Being Intentional About Innovation
Innovation is often about what is new, what is being done differently. Innovation in the social sector is also rife. But can one develop a strategy around innovation, to maximize social value? Can being intentional about innovation contribute to the creation of more consistent and reliable commodity for social good?
The WB Kellog Institute commissioned a study, “Intentional Innovation: How Getting More Systematic About Innovation Could Improve Philanthropy and Increase Social Impact” to explore these questions. The work has been carried out jointly by the Monitor Institute and Clohesy Consulting.
The purpose of the report is to help non-profits and philanthropists understand that innovation is not necessarily as organic as it might seem. Drawing from several case studies, reports, books, and conversations, it lays down a framework for building a “Creating a Culture for Innovation.” The framework it points to has five sections:
1. Setting the Conditions and building the committmenent to innovate.
2. Defining the Problem or Opportunity. In short identifying the targets for innovation.
3. Generating the idea
4. Engaging in piloting and prototyping.
5. Diffusion and scaling the innovation.
By understanding the framework and the process of innovation, the report provides a tool for donors and philanthropists to formulate ways in which they can be ‘intentional’ about creating innovation, and thereby increasing their social impact.
Read the entire report here.
Technology, Innovation and Gender
In February we featured a study by the International Council for Research on Women titled “Bridging the Gender Divide: How Technology can Advance Women Economically.” Villgro Fellow 2010, Jeanne Chen takes another look at this piece, focusing on how social enterprises can be more conscientious of the gender gap in innovation.
Technology and innovation are two words that form a pillar of social enterprise – even social enterprise itself is still considered an innovation. Social enterprises seek to develop technologies with the underlying assumption that they will increase productivity or create opportunities for social economic advancement. Some technologies are simple like the treadle pump, and others are complex like solar lanterns, but all of them help the BoP and it’s this latter benefit that we invest in. As social entrepreneurs, we’re obsessed with measuring this benefit and finding new ways to scale the impact further – in short we want to know that everyone who can benefit from this technology is adopting it. All the aforementioned statements are frequently discussed, but what we don’t hear enough about is whether these successful innovations are reaching men and women equally or whether there is a gender gap to adoption of technologies.
The International Council for Research on Women (www.icrw.org) recently published the report “Bridging the Gender Divide: How Technology can Advance Women Economically” (downloadable here: http://www.icrw.org/files/publications/Bridging-the-Gender-Divide-How-Technology-can-Advance-Women-Economically.pdf), which focuses on understanding how technology for the BoP differs in its impact on men versus women and what measures can be taken to ensure more inclusion of women. Four main barriers to adoption were identified:
- Lack of education and technology literacy: women are often excluded from opportunities to learn the new technology
- Time poverty: domestic responsibilities leave limited disposable time for tech exploration
- Social norms: women are often not in the habit of operating technology, or adoption would require women to enter a public arena (i.e., market) outside their customary comfort zone
- Limited economic means: domestic finances are most often controlled by the men of the households, leaving women unable to make a purchase decision to adopt innovations
These barriers can be overcome when developers of the technology or the social enterprise promoting the innovations take efforts to address the root causes, starting with including women in the design process. ICRW gives an example of the the Upesi rural biomass stoves, which were designed with inputs from women and consequently were adopted. I find this point to be one of the strongest recommendations – it addresses a systemic concern that prevents women adoption. As long as technology continues to be designed by men, women adoption will be low, perpetuating social norms that continue to support the existing gender gap. Sometimes, the solution is as simple as making a technology like a cooking stove, a height that women can reach. ICRW also suggests that inclusion of women in the design process can help to overcome many of the technology literacy and social norm barriers.
Other recommendations are centered on customizing the last mile distribution to address the awareness training needs, purchasing financing, and distribution through channels catered to women. By providing financing or bringing the innovation directly to the women, rather than relying on market place distribution, women are enabled to make the adoption. It is only through active efforts of the social enterprise to convert women adopters that this is possible.
ICRW provides the example of Solar Dryers in Uganda, which were financed by a partner NGO, enabling women to dry fruits for commercial consumption. As in the Solar Dryer example, technologies which can either create income generating activities or increase the productivity of women can go a long ways to contributing to their economic advancement. In addition, ICRW cites that the indirect benefits of increased productivity can also reduce the barrier of time poverty.
