Social entrepreneurship: Changing the World


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Social entrepreneurship: Changing the World

  1. 1. Social Entrepreneurship: Changing the world<br />ArunRamanujapuram<br /><br /><br />October 2010<br />
  2. 2. A world plagued with problems…<br />~10% of India jobless [ref]<br />½ the world < $2.50/day <br />[ref]<br />30%-40% of India<br />illiterate [ref]<br />global mortality, <5 years –<br /> 67 per 1000 [ref]<br />
  3. 3. Its all about social change…<br />A social entrepreneur is someone who uses entrepreneurial principles to bring about social change<br />Mohammed Yunus<br />Grameen Bank, Bangladesh<br />Microfinance<br />Alleviating poverty<br />
  4. 4. Social enterprises drive change<br />Primary goal is “social impact”<br />Livelihood or employment<br />Better health<br />Quality education<br />Access to essential goods – water, power, medicines, …<br />…essentially, create positive change at the “bottom of the pyramid”<br />Profits are a means to “sustain”<br />Novel business models<br />Novel service delivery models<br />High efficiency<br />
  5. 5. Constraints are many…<br />Undeveloped markets<br />Inadequate infrastructure<br />Lack of knowledge & skills<br />Restricted access to finances<br />Little or no regulations<br />
  6. 6. …but, opportunities exist<br />Meet basic needs of the poor<br />Food, quality water, power, sanitation and health-care<br />Increase productivity<br />Stronger access to information, products & services<br />Increase incomes<br />Poor as producers with stronger market access<br />Increase knowledge and skills<br />More awareness, high-quality education, vocational training<br />Large numbers – nearly 3B poor people to serve!<br />
  7. 7. Some examples<br />(scalable ones and new innovations)<br />
  8. 8. SKS - Microfinance<br />Microfinance to poor (incomes < Rs. 20,000/year)<br />Started in 1997<br />73,00,000 customers, 2266 branches, Rs. 16670 crores (USD 3.9B) disbursed<br />Mechanism<br />Small loans Rs. 2000-12,000 to poor women - joint-group liability model<br />Repayment rate > 99%<br />Technology<br />Smart-card based MF platform<br />Web-based business intelligence portal<br />Integrated & encrypted MPLS communication network and a mission-critical data-center<br />Social benefits<br />Alleviate poverty, improve livelihood<br /><br />
  9. 9. SELCO – Solar lighting<br />100,000+ solar lighting systems in 15 years<br />Karnataka & Gujarat<br />46% of households in India with no electricity<br />Technology<br />Photo-voltaic (PV) solar systems for lighting <br />Flexibility in usage<br />How user’s pay<br />4-light home system: Rs. 18,000/-<br />Cheaper than kerosene or dry-cell batteries<br />Initial capital via micro-finance, increased incomes repays loan<br />Social benefits<br />Increase in incomes (longer work hours, savings on kerosene!)<br />Improved health (no kerosene smoke inhalation!)<br />Children can study well (no excuses!)<br /><br />
  10. 10. Safari’s M-Pesa – Mobile money<br />Banked<br />population<br />Addressable<br />Mobile market<br />19%<br />70%<br />M-Pesa – mobile money<br />Person to person transfer, individuals to business, cash withdrawals, loans<br />12.6M customers, ~20,000 outlets<br />Started 2007<br />Benefits<br />Banking to the millions<br />Savings now possible<br />“Eko” in India along with SBI<br />81%<br />30%<br /><br />
  11. 11. Kiva - Microloans<br />~800,000 users; ~5000,000 lenders; $165M in loans; 98.9% repayment rate<br />Business model<br />Interest returned to lenders, part interest retained by Kiva<br />Technology<br />Web service for anyone to lend money<br />Easily track your loans, see impact – all online (web or mobile)<br />Benefits<br />Alleviate poverty, improve livelihood<br />In India: RangDe is similar<br /><br />
  12. 12. Samaanguru– Mobile supply-chain management<br />Strengthen rural supply-chains via mobile-phones<br />Inventory management, Ordering<br />Stock-level Optimization<br />Started 2009 – pilots underway<br />Technology<br />Mobile-phone based data capture<br />Cloud-based data processing<br />Algorithms for inventory optimization<br />Business model<br />SaaS, transaction-based pricing<br />Benefits<br />Ensure availability of essential goods in rural areas<br /><br />
  13. 13. Key Challenges and Lessons<br />
  14. 14. Key Challenges<br />How to get adoption?<br />How to monetize?<br />How to scale?<br />How to organize efficiently?<br />How to raise capital?<br />
  15. 15. Social Enterprises are all-round innovation labs!<br />Innovation and experimentation in every possible aspect of business creation:<br />Customer development<br />Business models<br />Service Delivery<br />Technology (and usability)<br />Organization models<br />Funding models<br />
  16. 16. We need to build the runway first…<br />Market creation<br />(expect undue delays!)<br />Towards monetization<br />(expect false starts!)<br />Sustainable<br />(expect turbulence!)<br />3-5 years<br />+1-3 years<br />+3-6 years<br />
