Description
During this brief information related to social entrepreneurship framework for feasibility analysis of social business concepts.
NTNU School of Entrepreneurship
May 2011
Lars Øystein Widding, IØT
Submission date:
Supervisor:
Norwegian University of Science and Technology
Department of Industrial Economics and Technology Management
Social Entrepreneurship
Framework for feasibility analysis of social business concepts
Ida Eikvåg Groth
Line Magnussen
ORIGINAL TITLE AND PROBLEM DESCRIPTION:
SOCIAL ENTREPRENEURSHIP
FRAMEWORK FOR FEASIBILITY ANALYSIS OF SOCIAL BUSINESS CONCEPTS
In this master thesis an existing framework for feasibility analysis of business
concepts is evaluated in a social entrepreneurship context. Weaknesses and
lacks in the framework with regard to this application are revealed through
theory and research.
A proposed framework for feasibility analysis of social business concepts is
then developed and presented as a tool for future analysis.
FEASIBILITY ANALYSIS OF TECHNOLOGY-BASED
SOCIAL BUSINESS IDEAS
- TOOL DEVELOPMENT-
MASTER THESIS
NTNU SCHOOL OF ENTREPRENEURSHIP
SPRING 2011
CANDIDATES: IDA EIKVÅG GROTH & LINE MAGNUSSEN
[email protected] | [email protected]
SUPERVISOR: LARS ØYSTEIN WIDDING
ABSTRACT
PURPOSE
With the increased interest in social entrepreneurship demonstrated within business
schools and academic environments, the adaption of existing academic entrepreneurial
constructs for social entrepreneurship applications becomes relevant. The purpose of this
thesis is to develop additional tools to the traditional feasibility analysis. The tools will be
specifically directed at technology-based concepts, due to the increased employment of
technology-based products to solve social problems, in combination with the authors’
engineering background, and the lack of academic contributions in this area.
APPROACH
A grounded theory approach is employed, in which unstructured interviews are used to
collect data on the topic of social entrepreneurship from practitioners and academics.
New theory is then developed through a discussion divided into three distinct parts, on
the basis of empirical findings and existing literature, before new data is collected through
a review of the proposed tools.
CONCLUSIONS
A total of seven analysis tools are introduced, where some are new constructs, while
others are based on existing ideas, or even existing models introduced into a new context.
A main characteristic of the tools is that they are not concerned with previously
established and distinct sections of feasibility analysis, but rather address the interception
between the established analysis components. This is the result of the discovery that the
success of social business ideas seem to depend on the ability of the entrepreneur to
maintain an overarching market and customer focus, which is infused in every aspect of
the proposed venture, thus erasing the division between the Market and Industry section
and other established sections of analysis.
IMPLICATIONS
The main implication for analysts is the opportunity to discover fundamental
opportunities and challenges in the process of solving a social problem by bringing a new
product to market through the establishment of a new organization.
FURTHER RESEARCH
Further research should include testing of the new tools in actual analysis of new ideas, as
well as implementation in a complete analysis framework
TRONDHEIM, MAY 29
TH
2011
PREFACE
The title and problem description of this thesis were adjusted after original registration, to
revolve around the development of new tools that would supplement, not replace, existing
analysis tools. In accordance with this, there is also less focus on the detailed lacks in the
existing framework than originally suggested. In addition, focus has been narrowed to
address technology-based social business ideas in particular. This choice is elaborated on in
the introduction.
The main subject of the thesis has, however, always remained the development of
feasibility analysis tools for social business ideas.
Throughout the process of writing this thesis, we have experienced an overwhelming
amount of goodwill and interest from our surroundings. There are more people deserving of
thanks than we will be able to mention here, but we will attempt to address the most
significant contributors.
We wish to thank our supervisor, Associate Professor Lars Øystein Widding, who enabled us
to travel to India to experience amazing acts of entrepreneurship, and who also provided us
with honest and brutal critique in the writing process, enabling us to stear clear of several
academic quagmires along the way.
We wish to thank Prof. Lars Groth at the University of Oslo for his advice and input on
structure, method and language during the final laps of our work. Thank you Dad.
We also wish to thank everyone who willingly (or unwillingly) gave us their time, as
interviewees, reviewers or both. Your cooperation has made a world of difference in our
work.
Lastly, we want to express our sincere gratitude and appreciation for our classmates and
travel companions in India; Gøran Berntsen, the knight in shining armor, and Bård Gamnes,
the indefatigable source of positive energy and strange ideas. Thank you both for being
yourselves.
