Dr. Christian Busch Associate Director Innovation & Co-Creation Lab London School of Economics (LSE) Twitter: @ChrisLSE

Social innovation and entrepreneurship: The

integration of profit and purpose

INACAP, Chile

Content

Global trends and challenges

‘Generation Why?’/millenials

The integration of profit and purpose

Business model innovation on a global level

Curating and accelerating serendipity

Looking ahead

LSE Innovation and Co-Creation Lab

Areas: Research, teaching, advisory

Research: Anthropology, development, management

Teaching: Open innovation; Business model innovation (from idea to business model); Enterprise development (design thinking)

Workshops & advisory: Business modelling, design thinking,...; e.g., Centrica, IBM, Shell, E & Y, Danone, GM, …

Thousand Network (formerly Sandbox): Leading community for innovators

Social and environmental

challenges Youth

unemployment; skill gaps; finite

resources

Networked economy and new markets New ways of

organizing and new customer

segments

Shift in needs and mindsets

Customer preferences

and employee (un-)

productivity

Need to innovate across organizations

Challenges

Millennial thought leaders

Generation “Why?”

Traditional models

Esteem Needs

Emotional Needs

Safety Needs

Material Needs

Self Actualization Maslow’s  Hierarchy  of  Needs…    

Self Actualizat

ion

Material Needs

Safety Needs

Esteem Needs

Emotional Needs ✔  

An ‘enlightened circle’ of needs

KPIs/Incentives

Action-driven

purpose

Genuine values

Technology Decentr. connect.

Integrating profit & purpose

Answer the “why?” (Sinek)

Make it about your followers, not about you/the leaders

Establish relevant community-links: Become part of broader, meaningful conversations (e.g., Coca Cola & Global Shapers)

>> increased legitimacy, joint ‘credible’ content, ‘buy-in’, appeal

Action-driven purpose

Genuine values

Decentralized connectivity

Source:  TEDx  

Facilitate decentralized connectivity

Technology

Source:  Aravind  

KPIs/Incentives

Source:  Ideo  

Innovation and creativity

Design thinking

Source:  Stanford  D-­‐School;  LSE;  Own  

Empathize

•  Observe •  Engage •  Watch •  Listen

Define

•  Identify patterns

•  Clarify real needs and wants

Ideate

•  Brainstorming

•  Mind-mapping

Prototype

•  Start building

•  Rapid iterations

•  Identify variables to test

•  Build with user in mind

Test

•  Show don’t tell

•  Create experiences

•  Ask users to compare

Source:  CColeman  

Culture of innovation

New customer needs: Creating new markets and products (e.g., sachets)

Basic, long-standing social needs and problems: Derived from theory of change (our focus)

>> increased legitimacy, joint ‘credible’ content, ‘buy-in’, appeal

Types of opportunity recognition

Characteristics of business model

“Rationale of how an organization creates, delivers, and captures value”

Elements derived from theory of change/strategic objectives: value proposition, revenue model, key activities, network/partners/customers

Similar for corporate- and project- level

Building blocks •  Needs/problem/trend: 400 m people in developing world suffer from

presbyopia/ have no access to affordable eyecare

•  Objective: Empower people to see & live a productive and dignified life

•  Customers: Adults over 35 suffering from presbyopia

•  Value proposition: Affordable access to eye care/reading glasses

•  Key activities: Providing eye glasses; training entrepreneurs (b-in-b)

•  Network/partners: Rural micro-entrepreneurs; network-based distribution

•  Revenue streams: Vision spring eyecare bag (around $4 p.p.)

Who is target client? Based on what do they evaluate your offering? Which features add more value than cost; which new features should be added? Think through more general experience of client and repeat exercise.

What are the value drivers for your client/the end-user?Where are they moving to/what are the trends?

Product (solar towers) >solutions (24h electricity)>experience (try to shift from left to right; e.g., car-sharing, PC, Tata Nano); improvement via procurement, use, maintenance, disposal, price, financing, group offers,...

Needs, wants, aspirations? Confusion of needs vs wants>>> formulate VP in terms of aspirations, not needs (‘skin moisturizing’ vs ‘eternal youth’)

Developing the value proposition

Structure of revenues: Fit the income stream of users (esp. in dev. countries); e.g., small unit pricing (e.g., sachets Unilever; installments CEMEX); e.g., end-user pay for electricity once per season or year (after harvest)

Take costs out of business model: repackage elements to create additional ones from others (e.g., governments in developing countries)

Developing the revenue model for you (and clients!)

