Social Entrepreneurship and Innovation: IFS Conference 2008 Jamila Aman's Presentation 1

Social Entrepreneurship and
Innovation
IFS Conference 2008 Jamila

Aman's Presentation
Workshop Purpose
Celebrate and build on success
Outline systematic approach
Earned income
Establish business objectives/criteria

Product development
Product screening
Risk management and readiness
Shared services (MSO)

Venture philanthropy
Aman's Presentation
Social Entrepreneurship
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

Aman's Presentation
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
Aman's Presentation
Organisational Readiness
Risk Management

Aman's Presentation
Issues
Fear of loss of control

Resources financial/human
Risk averse culture
Conflicting ends
Lack of structure/governance for success

Aman's Presentation
Organizational Readiness
Strategy
Governance
Human resources
Finances
Operations, Products and Services
Market perspective

Aman's Presentation
Strategic Management Overview

C. Input
Current
State
D. Throughput
Strategic
Implementation
Annual Strategic
Review and Update
A. Output
Future
State
Change Management
5. Current State
Assessment and
Business Planning
Parallel
Process with
Key
Stakeholders
4. Objective
Development
2. Strategic
Planning: Vision,
Mission, Values
B. Feedback
3.Strategic
Priority
Aman's Presentation
Mapping the Future

Ideal Future Vision
Formulate dreams that are worth believing
in & fighting for by meeting 3 challenges.
Challenge #1. Vision Statement
Challenge #2. Mission Statement
Challenge #3. Core Values

Aman's Presentation
Ideal Future Vision

Answer all or any of the following
questions:
What will put you out of business?
What is your ultimate vision of success?
What is your ideal community vision?
Answers may be - end of

homelessness, hunger etc.
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Mission
What is your organizations part in achieving
the vision?
What do we produce?
Who do we serve?
How do we do it?

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11
Values
What do board members & employees
stand for & embrace?
What are the rules?
May include integrity, transparency,
entrepreneurship, innovation etc

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Strategic Priority Development

Balanced Score Card Format
Consider organizational success from more
than one perspective, for example:
Internal Business Processes
Client
Financial
Human Resources
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13
Strategic
Priorities
Financial
Answer the question:
How do you wish to
appear to your
owners/funders?
Client

How do you wish appear
to your client/customer?
Vision
Mission
Values
Internal Business
Processes
In order to achieve your
mission, what business
processes must you excel
at?
Human Resources
How do you sustain your
ability to learn and grow?
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Earned Income

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15
Results in Other Ventures

90% of successful ventures relate to the nonprofits mission
Planning matters
46% of non-profits with ventures have more than
one
69% are profitable
Profitability is reached in 2.5 years on average
Only 10% use a spin-off cutting edge
The largest benefit is the creation of an
entrepreneurial culture (58%)
Aman's Presentation
From a survey of non-profits operating business
ventures
16
Systematic Approach

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Systematic Approach
Determine organisational
Need for innovation
Purpose
Organisational readiness and commitment

Product development
Search for opportunities

Create new services and screening
Research, design, testing
Launch, evaluation and revision
Portfolio approach
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Strengthens Organisations
Achieves Mission
Generates revenue
Unrestricted
Greater degree of control
Enables growth beyond funding base
Supports mission and strategic plan

Create valuable new services/SROI
Enhances profile
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Balancing Mission and Financial

Return
Strong Business
Case
Weak Business
Case
SECOND PRIOIRTY
BUSINESS
HIGHEST PRIORITY
VALUE ADDED
DONT PURSUE
PHILANTHROPY
Limited
Advances Mission

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Product Development
Process
Planning for Success
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Definition of a Good Idea
Meets a significant customer need a market

Return on investment
Risk managed
Competitive advantage
Cost
Performance
Leverages a strength/asset
Fits with mission/values
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Enterprises
Mission related products or services
Same product, new market: geographic or customer
Programme related products (manuals)/services
(EAP)
Staff resources (MSO/training)
Public sector contracting
New product/leveraging organisational strengths

Client resources (social firm)
Soft assets intellectual property (licensing/franchising)
Hard assets (rental)
Unrelated business (Ben & Jerrys)