Ida Eikvåg Groth Line Magnussen
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TABLE OF CONTENTS
List of Figures .......................................................................................................................................................... 2
List of Tables............................................................................................................................................................ 2
1. Introduction ........................................................................................................................................................ 4
1.1. Background .................................................................................................................................................. 4
1.2. Purpose ........................................................................................................................................................ 4
1.3. Research Question ....................................................................................................................................... 6
1.4. Definitions and Clarifications ....................................................................................................................... 6
1.5. Thesis Structure ........................................................................................................................................... 7
2. Method ................................................................................................................................................................ 8
2.1. Introduction ................................................................................................................................................. 8
2.2. Research Design ........................................................................................................................................... 8
2.3. Weaknesses and Reliability ........................................................................................................................ 14
3. Empirical Findings ............................................................................................................................................. 15
3.1. Introduction ............................................................................................................................................... 15
3.2. Market and Industry .................................................................................................................................. 15
3.3. Product ...................................................................................................................................................... 16
3.4. Organization .............................................................................................................................................. 16
3.5. Finance ....................................................................................................................................................... 18
3.6. Conclusion from Empirical Findings ........................................................................................................... 19
4. Applied Theory .................................................................................................................................................. 22
4.1. Introduction ............................................................................................................................................... 22
4.2 Overview of Applied Literature ................................................................................................................... 22
5. Discussion Part I: Starting Point Assessment .................................................................................................... 24
5.1. Introduction ............................................................................................................................................... 24
5.2. Tool #1: The Proximity Matrix ................................................................................................................... 24
5.3. Final Comments ......................................................................................................................................... 30
6. Discussion Part II: Product Employment Feasibility .......................................................................................... 31
6.1. Introduction ............................................................................................................................................... 31
6.2. Tool #2: The Product Trajectory ................................................................................................................ 31
6.3. Tool #3: The Dependency Matrix ............................................................................................................... 37
6.4. Final Comments ......................................................................................................................................... 42
7. Discussion Part III: Impact and Stakeholder Assessment .................................................................................. 43
7.1. Introduction ............................................................................................................................................... 43
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7.2. Tool #4: The Life Cycle Description ............................................................................................................ 43
7.3. Tool #5: Impacted Stakeholders ................................................................................................................ 51
7.4. Tool #6: The Social Value Chain ................................................................................................................. 56
7.5. Tool #7: The Impact Value Chain ............................................................................................................... 65
7.6. Final Comments ......................................................................................................................................... 69
8. Conclusions ....................................................................................................................................................... 70
8.1. General Review Response ......................................................................................................................... 70
8.2. Final Conclusions ....................................................................................................................................... 70
9. Implications ....................................................................................................................................................... 71
9.1. Implications for Analysts ............................................................................................................................ 71
9.2. Implications for Further Research ............................................................................................................. 71
10. References....................................................................................................................................................... 72
11. Appendices ...................................................................................................................................................... 76
2
LIST OF FIGURES
Figure 1: Tool #1: The Proximity Matrix Constructed I ......................................................................................... 26
Figure 2: Tool #1: The Proximity Matrix Constructed II ........................................................................................ 28
Figure 3: Tool #1: The Proximity Matrix Reviewed ............................................................................................... 30
Figure 4: Tool #2: The Product Trajectory Constructed ........................................................................................ 34
Figure 5: Tool #2: The Proposed Product Trajectory ............................................................................................ 37
Figure 7: Tool #3: The Dependency Matrix Constructed ...................................................................................... 39
Figure 6: Tool #3: Teece`s Complimentary Assets ................................................................................................ 39
Figure 8: Tool #3: The Proposed Dependency Matrix ........................................................................................... 41
Figure 9: Tool #3: The Exemplified Dependency Matrix ....................................................................................... 41
Figure 10: Tool #4: The Life Cycle Description Constructed .................................................................................. 47
Figure 11: Tool #4: The Proposed Life Cycle Description Exemplified .................................................................. 50
Figure 12: Tool #5: Impacted Stakeholders Constructed ...................................................................................... 53
Figure 13: Tool #5: The Proposed Impacted Stakeholders.................................................................................... 55
Figure 14: Tool #6: Porter and Kramer’s Social Value Chain ................................................................................. 62
Figure 15: Tool #6: The Proposed Social Value Chain .......................................................................................... 64
Figure 16: Tool #7: The Social Impact Chain (Clark et al., 2003a) ......................................................................... 66
Figure 17: Tool #7: The Proposed Impact Value Chain ......................................................................................... 69
LIST OF TABLES
Table 1: Overview of Interviewees ........................................................................................................................ 10
Table 2: Overview of Reviewers ............................................................................................................................ 13
Table 3: Overview of Applied Literature ............................................................................................................... 22
Table 4: Review Response, Tool#1: Proximity Matrix ........................................................................................... 28
Table 5: Review Response, Tool #5: The Product Trajectory ................................................................................ 35
Table 6: Review Response, Tool #3: The Dependency Matrix .............................................................................. 40
Table 7: Review Response, Tool #4: The Life Cycle Description ............................................................................ 48
Table 8: Review Response, Tool #5: The Impacted Stakeholders ........................................................................ 54
Table 9: Review Response, Tool #6: The Social Value Chain ................................................................................ 63
Table 10: Review Response, Tool #7: The Impact Value Chain ............................................................................. 68
3
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1. INTRODUCTION
1.1. BACKGROUND
Feasibility analysis can be viewed as a basis for a go/no-go –decision on the realization of new business
concepts. It is a central tool in the academic approach to entrepreneurship which has evolved in business
schools (Wyckham and Wedley, 1990), and there are a number of tools available for this purpose, such as
Porter’s five forces, a well-known tool for industry assessment.
