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Journey to Social Enterprise

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This presentation describes how organizations can embark on the Journey to Social Enterprise. It describes the challenges and skills required at each stage of the Journey.

Published in: Government & Nonprofit
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Journey to Social Enterprise

  1. 1. Journey to Social Enterprise As observed by Marcus Coetzee 2 August 2016
  2. 2. Introduction
  3. 3. www.MarcusCoetzee.co.za Table of Contents • Introduction • What is a social enterprise? • Outline of the Journey • Introduction to Strategic Inflexion Points • Transitioning through the Points • Reflection • Conclusion Mama Mimi’s is a social enterprise bakery that operates in Cape Town, South Africa.
  4. 4. www.MarcusCoetzee.co.za Who is Marcus Coetzee? • Helps leaders to cultivate Strategic Clarity • Social enterprise advocate • Advocates for mixing social purpose and business thinking • Works very closely with: o Social Enterprise Academy o Bertha Centre for Social Innovation and Entrepreneurship o Imani Development o Business Sculptors o Citizen Surveys • Served over 100 clients since 1996.
  5. 5. www.MarcusCoetzee.co.za First phase of my career focused on the “why”: • 1996-2012 • Advocated for social enterprise + mixing business thinking and social purpose Second phase focused on the “how”: • 2012+ • Coaching organizations and leaders along the Journey to Social Enterprise • Building supportive ecosystems Afrocharm Choir & Education From “Why” to “How” Social Enterprise
  6. 6. What is a social enterprise?
  7. 7. www.MarcusCoetzee.co.za Key Ingredients • A social enterprise is an organization that adopts a business like approach to tackling a social or environmental issue. It is a social business. • Key ingredients include: o It has an explicit social (or environmental) purpose o It generates the majority of its income through business activities o It uses its profits to further its social mission o It is accountable and transparent. Ludwick Marishane developed Dry Bath, a clear germicidal and moisturising gel, that can be used where clean water is not available.
  8. 8. www.MarcusCoetzee.co.za Some Social Enterprises in South Africa
  9. 9. Introducing the Journey
  10. 10. www.MarcusCoetzee.co.za Introducing the Journey to Social Enterprise • Social enterprises don’t just magically appear. • The Journey to Social Enterprise typically takes many years to complete. • Multiple obstacles need to be overcome. • Both non-profit organizations and businesses can embark on the Journey. Zip Zap Circus School was founded in 1992 to inspire young people to “dare to dream” and build a new culture of peaceful coexistence in South Africa.
  11. 11. www.MarcusCoetzee.co.za Convergence to Social Enterprise Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business Journey for NPOs Journey for Businesses
  12. 12. www.MarcusCoetzee.co.za Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business Expanded Classifications Social Enterprise: Broad Definition “Impact Enterprise” “Impact Entrepreneurship”
  13. 13. www.MarcusCoetzee.co.za Why Embark on the Journey? Reduce Risk • Build reserves • Decrease reliance on donors • Diversify income sources Maximize Impact: • Fund expansion of operations • Discretionary expenditure Beneficiary Employment: • Provide vehicle to employ or create customers for beneficiaries Motivation for NPOs Motivation for Businesses Future Proofing • Ensure that the business has a future decades from now. Improve Business • Increase customer engagement • Increase staff engagement • Improve supply chain • Improve business context Become Responsible • Minimize social & environmental harm Play a Broader Role in Society • Embrace a social purpose; make a real difference in the world
  14. 14. www.MarcusCoetzee.co.za Journey Takes Up to 5 Years • The Journey involves a fundamental shift in an organization’s strategy. • Timeframe of 3-5 years before a new pattern can be established. o Year 1 – Gather support from stakeholders o Year 2 – Explore ideas, gather resources, develop plans o Year 3 – Formal experiment with significant shift o Year 4 – Refine and extend o Year 5 – Consolidate and evaluate • Good leadership and change management required throughout. • This means that donors and impact investors should commit to a 3-5 year timeframe if they want to assist organizations on their Journey.
  15. 15. www.MarcusCoetzee.co.za There will be times when you need to pause on the journey to reflect or let your organization settle into a new pattern. This both ok and necessary.
  16. 16. Intro to Strategic Inflexion Points
  17. 17. www.MarcusCoetzee.co.za Strategic Inflection Points (“Transition Points”) “A strategic inflection point (SIP) is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”
  18. 18. www.MarcusCoetzee.co.za Drivers behind Strategic Inflexion Points • Tax laws (e.g. PBO laws) • B-BBEE policies • Exchange rates • Inflation • NPO policies • Government procurement policies • New financial instruments • Funding shortages • Increased competition • Unmet demand by beneficiaries • Leaders choosing to reposition or rebuild organization in order to strengthen it and improve impact. • Climate change • Planetary boundaries • Population growth and urbanisation • Food security • Resource shortages Politics and Macro Economics: Market Forces: Sustainability Megatrends: Intention:
  19. 19. www.MarcusCoetzee.co.za Transition Points on the Journey NPO 1: “Experiment and Improve Skills” NPO 2: “Rethink Business Model” B2: “Embrace a Social Purpose” B3: “Dedicate Profits” B1: “Become a Good Citizen” Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  20. 20. Transitioning through the Points
