social value creation: ideas and business models

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

HERAWednesday, 2 September 2015

Imperial means Intelligent BusinessImperial College Business School 2

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


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


Innovation vs. Social Innovation


What is innovation?


“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)


Innovation as recombination

Product Innovation


Product Innovation



Useful Inventions


+=


Useful Inventions



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


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

Emerson, 1889


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


A better mousetrap

Failed designs


A better mousetrap

Modern attempts


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


Invention ≠ Innovation

Try not to confuse them!


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


Social value creation at the base of the pyramid

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


Doing good whilst making profits

Prahalad’s Bottom Billion: Growth Trends


Contextual Challenges

Barriers to social innovation

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


Contextual Challenges

What are the barriers to social innovation?

Access $ Multiple stakeholders

Affordability

Resource Constraints

Poor Infrastructure and Weak Institutions


Overcoming access challenges

Project Shakti: Unleashing rural India


Overcoming resource constraints

Rethinking the object


Rethinking the object

Lifestraw example


Resource Bricolage

Be cheap!


Resource Bricolage

Affordability and simplification of design


Lifecycle Cost Thinking

Repurposing why we do what we do…


Business Models vs. Social Enterprise Models


What is a business model?


(Osterwalder, 2008)

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


Three key components…


Three building blocks…


Applied to the lemonade stand example


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


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


Case Study: Company Shop


Introducing the case study method

https://www.youtube.com/watch?v=Y4j25Pj4JyQ


What is Company Shop?

https://www.youtube.com/watch?v=pV0vDqh-6CQ


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