When conducting a feasibility analysis, the analyst must collect a significant amount of information about the
proposed market, about similar ventures, about the industry and competition, etc. (Mcgrath and Macmillan,
1995). The purpose of the analysis tools is to point to information needs, and help the analyst structure, and
make sense of, collected information. From this, the analyst must estimate the tangible, intangible and
financial resources needed to realize the proposed concept. The object of the analysis is to reveal the concept’s
viability and potential prior to any extensive resource commitment is made (Barringer and Ireland, 2008). A
feasibility analysis can be seen in a stage-gate perspective, where an early stage feasibility analysis can be
employed as step one, with a subsequent gate decision (Cooper et al., 2002). It is equally possible to divide the
analysis into separate stages, requiring that the market potential for the solution to a given problem is
confirmed, before devoting time and effort to analyzing the feasibility of a proposed solution (Barringer and
Ireland, 2008).
The outcome of the analysis is not necessarily a yes or a no, it may also be a rethink the concept, followed by
repeated analysis after changes have been made. The question is then whether realizing the proposed business
concept it is worth the risk and uncertainty. For most analysts this will be a question of financial returns, and a
go/no-go decision will be based on whether the venture will be competitive in the market, and whether it can
gain a necessary market share at an acceptable profit margin, thus creating financial value for entrepreneurs
and investors.
In the last decade, however, the interest in socially motivated business concepts has increased within academia
(Vurro, 2006). This can easily be verified by the social entrepreneurship classes springing up in MBA programs,
and social entrepreneurship fellowships established, in renowned institutions like Babson College, Boston
University, and Harvard Business School. The need for such dedicated classes suggests that there are
considerable differences between “traditional” entrepreneurship and so called social entrepreneurship, and
that these differences must be addressed explicitly.
This is complicated, however, by the debate on the meaning of the term social when used in an entrepreneurial
or business context, and also by the lack of agreement on the term entrepreneurship itself (Seelos and Mair,
2004, Austin et al., 2006, Gartner, 1985, Weerawardena and Mort, 2006). Social Entrepreneurship is a widely
used, and some say widely abused, term, applied to both for-profit and non-profit ventures, offering a wide
range of solutions affecting end users and other stakeholders in a variety of ways. Between the extremes of
traditional for-profit ventures, and non-profit NGO’s, an array of organizations are emerging (Vurro, 2006,
Perrini, 2006, Weerawardena and Mort, 2006), which employ a great variety of funding structures to create
value along social and financial dimensions at various ratios (Davis, 1997, Dees, 1998).
1.2. PURPOSE
As the focus on social aspects within business makes its way into the business school environment, where
feasibility analysis is an established step in business development, the subject of feasibility analysis which
includes social aspects becomes relevant.
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The objective of this thesis is to provide analytical tools for students of entrepreneurship, who, while
conducting a feasibility analysis, seek to explore both economic and social aspects of a business idea.
The fundamental premise of this thesis is as follows:
1. There are significant differences between NGO’s and traditional ventures, however, an array of hybrid
concepts are emerging, hence, an entire spectrum exists between the two. Such expressions as social
entrepreneurship/ventures/business/enterprise address this realm, although there is little agreement
on the boundaries of these constructs (Martin and Osberg, 2007).
2. The increased interest in social ventures among students of entrepreneurship and business calls for
adaption of established approaches to suit such ventures (Peredo and McLean, 2006).
3. The perceived differences between traditional and social entrepreneurship imply that feasibility
analysis for social entrepreneurship demands the inclusion of new or altered information needs (Dees
et al., 2001).
4. This implies a need to develop feasibility analysis to address the characteristic features of social
business concepts (Peredo and McLean, 2006). This analysis must not be based on a strict definition of
social, but rather address proposed business concepts aimed at social value creation in some form.
Due to the lack of an established definition of social, no space in this thesis will be devoted to the discussion of
boundaries, neither of social entrepreneurship nor CSR. The owners of a company may choose to spend their
profits on whichever social or even antisocial projects they like. If those projects are not intended to create any
other value for the firm than a potential image improvement, and if they are conducted independently of the
firms value crating and support activities, then they have no place in a feasibility analysis, simply because they
are in no way required to be strategically aligned with company activities, and do not affect the feasibility of
the firm. It is as relevant to the firm feasibility as whether or not the entrepreneur spends the first million
earned on a sailboat or simply donates the entire sum to doctors without borders. The latter is a noble deed,
but not really interesting in this context.
