SocEnt +

An SEV can be defined in many ways. A large problem in the social entrepreneurial field is the lack of a common definition of what social entrepreneurship exactly is. These six characteristics construct a framework for what an SEV can look like. 

Social change is placed above making a profit:

One of the most important qualities of an SEV is that it prioritizes social change and making an impact over monetary gain.  When examining your SEV, make sure you understand what you really want to achieve. Questions to keep in mind when considering this characteristic:

What are your goals for the venture?

How will this venture impact the world?

Shifts an unjust equilibrium:

“You could give a man a fish, and feed him for a day. Or you could teach a man to fish, and feed him for a lifetime.”

Your SEV should not be limited to temporarily helping its customer segment. Rather it should create a sustainable solution for its customers, that permanently improves their condition. Focus less on creating smaller, immediate changes, and more on balancing out the whole system.

Uses innovative solution:

There exist thousands of social entrepreneurs, much like yourself, but what makes your venture unique from all the others? SEV’s must bring to the table some new, unique aspect that no one has ever accomplished before.  That is the entrepreneurship part in creating your own SEV.

Aims to help a target group in need:

SEV’s should be targeting a group of people who do not have access or resources to accomplish the specific service that your product provides themselves.  By targeting a group of people in need, it ensures that you are targeting a community that actually needs the help and not just a group of people who can afford the service/ product.  

Has a plan for financial sustainability:

Although the focus of an SEV shouldn’t be making a profit, it still needs a stable cost structure in order to maintain the SEV. Whether your SEV is a leveraged non profit or a social business, there must be a concrete idea of where the venture’s source of revenue will come from.  

Takes a risk:

Your SEV or idea must include some risk factor. Ideas that are already existent in the business world already possess predictable outcomes. That is why innovation and risk taking go hand in hand. With new innovative products and services, you are never one hundred percent sure of its success.

Social Entrepreneurship: The Case for Definition [Article]

The Meaning of "Social Entrepreneurship" [Article]

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Ten Tree is a clothing brand which sells clothing at normal prices, and promises to plant ten trees for every article of clothing shown. Ten Tree was created with the purpose of  helping the environment by restoring forests, and uses clothing as a medium to raise money.

Typology:

Ten Tree is a social business because although it improves the environment for the world’s sake, its customer segment can easily afford clothing. In addition, while the main goal is to create positive change, they do generate profit as well, not all of which is used to expand their reach. Their promise to plant trees  helps attract customers, so they are more than  sustainable from just selling merchandise.

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SVN is an organization that aims to inspire others to become socially just business leaders of future generations. With these kinds of leaders pervading the future world, they believe that rather than taking from society, businesses could add a positive impact on their surroundings, and furthermore pay it forward to create a brighter future for the future’s children.

Typology:

SVN uses memberships and events to fund the outreach programs they put on, making it more a leveraged non-profit. The organization doesn’t take in profit, but rather uses the revenue it makes from these donations and memberships to fund their social good.

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The goal of Khan Academy is to provide a free education to anyone anywhere. Khan Academy provides online video lessons in all the major academic disciplines. The platform provides a legitimate, substantial educational resource to anyone with access to a computer.

There are several features that make Khan Academy more than just online video lessons. Videos on the site are grouped together and can be watched in the order that the material would be taught in a classroom. As students progress through content, they can test their knowledge with practice questions and receive instant feedback. Tutors, parents, and teachers can view what their students are learning and doing on the Khan Academy. Students can self-monitor themselves as well, since Khan Academy logs everything the students learn and practice on the site. This data is accessible by the student, as well as their tutors, parents, and teachers.

Typology:

Khan Academy is a leveraged non-profit. It provides a public good at no cost, and relies completely on grants and donations. The company relies on donations from users and philanthropists who believe in the cause (i.e. Google, The Bill & Melinda Gates Foundation, and The O’Sullivan Foundation). A percentage of crowd-sourced contributions are used to employ the small Khan Academy Team, and the rest of the funds are used for improving the curriculum and providing more content to a wider audience.

