Social Value Creation: Ideas and Business ModelsHERA Case Study Series on Managing and Organising Small Businesses

HERAWednesday, 2 September 2015

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Today’s agenda…

1. THEORY: SOCIAL INNOVATION AND ENTERPRISE –What is innovation? What is social innovation?– Building social enterprise business models

2. PRACTICE: CASE STUDY– Introducing the case study method– Company Shop: Promoting a social dividend

3. GUEST SPEAKER / Q&A

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Today’s speakers…

Chris Corbishley (Lecturer)- PhD candidate, Imperial College Business School

- Research on emerging market entry strategies

- London Stock Exchange ELITE programme helping high growth businesses to scale up (e.g. secret sales, graze, naked wines, swoon)

Clara Widdison (Guest Speaker)- London Area Manager, Individual and Community

Impact Programme at Community Shop

- Previously Head of Membership at London-based social enterprise: The People’s Supermarket

- MA candidate in Food Policy at City University London

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Innovation vs. Social Innovation

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What is innovation?

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“Innovation consists to a substantial extent of a recombination of conceptual and physical materials that were previously in existence”

Joseph Schumpeter (Austrian Economist c.20th)

“A new way of doing things that is commercialized”

Michael Porter (Harvard Business School)

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Innovation as recombination

Product Innovation

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Product Innovation

Innovation as recombination

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Useful Inventions

Innovation as recombination

+=

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Useful Inventions

Innovation as recombination

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Benefits of Innovation

Consumers, Business and Society

For consumers and society

• New and improved goods and services

• Reduced cost of existing goods and services

• Increased private wealth and social welfare

• Longer, healthier lives

For firms

• Better chances of surviving in the market (especially during recessions)

• Higher productivity and higher profits over the long term

• Provide higher wages and better quality of employment

• Have better credit ratings and higher market values

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“Build a better mousetrap and the world will beat a path to your door”

Emerson, 1889

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A better mousetrap

Marketplace for new ideas, new inventions

• US Patent Office has issued over 4400 mousetrap patents

• Only 20 of those patents have ever made any money

• 400 people still apply for mousetrap patents each year

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A better mousetrap

Failed designs

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A better mousetrap

Modern attempts

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Problem solved

• In 1899 John Mast of Lititz, Pennsylvania filed for a patent on his now-familiar snap-trap

• It was a design winner and has remained largely unchanged since

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Invention ≠ Innovation

Try not to confuse them!

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How is social innovation different?

It is more a question of who benefits?

“process involving the innovative use and combination of resources to pursue opportunities to catalyse social change

and/or address social needs”

(Mair and Marti, 2006)

Questions the assumption that benefits are naturally accrued to society, the consumer or end user.

Apportions the share of value (from new products/services) towards previously disenfranchised members of society, thus increasing social value creation

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Social value creation at the base of the pyramid

Prahalad’s ‘Fortune at the Bottom of the Pyramid’

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Doing good whilst making profits

Prahalad’s Bottom Billion: Growth Trends

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Contextual Challenges

Barriers to social innovation

What are the challenges of doing business in impoverished and geographically dispersed settings?

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Contextual Challenges

What are the barriers to social innovation?

Access $ Multiple stakeholders

Affordability

Resource Constraints

Poor Infrastructure and Weak Institutions

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Overcoming access challenges

Project Shakti: Unleashing rural India

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Overcoming resource constraints

Rethinking the object

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Rethinking the object

Lifestraw example

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Resource Bricolage

Be cheap!

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Resource Bricolage

Affordability and simplification of design

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Lifecycle Cost Thinking

Repurposing why we do what we do…

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Business Models vs. Social Enterprise Models

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What is a business model?

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(Osterwalder, 2008)

The business model canvas: A tool to create and analyse business models

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Three key components…

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Three building blocks…

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Applied to the lemonade stand example

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How is social enterprise different?A focus on social value creation

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Breaking down the components of ‘value’A focus on social value creation

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Case Study: Company Shop

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Introducing the case study method

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What is Company Shop?

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1) What is Company Shop’s business model? How does it contribute to social value creation?

2) Using the business model canvas, determine the following • Value proposition: What value does the business bring to its consumers and customers?

• Resources: Who are the company’s key suppliers/partners?

• Transactive structure: How does it make money and build social value?

3) Putting yourself in John and Mark’s shoes, should you focus on the economic side of the business & try to stay ‘under the radar’? OR should you invest in the social enterprise, building legitimacy as a way of increasing both economic and social value?

Break into groups of five, start reading the case, then let’s answer the following questions…

Case study questions