Instead, for the purpose of this thesis, we will employ a very wide definition of social, which does not exclude
any of the new organization forms in the above mentioned spectrum. In this thesis, social is defined as
employed in the following definition of Social Enterprise:
“Competitive firms that are owned and traded for a social purpose”
This definition is employed for research purposes by Smallbone et al. (2011), who’s research domain includes
both for profit and not for profit organizations. This implies that the definition can also include hybrids of the
two. The term social purpose is not elaborated on in this definition. The term will, for the purpose of this thesis,
be employed as referring to an intent to create social value through core activities, such as the distribution of a
unique product, or through support activities and organizational policies, such as Human Resource
Management.
Upon conclusion of the analysis, it is up to the individual entrepreneur to officially label the proposed business
concept as “social” or not, according to which ever definition he or she chooses.
The theory development in this thesis will focus around the social venture sub-segment of technology based
social ventures. The background of this focus is an increased employment of technology products to solve
social problems (Desa and Kotha, 2005) in combination with the lack of theory development in the field. The
authors’ background in engineering and technology based entrepreneurship studies also makes this a relevant
field of research for a master thesis. In addition, these ventures are characterized by particular activities, such
as production, physical distribution, product development, etc., which are interesting in a social perspective.
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1.3. RESEARCH QUESTION
The research question established for this thesis is as follows:
How can academic feasibility analysis of early stage business ideas address technology based business ideas
aimed at social value creation through key activities or support activities and organizational policies?
We choose to answer this research question through the development of analysis tools addressing the
common and characteristic challenges of such ventures with regards to information needs. We propose to do
so through three steps:
1. Identification of common characteristic challenges with regards to information need for early stage
technology-based social ventures
2. Identification and collection of relevant input for the development of tools to address these needs.
3. The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology based business ideas aimed at social value creation.
It must be underscored that the tools developed in this thesis will not constitute a complete framework for
feasibility analysis of early stage business ideas, but rather be introduced as additions to existing tools. This is
due to the fact that many general information needs, such as estimated market size and estimated capital
need, are shared by all new ventures, and already included in existing tools. Hence, new tools are primarily
needed to address the specific challenges of social business concepts.
1.4. DEFINITIONS AND CLARIFICATIONS
In order to avoid misunderstanding, some clarification regarding the term analysis is required. Feasibility
analysis and feasibility study are two terms being used interchangeably within the field of business
development. In the Oxford dictionary, however, the word analysis is defined as “detailed examination of the
elements or structure of something” (Oxford, 2010a) whereas the term study is defined as: “the devotion of
time and attention to acquiring knowledge on an academic subject, especially by means of books” (Oxford,
2010b). This implies that the conducting of an analysis may be an integral part of a study. For the purpose of
this thesis, the term feasibility analysis is employed.
In accordance with this, the term analyst will be employed to refer to the individual conducting the analysis.
This is also in accordance with the intended application of the proposed tools, which is in academic
environments. The term entrepreneur will, however, be employed to refer to the role of the entrepreneur
when discussing entrepreneurial challenges and activities.
After having conducted a theory search, on both feasibility analysis and feasibility study in databases including
Bibsys, Google Scholar and ProQuest, few acknowledged references were identified that specifically described
the process of either. Barringer and Ireland`s feasibility analysis, as presented in the textbook Entrepreneurship:
Successfully launching new ventures, proved the most detailed and updated source. Their framework is based
on the articles How to Write a Winning Business Plan and The Origin and Evolution of New Businesses, authored
by Sahlman (1992) and Bhide (2000) respectively. Thus, Barringer and Ireland (2008) provide the point of
departure for the theoretical discussion.
The tools developed here will, however, differ from those in the framework proposed by Barringer and Ireland
(2008) in three ways:
1. By inclusion of social value creation
2. By focusing on early stage concepts, implying that they are pre-business plan, but that the
entrepreneur has an idea about what problem he or she wishes to solve, who is experiencing the
problem, and what the solution might be. This implies an element of opportunity discovery and
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exploration, as opposed to pure evaluation, in the analysis, which in turn can enable the entrepreneur
to further develop the identified opportunity (Ardichvili et al., 2003).
3. By focusing on technology based ventures.
The division employed by Barringer and Ireland (2008) has four central pillars of analysis; The Product or
Service; The Industry and Market; The organization; and Finance. This structure is similar to the structure
employed by Schneider (1998) as the outline of a sound business plan; Market analysis and marketing plan,
Production plan, Organization and Management plans, and Financial analysis. This is also similar to the model
introduced by Mcgrath and Macmillan (1995) to identify where the venture will have to match existing industry
standard and where it has to excel. The structure is also found as a basic premise of the concept of
entrepreneurial knowledge reservoirs, were necessary business knowledge is divided into Market, Product,
Organization and Finance (Widding, 2005). Schneider (1998) proposes to include a summary and concept
description as a separated section proceeding the other parts of the business plan. Barringer and Ireland (2008)
suggest the same inclusion, but places the concept description under the Product or Service feasibility. For the
purpose of this thesis, the following structure will be employed:
1. Product feasibility
2. Market and Industry feasibility
3. Organizational feasibility
4. Financial Projections
The aim of the proposed analysis tools will be to point to information needs, and to facilitate the structuring of
information, so that the insight gained from performing the analysis may serve as a valuable basis for strategic
decisions. The task of the analyst employing the tools is defined as: to search for and collect relevant
information from the sources available to him or her at the time of analysis. The analyst must decide how
thoroughly he or she wishes to conduct the analysis, based on the current stage of business concept
development. In what manner the information is gathered will also be up to the analyst to decide.