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LIFESAVER aims to provide an innovative solution to the clean water crisis around the world. This organization provides immediate and long-term solutions to the provision of safe drinking water. LIFESAVER employs systems for water filtration that range from water bottles to water tanks. The systems effectively remove all bacteria, viruses, cysts, parasites, fungi, and all other microbiological waterborne pathogens without the aid of foul tasting chemicals. This organization also prepares disaster packs which ensure access to clean, sterile drinking water in the case of an emergency. LIFESAVER not only targets humanitarian relief, but also military and leisure markets in its goal to provide safe drinking water for everyone.

Typology:

LIFESAVER is best described as a hybrid non-profit. As this organization has multiple target markets--being humanitarian, military, and leisure--it generates funding from donations and partnerships, as well as from the sale of its products. All donated money goes directly to the humanitarian effort of LIFESAVER. A portion of the revenue generated from the sale of products is allocated to company cost structure, while another portion goes toward matching every donation made toward the disaster relief.

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GoodWeave seeks to stop child labor in the carpet industries of Nepal, India and Afghanistan. They monitor factories and carpet manufacturing of child labor and certify carpets made without child labor. They do this in the hopes of increasing the consumer preference of these carpets and this put out the companies which do utilize child labor.

Typology:

GoodWeave is a hybrid nonprofit because while the majority of their funding comes from the certified rugs they endorse and sell. They also get money from donations. This money compiled is often used to fund the education of the children saved from the child labor industry.

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Marketing is important for an SEV to remain active. Reaching a wider audience of supporters or customers allows the venture to be more sustainable. There are several steps to marketing, which can be summarized by the Get-Keep-Grow funnel. The “Get" part of the funnel describes the marketing required to acquire and activate new customers. Acquiring customer refers to the process of advertising to new possible customers and getting them interested and aware of the venture. Once these interested customers start interacting or purchasing from the venture, they are considered to be active customers. 

The Triple Bottom Line is most applicable when referring to a company's value proposition and revenue streams. It essentially proposes three main areas of focus: financial, social, and environmental responsibility. Depending on the SEV, the balance of the three may be adjusted in order to best suit both the typology and the long-term goals. SEVs generally do not focus on only gaining financial revenue like regular profit-driven ventures. They are created for the purpose of creating social change, which is why environmental and social returns are also of great importance to an SEV.

A helpful way to picture this framework is through a triangle, with the 3 dimensions of performance represented by vertices. The distance from the center shows the emphasis each dimension receives; keep in mind that an equilateral triangle is not necessarily the best.The 3 dimensions are outlined as follows:

Environmental: Measurement of the venture’s efforts in usage of natural resources and in relation to environmental protection.

Social: This is perhaps the most important dimension to an SEV. Measurement of venture’s focus on social change and well-being of people involved.

Financial: Measurement of the importance of income and flow of money to a venture’s long-term sustainability.

Product-Market fit describes how well a product is adapted to its chosen target market. A product needs to solve a problem or pain point that is clearly evident in the target market. A product that fulfils this need will sell easily. Conversely, if a product does not fit the market well, no one will want/need to buy it.

Serial Entrepreneur Steve Blanks coined the term customer development to describe testing whether or not a target market actually wants to purchase a product.

Blanks outlines four stages to the customer development process as iteration loops with the following success end goals:

Customer Discovery – Hypothesize what group a product caters towards. This guess should take into account factors like income range, location, age, special interests, etc.

Customer Validation – Confirm through tests and sales that the hypothesized target group actually wants the product.

Customer Creation – Increase marketing and penetration to the target market to sell to more customers.

Company Building – Scale the business up after sufficient demand is generated.

Blanks defines as achieving Product/Market fit as a repeatable and scalable sales model.  It is only after achieving product/market fit that substantial effort should be spent on marketing and demand creation. With good customer development and by getting feedback from customers, entrepreneurs can avoid making a product no one wants, build a more valuable product, and even gain new startup ideas.

