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Social Entrepreneurship Quadrant

 

The Social Entrepreneurship Quadrant desrcibes the orientation of a social entrepreneur. Each of the Quadrant offers a different approach of business and can help an entrepreneur model his/her social enterprise accordingly. Moreover, the Quadrant can also help impact investors, grant making agencies, and several other stakeholders options to consider the form of models before making a decision. Therefore, this Quadrant can also be used as a decision making tool. 

Quadrant I:- This Quad is also known as the Traditional Not for Profit Quadrant. This Quad represents organizations that are driven by social mission and do not make profits. They are not bound by taxation, and still has to raise enough money to meet the expenses. Foundations, Trusts, Societies, Religious institutions, etc come under this quadrant. They rely on grants, donations and charity money to support their socially driven operations. This qud is also considered the birth place of modern social enterprise, because the organizations in this quad achieve social goals by design. Social entrepreneurs belonging to this quad, sometimes design their organizations to provide some good or services for which they can charge a fee, in order to raise money for their operations. Examples from India are CIBART, CTD, TRIBAC (Tripura).

Quadrant II:- This Quad is also known as the Tipping Point Quadrant. This Quad represents Organizations that are not only driven by social mission but are also profit oriented. The Organizations and Social Entrepreneurs belonging to this quadrant hold the promise for bringing about an economic transformation. Depending on whether their “multiple botton-line” approach to business reaches critical mass in the marketplace, they may tip the scale for how all business performance is measured.  Some examples from India are Bamboo House India , GreenFlip , Green Venture Camp.

Quadrant III:- This Quad is also known as the Transient Org Quadrant. This Quad represents Companies, which are market driven, but are not profit oriented. hence, they may be operate for short periods of time. As Dorado says, the motivation for social entrepreneurs is not the creation of a new enterprise, but the creation of a path defined so participants can solve a complex social problem; whether or not the initiate derives profit is irrelevant. Organizations in this quad find support from public and private companies, grants or governmental support. They identify a need in the marketplace; and then use the proceeds from satisfying that need to support a social cause. Examples from India are ThinkChange India , ACCESS .

Quadrant IV:- This Quad is also known as the Traditional Biz Quadrant. This Quad repersents the most classical form of businesses, which are profit oriented and market driven. They produce goods and services the marketplace wants and they use the profits they generate to pay investors and taxes as well as to expand and grow. If they fail to generate profits, they cease to function or will be bought by the competition or close. Their startegy to grow is by following the market and change suit as per demand. if and when the marketplace decides that a social issue is worth paying for, the social entrepreneur in this quadrant addresses it by supporting activities that are useful in generating sales because they are considered socially responsible. Usually Companies in this Quadrant, donate part of their profits, build ‘green’ facilities, offer free and/or low cost services to social organizations.  Few examples of such companies from India are Joint Leap Teachnologies , and STRATESSENCE.

Traditional businesses have focussed till now only on profit maximisation, seeking to focus even more narrowly on those chosen set of activities that produces the maximum monetary returns for the owners. The marketplace is their theatre rather than their audition within society. Therefore, their social costs have been mounting. Its important that a new breed of social entrepreneurs emerge to tackle social problems and at the same time bring economic change in the society, with new models of businesses.

Which Quadrant do you belong to?

Social Innovation & Enterprise

All innovation involves the application of new ideas – or the reapplication of old ideas in new ways – to devise better solutions to our needs. Innovation is invariably a cumulative, collaborative activity in which ideas are shared, tested, refined, developed and applied. Social innovation applies this thinking to social issues: education and health, issues of inequality and inclusion, and environment.

 SE offers a new way to do business that is animated by a social purpose. Although most SEs are small, and many are fragile, the sector has attracted growing interest from policymakers, young people, entrepreneurs, funders and established businesses. That interest is testimony to the way that social enterprise addresses weaknesses in the operation of both markets and government. SEs trade products and services to further social and environmental goals. They are led by a sense of social purpose and aim to show that businesses and markets can deliver social benefits and tackle intractable social problems.

SEs deliberately adopt an uncomfortable position: they are in the market and yet against it at the same time. This ambiguous position is based on a recognition that solutions to many problems – poverty and employment, environment and fair trade development – depend on changing the way markets work. There can be no long-term solutions to many of these problems based entirely on government grants, subsidy or charitable donations. Long-term solutions have to be self-sustaining and in a market economy that usually means finding a way to make money from them so producers can sustain themselves.

The products and services offered by companies that are sold through the market only succeed by addressing social needs, from soap to keep us clean, to mortgages that pay for our housing, to heating in the winter and smoke alarms that keep us safe. SEs are based on the recognition that innovative solutions to difficult social problems are unlikely to come from markets left to their own devices. Some social businesses operate much like a mainstream business but covenant their profits to social causes. Many SEs, however, internalise their social mission. They make it central to the way they operate. A business that focuses on employing people long disconnected from the jobs market or ex-offenders needs to make an additional effort to do so. Extra time and costs are involved.

SE is sometimes a more complex, difficult and costly way to run a business. There are often easier ways for a business to make a profit. A framework is required for social innovation in which SE is likely to play a critical role. Social enterprise policy needs to be framed within a more comprehensive strategy for social innovation that is designed to deliver social impact by finding new ways to address unmet social needs. Open markets promote choice, make transactions efficient, stimulate competition and enable profit-driven innovation.

Prices may take little account of externalities – the impact a transaction might have on people not involved in it. A classic example is pollution. Markets often take more account of obvious and short-term costs and benefits and are less effective in accounting for long-term factors, such as climate change. Not everything that has a value can be traded. True personal care, for example, involves more than just labour; it depends on the quality of the relationship between the person caring and the person being cared for.

