How are Social Entrepreneurs using the Business Model Canvas when designing innovative new Enterprises?

Hi all,

I've been working with a couple of teams creating innovative new Business Models for Social Enterprises using both the BMG Canvas and Ash Maurya's Lean Canvas variant.

Business Model Generation makes brief reference in its closing pages to tracking social/environmental costs and social/environmental benefits with additional areas appended to the canvas - but these pages read like the beginning of a much longer conversation.

I'm curious to learn what you have learned while modelling Social Enterprises using a canvas? 

All the best,

Alastair

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Hi Alastair

I have worked with a few social enterprise startups and I am a mentor with the Ottawa Hub (part of the international Hub network for social entrepreneurship). Frankly I have never found the need for adapting the canvas. I use the tool as presented in the book. In fact the Hub has canvases on the walls in a number of places and makes personalized copies available to its members.

Where I do see challenges in working with social entrepreneurs is more along the lines of understand value creation from a sustainable business sense, and the need to validate your ideas with potential recipients, i.e. avoiding the trap of assuming a value proposition for which people are willing to pay. 

In the area of revenues, where it gets complicated is when there is a funding body. Often the entrepreneurs fail to realize they have to treat the funding body as a customer segment. They also fail to realized that, though the recipients of the product or services are not paying, the entrepreneur still has to capture a return value, in this case data - that is used to validate with the funding bodies that the organization is achieving the intended social impact. The startups need to design their business model to ensure they capture that data as part of their key activities. 

 

Gentlemen,

Glad to read someone else brought this issue up. Mike, fully concur that redefining the value proposition is an area where the focus needs to be. 

One definition of social entrepreneurship is either a for-profit organization that creates social value, or a not-for- profit organization that becomes financially sustainable.

The issue is that if using the same canvas, it would lead to different definitions of value. One is focused on a social value, whereas the other has a financial value. Perhaps a business value proposition and social value proposition addition can resolve that issue and translation of the existing assets to serve one or the other.

“... these pages read like the beginning of a much longer conversation.” This is what I thought, too, when I tried to modify the forerunner canvas based on Alexander’s dissertation from 2004.

When approaching sustainable or social business, it must be recognized that normative requirements beyond business as usual change the BM in practice (e.g. when new governance principles are applied to supply chains). This is easy to understand. But does this change the general BM concept? And how can we add a social or ecological bottom line to it?

To assess the social or ecological performance, awareness of very different relationships between the BM elements is required. For example, the environmental impact of a value proposition must be evaluated throughout the canvas. It must be connected to the infrastructure and customer elements and be expressed in monetary terms. Therefore, totally different relationships and causalities within the canvas have to be conceptualized. We need to connect the canvas to concepts of environmental and social accounting!

For the moment I think that the canvas is able to represent sustainable or social businesses, but the relationships and causalities between the BM elements are changing dramatically if a green or social bottom line is to be evaluated.

I tried to catch these thoughts by means of “extension” and “inclusion,” leading to some kind of a “five pillar template” based on the so called sustainability balanced scorecard (SBSC).

If you like, I can post or send the according discussion paper.

Best

Florian

Alastair, we use the BMC for exploring our Soc Ent ventures in a straight-forward manner. Sometimes the students find it helpful to bolt on the Social & Environmental Benefits (under Revenue Streams) and Costs (under the Cost Structure). But we also use a deeper analysis that will take some explaining...

One way to define a social enterprise is by its goal of disrupting an existing system that we find objectionable. That acknowledges that every market and every scenario - even when the the venture is creating a new market - is comprised of multiple over-lapping systems.

Our class's first step is to describe the existing systems prior to the venture's arrival - usually with the BMC framework. For example, what the social networks, information flows, and financial arrangements with potential customers, channels, value networks, etc.?

The second step is to diagram the specific systems that we seek to change. This analysis includes the reinforcing and balancing feedback loops, as well as their amplitude and time delays.

Later on, once the product/service and business model have been preliminarily identified, we explore different business models that might harness those existing feedback loops to drive customer acquisition or lower costs faster than a stand-alone model.

Finally, we use scenario planning to determine the long-term implications - positive and negative, direct and indirect - of the systems we expect to inhabit.

If you'd like to talk more, send me a note... ted @ tedladd .com

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