Using Survey.io for market surveys [website]

The base of the economic pyramid is constituted by the 4 billion low-income people, a majority of the world’s population. The analyzation of this group’s specific behaviors, purchasing powers, and needs in recent years has allowed for new market-based approaches, which empower the entry of the group into the world economy, to arise. Although individuals that fall under the bottom of the pyramid (BOP) segment live in general poverty and do not have much purchasing power, the BOP as a whole makes up a $5 trillion global consumer market.

One notable characteristic of BOP markets are that they are usually rural and poorly served. As a result, these markets are relatively inefficient and uncompetitive. Much of the BOP population suffers from significant unmet needs, including lack of water, sanitary services, electricity, health care, etc. Furthermore, most in the BOP are easily taken advantage of in the marketplace. Because they generally do not have direct access to sell their labor or goods, those in the BOP must go through middlemen who often exploit them. Another disadvantage to being in the BOP market is what is often referred to as the BOP penalty. Many of those in the BOP ironically pay more than most consumers for lower quality products.

The market-based approach is one which is based on the idea that being poor and being in the BOP does not completely eliminate commerce and the market processes. This approach fundamentally focuses on the consumers and producers and works to present solutions which make markets more efficient and competitive. In fact, there are several BOP business strategies popularly employed. First and foremost, focusing on the BOP specifically and engineering unique products or services for that BOP market can make those products or services more appealing.

Moreover, localizing the creation of value by franchising and by treating the community as a whole is a strategy frequently employed. In addition, giving the BOP population access to goods and services both financially and physically remains essential.

Overall, the key idea of the BOP market-based strategy is that targeting the impoverished, yet vast, market can not only make money for the companies, but also help bridge the economic gap between the BOP and higher-class markets.

Market Size and Business Strategy at the Bottom of the Pyramid [Article]

The Fortune at the Bottom of the Pyramid [Article]

There are three main types of SEVs: Leveraged Non-Profit, Hybrid Non-Profit, and Social Business. Leveraged Non-Profit ventures aim to meet the needs of people who are ignored by the current market. These ventures receive grants, loans, and donations from private investors and banks.Their revenue stream does not solely focus on beneficiary profit, because that is not a sustainable source of income.  Hybrid Non-Profit ventures aim to help those who are not served or underserved by mainstream markets. Their revenue streams include a mix of grants, loans, and donations, along with customer profit. The revenue stream of Hybrid ventures provides the greatest chance for innovation, because there is a dual source of income. There are other struggles that Hybrid ventures can face due to their innovative models. What balance should be placed on grants vs profits? Can they classify as non-profit ventures when applying for business or government grants?  Social Business ventures aim to create significant and sustainable social change in an obvious and existing market. They have a revenue stream created completely by the products and services they provide. The profits of social businesses are reinvested in growing the venture, opposed to the profit uses of regular businesses.

A business model lays out a comprehensive explanation of how an organization or business will create, deliver, and capture value. The business model canvas allows one to organize components of a business model visually. The nine segments work together to describe the plan of a business. 

Customer Segments: Target markets- who are the most important customers? Who are you serving?

Value Propositions: What value are delivering? What problems and needs are you solving?

Channels: How are we reaching our customers? How are the channels integrated? Which one works best?

Customer Relationships: The relationships that you establish and maintain with each customer segment. How costly are these relationships?

Revenue Streams: How much are your customers willing to pay?

Key Activities: The Key Activities that your value propositions, distribution channels, customer relationships, and revenue streams need.

Key Partnerships: Who are your key partners and how are they related to your Key resources? What Key activities do these partners perform?

Cost Structure: Cost important to your business? Costs of resources and activities?

It is important to go as in depth as possible when filling out the Business Model Canvas. Planning ahead ensures that the business can see possible hindrances and opportunities in advance.  Having a clear outline is a must when pitching ideas to possible donors or other sources of income. However, making too many guesses when filling out the model can be a waste of time. An advantage of the BMC is that it can be edited simply by restructuring only the segments that need to be modified.