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The new business of business – solving societal issues and
making profitMindaugas Danys
November, 2015, Vilnius
Outline• Introduction• Social innovations as driver for change• Double bottom line and social enterprise• Serving Bottom of the pyramid• Lean startup/design thinking/scaling• Impact investment & measurement• Cases
1st coworking space in Lithuania in 2010
1st Urban Garden in Vilnius in 2013
Monthly Hub Camps since 2011
6
The best minds of my generation are thinking about how to make people click ads.
That sucks.Jeff Hamerbacher, ex Facebook
To fix a problem at its root cause, you have to create change at all levels of society: individuals, communities, businesses, nonprofits, schools, and governments.
Tool bank & sharing economy
Car sharing/pooling & bike sharing
data by
SHARE THE ABUNDANCE: ROOMS
It’s getting big & noticed
Crowdfunding
Upcycling
What is Social Entrepreneurship
Social Entrepreneurship• The practice of creating business solutions to address the needs,
challenges, inefficiencies and inequalities in society actively engaging stakeholders with a profitable, wealth-generation and sustainable long term approach measured by a double-bottom line of financial return and social impact.
Single Bottom Line - Conventional Business• You open a restaurant to make people happy with your food.• People pay for food.• You pay your waiters, cooks and employees.• You pay for ingredients you buy in the markets.• What is the most important element?• To make a profit.
– If you don’t make money, you can’t buy ingredients, pay employees, sell your food and make people happy.
• Making a profit is your bottom line.
Double Bottom Line• You open a fair-trade, organic food restaurant to promote awareness and
support environmental, health and social issues.• People pay for food.• You pay your waiters, cooks and employees.• You pay for more expensive ingredients from fair-trade and organic
providers.• What are the important elements here?• To make a profit.
• If you don’t make money, you can’t buy ingredients, pay employees, sell your food, make people aware of the environmental, social and health issues or support them.
• You are willing to pay a higher price of ingredients and have less profit to support the causes.
• Making a profit and Having Social Impact is your double bottom line.
Jamie Oliver’s Fifteen
https://youtu.be/Tvs-2wEgGAc
The Empowerment Plan Project
https://youtu.be/mo-kvh1w60w
http://vimeo.com/43923922
Bee hives in Copenhagennearly 5 tons! of honey from 20 apiarieshttp://vimeo.com/30085046
The Big IssueThere are 9 Big Issue projects by the same name in other nations:The Big Issue Australia (From June 1996).The Big Issue Japan (From November 2003).The Big Issue Kenya (From 2007).The Big Issue Korea (From July 2010).The Big Issue Malawi (From 2009).The Big Issue Namibia The Big Issue The Republic of Ireland. The Big Issue South Africa (From December 1996).The Big Issue Taiwan (From April 2010).The Big Issue Zambia (From 2007).https://youtu.be/4K9Ni44CGYA
Social Entrepreneurship…• Is not Charity or Philanthropy• Social entrepreneurs are not asking for donations to give handouts to
those in need.• Is not about helping others.• Is about enabling, engaging, empowering and connecting stakeholders.• Is not Corporate Social Responsibility.• It is about making profit and maximizing efficiency while having a
double-bottom line: profit and social impact.• You can become wealthy by doing good.
Social Enterprise Mark UKYour company must:
• have social and/or environmental aims• have its own constitution and governance• earn at least 50% of revenue from trading (or as a new start, you
pledge to reach this within 18 months)• spend at least 50% of profits on social/environmental aims• distribute residual assets to social/environmental aims if dissolved• demonstrate SOCIAL VALUE
EU DefinitionAccording to the definition of the European Commission a social enterprise “operates by providing goods and services for the market in an entrepreneurial and sometimes innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involve employees, consumers and stakeholders affected by its commercial activities”
Make a business case
The Promise of Social Entrepreneurship
• As long as we remain true to a double-bottom line vision and committed to enabling and empowering stakeholders, profit generation and dividends can become the most powerful incentive towards efficient use of resources, transparency and realization of a growing social impact.
Spectrum of Businesses• Pure profit.Business.
