Download - Social entrepreneurship: Changing the World
A world plagued with problems…
½ the world < $2.50/day [ref]
~10% of India jobless [ref]
global mortality, <5 years – 67 per 1000 [ref]
30%-40% of Indiailliterate [ref]
Its all about social change…A social entrepreneur is someone who
uses entrepreneurial principles to bring about social change
Mohammed YunusGrameen Bank, Bangladesh
MicrofinanceAlleviating poverty
Social enterprises drive changePrimary goal is “social impact”
Livelihood or employment Better health Quality education Access to essential goods – water,
power, medicines, ……essentially, create positive change at
the “bottom of the pyramid”
Profits are a means to “sustain” Novel business models Novel service delivery models High efficiency
Constraints are many…Undeveloped markets
Inadequate infrastructure
Lack of knowledge & skills
Restricted access to finances
Little or no regulations
…but, opportunities existMeet basic needs of the poor
Food, quality water, power, sanitation and health-careIncrease productivity
Stronger access to information, products & servicesIncrease incomes
Poor as producers with stronger market accessIncrease knowledge and skills
More awareness, high-quality education, vocational training
Large numbers – nearly 3B poor people to serve!
Some examples(scalable ones and new innovations)
SKS - Microfinance Microfinance to poor (incomes < Rs.
20,000/year) Started in 1997 73,00,000 customers, 2266 branches, Rs.
16670 crores (USD 3.9B) disbursed Mechanism
Small loans Rs. 2000-12,000 to poor women - joint-group liability model
Repayment rate > 99% Technology
Smart-card based MF platform Web-based business intelligence portal Integrated & encrypted MPLS communication
network and a mission-critical data-center Social benefits
Alleviate poverty, improve livelihood
http://www.sksindia.com
SELCO – Solar lighting 100,000+ solar lighting systems in 15
years Karnataka & Gujarat 46% of households in India with no
electricity Technology
Photo-voltaic (PV) solar systems for lighting
Flexibility in usage How user’s pay
4-light home system: Rs. 18,000/- Cheaper than kerosene or dry-cell batteries
Initial capital via micro-finance, increased incomes repays loan
Social benefits Increase in incomes (longer work hours,
savings on kerosene!) Improved health (no kerosene smoke
inhalation!) Children can study well (no excuses!)
http://www.selco-india.com
Safari’s M-Pesa – Mobile money M-Pesa – mobile money
Person to person transfer, individuals to business, cash withdrawals, loans
12.6M customers, ~20,000 outlets Started 2007
Benefits Banking to the millions Savings now possible
“Eko” in India along with SBI
70%
30%
19%
81%
AddressableMobile market
Bankedpopulation
http://www.safaricom.co.ke
Kiva - Microloans
~800,000 users; ~5000,000 lenders; $165M in loans; 98.9% repayment rate
Business model Interest returned to lenders, part interest retained by Kiva
Technology Web service for anyone to lend money Easily track your loans, see impact – all online (web or mobile)
Benefits Alleviate poverty, improve livelihood
In India: RangDe is similarhttp://www.kiva.org
Samaanguru– Mobile supply-chain management Strengthen rural supply-chains via
mobile-phones Inventory management, Ordering Stock-level Optimization
Started 2009 – pilots underway Technology
Mobile-phone based data capture Cloud-based data processing Algorithms for inventory optimization
Business model SaaS, transaction-based pricing
Benefits Ensure availability of essential goods in
rural areas
http://www.samaanguru.org
Key Challenges and Lessons
Key Challenges
How to get adoption?How to monetize?How to scale?How to organize efficiently?How to raise capital?
Social Enterprises are all-round innovation labs!Innovation and experimentation in every
possible aspect of business creation:
Customer developmentBusiness modelsService DeliveryTechnology (and usability)Organization modelsFunding models
We need to build the runway first…
Market creation(expect undue delays!)
Towards monetization(expect false starts!)
