Journey to Social Enterprise

Journey to Social Enterprise

As observed by Marcus Coetzee

2 August 2016

Introduction

www.MarcusCoetzee.co.za

Table of Contents

• Introduction

• What is a social enterprise?

• Outline of the Journey

• Introduction to Strategic Inflexion Points

• Transitioning through the Points

• Reflection

• Conclusion

Mama Mimi’s is a social enterprise bakery that operates

in Cape Town, South Africa.

http://www.marcuscoetzee.co.za/


Who is Marcus Coetzee?

• Helps leaders to cultivate Strategic Clarity

• Social enterprise advocate

• Advocates for mixing social purpose and business

thinking

• Works very closely with:

o Social Enterprise Academy

o Bertha Centre for Social Innovation and Entrepreneurship

o Imani Development

o Business Sculptors

o Citizen Surveys

• Served over 100 clients since 1996.



First phase of my career focused on the “why”:

• 1996-2012

• Advocated for social enterprise + mixing business

thinking and social purpose

Second phase focused on the “how”:

• 2012+

• Coaching organizations and leaders along the Journey to

Social Enterprise

• Building supportive ecosystems

Afrocharm Choir & Education

From “Why” to “How” Social Enterprise


What is a social enterprise?


Key Ingredients

• A social enterprise is an organization that adopts a

business like approach to tackling a social or

environmental issue. It is a social business.

• Key ingredients include:

o It has an explicit social (or environmental) purpose

o It generates the majority of its income through business

activities

o It uses its profits to further its social mission

o It is accountable and transparent.

Ludwick Marishane developed Dry Bath, a clear

germicidal and moisturising gel, that can be used where

clean water is not available.



Some Social Enterprises in South Africa


Introducing the Journey


Introducing the Journey to Social Enterprise

• Social enterprises don’t just magically

appear.

• The Journey to Social Enterprise typically

takes many years to complete.

• Multiple obstacles need to be overcome.

• Both non-profit organizations and

businesses can embark on the Journey.

Zip Zap Circus School was founded in 1992 to inspire

young people to “dare to dream” and build a new culture of

peaceful coexistence in South Africa.



Convergence to Social Enterprise

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business

Journey for NPOs Journey for Businesses



Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business

Expanded Classifications

Social Enterprise: Broad Definition

“Impact Enterprise”“Impact Entrepreneurship”



Why Embark on the Journey?

Reduce Risk

• Build reserves

• Decrease reliance on donors

• Diversify income sources

Maximize Impact:

• Fund expansion of operations

• Discretionary expenditure

Beneficiary Employment:

• Provide vehicle to employ or create

customers for beneficiaries

Motivation for NPOs Motivation for Businesses

Future Proofing

• Ensure that the business has a future

decades from now.

Improve Business

• Increase customer engagement

• Increase staff engagement

• Improve supply chain

• Improve business context

Become Responsible

• Minimize social & environmental harm

Play a Broader Role in Society

• Embrace a social purpose; make a real

difference in the world



Journey Takes Up to 5 Years

• The Journey involves a fundamental shift in an organization’s strategy.

• Timeframe of 3-5 years before a new pattern can be established.

o Year 1 – Gather support from stakeholders

o Year 2 – Explore ideas, gather resources, develop plans

o Year 3 – Formal experiment with significant shift

o Year 4 – Refine and extend

o Year 5 – Consolidate and evaluate

• Good leadership and change management required throughout.

• This means that donors and impact investors should commit to a 3-5 year timeframe if they

want to assist organizations on their Journey.



There will be times when you need to pause on the journey to reflect or let

your organization settle into a new pattern.

This both ok and necessary.


Intro to Strategic Inflexion Points


Strategic Inflection Points (“Transition Points”)

“A strategic inflection point (SIP) is a time in

the life of business when its fundamentals are

about to change. That change can mean an

opportunity to rise to new heights. But it may

just as likely signal the beginning of the end.”



Drivers behind Strategic Inflexion Points

• Tax laws (e.g. PBO

laws)

• B-BBEE policies

• Exchange rates

• Inflation

• NPO policies

• Government

procurement policies

• New financial

instruments

• Funding shortages

• Increased competition

• Unmet demand by

beneficiaries

• Leaders choosing to

reposition or rebuild

organization in order to

strengthen it and

improve impact.

• Climate change

• Planetary boundaries

• Population growth and

urbanisation

• Food security

• Resource shortages

Politics and Macro

Economics:

Market Forces: Sustainability

Megatrends:

Intention:



Transition Points on the Journey

NPO 1: “Experiment

and Improve Skills”

NPO 2: “Rethink

Business Model”

B2: “Embrace a Social

Purpose”

B3: “Dedicate Profits”

B1: “Become a Good Citizen”

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business


Transitioning through the Points


Point NPO1 – “Experiment and Improve Skills”

Possible Focus Areas:

1. Call to action.

2. Overcome objections to business activities.

3. Pilot various business ideas.

4. Share and learn from other organizations’ experiences.

5. Measure social outcomes.

6. Learn how to cost business activities, make proposals profitable. and track business income and expenses.

7. Understand SARS’ rules regarding income generation.

8. Learn how to develop, package and sell products.

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business



Transition Point NPO1 – Example of STEPS

• STEPS works to eliminate clubfoot in

Southern and East Africa.

