Journey to Social Enterprise
As observed by Marcus Coetzee
2 August 2016
Introduction
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Table of Contents
• Introduction
• What is a social enterprise?
• Outline of the Journey
• Introduction to Strategic Inflexion Points
• Transitioning through the Points
• Reflection
• Conclusion
Mama Mimi’s is a social enterprise bakery that operates
in Cape Town, South Africa.
www.MarcusCoetzee.co.za
Who is Marcus Coetzee?
• Helps leaders to cultivate Strategic Clarity
• Social enterprise advocate
• Advocates for mixing social purpose and business
thinking
• Works very closely with:
o Social Enterprise Academy
o Bertha Centre for Social Innovation and Entrepreneurship
o Imani Development
o Business Sculptors
o Citizen Surveys
• Served over 100 clients since 1996.
www.MarcusCoetzee.co.za
First phase of my career focused on the “why”:
• 1996-2012
• Advocated for social enterprise + mixing business
thinking and social purpose
Second phase focused on the “how”:
• 2012+
• Coaching organizations and leaders along the Journey to
Social Enterprise
• Building supportive ecosystems
Afrocharm Choir & Education
From “Why” to “How” Social Enterprise
What is a social enterprise?
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Key Ingredients
• A social enterprise is an organization that adopts a
business like approach to tackling a social or
environmental issue. It is a social business.
• Key ingredients include:
o It has an explicit social (or environmental) purpose
o It generates the majority of its income through business
activities
o It uses its profits to further its social mission
o It is accountable and transparent.
Ludwick Marishane developed Dry Bath, a clear
germicidal and moisturising gel, that can be used where
clean water is not available.
Introducing the Journey
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Introducing the Journey to Social Enterprise
• Social enterprises don’t just magically
appear.
• The Journey to Social Enterprise typically
takes many years to complete.
• Multiple obstacles need to be overcome.
• Both non-profit organizations and
businesses can embark on the Journey.
Zip Zap Circus School was founded in 1992 to inspire
young people to “dare to dream” and build a new culture of
peaceful coexistence in South Africa.
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Convergence to Social Enterprise
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
Journey for NPOs Journey for Businesses
www.MarcusCoetzee.co.za
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
Expanded Classifications
Social Enterprise: Broad Definition
“Impact Enterprise”“Impact Entrepreneurship”
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Why Embark on the Journey?
Reduce Risk
• Build reserves
• Decrease reliance on donors
• Diversify income sources
Maximize Impact:
• Fund expansion of operations
• Discretionary expenditure
Beneficiary Employment:
• Provide vehicle to employ or create
customers for beneficiaries
Motivation for NPOs Motivation for Businesses
Future Proofing
• Ensure that the business has a future
decades from now.
Improve Business
• Increase customer engagement
• Increase staff engagement
• Improve supply chain
• Improve business context
Become Responsible
• Minimize social & environmental harm
Play a Broader Role in Society
• Embrace a social purpose; make a real
difference in the world
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Journey Takes Up to 5 Years
• The Journey involves a fundamental shift in an organization’s strategy.
• Timeframe of 3-5 years before a new pattern can be established.
o Year 1 – Gather support from stakeholders
o Year 2 – Explore ideas, gather resources, develop plans
o Year 3 – Formal experiment with significant shift
o Year 4 – Refine and extend
o Year 5 – Consolidate and evaluate
• Good leadership and change management required throughout.
• This means that donors and impact investors should commit to a 3-5 year timeframe if they
want to assist organizations on their Journey.
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There will be times when you need to pause on the journey to reflect or let
your organization settle into a new pattern.
This both ok and necessary.
Intro to Strategic Inflexion Points
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Strategic Inflection Points (“Transition Points”)
“A strategic inflection point (SIP) is a time in
the life of business when its fundamentals are
about to change. That change can mean an
opportunity to rise to new heights. But it may
just as likely signal the beginning of the end.”
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Drivers behind Strategic Inflexion Points
• Tax laws (e.g. PBO
laws)
• B-BBEE policies
• Exchange rates
• Inflation
• NPO policies
• Government
procurement policies
• New financial
instruments
• Funding shortages
• Increased competition
• Unmet demand by
beneficiaries
• Leaders choosing to
reposition or rebuild
organization in order to
strengthen it and
improve impact.
• Climate change
• Planetary boundaries
• Population growth and
urbanisation
• Food security
• Resource shortages
Politics and Macro
Economics:
Market Forces: Sustainability
Megatrends:
Intention:
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Transition Points on the Journey
NPO 1: “Experiment
and Improve Skills”
NPO 2: “Rethink
Business Model”
B2: “Embrace a Social
Purpose”
B3: “Dedicate Profits”
B1: “Become a Good Citizen”
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
Transitioning through the Points
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Point NPO1 – “Experiment and Improve Skills”
Possible Focus Areas:
1. Call to action.
2. Overcome objections to business activities.
3. Pilot various business ideas.
4. Share and learn from other organizations’ experiences.
5. Measure social outcomes.
6. Learn how to cost business activities, make proposals profitable. and track business income and expenses.
7. Understand SARS’ rules regarding income generation.
8. Learn how to develop, package and sell products.
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
www.MarcusCoetzee.co.za
Transition Point NPO1 – Example of STEPS
• STEPS works to eliminate clubfoot in
Southern and East Africa.