  17. 17. Sustenance is key – varied models!<br />Market research (early customer development)<br />Self-sustenance by entrepreneur(s)<br />Grant-based funding – esp. given its research for social good<br />Customer development<br />Angel and early-stage VC funding<br />Monetization<br />VCs – different ones at different levels of monetization<br />Sustainable Business<br />Customer revenues<br />
  18. 18. Customer development takes time<br />Customers are of many types:<br />Private-sector organizations – e.g. a hospital with rural clinics<br />Public-sector organizations - e.g. aid agencies<br />NGOs – Who already have a field presence<br />Government<br />Village consumers – esp. for a consumer-based products<br />Typically, a multi-partner model works best <br />Trusted and relevant partners are critical<br />Sales funnel should be crafted carefully<br />Use case diversity, and probability of project success are important<br />Strategically seeking customers/partners, pro-actively anticipating needs <br />and adapting fast are critical!<br />
  19. 19. Business models have to be novel<br />Customers cannot pay much, or are not used to!<br />Product pricing evolves over time<br />Learn and evolve fast – customer is also experimenting!<br />Cultural factors important – economics will not always work!<br />Understand value-proposition and willingness to pay – jointly with customer!<br />Extreme cost management is crucial<br />Management personaland organizationalcosts determines runway (initially) and margins (later)<br />Ensure BoP-friendly models and a deeply conscious ways of <br />running a business!<br />
  20. 20. Technology is essential to scale<br />Scale can be achieved only with new technologies!<br />Technology has to be disruptive & created anew<br />High usability (in resource-constrained environs)<br />Low cost<br />Easy ramp-up<br />Significant innovations are happening<br />Water purification, solar lighting, smokeless stoves, low-cost bamboo housing, …<br />Information & transaction services via the “Mobile-cloud”<br />Low-cost technology has to be invented along with a <br />deep understanding of usability<br />
  21. 21. Measurements are critical<br />Metrics are hard to define and measure<br />E.g. Can we correlate number of school meals to improved literacy?<br />Data matters, but is hard to come by!<br />Not easy to collect and manage data – mostly on paper!<br />Computers and mobile-cloud will make it easier<br />Need careful and trustworthy measurements <br />Done by credible individuals or organizations<br />Efficient frameworks for collecting and <br />visualizing metrics have to be designed upfront!<br />
  22. 22. Scaling impact is really hard<br />Pilot evaluations are easy, scaling is really hard!<br />Takes time, risks are high!<br />Needs:<br />Low-cost technology that can scale<br />Marketing to remote areas<br />Scalable customer support<br />Long-term capital<br />This is where most enterprises struggle!Few examples of <br />scalable models exist today.<br />
  23. 23. Funding models are evolving<br />New types of “social” investors<br />Organized foundations <br />E.g. Deshpande, Bill Gates, …<br />Angels<br />Social venture capitalists<br />Social impact vs ROI<br />Expect social outcomes<br />Expect return on investments – perhaps, with lower margins<br />“Patient capital”?<br />Outcomes and timeliness of outcomes are unpredictable! <br />Need a breed of investors who can wait!<br />
  24. 24. Social enterprise timelines<br />Start<br />5 years<br />13 years<br />15 years<br />8000<br />customers<br />73,00,000<br />customers<br />SKS<br />100,000+<br />customers<br />500<br />customers<br />SELCO<br />Akshay<br />Patra<br />1M+<br />Meals/day<br />5000 <br />meals/day<br />
  25. 25. Entrepreneur’s challenges are immense<br />Getting funding<br />Attracting talent<br />Understanding remote villager’s needs<br />Convincing customers<br />Creating usable technology<br />Getting customer to pay!<br />Living frugally<br />Managing costs efficiently!<br />Coping with family pressure<br />…<br />
  26. 26. Most importantly…<br />
  27. 27. It is a journey of personal change<br />Build deep compassion<br />Towards the underprivileged<br />Develop strong passion<br />Towards a social goal<br />Persevere, persevere, & persevere<br />Against all odds, over long periods<br />Simplify life, achieve sustenance<br />Voluntary simplicity – as found in villages today<br />
  28. 28. Be the change you wish to see…<br />Thank You!<br />Let’s create a good future…<br /><br /><br />
  29. 29. Reading List<br />My Experiments with Truth, Mahatma Gandhi.<br />Banker to the Poor, Mohammed Yunus.<br />Innovator’s Solution, Clayton Christensen.<br />Conscious Business, Fred Kofman.<br />Voluntary Simplicity, Duane Elgin.<br />Stanford Innovation Review<br /> []<br />The Social Enterprise – Harvard Business School <br /> []<br />Engineering Social Systems<br /> []<br />Top 25 Social Entrepreneurship Websites <br /> []<br />