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Ilo 2018 business models for social impact (low res)

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These are the low resolution slides of my workshop to the International Labor Organization (the oldest agency of the United Nations!) on how to plan the business model for your social enterprise, using the CLEVER social business model canvas, with a focus on balancing revenues, profit, and impact - and avoid mission drift.

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Ilo 2018 business models for social impact (low res)

  1. 1. source:  thenextweb.com  (2017) BUSINESS MODELS FOR SOCIAL IMPACT Alessandro Lanteri International  Labour  Organization   International  Training  Centre     Turin  (Italy)   16th  February  2018
  2. 2. Founded (2009), advised business incubators TEDx speaker (2017) Advisor, Consultant, Coach PhD Philosophy & Economics, Erasmus (NL) MA Economics, Bocconi (IT) Exec.Ed. Said Oxford (UK), MIT (USA) Academics Abu Dhabi University (UAE) Hult International Business School (UK) Professor of Entrepreneurship Ran a marathon | Lived in 15+ global cities Other Stuff https://www.youtube.com/watch?v=HAfLCTRuh7U Alessandro Lanteri
  3. 3. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  4. 4. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  5. 5. A Bath without Water What’s stopping you? www.headboy.org/drybath www.ted.com/talks/ludwick_marishane_a_bath_without_water?language=en
  6. 6. “The function of entrepreneurs is to reform or revolutionize the pattern of production.” (J. Shumpeter) Are Agents of Change “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.” (J.B. Say) Create Value “The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” (P. Drucker) Exploit Opportunities Entrepreneurs “The entrepreneur is not limited by his initial resource endowment.“ (H. Stevenson). Are Resourceful www.youtube.com/watch?v=F1_OoICS2b8
  7. 7. “A little bit of good can turn into a whole lot of good when fueled by the commitment of a social entrepreneur.” — Jeffrey Skoll “
  8. 8. A Little Bit of Good Intention Opportunity Gestation Start-Up where are the opportunities for social entrepreneurship? Scale
  9. 9. S.E. differ in how they identify social needs, acquire resources, and recognize opportunities: social bricoleurs: local small-scale issues - activate local resources - intimate knowledge and understanding of local conditions. social constructionists: broad market failures - structured and scalable solutions - general alertness to social needs (even as an outsider). social engineers: systemic failures - paradigm-changing initiatives - identify unsatisfactory institutions. A Little Bit of Good - Solve a problem source:  Zahra  et  al.  (2009) inaash Sarah’s bags
  10. 10. S.E. differ in how they identify social needs, acquire resources, and recognize opportunities: social bricoleurs: local small-scale issues - activate local resources - intimate knowledge and understanding of local conditions. social constructionists: broad market failures - structured and scalable solutions - general alertness to social needs (even as an outsider). social engineers: systemic failures - paradigm-changing initiatives - identify unsatisfactory institutions. source:  Zahra  et  al.  (2009)1298 Ambulance A Little Bit of Good - Solve a problem
  11. 11. S.E. differ in how they identify social needs, acquire resources, and recognize opportunities: social bricoleurs: local small-scale issues - activate local resources - intimate knowledge and understanding of local conditions. social constructionists: broad market failures - structured and scalable solutions - general alertness to social needs (even as an outsider). social engineers: systemic failures - paradigm-changing initiatives - identify unsatisfactory institutions. source:  Zahra  et  al.  (2009) DryBath A Little Bit of Good - Solve a problem
  12. 12. S.E. differ in how they identify social needs, acquire resources, and recognize opportunities: social bricoleurs: local small-scale issues - activate local resources - intimate knowledge and understanding of local conditions. social constructionists: broad market failures - structured and scalable solutions - general alertness to social needs (even as an outsider). social engineers: systemic failures - paradigm-changing initiatives - identify unsatisfactory institutions. source:  Zahra  et  al.  (2009) A Little Bit of Good - Solve a problem
  13. 13. A Little Bit of Good - Unmet Needs Maslow’s needs self-transcendence self-actualisation aesthetic cognitive needs self-esteem belongingness safety & security physiological
  14. 14. A Little Bit of Good - Unmet Needs Maslow’s needs Example of Social Opportunity self-transcendence self-actualisation aesthetic cognitive needs self-esteem belongingness safety & security physiological mentorship programs college scholarships promoting the arts academic programs empowerment prog.’s community prog.’s neighbourhood safety nutrition and health
  15. 15. “Why is it important?” “What is the scale?” “What are the contributing factors?” “What are the root causes?” ? 5  minUnderstanding the problem
  16. 16. “Why is the problem solvable?” “What other approaches were tried? What were their results?” “What will the world look like (your vision) after you succeed?” ? 5  minFinding the opportunity
  17. 17. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  18. 18. “What are you here for?”
