1

IREX Social Enterprise IREX Social Enterprise Development Development

Familiarization Training Familiarization Training

Gbanga, Liberia May 13th – 17th

Kim Alter Virtue Ventures LLC

Part FourPart Four

2

3

Innovative Solutions to Innovative Solutions to Problems Problems

Video case: Aravind

Social Enterprise DesignSocial Enterprise Design

Be clear about the purpose Be clear about the purpose

• Solve a social problem?• Earn money to fund social costs or overhead?• Strengthen organizational capacity?• Create entrepreneurial culture?• Diversify funding?• Hire and retain staff?• Attract new donors?• Sharpen mission?• Strengthen community relations?• Improve service and program delivery?

6

Social Enterprise Design ProcessSocial Enterprise Design Process

2. Theory of ChangeIdea Generation

5. FeasibilityStudy & Refine

concept

6. Business Plan

4. Draft business concept & models

1. Identify market failure / social

problem

3. Screen and select ideas

© Virtue Ventures

Ideas for potential business solutions to social problems

Pre-qualified SE concepts w/compelling

ToC

SE concepts which captures social &

business components

Spurs problem analysis

Validates feasibility of SE

concept

Process Result

Plan to implement

7. Implement Social enterprise

7

Inception and DirectionInception and Direction

The problem is the social enterpriseopportunity

The vision is the image of successfully solving the social problem

8

• Mission• Objectives• Theory of Change• Social criteria• Financial criteria• Assets and resources• Market information• Operating environment• Organizational factors• Stakeholders• Preferences

Informs DesignInforms Design

9

The Mission is the AnchorThe Mission is the AnchorTo

Vision

UnrelatedOpportunity

10

Objectives are AlignedObjectives are Aligned

Vision

Social ImpactObjectives

Social ImpactObjectives

Financial ObjectivesFinancial Objectives

Mission

11

ImpactImpact

GoalsGoals

Local business -Opportunities

Women -Gender roles

Community -EmpowermentChildren -Education

Environment -Renewable

Farmers -Markets

Local NGO -Engagement

Workers -Employment

12

Principles of Design - 1Principles of Design - 1

1. Social Aspects Start with the social problem Needs or special conditions of your

clients that must be factored into enterprise design

Social market analysis Determine stakeholders and their roles

related to the social enterprise Identify social stakeholders and their

needs and wants

13

Business Aspects Financial criteria Assets (have) Resources (needs) Market information Strategic environment Organizational factors Stakeholders (customers

and business relationships)

Preferences

Principles of Design - 1Principles of Design - 1

14

Social Market LandscapeSocial Market Landscape

• “Beneficiaries” of impact Client Community Environment Public

• Competitors Direct competitors

Role of subsidies in the market

Substitutes

• Collaborators Strategic alliances and

partners

15

Strategic Environment Strategic Environment

• Opportunities• Threats• Barriers• Industry dynamics• Demand• Market Segments &

Size• Trends• Competitors

16

Social CriteriaSocial Criteria

• Special design considerations or attributes required to achieve social impact objectives.

• Social Criteria often hinges on special needs or limitations of clients and/or beneficiaries.

• Social Criteria can impact: Operations Productivity Financial results Choice and type of enterprise

17

Assets IdentificationAssets Identification

• Tangible People Land Money

• Intangible Reputation / brand Methodologies Relationships Skills and expertise

18

Organizational FactorsOrganizational Factors

• Core competencies • Capacity

Human Resources Financial

• Stakeholder buy-in• Risk Profile• Preferences• Competitive advantages• Culture

19

Financial Aspects Financial Aspects

• Cost structure• Revenue structure• Subsidies• Opportunities for financial leverage

20

Resource StrategyResource Strategy

• Driven by resource requirements• Strategies

Earned income Grants In-kind subsidies Equity Soft loans /patient capital (below market

rate) Commercial loans

21

Personal FitPersonal Fit

• Passion and Commitment Commitment to realizing social mission

• Qualifications/experience Maximise resource utilisation

• Stage of life Avoid burn-out

• Time/activity Matches preferences

Idea Evaluation Idea Evaluation

Prioritize Screens Prioritize Screens

• Prioritizing screens depends on: What are you trying to achieve? What you have? What you don’t have? Organizational culture/priorities? Financial needs? Costs and cash flow?

Scoring OpportunitiesScoring Opportunities

Opportunity Enterprise

idea

Fit with

Mission

Fit with Social

Criteria

Fit with Organization

Fit with Assets

Fit with financial criteria

Market Potential

Fit with preferences

Create a custom scorecard based on your organization’sSocial enterprise criteria, priorities, purpose

Enterprise Idea Evaluation Enterprise Idea Evaluation • What is the mission; how does the social enterprise help to

accomplish the mission?• What is the social theory; how social enterprise social impact

goals be achieved? • What are the financial goals?• Social enterprise’s community and environmental impact goals?• What are the human resource needs for running the social

enterprise?• What specific characteristics/needs of the clients must be

considered in the social enterprise? • Timeline for implementing the social enterprise? • Is there stakeholder support for the enterprise?• What is the best type of business model to achieve social and

business goals?• What are the critical factors for ensuring social enterprise

success? • What’s it going to cost?• What biz attributes/characteristics are preferred?

26

Clarify enterprise conceptClarify enterprise concept In addition to solving a social

problem, is this a real business idea?

Quick and dirty qualification of enterprise concepts:

Products or services? Customers? Demand? Business model? HR requirements? Cost? Operational requirements? Positive impact on organizations

and clients? Risks and threats?