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INDEV308 Class 8 - Managing for Social Impact


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  • 1. INDEV 308: Introduction to Social Entrepreneurship Class 8: Managing for Social Impact Monday, June 27, 2011Instructors:Norm Tasevski ( Harji ( 1
  • 2. © Norm Tasevski & Karim Harji
  • 3. © Norm Tasevski & Karim HarjiAgenda•  Rockefeller Foundation•  Managing for Social Impact•  Preparing your investment pitches•  Next Week 3
  • 4. Managing for Social Impact… 4
  • 5. © Norm Tasevski & Karim HarjiTwo Main Responsibilities as a Manager of aSocial Enterprise… Achieving financial goals Achieving social goals 5
  • 6. © Norm Tasevski & Karim Harji 6
  • 7. © Norm Tasevski & Karim HarjiAchieving Financial GoalsKey Concepts•  Focus on your mission•  Know when to say “no”•  Build a business independent of yourself•  Test (prototype) often, and fail fastThe Market or the Mission? (Brinckenhoff)•  The market is always right•  The market is not always right for you•  The mission should be your organization’s ultimate goal 7
  • 8. Achieving Social Goals… 8
  • 9. © Norm Tasevski & Karim HarjiAchieving Social GoalsRemember…how is social entrepreneurshipdifferent?! Resourcefulness Motivation Innovation Risk Taking 9
  • 10. © Norm Tasevski & Karim HarjiAchieving Social Goals!1.  Identify your social goals –  Theory of Change (defining your social value) –  Embed them within/across your operations2.  Measure the social value created –  How do you measure your goals? –  Address the common challenges in measurement3.  Communicate your impact –  Know what to say and who your audience is –  Be creative around your message 10
  • 11. © Norm Tasevski & Karim HarjiStep 1: ID Your Social Goals!•  What Social Benefit are you creating?•  How do you decide? 11
  • 12. © Norm Tasevski & Karim Harji 12
  • 13. © Norm Tasevski & Karim Harji Remember what motivates The Social/ Environmental Entrepreneur?“…it was an epiphanal experience…” “I heard the same story again and again. Ray Anderson, Interface Carpets Someone had experienced an intense kind of pain that branded them in some way. They said, ‘I had’ to do this. There was nothing else I could do.” Jody Jensen, Ashoka “I was teaching in one of the universities while the country was suffering from a severe famine. People were dying of hunger, and I felt very helpless. As an economist, I had no tool in my toolbox to fix that “…that made a real impression on kind of situation.” me…”Mohammed Yunus, Grameen Bank Jeff Skoll, eBay, Skoll Foundation, etc.
  • 14. © Norm Tasevski & Karim HarjiThe Management Challenge•  To ensure that the motivations of other people in your organization align with your personal motivations (as a founder or manager)
  • 15. © Norm Tasevski & Karim HarjiTheory of ChangeTurnAround Couriers!Goals   Methods   Metrics   Hire  couriers  and  office   Recruit  youth  from   Youth  are  able  to  get   administra2ve  staff   youth  shelters  and   out  of  shelter  system   from  disadvantaged   youth  serving  agencies   and  into  independent   youth  popula2on   across  Toronto   housing   Provide  transi2onal   Provide  a  real  job,  not  a   Youth  meet  or  exceed   work  experience  to   job  training  experience   job  expecta2ons   enable  youth  to  develop   Establish  a  suppor2ve   TurnAround  helps  youth   employability  skills,  a   management   secure  next  job  and   resume  and  a  support   environment   establish  a  career  path     network   Assist  youth  with   Youth  are  able  to  get  off   Enable  youth  to  access   the     planning  and  making   and  stay  off   next  steps  regarding   government  financial   mainstream  job  market   housing  and   assistance   Enable  youth  to   employment     stabilize  life  situa2on,   begin  a  career  path  and   leave  the  shelter  system    
  • 16. © Norm Tasevski & Karim HarjiEmbedding “Social” across the BusinessModel 16
  • 17. © Norm Tasevski & Karim HarjiStep 2: Measure the Social ValueCreated!Why Measure, and for Whom?•  Management –  Performance management (meeting needs/ objectives) –  Organizational sustainability, attract new investment –  Demonstrate the value created by organization•  Social Investors (inc. funders) –  Impact of grants, mission alignment –  Accountability measures –  Assess organization value, relate to risk/return (of investment)•  Government Programs/Policy –  Make the case for investment in organization/ approach –  Accountability measures 17
  • 18. © Norm Tasevski & Karim HarjiThe Measurement Landscape! 18 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  • 19. © Norm Tasevski & Karim HarjiObjectives, Approaches,Application! 19 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  • 20. © Norm Tasevski & Karim HarjiWhy is Measurement Important?!“Not everything that can be countedcounts, and not everything that countscan be counted” “You can’t manage what you can’t measure” 20
  • 21. © Norm Tasevski & Karim HarjiChallenges in Measurement!•  Outputs vs. Outcomes•  Attribution vs. Contribution•  Qualitative vs. Quantitative•  Prove vs. Improve•  Rigour vs. feasibility “Metrics and evaluation are to development programs as autopsies are to health care: too late to help, intrusive, and often inconclusive.” (Trelsad) 21
