local entrepreneurship and innovation

1

Ontario Council of Organizations Serving Immigrants – ED Forum

Social Entrepreneurship and Innovation –November 2nd, 2009 – 4:00pm to 6:00pm

2

Social Entrepreneurship and Innovation• We are a world of wall builders,

partitioners, and dividers of space. We long for the security of safe places. We construct these barriers in a vain attempt to control the elements, to keep the rain from dampening the fire, the wind from covering ours lives with the inevitable dust. Many of the walls we build are essential to our survival. Many, however, are not. By fortifying the unnecessary walls, we in business (for profit and not-for-profit)..huddle in the systems we have closed. The consequences: thinking decays and novelty vanishes.

• Open Boundaries- Howard Sherman and Ron Schultz1998

3

Test

1. Are You a Self-Starter? a. If someone gets me started, I keep going all right. b. I do things my own way. Nobody needs to tell me to get going. c. Easy does it. I don't put myself out until I have to.

2. How Do You Feel About Other People? d. Most people bug me. e. I like people. I can get along with just about anybody.

f. I have enough friends and I don't need anybody else.

3. Can You Lead Others? g. I can get people to do things if I drive them.h. I can get most people to go along with me without much difficulty. i. I usually let someone else get things moving.

4

Test

4. Can You Take Responsibility? a. I'll take over if I have to, but I'd rather let someone else be

responsible. b. There's always some eager beaver around waiting to show off. I say,

let him. c. I like to take charge of and see things through.

5. How Good An Organiser Are You?a. I like to have a plan before I start. I'm usually the one who lines

things up. b. I do all right unless things get too complicated. Then I may cop out. c. I just take things as they come.

6. How Good a Worker Are You? a. I can't see that hard work gets you anywhere. b. I'll work hard for a time, but when I've had enough, that's it. c. I can keep going as long as necessary. I don't mind working hard.

5

Test7. Can You Make Decisions?

a. I can if I have plenty of time. If I have to make up my mind fast, I usually regret it.

b. I can make up my mind in a hurry if necessary, and my decision is usually O.K.

c. I don't like to be the one who decides things. I'd probably blow it.

8. Can People Trust What You Say?

d. I try to be on the level, but sometimes I just say what's easiest. e. They sure can. I don't say things I don't mean. f. What's the sweat if the other fellow doesn't know the difference?

9. Can You Stick With It? g. If I make up my mind to do something, I don't let anything stop me. h. If a job doesn't go right, I turn off. Why beat your brains out? i. I usually finish what I start.

10. Can You Keep Records? j. Records are not important. I know what's need to be known without keeping

records. k. I can, but it's more important to get the work out than to shuffle numbers. l. Since they are needed I'll keep records even though I don't want to.

6

Test

1. Are You a Self-Starter? a. If someone gets me started, I keep going all right. b. I do things my own way. Nobody needs to tell me to get going. c. Easy does it. I don't put myself out until I have to.

2. How Do You Feel About Other People? d. Most people bug me. e. I like people. I can get along with just about anybody.

f. I have enough friends and I don't need anybody else.

3. Can You Lead Others? g. I can get people to do things if I drive them.h. I can get most people to go along with me without much difficulty. i. I usually let someone else get things moving.

7

Test

4. Can You Take Responsibility? a. I'll take over if I have to, but I'd rather let someone else be

responsible. b. There's always some eager beaver around waiting to show off. I say,

let him. c. I like to take charge of and see things through.

5. How Good An Organiser Are You? a. I like to have a plan before I start. I'm usually the one who lines

things up. b. I do all right unless things get too complicated. Then I may cop out. c. I just take things as they come.

6. How Good a Worker Are You? a. I can't see that hard work gets you anywhere. b. I'll work hard for a time, but when I've had enough, that's it. c. I can keep going as long as necessary. I don't mind working hard.

8

Test7. Can You Make Decisions?

a. I can if I have plenty of time. If I have to make up my mind fast, I usually regret it.

b. I can make up my mind in a hurry if necessary, and my decision is usually O.K.

c. I don't like to be the one who decides things. I'd probably blow it.

8. Can People Trust What You Say?

d. I try to be on the level, but sometimes I just say what's easiest. e. They sure can. I don't say things I don't mean. f. What's the sweat if the other fellow doesn't know the difference?

9. Can You Stick With It? g. If I make up my mind to do something, I don't let anything stop me. h. If a job doesn't go right, I turn off. Why beat your brains out? i. I usually finish what I start.

10. Can You Keep Records? j. Records are not important. I know what's need to be known without keeping

records. k. I can, but it's more important to get the work out than to shuffle numbers. l. Since they are needed I'll keep records even though I don't want to.

