Social

Entrepreneurship
Lecture 8: Launch, Growth attainment

By:
Amrit Bista
BE, MBPM

Date: 27/01/2019
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 Five competitive forces model

Commercial firms are affected by

 Substitutes
 Ease of entry
 Market power of buyers
 Market power of sellers
 Competitive pressure from current rivals

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 What are parallel threats acting on
social enterprises?
 Substitutes ways for clients to meet their needs
 Competition for donors who support other non-profits
 Competition with other groups serving the same clients
 Socio-economic or demographic changes in client needs or
interest
 Public policy changes in regulation or funding levels
 Bargaining/market power of paid workers, lenders, land
owners, and third-party payers
 Figure 8.1 illustrate these forces

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 Figure 8.1: The threats to social value
creation

Substitute for service

Socio-economic and
demographic changes Ability to create social
value
Public policy shifts

Bargaining power of
sellers and buyers 4
 Social Entrepreneurship process

1. Opportunity recognition 2. Concept development

Social problems Identification of social

rewards
Unmet needs New products or markets

3. Resource determination and 4. Launch and Venture growth

acquisition

Financial resources Measurement of returns

Human capital Expansion and change

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Social Entrepreneurship process

5. Goal Attainment

Succeed in mission and shut down

Succeed in mission and find new opportunity

 Attain a stable service equilibrium

 Integrate into another venture

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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Key challenges of social enterprise

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 Launch and growth

 Follow a tangible business strategy with a plan

 Needs a growth strategy, explicit and transparent
 Must cover plans for removing obstacles (plan B) and
measuring progress through regular, appropriate
monitoring

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 Social enterprise growth strategies

 Product-driven growth
 Additional activities or programs
 Market driven growth
 Finding new consumers for existing services

 There are not mutually exclusive – social enterprises can

combine new or old products with new or old markets
 Table 8.1 illustrates these combinations

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 Table 8.1 Social enterprise growth
strategies

Existing Markets New Markets

Existing products Market Market expansion
penetration
New Products Product Product
development diversification

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 Merging as a growth strategy

Merger proposal should address

 Is there willingness to partner, as a starting point?
 Which organization is dominant?
 Is there much to gain, are the stakes high?
 Is there a catalyst leader?
 Are there other supporters?
 Is there enough (not too much) time to discuss?
 Do missions align?
 Can productive personal relationships develop?

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 Myths about social growth

A social venture will not grow quickly unless it is

in a high-growth sector
 Figure 8.2 shows that different sectors grow at the
different rates
 Growth is a more a characteristics of the specific non-
profit than the overall sector

Rapid growth requires a venture being the first of

its kind
 First-mover advantage is not as critical when there is
unmet need that an enterprise can address

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Figure 8.2: The growth of various
social sectors, 1977-97

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 Problems to anticipate during growth

 Being clear about the stimulus for growth

 Resistance to market-based change
 Boards are risk-averse
 Community relationships resist change
 It is hard to show the results of change
 There are human resource management as well as cultural
challenges

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 Creating an intrepreneurial
environment
 Encourage action
 Use informal meetings
 Understand that failure is a part of learning
 Be persistent in implementing ideas
 Make innovation a goal
 Encourage informal communications in the workplace
 Encourage the development of new ideas
 Assign people to think about the future
 Encourage ways to work around bureaucracy
 Reward innovation

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 The intrapreneurial process

Key elements are:

 Organizational characteristics
 A trigger event
 Entrepreneurial personnel
 Supported by resources and ideas
 Figure 8.3 shows how these forces interact

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 Figure 8.3: A model of
intrapreneurship

Organizational
Idea
characteristics favourable
quality
to innovation

Triggering event Ideas Implementation

of ideas

Personnel with
entrepreneurial Resources
characteristics
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 The intensity of social
entrepreneurship
It is characterized by degree and frequency
 Degree can be revolutionary or incremental
 Frequency can be continuous or sporadic
 Figure 8.4 shows these dimensions of intensity

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 Figure 8.4 A model of entrepreneurial
intensity

High
Continuous and
Continuous and
revolutionary
incremental
Frequency of
social
entrepreneurship

Infrequent and Infrequent and

incremental revolutionary
Low

Degree of social
Low High
entrepreneurship
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 Understanding risk factors for social
entrepreneurs
 Leadership risk
 Staff and volunteer risk
 Funding risk:
Current financial situation
Effect on future funding
Diversification – one business or more?
 Enterprise concept risk – is it really a good idea?
 Marketplace volatility – exposure to broad economic and
social factors

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 Managing and reducing risk

 Get help from experts and network with other social

enterprise
 Gather and use data, look for signs of volatility
 Plan with realistic models, updated frequently, with
contingencies
 Diversify the support base to spread the risk
 Grow and make commitments in stages
 Work on organizational weaknesses
 Avoid all-or-nothing bets – work steadily towards big goals.

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 The end of the social
entrepreneurship process
 Attaining goals is the last stage of entrepreneurship
 And then what – how to harvest the gains?
 Nonprofits do not provide the opportunity to divide or
distribute wealth
 The needs for social enterprise is likely to exist even in the
face of success

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 Some enterprise end in failure

 Just as in commercial venture, there are high failure rates

among social ventures
 Figure 8.6 shows the high share of new organizations
disappeared within four years in the 1990s
 Environmental, religious, arts and other types of
organizations seem to have been particularly fragile

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 Interpreting failure

 When social enterprises close, it is the impact of the

market mechanism at work
 One organization’s failure is an opportunity for another
one to succeed
 The failure of a social enterprise is not primarily a moral
lesion, but neither do social entrepreneurs have moral
immunity against failure

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 Figure 8_6 Organizational
disappearance
Rate of organizational disappearance within first four years of operation in
seven non-profit sub-sectors, 1992-1996

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 Goal attainment is a critical point of
decision
 Shut down
 Redefine
 Stabilize and continue
 Integrate into another venture with purpose

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 THOUGHT FOR CHANGEMAKERS

 Begin with an end in mind

 Do what you do best
 Have people ask you questions about your idea
 Practice pitching your idea
 Study the history of the problem you are attacking
 Develop a theory of change
 Keep thinking about how you can measure or evaluate
success
 Celebrate every victory, no matter how small
 Initiate new relationships
 Appreciate yourself with masters (Work without pay if
necessary

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 THOUGHT FOR CHANGEMAKERS

 Volunteer for a political campaign

 Publish a letter to the editor or an op-ed
 Meet with a newspaper editor
 Host dinner discussions about your idea
 Form a group to achieve a modest, short-term goal
 Ask a question at a public forum
 Engage people with opposing political views
 Ask for advice from people you admire
 Read biographies of people who have built things
 Spend some time working in a different sector, field or
country
 Practice public speaking

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 THOUGHT FOR CHANGEMAKERS

 Take a finance course

 Learn how to negotiate
 Find sources of inspiration and use them
 Hold to principles, be flexible about methods

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