Archive for June 30th, 2010
How Social Ventures can be Learning Laboratories
In a time of economic crisis, it is crucial that business entrepreneurs focus their innovations on the long-term effects. Previously, capital market innovations have focused on short-term profit, resulting in permanent damage to the economy. In their article, “Social Ventures as Learning Labs,” J. Gregory Dees points to how social ventures can be useful “learning laboratories” in which innovative business ideas can be tested without distorting markets. Rachel Padmanabhan, provides an overview of his article.
A decrease in economic opportunities exacerbates other social problems and in turn reverses progress made by impoverished families. This financial stress has proven to result in tension within communities, fewer children attending school, and inadequate health care. In order to make any improvement on these super-sensitive social and environmental problems, the markets must turn to social entrepreneurship.
Innovation by social entrepreneurs can reverse the pattern of destructive markets by focusing on the social impact that innovations can offer. Social entrepreneurship also allows experimentation of innovations that could potentially solve many issues on a small scale, while effectively working to achieve a larger goal. Social entrepreneurs, Dees says, provide what has been called a “learning laboratory” for these innovative business methods to be tested without negatively impacting the market. The resulting successful models can then be replicated and scaled to create a greater social impact.
The primary difference between these social entrepreneurs and others in the business world lies within their motives. While profit-seeking business entrepreneurs and corporations measure financial success quantitatively, social entrepreneurs measure success by the opportunities they create for the future. An example Dees points out to is 2006 Nobel Prize winner Muhammed Yunus and Grameen Bank that focused on micro-credit with the goal to alleviate poverty. While Bangladeshi officials did not see this as a substantial business opportunity, microfinance is now growing in popularity among mainstream business entrepreneurs and financial entities. Decades after the initial idea of microfinance, markets are beginning to acknowledge the viability of this method as an effective business opportunity.
Implementation of creative business models paired with resourcefulness is necessary in order for entrepreneurs to succeed. Recently within social venture business models, there has been a growing trend away from reliance on subsidies towards commercial strategies. Reliance on solely either of these funding methods is hardly optimal for social entrepreneurs to succeed. In order to create sustainable ventures, entrepreneurs must utilize a mixture of both commercial and philanthropic methods. As proven by VisionSpring, a non-profit organization in China, low-cost technologies paired with innovative business models are an effective way to both provide affordable products and create sustainable job opportunities.
The aforementioned application of these “learning laboratory” experimental innovative models to other businesses requires them to be replicated as well as scaled. This means that in order to be considered valuable, it is necessary that they be cost-effective and transferable as well as socially-impacting. However, entrepreneurs can also benefit from recognizing the failures and patterns of these experimental business models and applying new knowledge to future innovations. As financial crisis pushes businesses towards innovation, it can be expected that the growth trend towards social entrepreneurship will continue due to necessity. If this trend persists, many of the social and environmental issues that have been attributed to capitalistic markets in the past can be alleviated over time.
Read the original article here.
Working Wikily
Several grassroots level organizations today utilize online networks for communication and mobilization. Online networks was often seen as a secondary activity. But not since US President Barack Obama’s election. Obama rallied more than 13 million supporters and raised a record-breaking $745 million through out his presidential campaign using what the Monitor Institute has termed “Working Wikily.”
“Working Wikily” is a phrase that describes the new ways that people are applying network theory and networked technology to do the work they have always done in a more collaborative form.[1] A Stanford Social Innovation Review Summer 2010’s research paper, “Working Wikily” by Diana Scearce, Gabriel Kasper and Heather McLeod Grant, looks at the way this phenomenon has grown to represent greater openness, transparency, decentralized decision making, and collective action.[2]
The Benefits of “Working Wikily”
The research paper indicates that online social websites such as Facebook, Twitter and blogs are widely practiced by nonprofit organizations, however, only a very few of these organizations are utilizing these social tools to fundamentally change their operation and enhance their social impact. Kiva and Ocean Conservancy’s International Coastal Cleanup are the rare exceptions. The authors identified five prime reasons why people should use a network to achieve social impacts: weaving community, accessing diverse perspectives, building and sharing knowledge, mobilizing people, and coordinating resources and action.
The Challenges of “Working Wikily”
However, challenges of working wikily exist: In some cases, a more traditional operation of centralized and closed approach works better than the open community platform. For example, a website that holds restaurant reviews from ordinary patrons may not serve as well as an authoritative gourmet critiques from New York Times. A dominant opinion channel hold by experts may work much better in the organization that needs to take firm control of a product or process in order to maintain certain quality or when responsibility needs to be clearly assigned. For social change leaders, the challenge is to understand when it is best to maintain tight control and rely on the skills of experts, and when it is best to let go and rely on networks to yield the best result.[3]
The Lessons Learnt from “Working Wikily”
To wrap up the paper, the authors address five suggestions of how to work wikily based on their experiences and lessons learned from the pioneers in the area. 1. Design projects around a problem to solve, not around the tools. 2. Combine top-down and bottom-up approaches. 3. The rules of relationships still apply. 4. Understand your position within networks. 5. Share what you’re doing and learning. In sum, working wikily is not all or nothing. Hold on to control where it is necessary, but also look for small, strategic opportunities to let go.
[1] http://workingwikily.net/?page_id=149
[2] Diana Scearce, Gabriel Kasper, Heather McLeod Grant, “Working Wikily”, P32, Stanford Social Innovation Review, Summer 2010
[3] Diana Scearce, Gabriel Kasper, Heather McLeod Grant, “Working Wikily”, P35, Stanford Social Innovation Review, Summer 2010
Can Social Enterprise Scale Through Franchising?
The benefits of franchising are well understood – the franchisor bears lower capital expenditure to expand, yet derives revenue through the franchise, the franchisee does not have to invest time and energy in building a brand or a captive market, moreover he inherits the parent company’s best practices, systems and technology. The model is fairly standard and widely used in the corporate world – from car rental agencies, to fast food, to supermarkets.
One of the benefits that the model brings with it is the ability to replicate fast, and to scale. This fits perfectly into the challenge several social enterprises face. So can the franchising model be used to replicate and scale social enterprise, and therefore create a greater impact?
This is the topic of a publication by the Association of German Foundations, “Social Franchising: A Way to Systematic Replication to Increase Social Impact.”
At the outset, the report begins by building a clear benefit for social franchising. The opening section talks about the benefits of not reinventing the wheel, and the need for scale. Social enterprises it says, have an “obligation” to scale, seeing that many people are still not reached by existing projects and that social needs remain high. Often non-profits succumb to the idea of developing something new, rather than perfecting and scaling what they know already works. The imperative to scale therefore is high. And this is the case that the report builds.
Further, the report takes a closer look into how replication can be achieved, including franchising. It goes on to define some of the characteristics of commercial franchising, as well as drawing a distinction between the former and social franchising.
The third part of the report enumerates the opportunities and challenges for social franchising. The principal opportunities include: faster and more cost-effective replication of non-profit programs, improvement through systemic transfer of know-how and ongoing learning, financial gains and benefits in network synergies.
Of course, franchising is not without its risks for social enterprises. Some risks documented in the report include: risk of changing initial mission, risk of negative reputation, difficulties of monitoring and evaluation, difficulties in standardization, and competition over fundraising.
Further, the report highlights a framework for implementing social franchising, including suggestions to make models sustainable.
The report draws from several case studies including the work of the Annapurna Conservation Area Project in Nepal, Reach a program of Freedom from Hunger and Aflatoun. Its depth and detail provide for a good guide to any social venture looking to expand and grow via the franchising model.
Read the entire report here.