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Product Creation
Pre-work
Scan
Community trends and needs
Potential market opportunities market research
Attend conferences/read magazines/annual
reports/web/etc
Assess what competitors are doing
Scan
Internal capacities (swot)
Leading edge networking

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Brainstorming
Use information/knowledge/fantasy/dreams/intuition
Build on experiences of and skills/knowledge in the
organisation
Lateral thinking, scramble patterns
e.g. pose a problem and only outrageous solutions are
suggested
Look at data for opportunities, look at it from other

peoples perspectives
Be excited, accept thoughts/play with them - have fun
Bring experts from different organisations together
Discuss with others, family, friends, associates
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25
Level 1 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 profit potential (by third year)?

1= less than 20K, 2=more than 20 k but less than 50k, 3= more than 50k
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
Is there risk?
1 = high risk (no known mitigation), 2 = medium risk (new strategies needed), 3 = low risk
(strategies in place)
Scoring: each idea will have a score of 6-18

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26
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
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Screening Phase 3
Feasibility 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?
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The Success Quadrant

High
financial
and social
impact
Low Potential
Consider Later
Top Priority
Continue Screening
Low
financial
and social
impact
Not Strategic
Do Not Consider Further
Long Term
Consider Second
Low
(Idea will be relatively difficult to
implement)
High
(Idea will be relatively
easy
to implement)
Fit with Organisation

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First Set of Measures

Product A
Rating
Financial Measure
Significant customer problem
Appropriate solution
Revenue potential
Profit potential
Investment required
Investment financial payback
Weighting
1
1
2
Not a significant
need
Do not address
need as well as
competitors
Under 50K
Likely loss
1
1
Major investment
>100K
None
1
Need that is
addressed by others
reasonably well
Addresses need as
well as competitors
50-100K
0-50K
Large amount of
funding required 25-100K
>3 years

Aman's Presentation
Urgent unmet need

consistent with mission
Urgent unmet need

Addresses need in a
unique and more
effective way
100-250K
50-100K
Addresses need and no

one else does at all
>250K
>100K
Modest funding
required - <25K
1-3 years
Could achieve with

existing resources
First year
30
Second Set of Measures
Product A
Rating
Success Measure
Weighting
Fit with mission/ values
Contrary to
mission
Similar products in the market
Many similar
product exist
Stage of development
Spin-off effects
Conceptual
Negative impact
on organisation
reputation
Risk
High risk
Existing skills
Competitive advantage
Partnership opportunity
Inhibiters
1
Not a fit
Few similar product
exist, and cutomers
are satisfied
Defined idea
No impact beyond
initiative
Low / Medium risk

Skills are readily
Significant skill
available through
gap
partners
No significant
Competitive
difference from
disadvantage
competitors
Believe there are
partners, but not sure
No likely partners
who
Significant cultural
Some inhibiters
or other change which may be difficult
required
to address

Aman's Presentation
Partial fit
Yes
Few similar product
exist, but customers
are not saitsfied
No similar products exist
Developed marketing Business plan thought
plan
out
Strong positive impact
Positive impact on
on organisation and
organisation
community
Manageable risk
(strategies to address)
No risk
Can address skills with
modest training
Have the skills already
Good value
proposition but can be
Sustainable unique
matched
solution with niche
Possible partnerships Likely partners exist and
but unclear of interest
are interested
Some inhibiters, but
likely to be able
address
No significant inhibiters
31
Strength of Idea
High
financial
and social
impact
Product A
Low
financial
and social
impact
Low
(Idea will be relatively difficult to
implement)
High
(Idea will be relatively easy to
implement)
Fit with Organisation

Aman's Presentation
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Screening Phase 4
Business Planning

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33
Benefits of Writing a Business Plan

Refines the idea
Writing it down makes it real
Creates a framework for making the idea
happen
Method of external communication
Internal due-diligence tool

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Guidelines for Successful Plans

Aim for a maximum of no more than
twenty pages in the main body of the plan
Be as brief and crisp as possible when
explaining your idea and strategy
Quantitative
Specific
Cover what investors are looking for
Address risk and exit
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35
Business Plan Format
Cover Page and Executive Summary