1.5. THESIS STRUCTURE
The structure of this thesis is as follows: First, the employed research method is described, followed by a
review of the most significant empirical findings in each of the above mentioned analysis pillars, and the
identified challenges to be addressed. Next, a table overview provides a presentation of the theoretical
subjects which relate to identified challenges, and the literature used in the discussions. The traditional theory
review has in this thesis been infused in the discussions and thus the development of the respective tools. This
is due the significant thematic variation between discussions. The subsequent discussion is divided into three
chapters for the same reason. Each discussion chapter comprises of one or more tool development discussions,
and also includes responses from a review of the proposed tools, followed by final changes. Last, a general
conclusion and implications are presented.
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2. METHOD
2.1. INTRODUCTION
The object of this thesis is the development of analysis tools for feasibility analysis of technology-based social
ventures. These tools are to serve as facilitating constructs to help the analyst recognize information needs,
and also to help the analyst structure the information, so it can serve as a basis for subsequent strategic
decisions.
The establishment of these tools is based on three steps:
1. Identification of common characteristic challenges with regards to information need for early stage
technology-based social ventures
2. Identification and collection of relevant input for the development of tools to address these needs.
3. The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology-based business ideas aimed at social value creation.
This chapter describes the employed research approach in detail, and includes comments on the weaknesses
and reliability of the approach.
2.2. RESEARCH DESIGN
Social entrepreneurship in general, and technology-based social entrepreneurship in particular, are relatively
new research fields. Hence, the research approach employed had to encompass this newness, and compensate
for the lack of established theoretical frameworks.
The amount of literature in the field of social entrepreneurship is increasing, but there is still no consensus on
the boundaries of the construct, and the literature is still fragmented (Weerawardena and Mort, 2006). The
sub-category of technology-based social entrepreneurship, however, suffers from a great lack of academic
attention, in addition to the uncertainty of the definition of social itself (Desa and Kotha, 2005). To further
complicate matters, while the field of social entrepreneurship is developing in academia, it is also in rapid
development in practice (Weerawardena and Mort, 2006, Dees, 1998), causing the relevance of academic
works to decline within a short period of their publication.
In order to gain insight into what the common information challenges of entrepreneurs with a social intent
actually are, it was appropriate to employ an inductive approach, starting with a thorough submersion into the
real world phenomenon of solving social problems with an entrepreneurial approach. An inductive approach is
often recommended for the investigation of uncharted territory (Glaser and Strauss, 1967).
The research design employed in this thesis is highly inductive, and started in a real world setting, were current
experiences and opinions were gathered from people on the ground. As no complete theoretical framework
exists on which interview questions could be based, data gathering was conducted in the form of unstructured
interviews. The aim of this first step was to understand what is really going on in social entrepreneurship, and
what the common challenges of such ventures really are.
Findings from these interviews were then coded and analyzed, and lifted to a more abstract level when
discussed in relation with existing theory. The applied theory was collected from the field of social
entrepreneurship, but also from other research fields with relevance to each identified challenge respectively,
as no complete body of theory exists on the subject of technology-based social entrepreneurship.
9
The discussions of findings and existing theory resulted in the development of new theory, namely the
proposed analysis tools. In order to ensure the relevance and usability of the tools, the proposed tools were
then reinserted into a more practical setting, through a review, were they were evaluated by investors,
academics, business students, and also one user of socially intended technological products. The responses
from this review then formed the basis of final theory development, where adjustments were made to the
proposed tools. This approach can be described in six steps, corresponding to the three steps described above:
Identification of common and characteristic challenges of stage technology-based social ventures in general
and challenges relating to information need in particular:
1. Data gathering through unstructured interviews with experts and practitioners
2. Analysis of findings from the interviews
Identification and collection of relevant input for the development of tools to address these needs.
3. Theory search in the field of social entrepreneurship and other fields of relevance
The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology-based business ideas aimed at social value creation.
4. New theory development on the basis of existing theory and empirical findings
5. Review of the proposed new theory
6. Final theory development on the basis of review response
As described by Widding (2006), the process of data gathering and the development of theoretical
understanding were overlapping, and parallel, for a period, an approach described as theoretical sampling
(Widding, 2006, Eisenhardt and Graebner, 2007).
