ENTR4800 Class 9: Managing for Social Impact

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Theory: What are the unique challenges of managing a social enterprise? How do social entrepreneurs manage for social impact?

Practice: How do you grow or scale up a social enterprise? How do social enterprises assess their social impact, and balance the various facets of “blended value creation”?

http://www.socialentrepreneurship.ca/entr4800/

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ENTR4800 Class 9: Managing for Social Impact

  1. 1. 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)
  2. 2. © Norm Tasevski & Karim Harji
  3. 3. © Norm Tasevski & Karim Harji 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
  4. 4. © Norm Tasevski & Karim Harji Last Week – What did we learn? 4
  5. 5. © Norm Tasevski & Karim Harji Cheryl May 5
  6. 6. Managing for Social Impact… 6
  7. 7. © Norm Tasevski & Karim Harji Two Main Responsibilities as a Manager of a Social Enterprise… 7 Achieving social goals 7 Achieving financial goals
  8. 8. © Norm Tasevski & Karim Harji 8
  9. 9. © Norm Tasevski & Karim Harji 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
  10. 10. Achieving Social Goals… 10
  11. 11. © Norm Tasevski & Karim Harji Achieving Social Goals Remember…how is social entrepreneurship different?! 111111 Motivation Innovation Resourcefulness Risk Taking
  12. 12. © Norm Tasevski & Karim Harji 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
  13. 13. © Norm Tasevski & Karim Harji Step 1: ID Your Social Goals! 1313 •  What Social Benefit are you creating? •  How do you decide?
  14. 14. © Norm Tasevski & Karim Harji 14
  15. 15. © Norm Tasevski & Karim Harji 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.
  16. 16. © Norm Tasevski & Karim Harji The Management Challenge •  To ensure that the motivations of other people in your organization align with your personal motivations (as a founder or manager)
  17. 17. © Norm Tasevski & Karim Harji 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  
  18. 18. © Norm Tasevski & Karim Harji Embedding “Social” across the Business Model 1818
  19. 19. © Norm Tasevski & Karim Harji 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
  20. 20. © Norm Tasevski & Karim Harji The Measurement Landscape! 2020 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  21. 21. © Norm Tasevski & Karim Harji Objectives, Approaches, Application! 2121 Source: Clark et al. (2003) “Double Bottom Line Project Report: Methods Catalog”
  22. 22. © Norm Tasevski & Karim Harji 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”
  23. 23. © Norm Tasevski & Karim Harji 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)
  24. 24. © Norm Tasevski & Karim Harji 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.
  25. 25. © Norm Tasevski & Karim Harji 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    
  26. 26. © Norm Tasevski & Karim Harji 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
  27. 27. © Norm Tasevski & Karim Harji 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)
  28. 28. © Norm Tasevski & Karim Harji Step 3: Communicating Your Social Impact! 2828 How?
  29. 29. © Norm Tasevski & Karim Harji Conventional & Unconventional Marketing 29
  30. 30. © Norm Tasevski & Karim Harji Social Media… 30
  31. 31. © Norm Tasevski & Karim Harji 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
  32. 32. © Norm Tasevski & Karim Harji 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. 33. © Norm Tasevski & Karim Harji 33
  34. 34. Your Investment Pitches… 34
  35. 35. © Norm Tasevski & Karim Harji 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
  36. 36. © Norm Tasevski & Karim Harji 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
  37. 37. Break 37
  38. 38. © Norm Tasevski & Karim Harji Diane Popovski & Gwen Hughes 38
  39. 39. © Norm Tasevski & Karim Harji “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
  40. 40. © Norm Tasevski & Karim Harji What did we learn? 40
  41. 41. © Norm Tasevski & Karim Harji Next Week •  Speaker – Allyson Hewitt (SiG@MaRS) and Elisha Muskat (Ashoka) •  Deliverable – Have Questions Ready!! •  Readings 41

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