Description of the business
Industry and Market Analysis
Marketing, Communications and Sales Plan
Management and Operations / Launch Plan
Risk Assessment and Contingency Plan
Exit Strategy
Financial Plan for Your Venture
Supporting Documents
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After That.
Development
Testing
Launch
Entrepreneur

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Organisational
Structure

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Why Separate?
Different cultures/ends
Shield non-profit from business risk
Raise external capital
Enhance focus on non-core markets
without compromising non-profits purpose
or funding

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Structure
Business
Non-profit
Organisation
Business
Intellectual
Property
Enterprises
Holdings
Business
Business
Operational
Support
Purchase
Of
Service
Investors
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Transition
Clean break, separate entities

Share resources, purchasing services
Conflict of interest
Sharing management
Compensation
Share purchasing
Transition plan and monitoring
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Relationship With Non-profit

Customer/vendor/owner (major
shareholder)
Separate companies consistent vision
Some price concessions to keep charity
as a customer and meet mission
Mutually beneficial for Enterprises to
succeed
Negotiated and governed by contract
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Significant Key To Success

Foster a dynamic, success generating,
entrepreneurial ethos
Provide support to staff who are:
Creative
Innovative
Entrepreneurial
Productive
Successful
Aspiring
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Partnerships, Alliances
Mergers, Acquisitions

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Working together
Creating efficiencies
Enhancing quality
Allowing for a focus on services

Supporting social enterprise

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Context
Pressure to create efficiencies
Enormous duplication

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One Approach - MSO

A management service organisation
(MSO) is an integration that includes
the creation of a new organisation in
order to integrate administrative and
fundraising functions, and thus to
increase the administrative efficiency
and effectiveness of participating
organisations. It may include colocation.
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Benefits
Enhances quality, strengthens organisation

Generates revenue: cost savings/profit
Frees management time
Keep up
Enhances profile/reinforces advocacy partnering
Reduces risk
Entrepreneurial spirit
Supports mission and strategic plan
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Examples of Savings
and Quality Enhancement
Procurement
Average 26%, Up to 50% on certain items
One organisation 32% savings (equivalent
of a 1 FTE freed up for the organisation)
Finance/HR/IT
Higher quality, more comprehensive service
Potential for savings/minimally breakeven
Fundraising access to focused expertise

at low cost
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MSO Possibilities

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Process
Creative/interactive/inclusive
Full participation of the stakeholders,
leading to a strong sense of ownership
Mentoring
Idea creation and implementation process
Systematic

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Way Forward
Initial meeting/test concept

Research/interviews/preliminary assessment
Workshop/obtain commitment to the process
Business feasibility and priority setting
Stakeholder meeting/commitment
Business planning and communication
Partner meeting/buy-in
Launch/build scale
Add products
Add members/customers
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52
Process
Refine Business Plan with Trustees

Council support - letter of intent - 1.25M
Identify other markets
Discussions with other potential partners
Fundraising
Commitment from Trustees to MSO
Launch MSO Early 06
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One Final Thought

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The acid test for shared services (Tom Peters)
Are we good enough to sell this service

on the open market?
If not, why are we buying from

ourselves
when nobody else would buy it from
us?
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Venture Philanthropy
High Engagement Giving

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56
What is 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.
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Investing In
Programmes
Services
Infrastructure

Aman's Presentation
Commercial
Ventures
Social
Enterprise
58
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
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Priority
Significant problem
Appropriate solution
SROI
Enthusiasm/being with a winner
Impact/building on success
Innovative and entrepreneurial
Fit with your values/vision
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VP Benefits A US Example
What Funders and Grantees Say
Partnering
Reliable, long term grant money
Improved organisational capacity, better:
Evaluation systems
Marketing business and strategic planning
Fundraising
Improved organisational performance/growth

For every $1 invested, $3 gained in expertise
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61
UK VP Activities
Just Beginning
Funds
Examples
Charity Technology
Trust
Plan International
Tomorrows People
Help the Hospices
World-in-Need
Impetus
Laidlaw/Ryan
Corporate
Involvement
Shell
Diageo
EU VP Association
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Investor Motivation
Apply knowledge/intellectual stimulation

