Implementing Social Innovations for Development & Growth of BoP Ventures

The operating space of ventures of social enterprise has expanded its domain (Alboher: 2009 New York Times) from merely constituting social sector ventures, to also including the participation of for-profit businesses having ‘social mission’ as the core purpose of their existence. This interesting and emerging development introduces a greater scope for the integration and coordination of activities in the formal and social sector.

Thus, social entrepreneurs are afforded a window of opportunity to act on the implication behind removing the legal distinction between, the incorporation and registration of, the memorandums of association for profit companies and non-government not-for profit entities. The implication of this new development is, market orientated solutions for mobilizing capital in more formally established financial markets can thus be innovated for the purposes of funding capital formation and infrastructural developments targeted at the poorest regions of the world.

This development is based on developing a ‘social venture capital market’ for mobilizing capital from surplus agents to deficit agents pursuant to achieving a social mission. The volumes of capital which are mobilized create a far greater leveraging effect than traditional micro-financing institutions that operate at the Bottom of the Pyramid.

The Human Acumen Fund (http://www.acumenfund.org) is a non-profit social venture capital non-government agency which focuses on financing and consulting social enterprise ventures with the ethos ‘meeting urgent needs with patient capital’ (Case Study: Market Minded Development). Their social innovation is designing investment vehicles for small cap start ventures that cannot service debt under the terms of established merchant banks, as these ventures need patient financiers to grow. Social venture capital markets could therefore spark the next Greenback revolution in the history of usury and its impact on social change.

MASSIVE Change

I saw this exhibit in Chicago on MASSIVE Change years ago. It was fascinating! I think the projects show the importance (and elegance) of creativity and design to social innovation. The exhibit explored the ways in which design could improve human welfare. Many of the projects/systems/products would serve the BOP population described in the articles we read for this week. In particular, I recall seeing portable, low cost water filters and transportation methods that would create enormous, positive change: women who otherwise spent hours and hours a day hauling water from remote sources to their villages would have time to pursue other productive endeavors.

As the sidebar says, “Instead of structuring our project around professional design disciplines, like graphic design and industrial design, we looked at design from the perspective of the citizen.” The Massive Change approach fits in with the notion of frugal engineering described in the Sehgal article: maximize value to the customer while minimizing nonessential costs. After all, in order to truly provide value to the customer, the designer must see what the customer wants and needs. While the BOP population has not formerly been a traditional “customer,” it is indeed a critical population of customers and often times has unique needs.