• Good profit.Ethical Business
• Extra profit put to good use.Corporate Social Responsibility• Make profit and do good.Social Entrepreneurship• Profit but no dividend.Social Business
• Charity. No Profit, No Dividend.Non-Profit• Public Services, incentives and regulations.Government
• Framework initiatives.International Organizations
TOMS – not a social business but a strong mission
• https://youtu.be/7MV3HWQHl1s
Some Thoughts on the Challenges of Social Entrepreneurship• Regulations:
– Conventional legislation recognizes and regulates charity and for-profit business but not social entrepreneurship. It also provides incentives for both, but very little for social enterprises.
• Awareness:– People still ask: “are you a charity or a business?”. People think you don’t want to make
money.
• Unfair competition:– From Corporate Social Responsibility Programs and Non-Profit organizations with no
need to return a profit or efficiency.– From Businesses which don’t have a double bottom line and incure in lower costs.
• Is failing fast and forward an option for those who have nothing?
In 2014 Mom’s Fair in Vilnius and Kaunas received 137.500 of stuff from 1 500 families, over 60 % was sold, the rest was donated.
www.mamumuges.lt
Impact Measurement
Why Measure Performance and ImpactIt’s important to assess the performance of social enterprises and their impact. Enterprise Performance: measures the performance of the social enterprise and the return on investment. Social Impact: measures social/mission gains and risks as a result of the social enterprise. Indicators include number of active beneficiaries as well as jobs created per year and average income of active beneficiaries as a result of the social enterprise. Financial Sustainability: measures the financial sustainability gained as a result of the enterprise; Organizational Development: measures the organizational development gained as a result of the enterprise
• plant a seedling for $1; wait 6-10 years; sell a tree for $30.
Bottom of a Pyramid
Bottom of the Pyramid
Cheap, natural, easy to produce• Because the machines used in
production of the pads effectively run on solar-generated power, the factory can be set up anywhere. It takes just a week to set up a cottage industry and start producing MakaPads. The production timeline, from harvesting the raw papyrus to passing out a ready-to-use pad, takes an average of four days.
• https://youtu.be/jkhVmKkphN8
Biogas Backpack – 4 hours of cooking
SPOUTS of water
One Dollar Glasses
d.light celebrates 50 mill. lives impacted
Not enough to create good product
Design for social change
Repellent Mosquito Nets• In West Africa,
over 3,000 children die of malaria every day;
• 1 out of every 5 childhood deaths is due to malaria.
• Malaria kills a child every 30 seconds in West Africa.
How to outsmart competition
Be art
Show value addedMAMMU Latvia
79 EUR !
Tell a story – share your mission
Good causes – get viral
ALSA.org reports that as of September 2, 2014 it has received $106 million in Ice Bucket donations from over 3 million donors.
Millenials push for changes – use it
Engage
What’s your mission?
• 3,000 retail stores and on the auction site
• Retail sales: $3.5 billion• People served through
employment programs: 10 million
• People placed in employment: 350,815
Scaling up
Use mainstream channels
Piggy back
The rules has changed
Use Lean Startup methods
Business Canvass – an alternative to business plan
You are not alone
Impact investment is growing
Impact InvestmentsImpact investing refers to investments "made into companies, organizations, and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return" It is a form of socially responsible investing that serves as a guide for various investment strategies.
Public Support• The UK GOVERNMENT, provides a 30 percent tax relief for social
investments, which is anticipated to stimulate as much as GBP 500 million in additional investment over the next five years.
• The EUROPEAN UNION created regulation to formally recognize funds that invest 70 percent of investor capital into European social businesses as “European Social Entrepreneurship Funds,” enabling these managers to market and fundraise more effectively among impact investors.
Social impact bonds• The investors receive a financial return from the government based
on whether the project they've invested in achieves certain measurable milestones—for example 5% better education outcomes or 10% lower re-offending rates. In this way, the SIBs helps the government achieve its aims, often a lower cost than it could achieve itself, and the investors make a return on their money.
Names to know in the sector• Ashoka • Acumen • Schwab• Erste• Reach for Change• British Council• Kaos pilot• Unreasonable Institute
• Grameen• Social Capital Markets• Skoll• Kauffman• SEF Riga• Mammu• Global Impact Investment Network• EVPA
Bill Drayton, Ashoka’s Founder and CEO and a pioneer in the field of social entrepreneurship: “Social entrepreneurs are not content just to give a fish, or teach how to fish. They will not rest until they have revolutionized the fishing industry.”
What to do next?• Find your passion• Network & share• Ideate & prototype• Execute & scale • Inspire• Use your moral power• Engage volunteers• Capitalize on making
good