The value of many cultural experiences cannot be captured by the price we pay to access them. So although SE make up only a small part of the total enterprise sector of the economy, they matter in the overall business ecology because they are pioneering approaches to show how business can operate successfully while also taking into account social and environmental issues. SEs are one vital source of new business approaches to fair trade, social inclusion, community regeneration, creating jobs for those most marginalised in labour markets and environmental sustainability.

Most businesses would claim to have a social mission: they create jobs for people; provide consumers with products they need; pay taxes that support public services; donate to charities and foundations; often the best play a role in their communities. The challenge that SE poses is whether businesses could be doing more to internalise social and environmental costs, to do business in a different way not just to donate to charity or pay taxes. SEs increasingly shares common ground with more socially responsible mainstream businesses that sell fair trade products for example. SEs sustain themselves within the market, but often they do so by relying on non-market resources and motives.

More social entrepreneurs = more social enterprises + well managed growth of social enterprises = more social impact

Business in a Backpack: Common cold & potential remedies

Many startup ideas fail to ever be launched and many, many fail within the first year or two. In most cases, the failure has nothing to do with the business idea, but how the business is managed. The business of entrepreneurship is business first, then operations (what your business actually does). The Top Ten startup mistakes that lead to ultimate failure are:

Insufficient Startup Idea Development: Most startups do not fail because the business idea is bad. The problem is that many first-time entrepreneurs fail to actually plan the business before sinking cash into the startup. No matter how great a business idea is, it can’t succeed without detailed planning. Take the time to work through every angle of your business idea. Not only will you have a better grasp of how far your business can go, you will also reduce your risk and prepare yourself to make the best decisions as you go. [See our Idea Development Tool]

Failure to Understand Personal Values: An unbelievable number of entrepreneurs while working in teams ignore personal values of their team members and focus only on their professional acumen. Eventually this failure to judge personal symmetry will come back to bite you…and the outcome can be devastating. Every entrepreneur must understand her/his co-founders and initial team members for similar vision and focus for the success of the start-up. [Take our Team Symmetry Test]

Poor (or no) Marketing Planning: Marketing is the lifeblood of every business startup, and it is more than business cards and a yellow pages ad. A significant portion of your time and expense budget should be dedicated to marketing. Poor or no marketing equals no sales…equals business failure. Do your homework before you launch to identify your target markets, figure out how to best reach them, and establish clear objectives and evaluations to ensure your marketing efforts are paying off. [See our Market Planning Template]

Poor (or no) Financial Management: Success in business is all about the bottom line — no profit, no business. Keeping the books correctly is half the battle. Too many first-time entrepreneurs are willing to turn over complete responsibility for the books to someone else — a dangerous decision that very often leads to business failure. Reviewing and analyzing the financial reports is the other half. It is critical for every business owner to understand what the financial reports mean and how a change in one area affects all the others. Cash flow issues are also major financial management problem for many startups in the earliest stages. Good planning before launching a startup will clarify how much cash on hand your business idea will need to succeed. Whether you consider yourself a numbers person or not, as a business owner it is critical that you take responsibility for learning and applying basic financial management skills if you want to succeed. [See our simplified Startup Cash Flow Ready-to-use template]

Sales Forecast Errors: Establishing your initial sales forecast can be difficult, but there are procedures you can follow to make it as realistic and accurate as possible. All too often would-be entrepreneurs build a sales forecast around what they would like to sell, rather than what they are likely to sell. While optimism is an excellent entrepreneurial trait, an overly optimistic sales forecast will leave you with serious cash flow problems and even greater difficulty in securing financing.

Under-Capitalization: Not starting with enough capital to support the business through the initial stages is a common error. By thoroughly planning your idea, you will know how much capital you need to cover while you build your customer base, including working capital to keep yourself in cappuccinos until your business takes off. Good planning will also increase the chance of securing investors, whether public (banks) or private (family and friends).

Poor use of Web2.0: An effective web presence is an absolute must for any modern business. Simply posting a website is not enough. In fact, uploading a website without marketing it is like posting ad copy only in your own living room — if your target market doesn’t see it, it might as well not exist. Many recent startups have crashed and burned because the entrepreneur thought that simply posting a website to the internet would drive sales. It won’t. [See our Online Brand Building Tool]

Leaving Critical Tasks to Yourself: Many entrepreneurs believe that a good idea and solid operations are enough to build a successful business, so they opt to do critical startup tasks, like strategy and growth planning, on their own. Eventually, these choices backfire. You don’t always need to hire full time professionals to do it. You can look for mentors who can help you in specific critical tasks, so that you can focus on building the business.

No Ongoing Planning & Review: As the actual operations of a startup take up more and more of an entrepreneur’s time, it is very easy to overlook the critical tasks of reviewing and planning. Every aspect of a company should be reviewed periodically, particularly the financial statements and marketing plan. If you don’t know where you are or where you have been, it’s impossible to know where you are going.

Impatience: Every startup experiences a period of time between being ready to sell and actually building the sales. Many startups hit this point and the entrepreneur quits in frustration. Startups don’t generally succeed overnight. You need to refine internal systems, work through free internet marketing techniques (participate in relevant forums, write and publish articles, build website content), and plan for the future of the business. Don’t let the inevitable delay destroy your chances of success — plan for it, expect it, and use the time wisely. [Talk to us over coffee]

For the most part, a strong focus on the three keys of startup success (planning, marketing, and financial management) will overcome most of the common reasons for business failure. Pay attention to the details from the beginning, learn all you can about running your own business, and don’t let anything get in the way of building your business into the thriving company it can be.