  19. 19. Intended Impact source:  Colby  et  al.  (2004) A statement or a series of statements about what the organization is trying to achieve and it will hold itself accountable for. It identifies both the benefits the organization seeks to provide and the beneficiaries. e.g., who are our beneficiaries? what benefits do our programs create? how do we define success? Memorable Manageable Measurable Motivational Give people the financial tools they need to work their way out of poverty One day, all children in this country will have the opportunity to achieve an excellent education Educate leaders who make a difference in the world ex. { {
  20. 20. “How will you get there?”
  21. 21. Theory of Change source:  Colby  et  al.  (2004) how the organization’s intended impact will actually happen, the cause-and-effect logic by which organizational and financial resources will be converted into the desired social results. Often an organization’s theory of change will take into account not only its own resources but also those that others bring. e.g., what is the cause-and-effect logic that gets us from our resources to impact? where are the gaps or leaps of faith in this logic chain? are there other ways to achieve the desired outcomes? IMPACT! OUTCOMES OUTPUTS ACTIVITIES INPUTS
  22. 22. providing loans will improve enterprise development ☞ increase incomes ☞ improve health and education Theory of Change alleviate poverty Intended Impact Example https://www.youtube.com/watch?v=nMg_Lc6akos Assumption: the poor will not steal the money Assumption: the poor will invest successfully
  23. 23. Time for a BREAK Please be back in 15 minutes
  24. 24. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  25. 25. Your Dream Product Develop a product or service and represent it using the available resources (you can change their function). 15  min SOLVE A SOCIAL PROBLEM INNOVATIVE ENGAGE LOCAL COMMUNITY AND BENEFICIARIES FINANCIALLY SUSTAINABLE PRODUCED BY A COHESIVE TEAM CRITERIA
  26. 26. Business Model Intention Opportunity Gestation Start-Up let’s look into your solution Scale
  27. 27. A business model describes the rationale of how an organization creates, delivers, and captures value Business Model source:  Muller  (2012)
  28. 28. How do we create the product/service? How do we reach our beneficiaries? Value Architecture How much does our value architecture cost? How can we earn money from delivering our value proposition? Revenue Model Who are the customers/beneficiaries? What kind of value do we create for beneficiaries and partners? Value Proposition Business Model source:  Muller  (2012) Social What good do we create? What bad do we eliminate? What bad do we create? How do we mitigate it? Net Social Impact
  29. 29. TheSocialBusinessModelCanvas value proposition
  30. 30. TheSocialBusinessModelCanvas value architecture
  31. 31. TheSocialBusinessModelCanvas revenue model
  32. 32. TheSocialBusinessModelCanvas net social impact
  33. 33. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  34. 34. it was a very good day…
  35. 35. A World Without Poor Poverty, Money… and love www.kiva.org www.ted.com/talks/jessica_jackley_poverty_money_and_love?language=en (min. 4:10 - 9:38)
  36. 36. TheSocialBusinessModelCanvas wealthy westernersfeel good defeat poverty in emerging countrieskiva.org lend to ‘poor’ kiva.org what does Kiva do?
  37. 37. TheSocialBusinessModelCanvas wealthy westernersfeel good defeat poverty in emerging countrieskiva.org lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s and then what?
  38. 38. TheSocialBusinessModelCanvas defeat poverty in emerging countrieskiva.org what does it need? local MFI’s payment systems staff kiva.org wealthy westernersfeel good lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s
  39. 39. TheSocialBusinessModelCanvas defeat poverty in emerging countrieskiva.org what does it need to do? local MFI’s payment systems staff kiva.org risk management screen MFI’s promote kiva wealthy westernersfeel good lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s
  40. 40. TheSocialBusinessModelCanvas defeat poverty in emerging countrieskiva.org how much does it cost? local MFI’s payment systems staff kiva.org risk management screen MFI’s promote kiva fees to partners salaries losses wealthy westernersfeel good lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s
  41. 41. TheSocialBusinessModelCanvas defeat poverty in emerging countrieskiva.org how does it pay for this? local MFI’s payment systems staff kiva.org risk management screen MFI’s promote kiva fees to partners salaries losses optional donations wealthy westernersfeel good lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s
  42. 42. TheSocialBusinessModelCanvas wealthy westernersfeel good loans ‘poor’ entrepreneurs optional donations risk management local MFI’s payment systems staff kiva.org screen MFI’s promote kiva fees to partners salaries losses defeat poverty in emerging countrieskiva.org social media lend to ‘poor’ kiva.org local MFI’s
  43. 43. TheSocialBusinessModelCanvas optional donations defeat poverty in emerging countrieskiva.org wealthy westernersfeel good lend to ‘poor’ kiva.org loans ‘poor’ entrepreneurs local MFI’s
  44. 44. TheSocialBusinessModelCanvas fees on interest rates defeat poverty in emerging countriesmyc4.com wealthy westernersfeel good lend to ‘poor’ myc4.com loans ‘poor’ entrepreneurs local MFI’s
  45. 45. TheSocialBusinessModelCanvas interest rates defeat poverty in emerging countriesGrameen Bank lend to ‘poor’ Grameen loans ‘poor’ entrepreneurs
  46. 46. Business Model Revenues ought to be considered within the broader business model why? Why doesn’t Grameen Bank try to earn fees on interest rates? Why don’t Kiva or MYC4 try to earn interest rates?
