Social Entrepreneurship: Solving Societal Challenges through Innovative Business Models

SOCIAL ENTREPRENEURSHIP:
Solving Societal Challenges through
Innovative Business Models
E.M. Erasmus, MA
May 2018
Empower Yourself through Knowledge!

Copyright © 2018 by E.M. Erasmus (EBPAS). All rights reserved.
INTRODUCTION

E.M. ERASMUS, MA
Part-time lecturer at UA:
Faculty for Accounting, Finance &
Marketing:
• Management Accounting, Operations
Management, Management in SME
Faculty of Arts & Science:
• OGM (Economics & Finance, BP&P)
• SW&D (Social Entrepreneurship)
Full-time executive at Free Zone Aruba:
Head of Operations
Part-time entrepreneur: consultant / trainer

THE COMPANY
Erasmus Business Planning & Administration Services
Established since 2001
• Business planning & consulting services
• Accounting & tax advisory services
• Courses and workshops

THE COMPANY

UPCOMING COURSES
& WORKSHOPS

BEFORE WE START…
LET’S DO SOME
BRAIN EXERCISES…
SO ARE YOU READY?...

IN WHICH DIRECTION IS THE BUS TRAVELING?

CAN YOU SOLVE IT?

Roadmap: social entrepreneurship
Part I
Brief Introduction:
What? How?
Why?
Who (pioneers)?
Related Topics
Part II
Making Social
Impact:
7 Different
Ways
Opportunities
Part III
Getting Started!:
Tools &
Methods
Revenue Streams
Stimulus Policies
Questions/
Discussion

THE RISE OF SOCIAL
ENTREPRENEURSHIP…
• Not a new concept…
• A response to failures of governments and
corporations to tackle social challenges
• Accelerated pace: globalization and high
interconnectivity
• Pragmatic and real-time solutions

SOCIAL ENTERPRISE:
• An organization that applies business
(commercial) strategies to promote
development and maximize improvements in
human and environmental well-being,
rather than maximizing profits for company
shareholders.

+ =
Social
Entrepreneur
Social Entrepreneur Social
Entrepreneur

• WHAT IS NOTSOCIAL
ENTERPRENEURSHIP
• Charity
• Advocacy
• Sponsorship

SOCIAL ENTREPRENEURSHIP
• A process by which citizens build or
transform institutions to advance solutions to
social problems, such as poverty, illness,
illiteracy, environmental destruction, human
rights abuses and corruption, in order to
make life better for many.
• Creating new combinations of people and
resources that significantly improve society’s
capacity to address problems.

SOCIAL ENTREPRENEURS
• Social entrepreneurs create public
value, pursue new opportunities,
innovate and adapt, act boldly, leverage
resources they don’t control, and
exhibit a strong sense of accountability.

NGO APPROACH
Identify
social
problem
Develop
solution
Organize
processes
Request
govrnmnt
subsidy
Spending
of funds
Solve
problem

SOCIAL ENTERPRISE APPROACH
Identify
social
problem
Develop
solution
Design
viable
business
model
Organize
processes
Find
paying
customers
Spending
of funds
Solve
problem

SE vs NGO
• Social entrepreneurship is not a complete
substitute for (social) tasks of NGO’s
• But SE creates opportunities to look at social
problems from a different perspective
• SE approach may help generate new revenue
streams and therefore reduce pressure on
government funding (subsidies/grants)

SOCIAL VS. ‘BUSINESS’
ENTREPRENEURSHIP
Maximizing social value
Enduring commitment to
environmental principles in
their business operations
Most profits are reinvested
in communities
Focus on ethical business
Maximizing shareholders’
wealth
Environmental principles are
not necessarily followed
Most profits are reinvested in
growing the business
Focus on process efficiency
Social Enterprise: Business Enterprise:

THE PIONEERS

THE PIONEERS
Microfinance, rural education, social development

THE PIONEERS
• Both the Grameen Bank and BRAC
demonstrated that is was possible to mitigate
poverty on a massive scale.
• Growing solutions in a bottom-up fashion.
• Small loans -> big dreams.
• Social innovation and trial and error.

SOCIAL ENTERPRENEURSHIP:
RELATED TOPICS
• Fair Trade
• Corporate Social Responsibility
• Triple Bottom-line Thinking (3Ps)
• Social Innovation

FAIR TRADE
• = Trade in which fair prices are paid to
producers in developing countries.
• Most social entrepreneurship are fair trade
advocates

10 FAIR TRADE PRINCIPLES

CORPORATE SOCIAL
RESPONSIBILITY (CSR)
• = is a corporation’s initiatives to assess and
take responsibility for the company’s effects
on environmental and social wellbeing.
• The term generally applies to efforts that go
beyond what may be required by regulators
or environmental protection groups.

CSR: 4 KEY FOCUS AREAS

TRIPLE BOTTOM-LINE THINKING
• An accounting framework that incorporates
three dimensions of performance: social,
environmental and financial, aka:

TRIPLE BOTTOM-LINE THINKING

SOCIAL INNOVATION
• = the process of developing and deploying
effective solutions to challenging and often
systemic social and environmental issues in
support of social progress.
• Substantial benefits for everyone in society.