• Helped over 8,200 children since 2005.

• Secured the rights to import a popular

orthopaedic brace (“Ohio brace”) to sell to

health services in Southern Africa.

• These braces are required for treating

clubfoot using the Ponseti method.

• The feasibility has been assessed.

• Busy developing a formal business plan.



Point NPO2 – “Rethink Business Model”


1. Seek clarity of purpose.

2. Commit to chosen business direction.

3. Rethink fundamentals of business model.

4. Recruit specialized staff.

5. Change organizational culture.

6. Consider leadership change.

7. Create new governance structures (e.g. specialized steering committee)

8. Investigate whether hybrid structures are required.

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business



Point NPO2 – Example of Greater Capital

• Greater Capital is a social enterprise

providing social research, enterprise

development and due diligence services.

• After struggling to find donations, Greater

Capital repackaged its work as consulting

services.

• Eliminated certain product lines.

• Now over 100 paying clients.

• Earned income covers 100% of costs

• Become an influential organization.


…and from the other direction


Point B1 - “Become a Good Citizen”


1. Engage with stakeholders (e.g. investors, beneficiaries) to identify social and

environmental responsibilities.

2. Adopt social and environmental KPIs and set alongside financial indicators.

3. Start to measure social and environmental impact.

4. Mitigate harm.

5. Comply with an ethical certifications and industry standards.

6. Be congruent with responsible brand.

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business



Point B1 - Example of Woolworths

• Woolworths says its on a “good business journey” and is

working hard at becoming a responsible business .

o Ethical supply chain (e.g. farming, fish, cocoa)

o Minimizing environmental impact (e.g. store design and

fixtures, recycling)

o Cause-related marketing (e.g. MySchool, MyPlanet,

MyVillage)

o Healthy eating (e.g. food choices, moving sweets from isle)

• Measures and publishes its social and environmental

impact in its annual Good Business Journey report.

• Engages with various stakeholders re its responsibilities.

• But still struggles with its image (e.g. products from Israel)



Point B2 - “Embrace a Social Purpose”


1. Define purpose in social terms.

2. Revisit Theory of Change.

3. Embed impact in core products (“ethical products”).

4. Subscribe to higher ethical standards (e.g. RE100 re renewable energy and B Corp.)

5. Do no harm!

6. Measure and report on social and environmental outcomes.

7. Incorporate social enterprises in supply chain.

8. Shift organizational culture.

9. Create accountability structures.

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business



Point B2 –

Example of Silulo Ulutho Technologies

• Luvuyo Rani and his brother started Silulo Ulutho

Technologies in 2004 as an internet café in Khayelitsha.

• Now 39 branches with over 130 staff, and 5000+

students per year.

• Focused on using technology as a tool for learning.

• Guided by values of “Technology, Accessibility,

Empowerment and Education”.

• Striving to embed its social purpose into its business

model and retain its founding vision – a challenge as it

aims to franchise and establish itself in 200+

communities.



Point B3 - “Dedicate Profits”


1. Bring on other shareholders (e.g. non-profits, staff or beneficiary ownership).

2. Dedicate profits to purpose.

3. Review legal structures.

4. Create external accountability.

5. Communication of shift to stakeholders.

6. External impact assessment.

Donor-

Dependent

NPO

NPO with

Income

Activities

Social

Enterprise

High-impact

Business or

B-Corporation

Socially-

Responsible

Business

Traditional

Business



Point B3 - Shonaquip

• Shonaquip is a social enterprise that

designs and manufactures mobility devices

(e.g. wheel chairs and posture support) for

the physically disabled.

• Registered as a close corporation in 1992.

• Business played an active role in advocacy,

training and community development.

• In 2010, Shona concerned that business

pressures would undermine social agenda.

• Uhambo Foundation started in 2010 and

became a shareholder in business. Helped

create an “asset lock” to dedicate profits to

the social purpose.


Reflection


Further Reading


http://www.marcuscoetzee.co.za/wp-content/uploads/2016/03/ebook-hybrid-social-enteprises-30September2014-1.pdf

http://www.marcuscoetzee.co.za/essay-choosing-legal-form-for-your-socent/

http://www.marcuscoetzee.co.za/wp-content/uploads/2016/03/presentation-think-like-a-social-enteprise-3June2014.pdf


Reflecting on the Journey

• Presentation has shared my observations

from 16 years of consulting.

• It typically takes many years for

organizations to transition from one state to

the next, and for a new pattern to properly

settle.

• Best to do it properly rather than quickly.

• My dream that all organizations undertake

the Journey.

• Although social enterprise is not for

everyone, the ideal of social enterprise

should act as a beacon of hope for the

future.The Carpenter’s Shop provides social services to the homeless

in Cape Town. It is running 7 income generation projects.



Thank you, and good fortune on your journey.

An Old Irish Blessing:

“May the road rise up to meet you.

May the wind always be at your back.

May the sun shine warm upon your face,

and rains fall soft upon your fields.

And until we meet again,

May God hold you in the palm of His hand.”


Website: www.MarcusCoetzee.co.za

Linked-in: www.linkedin.com/in/coetzeemarcus

Twitter: @MarcusCoetzee

Thank you

36

Photos supplied by


http://www.linkedin.com/in/coetzeemarcus

Journey to Social Enterprise

Government & Nonprofit

Transcript of Journey to Social Enterprise