  47. 47. List the main expenditures you incur every month (the type, not the amount!) write down at least 10 ? 5  minHow do you spend your money
  48. 48. INAASH Sarah’s Bags
  49. 49. a few more examples
  50. 50. Revenue Streams permission to access/use protected intellectual property e.g., Good Weave Licensing availability and use of a service e.g., GrameenPhone Usage Fees continuous access to a service e.g., SEWA Subscription exclusive rights to use an asset for a period of time e.g., Grameen Bank Lending, Leasing ownership rights to a physical product e.g., Inaash Asset Sale intermediation services performed e.g., MYC4 Brokerage Fees
  51. 51. Pricing Options source:  Osterwalder  &  Pigneur  (2009) [skip?]
  52. 52. Cost Structure source:  Osterwalder  &  Pigneur  (2009) Cost-Driven [cost leadership] - outsourcing, scale, automation Value-Driven [differentiation] - performance, customization, innovation, newness, brand, status * * * fixed costs - costs that remain the same despite the volume of goods/services produced [e.g.,salaries,rent…] variable costs - costs that vary proportionally with the volume of goods/services produced [e.g.,rawmaterials,someutilities…] [skip?]
  53. 53. Should SE maximise profits? Should SE minimise costs? Should SE maximise revenues? ? 5  minSome critical questions
  54. 54. Time for a BREAK Please be back in 60 minutes
  55. 55. Business Model A warm embrace that saves lives www.embraceinnovations.com www.ted.com/talks/jane_chen_a_warm_embrace_that_saves_lives Social
  56. 56. Business Model Features source:  Muller  (2012) different goal: value creation vs. value appropriation different opportunities: social / environmental opportunities different approach: sustainable solution vs. competitive advantage address the root cause of problems: target causes, not symptoms empower beneficiaries: make them responsible, independent co-creation: integration of beneficiaries in production/distribution price-differentiation & cross-subsidization: products/services sold on a ability-to-pay basis Social
  57. 57. The 3 Main Approaches to Revenues commercial activity w/ social impact, which generates profits in correlation w/ impact. Lock-Step commercial activity w/o social impact, make profit, transfer (part of) profit to an activity w/ social impact. Profit Generator commercial activity w/ social impact, w/ a trade-off between profit and impact. Trade-Off for-profit w/ CSR, foundations investing in mainstream markets, trading subsidiaries of charities (e.g. Oxfam shop), cause-related products (e.g., Belu Water). fair trade business, micro- finance, firms employing disadvantaged workers (e.g., Inaash,TheBigIssue…). health care providers, renewable energy companies, education providers, organic food producers.
  58. 58. The 3 Main Approaches to Revenues commercial activity w/ social impact, which generates profits in correlation w/ impact. Lock-Step commercial activity w/o social impact, make profit, transfer (part of) profit to an activity w/ social impact. Profit Generator commercial activity w/ social impact, w/ a trade-off between profit and impact. Trade-Off for-profit w/ CSR, foundations investing in mainstream markets, trading subsidiaries of charities (e.g. Oxfam shop), cause-related products (e.g., Belu Water). fair trade business, micro- finance, firms employing disadvantaged workers (e.g., Inaash,TheBigIssue…). health care providers, renewable energy companies, education providers, organic food producers.
  59. 59. The 3 Main Approaches to Revenues commercial activity w/ social impact, which generates profits in correlation w/ impact. Lock-Step commercial activity w/o social impact, make profit, transfer (part of) profit to an activity w/ social impact. Profit Generator commercial activity w/ social impact, w/ a trade-off between profit and impact. Trade-Off for-profit w/ CSR, foundations investing in mainstream markets, trading subsidiaries of charities (e.g. Oxfam shop), cause-related products (e.g., Belu Water). fair trade business, micro- finance, firms employing disadvantaged workers (e.g., Inaash,TheBigIssue…). health care providers, renewable energy companies, education providers, organic food producers.
  60. 60. TheSocialBusinessModelCanvas ?Why does SE exist?
  61. 61. TheSocialBusinessModelCanvas ?Why does SE exist?