ARUBAN CONTEXT
• Social entrepreneurship is still heavily
underdeveloped
• Way too many ‘old-fashioned’ nonprofit
initiatives
• Solutions for social problems: top-down and
subsidy-based
• But change is coming…

Part II:
HOW SOCIAL ENTREPRENEURS
MAKE SOCIAL IMPACT

MAKING SOCIAL IMPACT
• Social entrepreneurs make social impact in
many ways
• Not just by the products and services they
provide…

“INPUT-TRANSFORMATION-
OUTPUT” MODEL
• All enterprises produce products and services
by changing inputs into outputs using an
‘input-transformation-output’ process.
• Inputs: factors of production
• Transformation: all activities involving
changing inputs into output
• Outputs: tangible “finished” products /
intangible services

Customers
SOCIAL ENTERPRISE MODELS
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
• All transformation processes
required to turn input
resources into outputs
Where in the “input-
transformation-output” model
would you like to generate social
impact?
Reinvestment
Dividend
Shareholders

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
A product/service that benefits/supports
people in need, or improves
social/environmental conditions
(1) OUTPUT-DRIVEN
SOCIAL IMPACT

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Provide employment to specific
(minority) groups who usually do not
get hired
(2) INPUT-DRIVEN
SOCIAL IMPACT
(transforming
resources)

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Rent/lease unused resources belonging to
(minority) groups who usually do not get a
fair chance to participate in the economy
(3) INPUT-DRIVEN
SOCIAL IMPACT
(transforming
resources)

EDIBLE PLAYGROUNDS

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Purchase raw materials or finished products
from ‘suppliers’ (minority groups) who usually
do not get a fair opportunity in the market
(4) INPUT-DRIVEN
SOCIAL IMPACT
(transformed
resources)

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Outsource part of the transformation
process to ‘business partners’ who usually
do not get a fair opportunity in the market
(5)
TRANSFORMATION-
DRIVEN
SOCIAL IMPACT

Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Transformation that generates immediate
impact for the society or the environment
Transformation with
commercial impact
Transformation with
social/environmental
impact
(6) CROSS-
TRANSFORMATION-
DRIVEN
SOCIAL IMPACT

Invest large portion of
profits to improve
communities and social
conditions
Customers
Input
resources
Output
Products and
services
THE TRANSFORMATION
PROCESS
Transformed
resources:
• Materials
• Information
Transforming
resources:
• Buildings
• Equipment
• Employed staff
Reinvestment
Dividend
Shareholders
Communities
Projects
(7) FUNDS
APPROPRIATION-
DRIVEN
SOCIAL IMPACT

WHERE ARE THE OPPORTUNITIES?
• Environmental
• Housing
• Health and care
• Information services
• Public services
• Animal care
• Financial services
• Training and business
development
• Manufacturing
• Food and agriculture

SOCIAL ENTERPRISE MODELS…
• Revolutionizing approaches to business
conceptualization
• Creative organizational structures
• Integrated use of technology
• Bottom-up approach
• Sparking off innovation and change

NOT JUST THE RIGHT THING…
• Investment in social enterprise is rising
around the world
• Biggest economic opportunities are around
solving societal needs
• Big benefits for countries that pursue it

GETTING STARTED….
• Social entrepreneurship is not for everyone…
• Driving force: PASSION for a cause
• Articulating the problem and the solution
• Use of available resources
• Find synergy
• Financially sustainable business model

TOOLS AND METHODS
• Lean Canvas
• Business Model Canvas
• Mind Mapping

LEAN CANVAS

BUSINESS MODEL CANVAS

MIND MAPPING

SOCIAL ENTERPRISE:
REVENUES STREAMS MODEL
• Sales of physical products
• Usage fee
• Subscription fee
• Lending/renting/leasing
• Brokerage fee (through intermediate services)
• Advertising
• Etc., etc.

STIMULUS?…
Policy Tools for SE’s:
• Legal Form: enact laws to recognize new
legal form for social enterprises
• Fiscal Incentives: some sort of Social
Investment Tax Relief to benefit those who
invest in social enterprises
• Grants: Social Innovation Funds
• Incubations and Acceleration
• Training and Capacity Building

HOWEVER…
• Don’t wait for every thing to be
perfectly in place to get started….

ENTREPRENEURSHIP IN ARUBA
...is getting things done,
despite people around you
thinking up excuses why
they can’t be done…

Edward M. Erasmus, MA
edward@erasmusbpas.com
edward.erasmus@ua.aw
Website: http://www.erasmusbpas.com
Facebook: https://www.facebook.com/erasmusbpas
Twitter: http://www.twitter.com/erasmusbpas
LinkedIn: http://www.linkedin.com/in/edwardmerasmus
Blog: http://edwardmerasmus.wordpress.com
https://medium.com/@erasmusbpas

Empower Yourself through Knowledge!

Social Entrepreneurship: Solving Societal Challenges through Innovative Business Models

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