Distributed generation? Turning consumers into producers? (e.g., Community Energy Solutions in the US> using public buildings; SMUD: letting locals invest into local solar farm); learning from wind

Especially for governments: What is the most powerful VP for them? Is it only product itself (solar tower), or creating work, engaging communities, etc.? (c.f., later?)

Vodafone: Cost effectiveness

Issue: Need broad coverage, yet physical infrastructure extremely expensive

Partnership with O2 (pre-competition): Putting masts together; getting rid of duplicates; building new ones (18500 in UK once done)

To get grid running: Equally divided; set up independent company to manage passive infrastructure (mast sites)>> everything that’s not signal

Vodafone does network maintenance in West of UK/Wales, O2 rest of UK

Not shared: Signal, fibre backbone network, or any of the services

40% more coverage, potentially 100 millions of savings

Package dissemination initiatives (down-skilling)

Leveraging existing assets of marginalized groups (‘scaled bricolage’)

Capacity building (increasing ability to self-help)

Replication approaches (incl. networks)

Scaling impact

Stage  I  

Stage  III  

Stage  II  

Structural: Dense network of family, friends, researchers

Relational: Uni-dimensional emotional monetary, and ideas support

Cognitive: Trusting faith

Lack of existing ecosystem

Stage  IV  (incl.  turnaround)  

Structural: Dense local network paired with international ties

Relational: Reciprocal, trusted relationships

Cognitive: Effective education of and understanding with key stakeholders

Success

Lack of existing ecosystem

Structural: Central, dominant role in local network combined with international ties

Relational: Reciprocal and empowering relationships with key stakeholders

Cognitive: Establishment of narrative and alignment with mental frames of stakeholders

Success

Lack of existing ecosystem

Collectivistic expectations

Relational: Empowerment and governance of whole ecosystem; engagement trusted multipliers

Cognitive: Shared understand. via alignment of interests & mature sense-making approach

Success

Devolution Lack of existing ecosystem

Collectivistic expectations

Success

Structural: Central positioning and pro-active capacity-building across the extended value chain

Figure 1. Dynamic networks

Example involving locals: Rlabs

Premise: Training platform to empower people in poverty to better their skill- and mindsets

People out of community; former drug addicts

Train-the-trainer: Next generation takes over

‘Scaled bricolage’: Simple, replicable structure and approach

‘Decentralized connectivity’ (incl. cultural sensitivity)

More than 5 million people within 5 years

Success patterns

Word-of-mouth: Show-farms, tell-the-neighbour

Deskilling (e.g., high-skill processional services such as eye care (Aravind, gynecology (Life Spring): key process re-engineered into smaller discrete parts, by para-professional staff

Accountability among team members (e.g., Co-Tweets, etc.)

Active management of whole value chain (e.g., financing farmers; supply-side guarantees, etc.); outsourcing service maintenance (e.g., street representatives that manage electricity operations in dev. countries)

Scaling via approaches incl. micro-franchising (funding, purchasing guarantee, etc.; e.g., Rutuba with fertilizer + local waste management)

‘Embedded disembedding’; social rather than financial control mechanisms

Innovation communities

“Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it is the only thing that ever has” Margaret Mead

Triggering innovation

Can be inspired, but not controlled

Need boundaries, but should be diverse

Need people ‘among themselves’ that shape the conversation (e.g., Karma points; Ebay)

Need contextualized storytelling adjusted to local traditions

Innovation communities

New technology enables new ways of interaction (holograms, telepresence,…)

Curating serendipity

Accelerated serendipity

Environment fostering unexpected encounters

Multipliers/filters that enable access

Visibility towards people that matter

Open-mindedness/ability to leverage encounters

Curating serendipity

“You  can't  connect  the  dots  looking  forward;  you  can  only  connect  them  looking  backwards.  So  you  have  to  trust  that  the  dots  will  somehow  connect  in  your  future.”  (S.J.)  Really?  

System-innovation rather than only product- or business model- innovation

Leveraging existing human capital

Reverse innovation; jugaad  

Cross-subsidization, across segments

Cross-subsidization/‘product remittances’: New markets

Innovations of the future

Enhanced cost effectiveness

Higher customer satisfaction and employee productivity

An ‘enlightened self-interest’ based capitalism

Longer-term sustainability and legitimacy

Why all this?

“If you take man as he is, you make him worse, but if you take man as what he could be, you make him capable of becoming what he can be.” Goethe (& Frankl!)

Twitter: @ChrisLSE LinkedIn: h#p://www.linkedin.com/in/chris4anwbusch New book out soon! (‘The emergence of the Impact Organization’)

Progressive organizations