2.2.1. UNSTRUCTURED INTERVIEWS
The unstructured interview format was chosen in order to maintain open mindedness when approaching the
loosely defined subject of social entrepreneurship. As the object of the data gathering was the identification of
common information challenges for entrepreneurs with a social intent, the aim of the interviews was to get
interviewees to talk about the subject of social entrepreneurship in general, and challenges related to
information needs for early stage technology-based social ventures in particular. This was not to enable the
researchers to conclude on which challenges were faced by all such entrepreneurs, but rather on which
challenges were considered relevant for such ventures in general.
SELECTION
The need for some degree of generalization required interviewees to represent different perspectives
and experiences with social entrepreneurship, to provide breadth in the data. As student researchers,
limited in terms of funds and range, aspects of practicality posed a challenge in this area, however, the
opportunity to gather data in India presented itself through a larger university project. As India is a
society of great social differences and tremendous social challenges, and known to be at the forefront
of what is generally referred to as social entrepreneurship, this was a great opportunity. Thus, large
parts of the data gathering were conducted across several Indian cities and villages over a period of 17
days in January/February 2011.
In order to counteract a “cultural perspective” bias, data was later gathered in Scandinavia, as well as
through e-mail and Skype in the US, to triangulate results.
Interviewees were chosen through several methods. In India, academics were mostly identified on the
basis of prior connections with other members of the project delegation, while entrepreneurs and
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investors to a large extent were identified through a snow-balling technique, following introductions
at a social entrepreneurship conference at XLRI in Jamshedpur late January 2011. Interviewees in
Scandinavia and the US were identified through prior knowledge and media search.
For subsequent analysis of the gathered data, interviewees were divided into groups depending on the
nature of their involvement in social entrepreneurship;
1. Investors
2. Academics
3. Entrepreneurs
4. Users/Customers
5. Facilitating organizations
Investors are a particularly interesting group with regards to feasibility analysis, as they spend much of
their time conducting due diligence on business concepts which they consider funding. This implies
that investors generally have opinions and experiences relating to all aspects of the analysis, and also a
more practical view of the relevant issues than do most academics. Investors also generally have
experience from a wide range of business cases, while entrepreneurs usually have experience from
one, or in the case of serial entrepreneurs, a small number of ventures.
The 21 interviewees comprised of:
QUESTIONS
Interviews were conducted over a period of three months, during which the focus of the research and
the maturity of the researchers developed considerably. As these interviews were unstructured, there
was no prescribed interview guide with standardized questions. The questions asked were part
questions prepared prior to the interviews, depending on the actor in question as well at the stage of
research, and part spontaneous questions concerning things that were brought up during interviews,
which generally took the form of quite natural conversations.
TABLE 1: OVERVIEW OF INTERVIEWEES
Numbers Status and experience Nationality Group
5 Social or impact investors
Two Indian, two Scandinavian
and one India based American
I
4
Academics working with social
entrepreneurship and social
entrepreneurs
Indian A
1
Academic working with
environmental challenges and
corresponding social issues
Indian A
4 Social entrepreneurs
Two Indian, One American, One
Scandinavian
E
6 Users/customers Two Indian, Four American U
1
Representative for a facilitating
organization for social
entrepreneurship in India
Indian O
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DOCUMENTATION
The methods of documentation used were also influenced by the aspect of practicality. While sound
recording and video were widely used to capture interviews, external conditions sometimes prevented
the use of such technology. The most pressing problem were encountered in India, in the form of
noise from the surroundings, usually present in the form of traffic and ventilation. This resulted in the
use of handwritten notes as documentation for a small number of interviews, however, the presence
of a minimum of two interviewers at every meeting to some degree countered flaws in the
documentation.
Most interviews were transcribed verbatim. The exception was the small number of manually
documented interviews conducted in India, which were documented as summaries, including main
points and selected relevant quotes.
2.2.2. ANALYSIS
After transcribing the interviews, the transcripts and the few written responses were de-constructed into
quotes regarding a great variety of subjects. These were then analyzed in three steps, based on the abstraction
stages described by Widding (2006). This method of analysis was employed to ensure that no topics were lost
in analysis. The basic principle is to code data twice; Once based on topics identified in the data pool itself,
implying that new categories are generated until every finding has been placed in a category, either by itself, or
with others; and once based on a theoretical framework, in this case the analysis framework presented by
Barringer and Ireland (2008), as well as some categories generated from social entrepreneurship literature,
addressing the trade-off between ROI and social value creation. This implies that a finite number of categories
were generated, into which all findings were attempted sorted. Not all findings could be placed in a category,
and not all categories had data placed in them. These two sorting steps then formed the basis of a final sorting.