Overall, what I find most compelling and the most important point to takeaway is the need to examine and reevaluate how we think about the potential impact of a technology on helping the BoP. Social enterprises need to be more conscientious of the gender gap in innovation adoption and need to be vigilant in their efforts to address this gap.
One particular example comes to my mind of an innovative successful business model, who could benefit from thinking about their social impact with respect to an adoption gender gap. VisionSpring (www.visionspring.org), an organization recently partnered with Villgro, uses a high touch-point sales distribution model to bring low-cost reading glasses to the BoP across southeast India. VisionSpring’s customer demographics are heavily skewed towards men even though there are many women who attend the eyecamps and should be customers. There seem to be two primary reasons for the gender divide between VisionSpring’s customers. The first is that eyeglasses are perceived as aesthetically unappealing, which trumps the value of clear vision. The second is that women are less likely to have disposable income and the economic means to make the purchase. Both these reasons are problems that should be and can be addressed by the social enterprise. Awareness campaigns for the importance of proper reading glasses in the preservation of vision, not to mention the benefits of increased productivity, can be conducted to overcome what is essentially a misguided social norm that is a barrier to wearing glasses. Women can also be engaged in sourcing frames that are more aesthetically appealing. Finally, some form of partnership with a microfinance institution to finance the purchases is also possible to overcome the economic concern.
The point I want to emphasize is not how VisionSpring can work to increase its female customers, but rather that it needs to proactively think and evaluate the impact of its technology to identify how to overcome the gender gap. This is true across all social enterprises. Even though many social enterprises have introduced game changing technologies to the BoP, I think if we look closer, we would see a divide in the impact by gender. This gap is one that needs to be overcome if we truly want economic advancement for all of the BoP – of both women and men.
Social Entrepreneurship = Social Transformation?
There is no doubt that entrepreneurship in different forms has lead to social transformation. There is invariably a ripple effect on several spheres, including politics and society. Social enterprises are no exception to the power of transformation.
What are the factors that are commonly associated with social enterprises? Do successful enterprises have anything in common at all? Authors Sarah H. Alvord, David Brown and Christine W. Letts of the Kennedy School of Government take a look at seven social enterprises to establish this.
The findings are presented in their paper, “Social Entrepreneurship and Social Transformation: An Exploratory Study.” The study looked at the following enterprises:
- BRAC, Bangladesh
- The Green Belt Movement, Kenya
- The Highlander Research and Education Center, USA
- Plan Puebla, Mexico
- SEWA, India
- Grameen Bank, Bangladesh
- Six-S, Burkina Faso and France
The study identified several forms of core innovation, including building local capacity, innovative ways of disseminating a group of innovations, and building a movement from grassroots alliances to take on the more powerful. These findings form a part of the first hypothesis for successful social entrepreneurship.
The second hypothesis the study makes is that successful social enterprises involve innovations that mobilize existing assets of marginalized groups. An example of this would be the work of Grameen Bank in Bangladesh, which encourages its clients to participate more effectively in local economies.
The third hypothesis for a successful social enterprise is that success is built when there is an emphasis on systematic learning in order to operate at scale.
Read more about the study here.
Balancing Value and Markets in Social Enterprise
Columbia University’s Research Initiative in Social Entrepreneurship (RISE), conducted a study in 2006 that compiled the findings of conversations with more than 200 CEOs of social enterprises based with operations in the US and globally. The study was aimed at understanding the kind of social value that was being created by social enterprises, and the associated challenges that they faced. The report, “RISE For-Profit Social Entrepreneur Report: Balancing Markets and Values” is a follow-up on an earlier reports that looked at the double bottom line capital markets.
Some highlights from the report are:
- CEOs mentioned difficulty in raising money from people who may or may not understand the businesses commitment to a social mission.
- Identifying best definitions and labels for the business venture, and deciding when to use the company’s mission to educate and connect with people and when to avoid doing so.
The report also identifies four types of CEOs of Social Ventures. These were classified based on their prioritizing of social and financial priorities. The four classes of CEOs identified are by the report are: Activits (socially oriented, and explicit about this with their customers), Change Agents (socially oriented, but not explicit about this with their customers), Market Pioneers (financially oriented and explicit to customers), Market Influencers (financially oriented and not explicit about this to their customers).
A majority of the respondents of their survey worked towards creating value in environmental issues, followed by health and community development. The most common vehicle to disseminate this social value created was through a product or service offering. However, this varies by sector. For example, advocacy and philanthropy as vehicles for creation of value is widely used by those in the media.
