SOCIAL ENTREPRENUR SPECIAL ....A Five-step Process That Can Help Social Enterprises Succeed
In their ebook, The Social Entrepreneur's Playbook, Ian
C. MacMillan, a
Wharton management professor, and James Thompson, director of the
Wharton Social Enterprise
Program, offer specific suggestions to strengthen the effectiveness of social
enterprises. In the second of a two-part interview, the authors discuss how two
African social enterprises -- one in the chicken feeds business and the other
in the sanitation industry -- used a five-step process to maximize the social
and business impact of their operations.
Excerpts are given below.
Knowledge@Wharton: I would like to talk through some of the chapters in your
book and some of the things that social entrepreneurs should be thinking about.
To begin with, you recommend that social entrepreneurs need to articulate the
problem that they are trying to solve, as well as a solution that they propose
to offer. Could you take us through some of the steps that they should go
through to do that?
Ian (Mac) MacMillan: What we tried to do is push people into thinking beyond
high-level problems -- there's a problem of nutrition or there's a problem of
education -- and begin to think about what the so-called beneficiaries of this
program are going to actually receive, what the problem is from their
perspective and whether they recognize that they have a problem. For instance,
one of the projects in India was the concept of taking sachets of disinfectant
and distributing them in villages where the water was unhygienic and people
were subject to all sorts of dysentery-type diseases, high death rates and so
on.
When you arrive in the village, it's
not evident to the people in that village, who have very little education, of
the connection between the diseases and the water. If you tell them that the
water is bad and they can't see the microbes or bacteria in that, they just don't
believe you. It's really important to understand the problem, not just from a
point of view of the benefactor, but also from the point of view of the
beneficiary. What we do in the book is we give people very systematic ways of
beginning to unfold what the problem is in the eyes of the person who is
supposed to benefit.
Knowledge@Wharton: One chapter in your book refers to the need to segment the
target population. Jim, I wonder if you could help explain how this process
should work.
James D. Thompson: To your question, Mac mentioned this idea of finding a
group of these beneficiaries or a segment of them that has a higher likelihood
of early adoption of what it is that you are trying to do than others. We spend
an entire chapter framing a method for segmenting the beneficiaries. It
includes some of the typical segmentation instruments -- geographic location,
gender, all of that -- but then there are also behavioral segmentation issues.
We then have a framework for people
to use to segment their beneficiaries, which can be used to select one with
which to start. We articulate the characteristics of a good wedge, if you will:
a segment that is most likely to adopt in the shortest space of time at the
lowest cost and provides a high rate of learning.
Knowledge@Wharton: Mac, as you have said before, sometimes a seemingly
wonderful idea leaves the beneficiaries cold and unresponsive. Why does that
happen? What could social entrepreneurs do to prevent their enterprises from
falling into that trap?
MacMillan: The fundamental problem is that people come in with what I
call the wild-eyed, Western solution to a problem where you are expecting
behaviors to take place in defiance of deep-seated cultural behaviors. There
are some things that you just don't do. One of the projects that we looked at
when I was in Cape Town a couple of years ago was the whole idea of beginning
to distribute tricycles, three-wheeled bicycles, so that women, instead of
having to carry their crops to the market, could actually peddle their crops to
the market. That sounds like a wonderful idea. But when you arrive with the
bicycles, you find out that the men have decided that women should not ride
bicycles; it's something only a man is allowed to do. By not paying attention
to what the cultural factors are, they just wasted their time.
Going into an African country with
condoms to try and prevent AIDS, you [must] take into account the fact that, in
many of the African societies, fertility is extremely well regarded. A woman
must be fertile. Secondly, sexual behavior [must be] taken into account. [If a]
woman goes to her husband and says, "I expect you to use a condom,"
... she can get thrown out of that house. She can get sent back to her original
family and live the rest of her life in disgrace because her husband has banned
her from his home. This lack of cultural sensitivity is often a huge problem.
Knowledge@Wharton: Why is it important for social entrepreneurs to identify
the most competitive alternatives to the idea that they are trying to propose?
How can they use this information that they gather to make their own offering
more valuable?
Thompson: There's always a competitor, even if it is what they are
doing today. We stress this because it forces people to spend time with the beneficiaries
they have in mind and the communities at large. By mapping out what the nearest
alternative is to what the team has in mind, in effect, we're forcing them to
build insight into the realities of that sector of the population on the ground
as it exists. That's the first thing.
The second thing is it gives a
methodical manner with which to compare, step by step, the idea that a team has
for a social entrepreneurship activity versus what exists on the ground or
could exist on the ground. We use that to force people to get the kind of
information that they should have. Then they need to have a fairly hard look at
what it is they propose and how it compares from the beneficiary's perspective
with what they are already doing.
Knowledge@Wharton: Mac, what operational issues do social entrepreneurs need
to address before they can deliver their product or service?
MacMillan: This is so important that we actually have the would-be
social entrepreneur develop what we call a deliverables table where you need to
be very clearly focused on articulating everything that the beneficiary must go
through in order to receive the benefit. Then, think a little bit about what
it's going to take for that benefit to take place. Let's say you have got a
program in which you are distributing product to village communities out in the
boonies, as they say. You can't just assume that there's going to be a
transportation system that will deliver that stuff. You have to think a little
bit about not just how the product is going to be sold, but how is the product
going to be transported to where you want it sold? How are we going to know
that we need to send more? Do we have a logistical system in place?
