Social entrepreneurs typically function in environments much different from more traditional entrepreneurial enterprises.
For those who wish to make modest profits while attacking a social problem, the major difference is the level of perceived risk. It’s not that social entrepreneurs face more risk than traditional entrepreneurs; they face greater uncertainty. Social entrepreneurs target intractable problems that are not easy to solve; they often need to create a market where none exists; and they work in environments that, by their very nature, are characterized by high levels of uncertainty, from underdeveloped markets to unreliable infrastructure.
Our work with social enterprises yielded a field-tested methodology for launching a social enterprise in a way that conserves resources and reduces risk.
1. Map the entire beneficiary experience.
Many entrepreneurs focus on what they want to deliver—the product itself—rather than the people they hope to serve. It’s important to have a beneficiary, or customer, orientation, rather than a product focus. Start off by systematically thinking through the entire set of experiences your target population segment must go through in order to derive the proposed benefit of your offering. In other words, take a serious look at the offering from the perspective of the beneficiaries, and map out the total set of experiences they will be required to go through. Then, understand and articulate what behavioral changes will be required in order for the benefit to be willingly accepted.
2. Compare your proposed offering with the most competitive alternatives.
Once you have the beneficiary experience mapped out, you need to begin thinking realistically about who, and what, you are going to be competing against, in order to win over the beneficiaries. Let’s face it; the beneficiaries have in many cases survived, perhaps with serious privation, for many years without your offering. So the next step in the process is to compare how your offering will stack up against the most competitive alternatives to which beneficiaries are already devoting their attention and resources. There is always some alternative, perhaps simply doing nothing but enduring. Your offering must be seen as compellingly different in the eyes of the beneficiary.
As you look at the most competitive alternative, if your solution appears to come up short of the most competitive alternative, ask yourself whether and how you can innovate to get a competitive edge. Innovation can come in many forms, from innovation in delivery to innovation in payment systems.
3. Identify all the required beneficiary capabilities.
Now you need to consider what capabilities and skills your beneficiaries must have in place in order to make the project work. Assuming they can get to your location is often incorrect. If you were delivering chickens, for example, the beneficiaries will need to know how to care for them, where to get feed, and so on. Lack of attention to the capability requirements has doomed many a well-meaning enterprise.
4. Map out everything you have to deliver to make it work.
Knowing what capabilities the beneficiaries will need will allow you to think through what you need to deliver in order for your program to work. Providing the missing capabilities—such as transportation—is also a key contributor to costs you are likely to incur. Think through the important steps you will need to take for your venture to deliver the required activities. This could include unexpected costs like providing transportation or emergency power supply or developing training programs to skill up potential employees. If you don’t cover the cost of compensating for such deficiencies, it’s unlikely that anyone else will.
5. Assemble, utilize, and expand a challenging advisory group.
Now consider whether you have an advisory team with sufficient complementary expertise and influence to evaluate your current position and assist you in your next steps. We highly recommend that your advisory board be willing to persistently challenge your concept, invoking expertise that your management team does not have.
Consult with your advisors in order to determine key considerations, such as: the plausibility of your proposed beneficiary experience (for example, it may not be possible to deliver certain goods or services during the rainy season in some areas); their response to your proposed offering relative to the most competitive alternative (do they believe it to be sufficiently superior to the alternatives to warrant your pursuit of the enterprise); whether or not they believe it possible for beneficiaries to secure the necessary capabilities required to participate in your program; and to direct you to other suitable advisers whom you might recruit to assist you with the next stages of your enterprise development.
The advisory group must play an active role in the development of your enterprise. It is better to solicit their involvement early on and to get them to help you build out your advisory team in order that they become increasingly vested in your success. As important as their support is, so, too, is their charter to identify key risks within the environment early on and to assist you in mitigating and overcoming them to prevent unnecessary barriers and time-consuming delays.
These guidelines stemmed from 13 years of work with social entrepreneurs. We used this same approach to develop and publish our new ebook, The Social Entrepreneur’s Playbook: Pressure Test Your Start-Up Idea
Step 1. We are publishing the first part for free and crowdsourcing feedback from an advisory group of readers. In the fall, we will publish the expanded edition, which covers all three steps of the process: pressure testing, launching, and scaling the enterprise. To download the free ebook and provide your feedback to shape the expanded edition, click here.
—Ian C. MacMillan and James D. Thompson are the authors of The Social Entrepreneur’s Playbook: Pressure Test Your Start-Up Idea.
[Image: Flickr user Vee-vee]