9

Social Entrepreneurship• Application of entrepreneurial attitudes to

social sector:– Change is the norm– Embrace change– Seek change– Client focused– Shift resources from low to high productivity– Calculated risks– Create something new– Strive for Transparency

10

Social Innovation

• Application of principles of innovation to social sector:– ” …..broadly classified in two categories:

• those that see innovation as the final event - 'The idea, practice, or material artifact that has been invented or that is regarded as novel independent of its adoption or non adoption' (G. Zaltman, R. Duncan and J. Holbeck, Innovations and Organizations, Wiley, 1973) and

• those who see it as a process 'which proceeds from the conceptualization of a new idea to a solution of the problem and then to the actual utilization of a new item of economic or social value.' (S. Meyers and D.G. Marquis, Successful Industrial Innovations. National Science Foundation,1968). We adopt that latter definition...use the terms innovation and innovation process interchangeably.”

– Innovation = execution

11

Social Enterprise Traditionally, businesses (especially

corporations) have focused primarily on their own financial bottom lines, while…

Non-profits have focused primarily on addressing their communities’ social and/or environmental issues

Productive enterprises cross boundaries, by using a business model to address social and/or environmental issues

continued…

12

Social Enterprise

Any business venture whose primary purpose is to address social and/or environmental issues.

Like any business, a social enterprise needs to sell products or services to paying customers, in a financially-sustainable manner.

Any legal form of organization can be or operate a social enterprise.

A social enterprise can be an initiative within a larger organization or be a free-standing business

13

Social Enterprise:Various Definitions An organization or venture that advances its social mission

through entrepreneurial, earned income strategies Social enterprises apply entrepreneurial approaches to

address social and/or environmental issues and create positive community change.

An enterprise, owned at least in part by a non-profit organization, that uses entrepreneurial methods to accomplish social and/or environmental goals and providing its profits to its owner(s) for use in continuing their core missions.

A social enterprise is a revenue-generating business with primarily social and/or environmental objectives whose surpluses are reinvested for that purpose in the business or in the community, rather than being driven by the need to deliver profit to shareholders and owners.

14

Nonprofits & Social Enterprise

Charging their clients & other beneficiaries appropriate fees

Contracting with third parties to provide products & services to others who need them, but who are unable to pay

Marketing their products & services to new customers

Social purpose businesses – employing their clients in businesses, providing meaningful training, work experience & wages

15

Businesses & Social Enterprise

Sustainable Business “More than One” Bottom Line Corporate Social Responsibility

initiatives Venture Philanthropy Micro-enterprise and micro-finance Social purpose businesses – employing a

disadvantaged group in business, providing meaningful training, work experience & wages

Differential/discounted pricing

16

Organizational Readiness

• Strategy• Governance• Human resources• Finances• Operations, Products and Services• Market perspective

17

Overview of Social Enterprise

Benefits of Social Enterprise• Diversifies funding sources• Generates unrestricted funding• Creates an “entrepreneurial spirit”• Enhances understanding of clients• Tests social value• Adds skills and competencies to the organization

18

Traditional View

19

Social Enterprise View

20

Common Misunderstandings / Myths• The purpose of social enterprise is to make

money• The purpose of social enterprise is to

employ people• Social enterprise will distract my

organization from achieving its mission• We will lose our non-profit status• Social enterprise is a new concept• We will never need to fundraise again• If we make too much money, funders will

cut us off

21


Process Overview

• Context Setting• Idea Generation and 1st Screen• Business Concept and 2nd Screen• Business Planning Workshop• Write Business Plan

22

Context Setting

Understanding the Context

• Internal Context– The strategic framework– Goals, expectations for the

initiative– Management capabilities– Marketable assets – skills,

products/services, brand/reputation & intellectual property

– Clients and other key stakeholders

• External Context– Trends– Opportunities– Challenges

External ContextOrganizational Readiness Workbook

23


Development Funnel

Brainstorming

Screen 1

Screen 2

Key Questions

Business Plan

5 seconds100 ideas

2 minutes10 ideas

2-3 hours1-3 ideas

2 days0-3 ideas

15 days +1-3 ideas

24

Level 1 Screen

Identifying Opportunities

Customers

Current New but Related New, Unrelated

Products and Services

Current

“Increase Profits from

Current Business”

“Develop New Customers”

New But

Related

“Develop New Products” “Diversify”

New - Unrelated

25

Brainstorm 50 -100 Ideas

27

Case Study

Three members of Northwood Management team generated the following list of earned income opportunities:

1.Summer Camp2.Cyber School3.Translation Bureau4.Training- Proposal Writing/ Fundraising5.Training- Home Child Care6.Training-Dance / Fitness-Salsa for mothers of

newly born babies

28

Earned income Opportunities brainstorming session Continues….

7. Renting Space8. Sponsorship Program9. Day Care 10.ESL11. Placement Agency12.Community Information Center13.Job Training

29

Earned income Opportunities brainstorming session Continues….