• Helped over 8,200 children since 2005.
• Secured the rights to import a popular
orthopaedic brace (“Ohio brace”) to sell to
health services in Southern Africa.
• These braces are required for treating
clubfoot using the Ponseti method.
• The feasibility has been assessed.
• Busy developing a formal business plan.
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Point NPO2 – “Rethink Business Model”
Possible Focus Areas:
1. Seek clarity of purpose.
2. Commit to chosen business direction.
3. Rethink fundamentals of business model.
4. Recruit specialized staff.
5. Change organizational culture.
6. Consider leadership change.
7. Create new governance structures (e.g. specialized steering committee)
8. Investigate whether hybrid structures are required.
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
www.MarcusCoetzee.co.za
Point NPO2 – Example of Greater Capital
• Greater Capital is a social enterprise
providing social research, enterprise
development and due diligence services.
• After struggling to find donations, Greater
Capital repackaged its work as consulting
services.
• Eliminated certain product lines.
• Now over 100 paying clients.
• Earned income covers 100% of costs
• Become an influential organization.
…and from the other direction
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Point B1 - “Become a Good Citizen”
Possible Focus Areas:
1. Engage with stakeholders (e.g. investors, beneficiaries) to identify social and
environmental responsibilities.
2. Adopt social and environmental KPIs and set alongside financial indicators.
3. Start to measure social and environmental impact.
4. Mitigate harm.
5. Comply with an ethical certifications and industry standards.
6. Be congruent with responsible brand.
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
www.MarcusCoetzee.co.za
Point B1 - Example of Woolworths
• Woolworths says its on a “good business journey” and is
working hard at becoming a responsible business .
o Ethical supply chain (e.g. farming, fish, cocoa)
o Minimizing environmental impact (e.g. store design and
fixtures, recycling)
o Cause-related marketing (e.g. MySchool, MyPlanet,
MyVillage)
o Healthy eating (e.g. food choices, moving sweets from isle)
• Measures and publishes its social and environmental
impact in its annual Good Business Journey report.
• Engages with various stakeholders re its responsibilities.
• But still struggles with its image (e.g. products from Israel)
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Point B2 - “Embrace a Social Purpose”
Possible Focus Areas:
1. Define purpose in social terms.
2. Revisit Theory of Change.
3. Embed impact in core products (“ethical products”).
4. Subscribe to higher ethical standards (e.g. RE100 re renewable energy and B Corp.)
5. Do no harm!
6. Measure and report on social and environmental outcomes.
7. Incorporate social enterprises in supply chain.
8. Shift organizational culture.
9. Create accountability structures.
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
www.MarcusCoetzee.co.za
Point B2 –
Example of Silulo Ulutho Technologies
• Luvuyo Rani and his brother started Silulo Ulutho
Technologies in 2004 as an internet café in Khayelitsha.
• Now 39 branches with over 130 staff, and 5000+
students per year.
• Focused on using technology as a tool for learning.
• Guided by values of “Technology, Accessibility,
Empowerment and Education”.
• Striving to embed its social purpose into its business
model and retain its founding vision – a challenge as it
aims to franchise and establish itself in 200+
communities.
www.MarcusCoetzee.co.za
Point B3 - “Dedicate Profits”
Possible Focus Areas:
1. Bring on other shareholders (e.g. non-profits, staff or beneficiary ownership).
2. Dedicate profits to purpose.
3. Review legal structures.
4. Create external accountability.
5. Communication of shift to stakeholders.
6. External impact assessment.
Donor-
Dependent
NPO
NPO with
Income
Activities
Social
Enterprise
High-impact
Business or
B-Corporation
Socially-
Responsible
Business
Traditional
Business
www.MarcusCoetzee.co.za
Point B3 - Shonaquip
• Shonaquip is a social enterprise that
designs and manufactures mobility devices
(e.g. wheel chairs and posture support) for
the physically disabled.
• Registered as a close corporation in 1992.
• Business played an active role in advocacy,
training and community development.
• In 2010, Shona concerned that business
pressures would undermine social agenda.
• Uhambo Foundation started in 2010 and
became a shareholder in business. Helped
create an “asset lock” to dedicate profits to
the social purpose.
Reflection
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Further Reading
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Reflecting on the Journey
• Presentation has shared my observations
from 16 years of consulting.
• It typically takes many years for
organizations to transition from one state to
the next, and for a new pattern to properly
settle.
• Best to do it properly rather than quickly.
• My dream that all organizations undertake
the Journey.
• Although social enterprise is not for
everyone, the ideal of social enterprise
should act as a beacon of hope for the
future.The Carpenter’s Shop provides social services to the homeless
in Cape Town. It is running 7 income generation projects.
www.MarcusCoetzee.co.za
Thank you, and good fortune on your journey.
An Old Irish Blessing:
“May the road rise up to meet you.
May the wind always be at your back.
May the sun shine warm upon your face,
and rains fall soft upon your fields.
And until we meet again,
May God hold you in the palm of His hand.”
Website: www.MarcusCoetzee.co.za
Linked-in: www.linkedin.com/in/coetzeemarcus
Twitter: @MarcusCoetzee
Thank you
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