  • 22. © Norm Tasevski & Karim HarjiA Note on SROI!•  Discounted, monetized value of the social value that has been created, relative to the value of the investment.•  Pioneered by Roberts Enterprise Development Fund (REDF) and Jed Emerson•  Various uses for, and approaches to, SROI•  Despite “hype” around SROI, it can be resource-intensive, and issues around feasibility, replication, reporting still remain. 22
  • 23. © Norm Tasevski & Karim Harji SROI Snapshot: TurnAround Couriers!Overview  of  Target  Popula2on  (sample)   Avg  Change  in  Societal  Contribu2on    • 38%  recruited  directly  from  shelters   (Target  Employees):   $9,391• 23%  female   Average  Number  of  Target  Employees: 10• Average  age:  21   Current  Year  Cost  Savings  to  Society:   $93,910• 100%  unemployed  at  2me  of  hire  • 54%  receiving  social  assistance  at  hire   Cumula2ve  Cost  Savings  (prior  to  Y5): $191,170• 54%  been  involved  with  jus2ce  system   Total  Cost  Savings  to  Date: $285,080• 54%  did  not  complete  high  school   Cumula2ve  Societal  Payback  Period: 1.8    years   Cumula2ve  SROI: 285%        Sustainable  Livelihood  Outcomes  (sample)   Note:  ini2al  SCP  investment  =  $100,000  • 89    youth  in  total  have  been  hired  over  5   years   Employment  Outcomes  (sample)  • 100%  target  popula2on  recruited  from   shelters  able  to  get  out  of  shelter  system   • Increased  target/non-­‐target  staff  ra2o  to  83%     and  secure  independent  housing  within  6   • 69%  con2nue  to  work  at  TAC  (9)   months  of  employment  at  TAC   • 15%  moved  onto  mainstream  employment  in  • 85%  who  relied  on  income  support  through   window  cleaning  industry  (2)   social  assistance  at  2me  of  hire  able  to  get   off  and  stay  off     • 8%  went  on  to  post  secondary  educa2on  (1)   23
  • 24. © Norm Tasevski & Karim HarjiAcumen Fund: social performancemeasurement in the investment process!•  Due Diligence –  Literature review: state of practice –  Estimate # of people served over the life of the investment –  Assess how delivery of those “outputs” compare (more or less favorably) to the “best alternative charitable option”•  During Deal Structuring –  Conversations on how to think about performance management over the life of the investment, not just “mandatory reports”•  Post-Investment –  Quarterly reporting – performance, capacity, strengths/weaknesses –  Semi-annual “forced ranking” across portfolio against investment criteria - financial sustainability, social impact at scale, breakthrough insights, and high-quality leadership - as well as actual performance to date and the investment’s potential for impact in the future•  Closed Investments –  Short “exit memo” looking at results generated, financial return, and lessons learned 24
  • 25. © Norm Tasevski & Karim HarjiSimple Measures for Social Enterprise:Lessons from the Acumen Fund!•  Culture matters far more than systems –  Tolerance for / learning from failure•  If you build systems, start with a pencil and paper –  Start simple; technology is an enabler not the solution•  Think on the margin –  Performance is always relative to what you had been doing before (past), to what your competition did over the same time period (peers), and to what you should have done (projections)•  Count outputs and then worry about outcomes –  “the conclusions you can draw from these outputs may not be made with scientific rigor, but they can inform businesslike decisions and raise important policy questions”•  Don’t confuse information with judgment –  Balance qualitative and quantitative –  Use informed judgment, hold oneself accountable (to them) 25
  • 26. © Norm Tasevski & Karim HarjiStep 3: Communicating YourSocial Impact! How? 26
  • 27. © Norm Tasevski & Karim HarjiSocial cost•  SCP: 5 factors that have an impact on profitability in a “purpose built” social enterprise –  The inherent business capacity of the social enterprise –  The complexity of the business –  The size and nature of the employment barriers of the people being hired –  The skills/training gap which is the difference between the skills of the people being hired and the skills required to make the business successful –  The degree of emphasis on the social mission in the day to day decision making process 27
  • 28. © Norm Tasevski & Karim Harji 28
  • 29. Break 29
  • 30. Your Investment Pitches… 30
  • 31. © Norm Tasevski & Karim HarjiElements Important to the “Social Investor”•  Overview and mission •  Business model•  Management and •  Competitive advantage Advisors •  Collaboration/•  Problem partnerships –  social issue being •  Marketing and Sales addressed •  Financial projections•  Size of the problem •  Financial requirements –  how big is the social issue•  Solution –  Here’s how it works…•  Value proposition –  Inc. social benefit 31
  • 32. © Norm Tasevski & Karim HarjiElements Important to the Angel Investor•  Overview and mission •  Business model•  Management and •  Marketing and sales Advisors •  Financial projections•  Customer problem •  Financing requirements•  Market opportunity/size•  Solution –  Inc. social issue being addressed•  Value Proposition•  Competitive advantage•  Where the solution fits 32