Below, the process is described in more detail for each of the three steps:
Step 1: All quotes were sorted into categories derived from the quotes themselves. These categories were
denoted A-categories, and a total of 39 such categories were created to include all quotes. Although the
categories were derived from unique themes revealed in the data, several quotes were placed in more
than one A-category. Each category did, however, have a unique composition of quotes, and no one
category was fully included in another. Each category was given a number. In addition, each quote was
given an identification code to denote whether it came from an investor (I), and entrepreneur (E), and
academic (A), a facilitating organization (O), or an end user (U), along with a two-letter code identifying the
individual interviewee. Finally, each quote received a number denoting its place in the sequence of quotes
from the same source within one category. The code was then on the format of the following example:
A12IPD2, were the letter I denotes that the interviewee is an investor, and the letter A implies that this is a
code generated in the A-round.
Step 2: New categories were established, this time with basis in the pillars of feasibility analysis employed
by Barringer and Ireland (2008), as well as key challenges outlined in social entrepreneurship literature,
mainly concerning trade-offs between ROI and social value creation. These 36 new categories were
denoted B. While keeping their A-codes, all quotes were collected from their A-categories and mixed.
They were then pulled in random order, and placed into the B-category most suitable. Several quotes were
placed in more than one B-category. There were some quotes for which no B-categories were applicable.
These were discarded as irrelevant for this round. There were also B-categories to which no quotes were
ascribed. These were also discarded.
12
Step 3: Finally, 21 C -categories were generated. These were based on a thorough evaluation of the B and
A-categories, and include most B-categories, as well as some A-categories, were the data generated A-
categories were considered as ;
a. Having revealed a relevant subject that had not been suggested by theory
b. Having revealed a more practical division or structure of a subject, than had the
corresponding B-categories.
The purpose of this method is to tie the empirical findings to the theoretical framework, so as to relate
to the themes from the theory discussion, without missing any relevant new themes that could be
derived from the findings themselves. Each C-category contains one or a number of A or B-categories,
however, each C-category has a unique composition of quotes, and no one category is in its entirety
included in another. A complete overview of the code categories, as well as the complete C-codes, can
be found in Appendix 1.
2.2.3. THEORY SEARCH AND SELECTION
Currently there is no framework available which offers relevant underpinnings for a debate on the subject of
technology based social entrepreneurship in general (Desa and Kotha, 2005), making a full scale literature
review of the field infeasible. However, several of the topics for tool development, which were revealed in the
empirical findings, relate to substantial bodies of literature in such fields as strategy, stakeholder theory,
product development methodology and even philosophy. As students working in a relatively new research
area, we are required to seek relevant theory from other areas, even those of peripheral interest (Bruce, 2001).
The theory search followed the data collection, with a period of overlap, as theory was chosen on the basis of
challenges identified in the empirical findings. Some literature was even chosen on the grounds that it served
as a basic introduction to topics suggested by interviewees themselves. After the review of the proposed tools,
a limited need for additional literature became apparent.
Based on the feedback, additional literature was identified within the same theory subjects, to answer to
suggested shortcomings. A complete table of theory and sources and can found in chapter 4, Applied Theory.
2.2.4. THEORY DEVELOPMENT
Theory development was conducted through the discussion of empirical findings in relation to literature from
related fields. The discussion is divided into three distinct parts, due to the spread of the identified challenges.
One tool is developed in the first discussion, while the subsequent discussions result in the introduction of two
and four proposed tools, respectively.
The ratio of empirical versus theoretical grounding vary between the proposed tools, depending on the degree
to which solutions were suggested in the findings, as well as the relevance of existing literature. The variation
in the foundation between the different tools, both with regards to findings versus theory, but also with
regards to the field from which the respective theory is drawn, has also resulted in significant variation in the
format of the proposed tools.
2.2.5. REVIEW
The review of the proposed tools was conducted between May 13
th
and 20
th
2011. Reviewers were e-mailed
slides with proposed tools, which included theoretical backing and practical relevance of each tool. An
introductory letter explaining the goal of the thesis was included in the e-mails. This letter and the
accompanying slides can be found in Appendix 2.
The exception to the distribution by e-mail was the review conducted by two graduate students of technology-
based entrepreneurship, and one academic (No. 3). This exception was made for practical reasons as these
13
actors were situated on the authors’ university campus, and could be reached in person. Their responses were
documented through the respondents’ own notes, and the notes of the authors, which were subsequently
approved by the respective reviewers.
For the purpose of the review of the tools, it was appropriate to mainly include actors who had extensive
experience conducting feasibility analysis of business concepts. The experience with social entrepreneurship
per se therefore varied among the participants.
A total of seven individuals participated in the review:
Numbers
Status and
experience
Background, basis for sense making Nationality
Interviewed
during initial
data
gathering?
1
Social or impact
investor
Background from industrial economics studies, and
a previous career in management consulting.
Scandinavian Yes
1
User of a social
technology
product
7th Grade IRR Teacher, Language Arts & Social
Studies, facilitates the use of study aids for
students with disabilities. Familiar with the
challenges of technological aids from a user
perspective.
American Yes
3
Academics
working with,
and/or teaching,
entrepreneurship
and business
development.