High engagement
Joy of giving
Image enhancement
Social return on investment
Corporate social responsibility
Help business units achieve their goals
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Case Study: Corporate Venture

Philanthropy
Diageo plc
Small number of very high engagement initiatives

Directly led to the creation of Tomorrows People
Board and management support
Measurement and accountability
SROI evaluation
Communication of value to stakeholders in community
Exit strategy in long term

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Case Study: Strategic

Partnerships
New Profit, Inc.
Modelled after a venture capital fund
Significant support to few investments
CEO coach from Monitor Group
Board of Directors position
Portfolio manager
Access to other resources

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Trade Association Driven Fund

Social Equity Fund
Created by trade association to further its
business objectives
Special purpose fund managed by the trade
association using VP principles
Invests in charities in a competitive fashion
an market place for innovation
Mechanism for member organisations to act
as high engagement donors
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Trends
Increased/new capital and expertise

Impact on/leverage with other funders
VP model will evolve
Impact on charity behaviour

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Increased Capital
New philanthropic giving - people or
corporations who may otherwise not be
philanthropic
Opening up opportunities beyond CSR
departments to access funds/expertise from the
various business units
Increase the level of commitment of existing
donors, reinvigorating and advancing mature
funding relationships
Success stories will lead to expansion in Europe
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68
Leverage Outside Of Movement

Traditional grant makers will adapt some of the
principles of the movement
Increase in the acceptability of infrastructure
funding
Traditional grant makers will co-invest with
venture philanthropists
Venture philanthropy due diligence/investment
will act as a positive signal to other grant makers
Venture philanthropists will provide services to
support other grant makers
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Evolution Of The Model

Partnering in a true sense - working within
the mission of the organisation as
opposed to driving the mission
Social return on investment evaluation will
continue to be applied, leading to more
efficient practices
Increase in investing in mission-based
social enterprise/trading for a FROI/SROI
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New Capital Structures

Funders will create blended fund portfolios
diverse funders, joint working
Charities will lead the creation of captive
funds in support of their mission

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The Organisational
Strategic Plan
Internal
Marketplace
BUSINESS PLANNING
Extra capacity + expertise
Capital
Innovation
Fund
Funds
Portfolio
ORGANISATIONAL
EXPERTISE
Revolving
Innovation
Fund
INVESTOR
EXPERTISE
Endowment
Innovation
Fund
INVESTOR
investment

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Changes In Charitable
Organisation Behaviour
Charities will proactively encourage
venture philanthropy and create venture
philanthropists creating an internal
market
Increased emphasis on social return on
investment will encourage a more efficient
use of resources
Increased familiarity with business
language and practices
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73
Screening Criteria
Significant problem/appropriate
solution/SROI
Good strategy, business plan, exit strategy
Good management team
Do the numbers make sense?
Enthusiasm/being with a winner
Building on success
Innovative and entrepreneurial
Fit with your values/vision
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SROI Elements
Issue/problem
Solution (product/service)
Investment required
Desired outcomes
Client
Organisation/enterprise
Stakeholder/investor desired outcomes
Data management/evaluation
Social and financial return on investment
Social enterprise financial performance/value
Cost savings/gains to government
Client
Sources of information
Roberts Enterprise Development Fund
New Economics Foundation

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Strategic Issues
Develop criteria in partnership

Trust, partnering and control
Due diligence and fit
Innovation and risk taking
Organisational readiness
Cultural differences
Exit and sustainability
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Process with a Charity

Product development/feasibility study
Finalise programme/infrastructure/commercial
selection and internal fund structure
Finalise readiness issues and solutions/plans
Prepare business cases and business plans
Research, preparation and training
Launch, implementation and evaluation
Networking and business to business
presentation
Follow-up and negotiation
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Identifying Potential Investors

Current supporters and their networks
Existing member/donor database
Member/donor networks
Staff/volunteer knowledge
Research
Competition
Rich lists
Trusts
Media
Investor groups
Companies
Demographic identification and analysis

Networking/interviews/feasibility testing
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Business Case
(Two Pages)
Quote
Problem/market
Solution/business idea
Right strategy
People to make it work
Exit/sustainability
SROI/FROI
The organisation and its desirability
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Success Factors in Obtaining The

Investment
Is the proposal convincing?

