INDEV308 Class 8 - Managing for Social Impact

INDEV 308: Introduction to Social
Entrepreneurship

Class 8: Managing for Social Impact

Monday, June 27, 2011

Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
1


Agenda

•  Rockefeller Foundation
•  Managing for Social Impact
•  Preparing your investment pitches
•  Next Week

3

Managing for Social Impact…

4


Two Main Responsibilities as a Manager of a
Social Enterprise…

Achieving financial goals

Achieving social goals

5


6


Achieving Financial Goals
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

7

Achieving Social Goals…

8


Achieving Social Goals
Remember…how is social entrepreneurship
different?!

Resourcefulness

Motivation

Innovation
Risk Taking

9


Achieving Social Goals!
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

10


Step 1: ID Your Social Goals!

•  What Social Benefit are you creating?

•  How do you decide?

11


12


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

Methods

Metrics

Hire
couriers
and
office
Recruit
youth
from
Youth
are
able
to
get

administra2ve
staff
youth
shelters
and
out
of
shelter
system

from
disadvantaged
youth
serving
agencies
and
into
independent

youth
popula2on
across
Toronto
housing

Provide
transi2onal
Provide
a
real
job,
not
a
Youth
meet
or
exceed

work
experience
to
job
training
experience
job
expecta2ons

enable
youth
to
develop

Establish
a
suppor2ve
TurnAround
helps
youth

employability
skills,
a

management
secure
next
job
and

resume
and
a
support

environment
establish
a
career
path

network

Assist
youth
with
Youth
are
able
to
get
off

Enable
youth
to
access

the

planning
and
making
and
stay
off

next
steps
regarding
government
financial

mainstream
job
market

housing
and
assistance

Enable
youth
to
employment

stabilize
life
situa2on,

begin
a
career
path
and

leave
the
shelter
system


Embedding “Social” across the Business
Model

16


Step 2: Measure the Social Value
Created!
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 17


The Measurement Landscape!

18
Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”


Objectives, Approaches,
Application!

19
Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”


Why is Measurement Important?!

“Not everything that can be counted
counts, and not everything that counts
can be counted”

“You can’t manage what you can’t
measure”
20


Challenges in Measurement!

•  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)

21


A Note on SROI!
•  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.

22


SROI Snapshot:
TurnAround Couriers!
Overview
of
Target
Popula2on
(sample)
Avg
Change
in
Societal
Contribu2on

• 38%
recruited
directly
from
shelters
(Target
Employees):
$9,391
• 23%
female
Average
Number
of
Target
Employees: 10
• Average
age:
21

Current
Year
Cost
Savings
to
Society:
$93,910
• 100%
unemployed
at
2me
of
hire

• 54%
receiving
social
assistance
at
hire
Cumula2ve
Cost
Savings
(prior
to
Y5): $191,170
• 54%
been
involved
with
jus2ce
system
Total
Cost
Savings
to
Date: $285,080
• 54%
did
not
complete
high
school

Cumula2ve
Societal
Payback
Period: 1.8

years

Cumula2ve
SROI: 285%

Sustainable
Livelihood
Outcomes
(sample)

Note:
ini2al
SCP
investment
=
$100,000

• 89

youth
in
total
have
been
hired
over
5

years

Employment
Outcomes
(sample)

• 100%
target
popula2on
recruited
from

shelters
able
to
get
out
of
shelter
system
• Increased
target/non-‐target
staff
ra2o
to
83%

and
secure
independent
housing
within
6
• 69%
con2nue
to
work
at
TAC
(9)

months
of
employment
at
TAC

• 15%
moved
onto
mainstream
employment
in

• 85%
who
relied
on
income
support
through
window
cleaning
industry
(2)

social
assistance
at
2me
of
hire
able
to
get

off
and
stay
off

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

23


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
24


Simple Measures for Social Enterprise:
Lessons from the Acumen Fund!
•  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) 25


Step 3: Communicating Your
Social Impact!

How?

26


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 27


28

Your Investment Pitches…

30


Elements Important to the “Social Investor”

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

31


Elements Important to the Angel Investor

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

32

INDEV308 Class 8 - Managing for Social Impact

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