water, safe birthing kits and anti-bullying education[ii].
In his Fast Company article, Hugh Whalan highlights that sometimes charity, and giving away products for free, isn’t the best answer.[iii] TOMS is a prime example of this, what if instead of giving away shoes, local vendors were able to buy inventory for a nominal price and sell them or if they could be a part of the manufacturing process, earning wages through production. TOMS has begun to shift more towards Whalan’s way of thinking, with their CEO committing to producing 1/3 of their inventory in countries where they then donate the shoes[iv]. TOMS was founded to help people and as they continue to evolve their philanthropic philosophy I believe they should continue to focus on how to help solve the larger problems people are facing through enabling financial independence, not just continuing the cycle of giving things away.
[i] TOMS Shoes Responds to Critics, but it may not be Enough.(Otto, July 24, 2013) http://www.globalenvision.org/2013/07/23/toms-shoes-responds-critics-it-may-not-be-enough
[iii] How Misinformed Ideas About Profit Are Holding Back The World’s Poor (Whalan,
Fast Company, May 8, 2013); www.fastcoexist.com/1682004/how-misinformed-ideasabout-profit-are-holding-back-the-worlds-poor
[iv] TOMS Shoes Responds to Critics, but it may not be Enough.(Otto, July 24, 2013) http://www.globalenvision.org/2013/07/23/toms-shoes-responds-critics-it-may-not-be-enough
Leveraging the Power of Others
This week’s readings center on the problems social entrepreneurs face in developing and scaling their projects. An innovation’s impact can suffer by not being replicable, meaning other organizations cannot adopt the innovation or cannot maintain the quality of the innovation. The dilemma of scaling is described in the Tripp article: “Do we grow our organization continuing to provide our service directly or do we expand our impact by helping other organizations adopt the model?” [1]. So I propose I another question: How can social innovators generate impact through aligning more directly to existing structures and organizations? Lending an innovation's success to other organizations, local businesses, or existing infrastructure can be a way to perpetuate the innovation.
Spreading an innovation to its maximum capacity for impact involves a shift in perception for the social innovator. If the innovation actually works in a measurable capacity, perhaps one of the best routes to consider for growth would be an alliance with an existing organization, company, or system, rather than try to freshly establish themselves. The advantage of forming alliances is to take advantage of the existing footholds within a particular location. The more social innovators can partner with huge global companies like Coca-Cola, the more reach is possible for that innovation. If entrepreneurs can think in terms of appealing to huge companies, like Coca-Cola, they will find an already paved avenue for their innovation. According to the Whalan article, “you can often find a bottle of Coke in a village where basic medicine is not even available.” [2]
By knowing what products are already available or widely used in the area, an innovator can plot how an alliance could be mutually beneficial both for the intended audience and the existing organization. Even in rural Kenya, Coca-Cola has managed to gain footing, generate revenue, and spread marvelously in the most low access areas [3]. If the social innovator can flexibly cater to the needs of a existing organizations, the adoption rate for the innovation may be reduced as well. While massive conglomerate companies may not hold the social impact as a priority, they will implement the project if it can improve the lives of it employees in countries around the world, thus improving its foothold in underdeveloped markets. If innovators think of themselves as ephemeral, continuously adapting, and attaching themselves to already existing structures, scaling the impact will become trivial.
[1]It’s Not All About Growth For Social Enterprises (Harvard Business Review Blog Network, January 21, 2013)
[2] How Misinformed Ideas About Profit Are Holding Back The World’s Poor (Whalan, Fast Company, May 8, 2013)
[3] Why Coke Is Bringing Solar Power To Rural Kenya (Fast Company, June 14, 2013)
Spreading an innovation to its maximum capacity for impact involves a shift in perception for the social innovator. If the innovation actually works in a measurable capacity, perhaps one of the best routes to consider for growth would be an alliance with an existing organization, company, or system, rather than try to freshly establish themselves. The advantage of forming alliances is to take advantage of the existing footholds within a particular location. The more social innovators can partner with huge global companies like Coca-Cola, the more reach is possible for that innovation. If entrepreneurs can think in terms of appealing to huge companies, like Coca-Cola, they will find an already paved avenue for their innovation. According to the Whalan article, “you can often find a bottle of Coke in a village where basic medicine is not even available.” [2]
By knowing what products are already available or widely used in the area, an innovator can plot how an alliance could be mutually beneficial both for the intended audience and the existing organization. Even in rural Kenya, Coca-Cola has managed to gain footing, generate revenue, and spread marvelously in the most low access areas [3]. If the social innovator can flexibly cater to the needs of a existing organizations, the adoption rate for the innovation may be reduced as well. While massive conglomerate companies may not hold the social impact as a priority, they will implement the project if it can improve the lives of it employees in countries around the world, thus improving its foothold in underdeveloped markets. If innovators think of themselves as ephemeral, continuously adapting, and attaching themselves to already existing structures, scaling the impact will become trivial.
[1]It’s Not All About Growth For Social Enterprises (Harvard Business Review Blog Network, January 21, 2013)
[2] How Misinformed Ideas About Profit Are Holding Back The World’s Poor (Whalan, Fast Company, May 8, 2013)
[3] Why Coke Is Bringing Solar Power To Rural Kenya (Fast Company, June 14, 2013)
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