Read more about the survey and its findings here.
Energy Generation for Low-income Customers
Low-income markets are often the most neglected when it comes to access to energy. Traditional energy sources have been firewood, and kerosene stoves. There are recognized health risks that come with these. Not to mention that they are not efficient. A new breed for energy solutions are making their way into these low-income markets. Next Billion, a great resource for information on all things within the development sphere, has put compiled a profile of some organizations that are catering to BoP markets through their innovative products.
For the Public Good
The indicators of a successful social enterprise often go beyond just making a profit. Social impact is increasingly becoming a key indicator of success as well. An article by Parminder Bahra in UK newspaper The Sunday Times, points to other pointers to setting up a successful social enterprise.
1. Be hard-headed. Social entrepreneurs (SEs)need all the qualities of commercial entrepreneurs. They take risks, grasp opportunities and are proactive rather than reactive. Most social enterprises are viable profit-making entities. If you haven’t got a head for business, then you’ll not cut it as an SE.
2. Everything in triplicate please. Social enterprises have a double or triple bottom line. This doesn’t mean that they are overweight, it means that they combine profits with social and environmental objectives, for example, ensuring that an organization is environmentally neutral.
3. Social entrepreneur or social enterprise? The two are sometimes confused. SEs are interested in outcomes, not processes. Their benchmarks will incorporate any of the three bottom lines, but their organization will be value-led and exist for social benefit. Social enterprises are more fixed in terms of process. They make profits, but then reinvest them into the business or into the community.
4. Know your market. Like commercial entrepreneurs, SEs spot a gap in the market and try to fill it. According to the Social Enterprise Coalition, gaps exist where the private and public sectors fail to provide a service or product.
5. Keep it local. Many social enterprises work at a local level, involving the community in which it provides a service. Nick Temple, the network development manager at the School for Social Entrepreneurs, says that because of the nature of social enterprises, people come from diverse backgrounds and SEs must be able to network with a variety of people and communities.
6. Make a change. SEs are change agents in society, creating and sustaining social value by using all the resources that are available to them. They have to be creative and innovative. SEs should be good at spotting and re-using resources that are underused or abandoned, such as buildings and open spaces. Most importantly, Temple says: “SEs must not be afraid to make mistakes but must be able to learn from them.”
7. Challenge propositions. Temple also says that SEs can be difficult to work with: “They are highly motivated people who can be persistent. They change the status quo. They push the boundaries and against traditional barriers.”
8. Don’t want to start your own organization? There are many ways in which you can get involved without starting your own organization. All social enterprises need trustees to make sure that they are fulfilling their objectives.
9. Use your commercial sector skills. Don’t be put off if you have no sector-specific skills. Social enterprises need people who have the skills gained in commercial organizations, such as marketing, finance and accounting.
10. Other opportunities. According to Temple, commercial organisations are increasingly looking at corporate social responsibility and triple bottom line accounting: “There is a tendency for convergence among all organizations to incorporate these ideas.”
Have you started your own social enterprise? Do you have any other pointers for would-be entrepreneurs? Leave us your comments below.
The original article can be found here.
Business Linkages at the BoP
Business Linkages are often-times the key to reaching out to the BoP. Often companies are unable to act on their own, requiring several layers of linkage in order to acheive their goals.
The IFC, in collaboration with the the International Business Leaders Forum, and the CSR Initiative of the Harvard Kennedy School has been organizing a series of roundtable discussions to understand the several kinds of linkages that exist. Following one such roundtable in Jaipur in 2009, they jointly brought out a report titled “Business Linkages: Enabling Access to Markets at the Base of the Pyramid.*”
The report draws from experiences of participants at the round table. The discussions are based around three areas: Opportunities to enable access to markets at the BoP, Challenges in forming business linkages, and Patterns of Solutions and cross-cutting themes.
The case examples used in the report draw not from “social enterprises” particularly. For example, while discussing the opportunities to enable access to markets at the BoP, the report highlights the work of the Aditya Birla group in selling to the BoP. The group’s cellular network service, Idea Cellular, has been able to penetrate into rural markets by offering a suite of products and services customized to the needs of rural customers.
The report also talks about how enterprises can find opportunity at the BoP by going beyond traditional value chains. These are applicable in areas that improve the quality of life and help strengthen and diversify local economies. For example, education and health. The work of the Syngenta Foundation is cited as an example. The Foundation focuses on raising farmer productivity and access to markets through farmer training, and assistance with commercialization.