  62. 62. Profits are for Impact Revenues Financial Sustainability IMPACT Scale Impact SUCCESS
  63. 63. Should SE maximise profits? Should SE minimise costs? Should SE maximise revenues? !!!Back to those questions
  64. 64. Financial Management for Impact commercial activity w/ social impact, which generates profits in correlation w/ impact. Lock-Step commercial activity w/o social impact, make profit, transfer (part of) profit to an activity w/ social impact. Profit Generator commercial activity w/ social impact, w/ a trade-off between profit and impact. Trade-Off for-profit w/ CSR, foundations investing in mainstream markets, trading subsidiaries of charities (e.g. Oxfam shop), cause-related products (e.g., Belu Water). fair trade business, micro- finance, firms employing disadvantaged workers (e.g., Inaash,TheBigIssue…). health care providers, renewable energy companies, education providers, organic food producers. Maximise Profits Maximise Revenues (usually) Minimise Costs
  65. 65. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  66. 66. TheSocialBusinessModelCanvas
  67. 67. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! 12
  68. 68. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! What problem do we solve for Beneficiaries? Who are the B? How do we reach B? What is our offer? Which tasks do we need to perform to create our offer? 334 5 6 What assets/ capabilities do we need to perform the activities? 7
  69. 69. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! What problem do we solve for Beneficiaries? Who are the B? Who pays for this? What problem do we solve for Payors? How do we reach B? How do we convince B/P? Whose help do we need? What value do we create for Partners? What is our offer? Which tasks do we need to perform to create our offer? 8 9 10 11 12
  70. 70. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! What problem do we solve for Beneficiaries? Who are the B? Who pays for this? What problem do we solve for Payors? How do we reach B? How do we convince B/P? Whose help do we need? What value do we create for Partners? What assets/ capabilities do we need to perform the activities? What is our offer? Which tasks do we need to perform to create our offer? How much do the resources cost? How much money do we need? How do cover the costs? How do we generate revenues? What are the negative externalities caused by our activities? Can we offset them? What is the impact we create? Is it the intended impact? Are we maximising it? 13 14 15 16
  71. 71. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! What problem do we solve for Beneficiaries? Who are the B? Who pays for this? What problem do we solve for Payors? How do we reach B? How do we convince B/P? Whose help do we need? What value do we create for Partners? What assets/ capabilities do we need to perform the activities? What is our offer? Which tasks do we need to perform to create our offer? How much do the resources cost? How much money do we need? How do cover the costs? How do we generate revenues? What are the negative externalities caused by our activities? Can we offset them? What is the impact we create? Is it the intended impact? Are we maximising it? 12 334 7 8 56 9 1011 12 13 14 15 16
  72. 72. TheSocialBusinessModelCanvas 12 334 7 8 56 9 1011 12 13 14 15 16
  73. 73. TheSocialBusinessModelCanvas Write it here: Commit to it!We need a name! What problem do we solve for Beneficiaries? Who are the B? Who pays for this? What problem do we solve for Payors? How do we reach B? How do we convince B/P? Whose help do we need? What value do we create for Partners? What assets/ capabilities do we need to perform the activities? What is our offer? Which tasks do we need to perform to create our offer? How much do the resources cost? How much money do we need? How do cover the costs? How do we generate revenues? What are the negative externalities caused by our activities? Can we offset them? What is the impact we create? Is it the intended impact? Are we maximising it?
  74. 74. Choose any social enterprise you are familiar with and describe its functioning with the social business model canvas. ! 30   minIn practice
  75. 75. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  76. 76. Your Dream Product Develop the social business canvas for your dream product & Upgrade your Dream Product. 45  min SOLVE A SOCIAL PROBLEM INNOVATIVE ENGAGE LOCAL COMMUNITY AND BENEFICIARIES FINANCIALLY SUSTAINABLE PRODUCED BY A COHESIVE TEAM REMEMBERTHECRITERIA Upgrade
  77. 77. Intended Impact, Theory of Change & the Social Business Model Revenue Models The Social Business Model Canvas (part 2) Content The Social Business Model Canvas (part 1) A Little Bit of Good: Opportunities for Social Entrepreneurship Your Dream Product Impactful Wishes
  78. 78. A Bath without Water What’s stopping you? www.headboy.org/drybath www.ted.com/talks/ludwick_marishane_a_bath_without_water?language=en
  79. 79. “A little bit of good can turn into a whole lot of good when fueled by the commitment of a social entrepreneur.” — Jeffrey Skoll “
  80. 80. Impactful Wishes What’s your little good? www.sarahsbag.com www.youtube.com/watch?v=F4WX1_xSqw4
  81. 81. thank you! Alessandro Lanteri alelanteri@gmail.com

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