14.Financial GYM at reduced price 15.Planning16.Consulting Non-for-profit17. Sensitivity Training18. Access and Equity training19. Tourism Advisory20. Restaurant21. Apprenticeship Program

30

Northwood Screening Criteria

Does the idea further your vision, mission, values and strategic priorities?1=no, 2=partial fit, 3=full fit

Is there a potential customer benefit? 1=none, 2=some need/some customers, 3=urgent need/many customers

Are there financial savings and how much? 1= increase costs, 2=break even, 3= likely savings

What investment is required?1 - greater than 100,000, 2 - Less than 100,000 3 - less than 50,000

Is there a champion? 1=no, 2= neutral 3=yes

Scoring: each idea will have a score of 5-15

31

Create new services and screening• The Following Four Earned Income

Opportunities rates the highest using the filter

• 1. Sponsorship Program (3/3/3/3/3)• 2. Cyber School (3/3/3/3/3/3)• 3. Translation Bureau (3/3/3/3/3)• 4. Renting Space (3/3/2/2/3/2)• 5. Summer Camp(3/3/2/2/3/2)

32

Screening Phase 2

• Create a concept statement– Describe product– Target audience and reason for buying it– When, where, how?

• Product attractiveness– Financial results– Marketing issues and competitors– Risk factors

• Does it fit with the organisation?• Test with sample of external experts

33

Screening Phase 3Feasibility Analysis and Priority Setting

– Does the product have financial potential?– How likely is the product to implemented

successfully (easy or hard)?– Is an investment required?– Is an investment justifiable in terms of financial or

mission improvement?– Does the product advance mission

and strategic priorities?

34

First Set of Measures

Product A

Financial Measure Weighting 0 1 2 3

Significant customer problem 2Not a significant

need

Need that is addressed by others reasonably

well Urgent unmet needUrgent unmet need

consistent with mission

Appropriate solution 1

Do not address need as well as

competitorsAddresses need as well

as competitors

Addresses need in a unique and more effective

wayAddresses need and no

one else does at allRevenue potential 1 Under 50K 50-100K 100-250K >250KProfit potential 2 Likely loss 0-50K 50-100K >100K

Investment required 1Major investment

>100K

Large amount of funding required - 25-

100KModest funding required -

<25KCould achieve with existing

resourcesInvestment financial payback 1 None >3 years 1-3 years First year

Rating

35

Second Set of MeasuresProduct A

Success Measure Weighting 0 1 2 3

Fit with mission/ values 2Contrary to

mission Not a fit Partial fit Yes

Similar products in the market 2Many similar product exist

Few similar product exist, and cutomers

are satisfied

Few similar product exist, but customers

are not saitsfied No similar products exist

Stage of development 2 Conceptual Defined ideaDeveloped marketing

planBusiness plan thought

out

Spin-off effects 1

Negative impact on organisation

reputationNo impact beyond

initiativePositive impact on

organisation

Strong positive impact on organisation and

community

Risk 2 High risk Low / Medium riskManageable risk

(strategies to address) No risk

Existing skills 1Significant skill

gap

Skills are readily available through

partnersCan address skills with

modest training Have the skills already

Competitive advantage 2Competitive

disadvantage

No significant difference from

competitors

Good value proposition but can be

matchedSustainable unique solution with niche

Partnership opportunity 1 No likely partners

Believe there are partners, but not sure

whoPossible partnerships but unclear of interest

Likely partners exist and are interested

Inhibiters 1

Significant cultural or other change

required

Some inhibiters which may be difficult

to address

Some inhibiters, but likely to be able

address No significant inhibiters

Rating

36

Design

Northwood Neighbourhood Services launched the Translation Bureau

• Social Purpose: Creating jobs for newcomers

• Low start up cost• High return• Expertise of 25 Years• Champion ( experienced )

37

Research

• Our research indicated that there is a need for translation earned income opportunity

Surprise:

• Found out a sister organization inherited a translation Social Enterprise

What did we do?

38

Testing/Piloting

Northwood Neighbourhood Services • Launched Translation Bureau• Launched Cyber School• Launched Summer Camp• Launched Space Rental

39

Evaluation

• Business Generated $___• Employed 190 Translators and

Interpreters• Built organizational capacity to

regenerate income• Developed expertise in the area• Launched 3 other successful

ventures

40

Level 1 Screen

Definition of a “Good” Idea

– Meets a significant customer need – there is a market

– Return on Investment (ROI)

– Risk can be managed– Competitive advantage

• Price• Performance

– Leverages a strength/asset

– Fits with mission/values

41

Level 1 Screen

Level 1 Screening Criteria

– Does the idea further your vision, mission, values and strategic priorities?