However, the report identifies significant challenges to establishing business linkages. These are in the form operational challenges (obtaining reliable information), reputational and relationship management challenges (managing expecations and reducing dependence) and systemic challenges (skill-building, improving access to finance, strengthening regulatory environment).
The third part of the report draws from previous roundtables in Washington, Johannesburg and Rio de Janeiro, to establish a clear pattern of challenges and a scheme of solutions to meet those challenges. Beyond particular solutions, two broad solutions are offered. The first is to develop a “systems thinking” mentality. This is recommened to enable those engaging with BoP markets to counter inefficiencies that might arise due to the unpredictable nature of BoP suppliers, distributors and customers. To combat a system full of holes that can not be taken for granted, the report suggest that companies think proactively about the sytems, and often take action to make sure they work better.
A second solution on offer is that of “collaboration.” Collaboration becomes necessary when it is not economically feasible for a company to plug all the systemic loopholes on its own. In such cases companies may look for partners — either government agencies, civil society organizations, international development agencies — that are themselves in complementary lines of businesses. For example, GlaxoSmithKline is able to organize a milk value chain from end-to-end for its Horlicks brand, but ICICI Lombard partners with microfinance service providers such as BASIX.
The report emphasises the need for building these linkages at a time when truly risk-free opportunities are rare. The plethora of solutions on offer a valuable set of solutions to organizations looking to reach out to the BoP.
Read the entire report here.
* Jenkins, Beth and Eriko Ishikawa. 2009. “Business Linkages: Enabling Access to Markets at the Base of the Pyramid.” Report of a Roundtable Dialogue, March 3-5, 2009, Jaipur, India. Washington, D.C: International Finance Corporation, International Business Leaders Forum, and the CSR Initiative at the Harvard Kennedy School.
Growing Social Innovation
With it’s Office of the Third Sector, the UK invests a lot of money into supporting the social enterprise sector. NESTA – the UK’s National Endowment for Science, Technology and the Arts brought out a report titled “In and Out of Sync: The Challenge of Growing Social Innovations,” brought out a report which looks at the ways in which social innovation grows and spreads.
Drawing from 11 cases studies, the establishes conditions for growing a social enterprise. It also addresses the fundamental issue of growth: synchronizing ‘demand’ and ’supply’ factors through several strategies. Additionally, the report seeks to establish that there is in fact a distinct difference to the diffusion of social innovation from a diffusion of technology innovation, and therefore emphasizes the need to address social innovation differently.
The four necessary conditions for scaling up innovative products and services are identified below:
- A ‘pull’ factor, in the form of addressing an acknowledged societal need.
- A ‘push’ factor which stems from effective supply
- Effective strategies that connect ‘pull’ and ‘push’ factors, and finds the right organizations structure for the innovation
- A process of learning and adaption that ensures the innovation achieves its social impact, and adapts to changes in the environment
One finding that comes out of the report is the lack of institutions that connect ‘pull’ and ‘push’ factors. The report identifies several causes for this — fragile markets, an underdeveloped capital market, weak institutions and networks, a lack of knowledge of established methods and strategies for nurturing and growing innovation, and a lack of managerial talent.
Key to the growth of innovation is the strategy in use. The report develops a framework for classifying the growth/diffusion of innovation — depending on the organizational form, the control exerted by the innovator, location and the intended beneficiaries.
The framework identifies the following types of innovation diffusion:
- Uncontrolled diffusion: Typically carried forward by a self-appointed champion. Such diffusion tends to adapt itself to local conditions.
- Innovator-led diffusion: Such innovation typically follows prescribed processes and methods established by the innovator or parent organization. This can be done through concerted promotion through formal or informal networks, franchising, licensing and so on.
- Taken-over diffusion: Where innovators can adopt a deliberate strategy to allow their innovation to be taken over by a larger organization.
- Diffusion through organizational growth: Where the innovation spreads through the growth of the company itself
Besides adopting different strategies, the report goes on to list a set of priorities required for improving and scaling up innovation:
- Availability of more mature sources of financing. Particularly those that allow genuine risk-taking
- Developed exchanges and intermediaries
- Stronger knowledge and experience base for the field of social innovation
- Incentivizing the adoption of better performing models
While the case studies used in the report are not based in the developing world, the findings of the report definitely have implications for how social innovation globally can be enhanced.