In many of these situations, there
just isn't the infrastructure to do it. What we are looking at here is what
specific operations -- from the time that the beneficiary first becomes aware
that they have a need and you can fix it, through the final delivery and
consumption of that benefit -- have to be documented. Then you have to sit down
and say, what must happen physically? Because if the system isn't there, it
just isn't going to happen.
To illustrate this, there was a
program in Lesotho in which they were going to deliver medicines by motorbike,
because Lesotho has very bad roads, but you can go on motorbikes to many of
these places. They built this whole program with dozens of motorbike riders
taking samples and medicines out to remote areas. Everything went fine until
the motorbikes started breaking down. Then they suddenly found out that there
was no one there to repair the motorbikes. What you now have is a mountain of
unused motorbikes that have basically just gone to waste.
Knowledge@Wharton: The next question is for both of you. One of the things I
found most fascinating about your book is the examples that you give of two
companies, Zambia Feeds and Ecotact, and how they went through the different
steps that you have just outlined. Could you tell us about these two companies
and what are the main lessons that other social entrepreneurs can learn from
their experience?
Thompson: Zambia Feeds is a company in the northwestern part of
Zambia that produces fairly high quality animal feed at relatively good prices.
The company started back in 2000 and has systematically built an alternative
production system for poultry rearing in that region. At the end of last year,
they had nearly 2,000 customers producing really high-quality poultry fairly
efficiently. Of course, this had to scale over more than a decade.
The first thing that we did, when we
learned of this, was to sit down with the entrepreneur and say, "Alright,
what is success for you? And how do you know when you are there?" As
simple as that sounds, it turns out that a lot of folks don't really think like
that. The reason we did it was because of the huge uncertainty in the area.
We put in place a few parameters
that the team needed to commit to in order for us to continue working with
them. We didn't want to commit ourselves to a team of people that was going to
use the conventional "let's come up with a great idea, raise the money and
go and build it" approach. Fortunately, the team over there [committed to
our parameters]. We can't take all of the credit. We were working with a social
entrepreneur from that environment, and she had been in commerce before.
They started small: picked segments,
geographic location, accessibility, etc.; didn't buy used equipment; didn't buy
buildings; and attended to the sociopolitics by starting it as an
entrepreneurial venture within an existing company, a big company that could
provide some defense from interference.
They then spent the better part of
nearly seven years building an organization that systematically developed these
new segments. In keeping with the philosophy of the book, they only began to
accrue production assets when they needed to accrue those assets to produce
higher volumes at higher quality. Fortunately for us, that case was the first
one we took on and it has been very, very successful. In fact, they have
impacted the whole industry in the country to the degree where the
entrepreneur, when she retired last year, was on the national poultry
association board. We use that case throughout the book as the golden thread
from the beginning through the end as a way to show what was done. It's the
applicability of each of the tools and frameworks to the case.
Knowledge@Wharton: The other really interesting case you have is of a company
called Ecotact. Can you tell us about that one, too?
MacMillan: Ecotact was not something that Jim or I actually worked on.
This was a project that a Wharton student was involved in. When she took the
course that we were teaching on entrepreneurship here, she [focused on]
sanitation facilities for people [in East Africa] who were using the streets.
The interesting thing there is the segmentation of the markets, because
inadequate sanitation is a huge problem. Millions of people under the age of
five die every year because of diseases caused by inadequate sanitation. Part
of the challenge in the beginning was what we wanted to try to do was build toilets
which were functional and were sanitary. But people were used to just using the
streets and things like that. The entrepreneur's problem was he had to charge
money for people to use these toilets, and people were basically thinking to
themselves, why should I pay when I can do it for nothing? So the perceptual
breakthrough was enormous.
As he started to segment, he had to
think a little bit about making a distinction between the many, many people in
what they call the estates, which are basically the slums in the East African
towns where there were hundreds of thousands of people who were exposed to
unsanitary conditions; people in the towns where you had municipal toilets, but
which were very, very badly maintained and just basically not kept clean; and
then people who could not just avail themselves of facilities at night where
nobody could see them.
The segment he chose was the
markets, because people come to the markets and they are there all day. The
people who come to markets tend either to sell or to buy, and that means they
have some money. He got the whole thing started by building in markets.
Now the interesting thing about that
particular project is that there were two unexpected outcomes. The first one
was that these facilities that he built near the markets became attractive to
women who were going to give birth to children because it was clean and it was
sanitary....
The other thing that they found is
that the places where there were congregations of people with money were not
only just markets but also bus shelters, places where buses congregated,
because large numbers of people go back and forth all the time, catching buses
to and from the town. They, in a way, discovered what the true segment was for
that particular form of enterprise, neither of which had been anticipated in
the beginning. But fortunately, he didn't go and build a huge network of
toilets which no one was going to use.
Knowledge@Wharton: That's a great example. To end, what would you like our
readers and viewers to do to participate in your project, The Social
Entrepreneur's Playbook ebook, so that you can move it onto the next phase?
Thompson: Firstly, to read it. We have taken a slightly different
approach in the publication of this book.... What we are trying to do is use
the ebook in the spirit of the approach of the ideas in the book: start small
and change fast. We would like to get responses from readers out there. We are
going to use those responses [to shape the expanded edition of the book, which
publishes in November 2013.]
If any of our readers are in the
social entrepreneurship space, use the book to spread the word. If any of our
readers know people in this space, please get the book out to them. We think it
will be useful, and everybody we have tested it with has found it very, very
useful in the field, nonprofit or for profit.
FOR MORE DETAILS READ
http://knowledge.wharton.upenn.edu/article.cfm?articleid=3303
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