• 1=no, 2=partial, 3=full fit

– Is there a potential customer benefit?• 1=none, 2=some need/some customers, 3=urgent

need/many customers

– Is there profit potential (by third year)?• 1=Breakeven, 2= $10K-$20K, 3=more than $20K

– What investment is required?• 1=major investment, 2=minor investment, 3 achieve with

current resources

– Is there a champion?• 1=no, 2=neutral, 3=yes

Scoring: each idea will have a score of 5-15

42

Level 1 Screen

Feasibility Dimensions

• Organizational Fit– Strategic (Do we want to do it?)– Operational (Can we do it?

• Business Potential– Market (Will others want to buy it from us?)– Financial Model (Will it meet our financial goals?)

43

Level 1 Screen

The Success Quadrant

Long TermConsider Second

Top PriorityContinue Screening

Not StrategicDo Not Consider

Further

Possible Quick Win

Bu

sin

ess

Pote

nti

al

Organizational Fit

Low strategic & Operational Fit

High strategic & Operational Fit

HighFinancial &

Market Potential

LowFinancial &

Market Potential

44

Level 1 Screen

Guidelines for Fast Screening Process

– Trust experience/judgment– Be objective (not about personal taste)– Think about the customer perspective– Simple and quick discussion – screen quickly– Don’t split hairs – the winners will be clear winners– Accept that some good ideas will not be selected– No more than 2 minutes per idea– Ask, “What do I need to believe is true?”

45

Identify Short List to Explore Further

Top Ideas & Champions

46

Decision Measures Product A

Success Measure Weighting 0 1 2 3

Fit with mission/ values 2Contrary to

mission Not a fit Partial fit Yes

Similar products in the market 2Many similar product exist

Few similar product exist, and cutomers

are satisfied

Few similar product exist, but customers

are not saitsfied No similar products exist

Stage of development 2 Conceptual Defined ideaDeveloped marketing

planBusiness plan thought

out

Spin-off effects 1

Negative impact on organisation

reputationNo impact beyond

initiativePositive impact on

organisation

Strong positive impact on organisation and

community

Risk 2 High risk Low / Medium riskManageable risk

(strategies to address) No risk

Existing skills 1Significant skill

gap

Skills are readily available through

partnersCan address skills with

modest training Have the skills already

Competitive advantage 2Competitive

disadvantage

No significant difference from

competitors

Good value proposition but can be

matchedSustainable unique solution with niche

Partnership opportunity 1 No likely partners

Believe there are partners, but not sure

whoPossible partnerships but unclear of interest

Likely partners exist and are interested

Inhibiters 1

Significant cultural or other change

required

Some inhibiters which may be difficult

to address

Some inhibiters, but likely to be able

address No significant inhibiters

Rating

47

Decision MeasuresProduct A

Financial Measure Weighting 0 1 2 3

Significant customer problem 2Not a significant

need

Need that is addressed by others reasonably

well Urgent unmet needUrgent unmet need

consistent with mission

Appropriate solution 1

Do not address need as well as

competitorsAddresses need as well

as competitors

Addresses need in a unique and more effective

wayAddresses need and no

one else does at allRevenue potential 1 Under 50K 50-100K 100-250K >250KProfit potential 2 Likely loss 0-50K 50-100K >100K

Investment required 1Major investment

>100K

Large amount of funding required - 25-

100KModest funding required -

<25KCould achieve with existing

resourcesInvestment financial payback 1 None >3 years 1-3 years First year

Rating

48

Next Steps

• Business Concept and Level 2 Screen

• Business Planning

• Write Business Plan

49

Partnerships

• What are they:– Shared risk and return– Negotiated objectives– Customized investment

50

Entrepreneurial Partnering

Cause-related marketing Cause-related purchasing Joint ventures Mergers Acquisitions Partnerships

Least Structured to Most Structured

Human

and F

inan

cial

Inve

stm

ent

52

Partnerships - examples• Management Services Organizations

– Sharing of services between a number of not-for-profits– Examples - CHSI - Health Care System

• Vendor through to M&A relationships

53

Venture Philanthropy

• Capital and human resources invested in charities by various types of investors in search of a social return on their investment. VP involves a high engagement over many years with fixed milestones and tangible returns and exit achieved by developing alternative, sustainable income.

54

Venture Philanthropy Priority• Significant problem• Appropriate solution• SROI• Enthusiasm/being with a winner• Impact/building on success• Innovative and entrepreneurial

55

Elements

• Capital for growth, reliable money• Human resource expertise/strategic

coaching• Partnering internally and externally• Performance centred, results orientated• Long term, exit strategy to sustainability• Business case/plan • Business to business presentation• Management, board, cash management,

impact

56

Venture Philanthropy - examples

• Social Venture Partner - Canada/International

• New Profit, Inc• Small foundations

57

John Baker Aperio

215 Spadina Ave Suite 170 Toronto, Ontario

M5T 2C7

Direct: 416-304-0016 Toll Free: [email protected]

http://www.aperio.ca