ENTR4800 Class 9: Managing for Social Impact

ENTR 4800: Social Entrepreneurship
Class 9: Managing for Social Impact
Monday, November 15, 2010
1
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)

Agenda
•  Rockefeller Foundation
•  What did we learn – Last Week?
•  Guest Speaker – Cheryl May (Skills for Change)
•  Managing for Social Impact
•  Preparing your investment pitches
•  Presentation – Diane Popovski & Gwen Hughes
(CYBF)
•  “Live Case” – Cheryl, Diane and Gwen
•  What did we learn – Today?
•  Next Week
3

Last Week – What did we learn?
4

Cheryl May
5

Managing for Social Impact…
6

Two Main Responsibilities as a Manager of a
Social Enterprise…
7
Achieving social goals
7
Achieving financial goals

8

Achieving Financial Goals
99
Key Concepts
•  Focus on your mission
•  Know when to say “no”
•  Build a business independent of yourself
•  Test (prototype) often, and fail fast
The 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

Achieving Social Goals
Remember…how is social entrepreneurship
different?!
111111
Motivation
Innovation
Resourcefulness
Risk Taking

Achieving Social Goals!
1212
1.  Identify your social goals
–  Theory of Change (defining your social value)
–  Embed them within/across your operations
2.  Measure the social value created
–  How do you measure your goals?
–  Address the common challenges in measurement
3.  Communicate your impact
–  Know what to say and who your audience is
–  Be creative around your message

Step 1: ID Your Social Goals!
1313
•  What Social Benefit are you creating?
•  How do you decide?

14

Remember what motivates The Social/
Environmental Entrepreneur?
“…it was an epiphanal experience…”
Ray Anderson, Interface Carpets
“I heard the same story again and again.
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
kind of situation.”
Mohammed Yunus, Grameen Bank
“…that made a real impression on
me…”
Jeff Skoll, eBay, Skoll Foundation, etc.

The Management Challenge
•  To ensure that the motivations of other people in
your organization align with your personal
motivations (as a founder or manager)

Theory of Change
TurnAround Couriers!Goals

Hire
couriers
and
office

administra2ve
staff

from
disadvantaged

youth
popula2on

Provide
transi2onal

work
experience
to

enable
youth
to
develop

employability
skills,
a

resume
and
a
support

network

Enable
youth
to
access

the

mainstream
job
market

Enable
youth
to
stabilize

life
situa2on,
begin
a

career
path
and
leave

the
shelter
system

Methods

Recruit
youth
from

youth
shelters
and

youth
serving
agencies

across
Toronto

Provide
a
real
job,
not
a

job
training
experience

Establish
a
suppor2ve

management

environment

Assist
youth
with

planning
and
making

next
steps
regarding

housing
and

employment

Metrics

Youth
are
able
to
get

out
of
shelter
system

and
into
independent

housing

Youth
meet
or
exceed

job
expecta2ons

TurnAround
helps
youth

secure
next
job
and

establish
a
career
path

Youth
are
able
to
get
off

and
stay
off
government

financial
assistance

Embedding “Social” across the Business
Model
1818

Step 2: Measure the Social Value
Created!
1919
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

The Measurement Landscape!
2020
Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”

Objectives, Approaches,
Application!
2121
Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”

Why is Measurement Important?!
2222
“Not everything that can be counted
counts, and not everything that counts
can be counted”
“You can’t manage what you can’t
measure”

Challenges in Measurement!
2323
•  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)

A Note on SROI!
2424
•  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.

SROI Snapshot:
TurnAround Couriers!
Avg
Change
in
Societal
Contribu2on

(Target
Employees):
$9,391
Average
Number
of
Target
Employees: 10
Current
Year
Cost
Savings
to
Society:
$93,910
Cumula2ve
Cost
Savings
(prior
to
Y5): $191,170
Total
Cost
Savings
to
Date: $285,080
Cumula2ve
Societal
Payback
Period: 1.8

years
Cumula2ve
SROI: 285%

Note:
ini2al
SCP
investment
=
$100,000

25
Overview
of
Target
Popula2on
(sample)

• 38%
recruited
directly
from
shelters

• 23%
female

• Average
age:
21

• 100%
unemployed
at
2me
of
hire

• 54%
receiving
social
assistance
at
hire

• 54%
been
involved
with
jus2ce
system

• 54%
did
not
complete
high
school

Employment
Outcomes
(sample)

• Increased
target/non-‐target
staff
ra2o
to
83%

• 69%
con2nue
to
work
at
TAC
(9)

• 15%
moved
onto
mainstream
employment
in

window
cleaning
industry
(2)

• 8%
went
on
to
post
secondary
educa2on
(1)

Sustainable
Livelihood
Outcomes
(sample)

• 89

youth
in
total
have
been
hired
over
5

years

• 100%
target
popula2on
recruited
from

shelters
able
to
get
out
of
shelter
system

and
secure
independent
housing
within
6

months
of
employment
at
TAC

• 85%
who
relied
on
income
support
through

social
assistance
at
2me
of
hire
able
to
get

off
and
stay
off

Acumen Fund: social performance
measurement 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
26

Simple Measures for Social Enterprise:
Lessons from the Acumen Fund!
27
•  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)

Step 3: Communicating Your
Social Impact!
2828
How?

Conventional & Unconventional
Marketing
29

Social Media…
30

Marketing Considerations Specific
to Social Enterprise…
•  Communicating the social benefit alongside the
product – how much do you weigh the social
impact vs. price vs. product quality?
–  One can dilute from the other
–  This is a big problem for social enterprises (e.g. doing good
means that quality sometimes isn’t there)
31

Social 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 32

33

Social Investment Pitch…
35
•  Overview and mission
•  Management and
Advisors
•  Problem
–  social issue being
addressed
•  Size of the problem
–  how big is the social issue
•  Solution
–  Here’s how it works…
•  Value proposition
–  Inc. social benefit
•  Business model
•  Competitive advantage
•  Collaboration/
partnerships
•  Marketing and Sales
•  Financial projections
•  Financial requirements

Angel Investment Pitch…
36
•  Overview and mission
•  Management and
Advisors
•  Customer problem
•  Market opportunity/size
•  Solution
–  Inc. social issue being
addressed
•  Value Proposition
•  Competitive advantage
•  Where the solution fits
•  Business model
•  Marketing and sales
•  Financial projections
•  Financing requirements

Diane Popovski & Gwen Hughes
38

“Live Case” – Cheryl, Diane & Gwen
39
•  Cheryl – questions about
your investment pitch and/or
managing for social impact
•  Diane – questions about
mentors (how to find them,
how to approach them,
etc.)
•  Gwen – questions about
CYBF (becoming a client?),
other orgs/resources that
would be useful
•  Karim and Norm – questions
on investment pitches or any
component of your business
model

What did we learn?
40

Next Week
•  Speaker – Allyson Hewitt (SiG@MaRS) and Elisha
Muskat (Ashoka)
•  Deliverable – Have Questions Ready!!
•  Readings
41

ENTR4800 Class 9: Managing for Social Impact

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