Did the unique value come through?
Is the proposal customer driven?
Was it credible? Was it enthusiastic?
Would you remember the presentation? Was the
presentation style compelling?
Did it catch your attention in the first minute?
Was the ask or proposal clear?
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Key Learnings
Build on current network, donors and
investors
Research the investor
Focus on and engage the investor, think
laterally
It is a sales process
Be patient/persistent, it could take up to 2
years
It is partnering, be organisationally ready
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How would you apply earned

income/MSO/venture philanthropy
to your Organisation?

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Some Great Resources

Fraser Valley Centre for Social Enterprise
www.centreforsocialenterprise.com
Social Enterprise Alliance
www.se-alliance.org
Social Venture Network, www.svn.org
Social Venture Partners, www.svpi.org
Centre for Community Enterprise
www.cedworks.com
Centre for Social Innovation
www.socialinnovation.ca
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More Great Resources

Toronto Enterprise Fund
www.torontoenterprisefund.ca
Aperio Consulting
www.aperio.ca
Andrew Horsnell & Associates
www.AndrewHorsnell.com
Canadian Social Entrepreneurs Network
www.csen.ca
npEnterprise Forum, www.npEnterprise.net
Sustainable Enterprise Resource Centre
www.sustainabilityincubator.com
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More Great Resources

Canadian Conference on Social Enterprise
www.socialenterprise.ca
Business and Sustainable Development
www.bsdglobal.com
Canadian Centre for Social Entrepreneurship
www.bus.ualberta.ca/ccse/
Canadian Business for Social Responsibility
www.cbsr.ca
Sustainable Enterprise Academy
www.sustainableenterpriseacademy.com
Net Impact, www.netimpact.org
www.GreenBiz.com
www.greenleaf-publishing.com
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Yippy! We Are Done!

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86
Jamila M. Aman
4330 Brandon Gate Drive
Mississauga, Ontario
L4T 3K4
Direct: 416-618-3041
jaman@northw.ca
http://www.northw.ca

Aman's Presentation
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Social Entrepreneurship and

IFS Conference 2008 Jamila

Establish business objectives/criteria

Shared services (MSO)

Open Boundaries- Howard Sherman and Ron Schultz1998

IFS Conference 2008 Jamila

Change is the norm

IFS Conference 2008 Jamila

Fear of loss of control

IFS Conference 2008 Jamila

IFS Conference 2008 Jamila

Strategic Management Overview

Mapping the Future

IFS Conference 2008 Jamila

Ideal Future Vision

Answers may be - end of

IFS Conference 2008 Jamila

IFS Conference 2008 Jamila

Strategic Priority Development

Answer the question:

IFS Conference 2008 Jamila

Results in Other Ventures

IFS Conference 2008 Jamila

Organisational readiness and commitment

Search for opportunities

Supports mission and strategic plan

Balancing Mission and Financial

IFS Conference 2008 Jamila

Definition of a Good Idea

Meets a significant customer need a market

New product/leveraging organisational strengths

Unrelated business (Ben & Jerrys)

Leading edge networking

Look at data for opportunities, look at it from other

Level 1 Screening Criteria

Is there a potential customer benefit?

Are there profit potential (by third year)?

What investment is required?

Scoring: each idea will have a score of 6-18

IFS Conference 2008 Jamila

Does it fit with the organisation?

The Success Quadrant

Fit with Organisation

First Set of Measures

Significant customer problem

IFS Conference 2008 Jamila

Urgent unmet need

Urgent unmet need

Addresses need and no

Could achieve with

Second Set of Measures

Fit with mission/ values

Similar products in the market

Low / Medium risk

IFS Conference 2008 Jamila

Fit with Organisation

IFS Conference 2008 Jamila

Benefits of Writing a Business Plan

IFS Conference 2008 Jamila

Guidelines for Successful Plans

Business Plan Format

Cover Page and Executive Summary