Sustainable(expect turbulence!)
3-5 years +1-3 years +3-6 years
Sustenance is key – varied models!Market research (early customer development)
Self-sustenance by entrepreneur(s)Grant-based funding – esp. given its research for social good
Customer developmentAngel and early-stage VC funding
MonetizationVCs – different ones at different levels of monetization
Sustainable BusinessCustomer revenues
Customer development takes time Customers are of many types:
Private-sector organizations – e.g. a hospital with rural clinics Public-sector organizations - e.g. aid agencies NGOs – Who already have a field presence Government Village consumers – esp. for a consumer-based products
Typically, a multi-partner model works best Trusted and relevant partners are critical
Sales funnel should be crafted carefully Use case diversity, and probability of project success are important
Strategically seeking customers/partners, pro-actively anticipating needs
and adapting fast are critical!
Business models have to be novelCustomers cannot pay much, or are not used to!
Product pricing evolves over time Learn and evolve fast – customer is also experimenting! Cultural factors important – economics will not always
work! Understand value-proposition and willingness to pay –
jointly with customer!
Extreme cost management is crucial Management personal and organizational costs
determines runway (initially) and margins (later)
Ensure BoP-friendly models and a deeply conscious ways of
running a business!
Technology is essential to scale Scale can be achieved only with new technologies!
Technology has to be disruptive & created anew High usability (in resource-constrained environs) Low cost Easy ramp-up
Significant innovations are happening Water purification, solar lighting, smokeless stoves,
low-cost bamboo housing, … Information & transaction services via the “Mobile-
cloud”
Low-cost technology has to be invented along with a
deep understanding of usability
Measurements are criticalMetrics are hard to define and measure
E.g. Can we correlate number of school meals to improved literacy?
Data matters, but is hard to come by! Not easy to collect and manage data – mostly on
paper! Computers and mobile-cloud will make it easier
Need careful and trustworthy measurements Done by credible individuals or organizations
Efficient frameworks for collecting and visualizing metrics have to be designed
upfront!
Scaling impact is really hardPilot evaluations are easy, scaling is really hard!
Takes time, risks are high!
Needs: Low-cost technology that can scale Marketing to remote areas Scalable customer support Long-term capital
This is where most enterprises struggle! Few examples of
scalable models exist today.
Funding models are evolvingNew types of “social” investors
Organized foundations E.g. Deshpande, Bill Gates, …
Angels Social venture capitalists
Social impact vs ROI Expect social outcomes Expect return on investments – perhaps, with lower margins
“Patient capital”?
Outcomes and timeliness of outcomes are unpredictable! Need a breed of investors who can wait!
Social enterprise timelinesStart 5 years 13 years 15 years
SKS 8000customers
73,00,000customers
SELCO 500customers
100,000+customers
AkshayPatra
5000 meals/day
1M+Meals/day
Entrepreneur’s challenges are immenseGetting fundingAttracting talentUnderstanding remote villager’s needsConvincing customersCreating usable technologyGetting customer to pay!Living frugallyManaging costs efficiently!Coping with family pressure…
Most importantly…
It is a journey of personal changeBuild deep compassion
Towards the underprivilegedDevelop strong passion
Towards a social goalPersevere, persevere, & persevere
Against all odds, over long periodsSimplify life, achieve sustenance
Voluntary simplicity – as found in villages today
Reading ListMy Experiments with Truth, Mahatma Gandhi.Banker to the Poor, Mohammed Yunus. Innovator’s Solution, Clayton Christensen.Conscious Business, Fred Kofman.Voluntary Simplicity, Duane Elgin.Stanford Innovation Review
[http://www.ssireview.org/]The Social Enterprise – Harvard Business School
[www.hbs.edu/socialenterprise]Engineering Social Systems
[http://ess.santafe.edu/]Top 25 Social Entrepreneurship Websites
[http://e-180.com/2009/02/04/our-top-25-social-entrepreneurship-websites/]