This report was authored by Geoff Mulgan with Rushanara Ali, Richard Halkett and Ben Sanders. Read the entire NESTA report here.
Important Distinctions in the Social Enterprise Field
When talking about social enterprise, how do we distinguish between the several kinds of organizations that exist? Kim Alter in her paper on Social Enterprise Typology plotted enterprises along a hybrid spectrum, classifying practitioners into four types: non-profit with income generating activities, social enterprise, socially responsible business and corporation practicing social responsibility.
However, within the realm of the social enterprise itself there is much misunderstanding about what the term means. Organizations are quick to label themselves as a social enterprise without fully understanding the distinctions that need to be drawn.
In an article published on Social Enterprise Alliance, authors Jerr Boschee and Jim McClurg run us through some important distinctions to be made. The paper is geared towards helping non-profits identify the lines of distinction between themselves and traditional for-profit enterprises. Both the authors have considerable experience in the social enterprise world, and draw on this in their paper.
They point to four crucial distinctions.
1. The differences between “entrepreneurship” and “social entrepreneurship.”
A traditional entrepreneur, they point out have “the ability to take a business to the point at which it can sustain itself on internally generated cash flow.” A traditional entrepreneur may engage in activities that are socially relevant, but not core to the businesses operations. For example, donating to charity.
A social entrepreneur on the other hand, is anyone who “uses earned income strategies to pursue a social objective.” As opposed to traditional entrepreneurs who use profit as an indicator of success or failure, a social entrepreneur is driven by a double — sometimes triple — bottom line. His or her success is defined by a blend of financial and social returns.
2. The differences between “sustainability” and “self-sufficiency.”
While traditional non-profits have used philanthropy, subsidies and earned revenue to achieve sustainability, a social enterprise, while it may welcome philanthropy and subsidies, relies wholly on earned income.
3. The differences between “earned income strategies” and “social purpose business ventures”
Typically non-profits enter carry out strategies to cover program costs, and increase revenue. These are referred to “earned income strategies.” Example of these may be in membership fees, or program registrations. A “social purpose business venture” is sometimes the next step that non-profits take. This often means starting a whole new business, which is legal and operationally separate from the parent organization.
Of course for many the “social purpose business venture” route is the first option. But for those who wish to create impact without engaging in the rigor of a business venture, “earned income strategies” offer a sustainable option.
4. The differences between “innovators,” “entrepreneurs” and “professional managers”
The last point of differentiation is made to enable non-profits to correctly identify the kind of people it needs at different stages at growth. Drawing from their experience, the authors point out that often non-profits realize that their efforts are doomed because they are being lead by the wrong kinds of people.
They draw the following lines of distinction:
Innovators, who are dreamers. They “create prototypes, work out the kinks” often with little emphasis on the financial viability of what they do.
Entrepreneurs who are builders. They turn the prototypes into businesses. Financial viability is key to what they do.
Professional managers are akin to trustees. They “secure the future by installing and overseeing systems and infrastructure” needed to keep things going.
This distinction could perhaps be useful in helping non-profits identify the right resources for their projects.
Overall the paper serves as a good guide for those thinking of starting an enterprise, and for those non-profits considering a for-profit model. It helps clear the lines of confusion that might exist.
Enhacing Food Value Chains
Agricultural practices have a direct bearing on how an economy feeds itself and the general quality of life of a population. Adopting sound agricultural practices is therefore crucial for any economy. Agri-businesses no doubt, play a strong role in enhancing agriculture value chains.
According to a recent report by the World Economic Forum, “Next Billions: Business Strategies to Enhance Food Value Chains and Empower the Poor,” more than 70% of the bottom of the pyramid depends on agriculture value chains for their income. The benefits of enhancing these value chains through new business models is no doubt huge.
Tapping in on this opportunity, the report takes a look at the several business models that can be employed to enhance value for the several actors in play. The report presents solutions to producers, consumers and solutions to empower entrepreneurs.
It also makes recommendations for stakeholder engagement, such as strengthening incentives for business engagement, providing complementary funding and capacity, facilitating corporate engagement.
The report offers business models that have the potential to create substantial value for the poor consumers, producers and entrepreneurs as well as for companies. It hopes to provide a roadmap for companies seeking a win-win approach in emerging markets, and those that wish to establish a workable, profitable and scalable business model.
Read the complete WEF report here.