  21. 21. www.MarcusCoetzee.co.za Point NPO1 – “Experiment and Improve Skills” Possible Focus Areas: 1. Call to action. 2. Overcome objections to business activities. 3. Pilot various business ideas. 4. Share and learn from other organizations’ experiences. 5. Measure social outcomes. 6. Learn how to cost business activities, make proposals profitable. and track business income and expenses. 7. Understand SARS’ rules regarding income generation. 8. Learn how to develop, package and sell products. Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  22. 22. www.MarcusCoetzee.co.za Transition Point NPO1 – Example of STEPS • STEPS works to eliminate clubfoot in Southern and East Africa. • Helped over 8,200 children since 2005. • Secured the rights to import a popular orthopaedic brace (“Ohio brace”) to sell to health services in Southern Africa. • These braces are required for treating clubfoot using the Ponseti method. • The feasibility has been assessed. • Busy developing a formal business plan.
  23. 23. www.MarcusCoetzee.co.za Point NPO2 – “Rethink Business Model” Possible Focus Areas: 1. Seek clarity of purpose. 2. Commit to chosen business direction. 3. Rethink fundamentals of business model. 4. Recruit specialized staff. 5. Change organizational culture. 6. Consider leadership change. 7. Create new governance structures (e.g. specialized steering committee) 8. Investigate whether hybrid structures are required. Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  24. 24. www.MarcusCoetzee.co.za Point NPO2 – Example of Greater Capital • Greater Capital is a social enterprise providing social research, enterprise development and due diligence services. • After struggling to find donations, Greater Capital repackaged its work as consulting services. • Eliminated certain product lines. • Now over 100 paying clients. • Earned income covers 100% of costs • Become an influential organization.
  25. 25. …and from the other direction
  26. 26. www.MarcusCoetzee.co.za Point B1 - “Become a Good Citizen” Possible Focus Areas: 1. Engage with stakeholders (e.g. investors, beneficiaries) to identify social and environmental responsibilities. 2. Adopt social and environmental KPIs and set alongside financial indicators. 3. Start to measure social and environmental impact. 4. Mitigate harm. 5. Comply with an ethical certifications and industry standards. 6. Be congruent with responsible brand. Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  27. 27. www.MarcusCoetzee.co.za Point B1 - Example of Woolworths • Woolworths says its on a “good business journey” and is working hard at becoming a responsible business . o Ethical supply chain (e.g. farming, fish, cocoa) o Minimizing environmental impact (e.g. store design and fixtures, recycling) o Cause-related marketing (e.g. MySchool, MyPlanet, MyVillage) o Healthy eating (e.g. food choices, moving sweets from isle) • Measures and publishes its social and environmental impact in its annual Good Business Journey report. • Engages with various stakeholders re its responsibilities. • But still struggles with its image (e.g. products from Israel)
  28. 28. www.MarcusCoetzee.co.za Point B2 - “Embrace a Social Purpose” Possible Focus Areas: 1. Define purpose in social terms. 2. Revisit Theory of Change. 3. Embed impact in core products (“ethical products”). 4. Subscribe to higher ethical standards (e.g. RE100 re renewable energy and B Corp.) 5. Do no harm! 6. Measure and report on social and environmental outcomes. 7. Incorporate social enterprises in supply chain. 8. Shift organizational culture. 9. Create accountability structures. Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  29. 29. www.MarcusCoetzee.co.za Point B2 – Example of Silulo Ulutho Technologies • Luvuyo Rani and his brother started Silulo Ulutho Technologies in 2004 as an internet café in Khayelitsha. • Now 39 branches with over 130 staff, and 5000+ students per year. • Focused on using technology as a tool for learning. • Guided by values of “Technology, Accessibility, Empowerment and Education”. • Striving to embed its social purpose into its business model and retain its founding vision – a challenge as it aims to franchise and establish itself in 200+ communities.
  30. 30. www.MarcusCoetzee.co.za Point B3 - “Dedicate Profits” Possible Focus Areas: 1. Bring on other shareholders (e.g. non-profits, staff or beneficiary ownership). 2. Dedicate profits to purpose. 3. Review legal structures. 4. Create external accountability. 5. Communication of shift to stakeholders. 6. External impact assessment. Donor- Dependent NPO NPO with Income Activities Social Enterprise High-impact Business or B-Corporation Socially- Responsible Business Traditional Business
  31. 31. www.MarcusCoetzee.co.za Point B3 - Shonaquip • Shonaquip is a social enterprise that designs and manufactures mobility devices (e.g. wheel chairs and posture support) for the physically disabled. • Registered as a close corporation in 1992. • Business played an active role in advocacy, training and community development. • In 2010, Shona concerned that business pressures would undermine social agenda. • Uhambo Foundation started in 2010 and became a shareholder in business. Helped create an “asset lock” to dedicate profits to the social purpose.
  32. 32. Reflection
  33. 33. www.MarcusCoetzee.co.za Further Reading
  34. 34. www.MarcusCoetzee.co.za Reflecting on the Journey • Presentation has shared my observations from 16 years of consulting. • It typically takes many years for organizations to transition from one state to the next, and for a new pattern to properly settle. • Best to do it properly rather than quickly. • My dream that all organizations undertake the Journey. • Although social enterprise is not for everyone, the ideal of social enterprise should act as a beacon of hope for the future. The Carpenter’s Shop provides social services to the homeless in Cape Town. It is running 7 income generation projects.
  35. 35. www.MarcusCoetzee.co.za Thank you, and good fortune on your journey. An Old Irish Blessing: “May the road rise up to meet you. May the wind always be at your back. May the sun shine warm upon your face, and rains fall soft upon your fields. And until we meet again, May God hold you in the palm of His hand.”
  36. 36. Website: www.MarcusCoetzee.co.za Linked-in: www.linkedin.com/in/coetzeemarcus Twitter: @MarcusCoetzee Thank you 36 Photos supplied by

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