Nr 1: Harvard MBA, Executive-in-Residence,
Entrepreneurship and Strategy, and Director of
Entrepreneurship Programs for the Institute of
Technology Entrepreneurship & Commercialization
at a US University. Previously the CEO of a
technology company, and current board and
advisory board member for a number of
commercial and non-profit organizations.
Nr 2: Harvard MBA, Lecturer/Executive-in-
Residence, Strategy and Innovation at a US
university. Previous experience from management
consulting, strategy and marketing, and as founder
of two companies.
Nr 3: American BSc in Chemistry and MBA,
currently Post-doc in the Globalization Program,
Global Production and Communications of NTNU.
Previous experience as a two time entrepreneur
within technology-based start-ups.
All American,
one currently
Norwegian
based.
No
2
Graduate students
of technology-
based
entrepreneurship
and engineering.
Both graduate students in industrial economics and
technology-based entrepreneurship at NTNU, with
previous MBAs from a US university. Experienced in
conducting feasibility analysis for technology-based
and non-technology-based business concepts in
both Norway and the US.
Scandinavian
No
TABLE 2: OVERVIEW OF REVIEWERS
14
2.2.6. FINAL THEORY DEVELOPMENT
Based on response from the reviews, final changes were made to the proposed analysis tools. Due to
continuous exposure to literature, researchers and the real world phenomenon of social entrepreneurship, the
maturity of the authors also progressed, resulting in some additional changes not directly related to the review
responses, but rather to increased maturity and widened perspective.
2.3. WEAKNESSES AND RELIABILITY
2.3.1. WEAKNESSES
The weaknesses of the employed approach are mainly concerned with the process of data gathering, and the
most dominant obstacles for data gathering were, not surprisingly, encountered in India. Language, as well as
cultural factors such as codes of conduct and symbolic meaning of expressions and objects, presented great
difficulty when conducting interviews. This was particularly pressing when interviewing entrepreneurs and end
users, who did not necessarily have the English skills and business vocabulary shared by most actors in the
three remaining subject groups. The need to use translators presented additional problems, which were
enhanced by the fact that translation was performed by the most skilled or eager individual present at any
given point in time. While the language skills of the translators themselves varied, so did the pre-existing
relationship between the translator and the subjects, which undoubtedly must have influenced the responses
in some cases.
Another possible weakness in the research is the background and grounding of the authors, both graduate
students of mechanical engineering and technology-based entrepreneurship at the Norwegian University of
Science and Technology, and subjected to a limited regime with regards to feasibility analysis. Both authors
have, however, also attended one semester of entrepreneurship courses at the School of Management at an
American university, which implies at least some degree of alternative inspiration.
2.3.2. RELIABILITY
The object of this research is not the development of analysis tools addressing challenges faced by all
entrepreneurs with a social intent, but rather the development of tools which address common challenges,
which for many are relevant to consider in the earliest stage of development. We do not state that the
challenges identified in our data gathering are the only relevant challenges. As such, the limited number of
interviewees does not present a problem, and we believe that if the employed approach is replicated, findings
will not resemble our findings exactly, but are likely to overlap to a large degree, as many of the subjects
discussed can be considered quite general and fundamental.
In order to ensure a basis for some degree of generalization, results have been sought triangulated, through
three steps:
1. Triangulation in terms of representation from five distinct groups of interviewees, based on the nature
of their involvement with entrepreneurship.
2. Triangulation in terms of selection of interviewees from three continents.
3. Triangulation in terms of the subjection of constructs to additional empirical input after initial theory
development has been conducted.
As a result of these efforts, we are certain that the proposed tools hold some relevance to the early stage
exploration and planning for many technology-based ventures addressing social issues.
15
3. EMPIRICAL FINDINGS
3.1. INTRODUCTION
In this chapter, the main features of the empirical findings from interviews are presented. These findings serve
as the basis of identification of main challenges relating to information needs, which again serve as basis for
theory selection. A complete table overview of applied theory is presented in the next chapter, linking
theoretic fields to the respective challenges identified in the conclusion of this chapter.
Interviewees in general, and investors in particular, stated that all aspects that were important to start-ups in
general were also important in social start-ups, but that the concept described had to be based on a
fundamental knowledge about the target market. In general, the findings suggest that practitioners and
academics working with social entrepreneurship are generally very attentive to the critical importance of
including stakeholder and customer perspectives in every aspect of a proposed venture. This was confirmed
when findings were summarized for each pillar of analysis respectively:
3.2. MARKET AND INDUSTRY
Reoccurring subjects related to the market and industry can be summed up the following categories:
1. Trends
2. Environmental and Socio-political Factors
3. Market Entry
3.2.1. TRENDS
Both academics and investors stated that there was a clear trend in business in general to think more in terms
of social value creation. A Norwegian investor also argued that it was among newly-hired employees and
students currently attending universities that the interest was most evident. One investor in India argued that
competitive advantage could not be an entrepreneurs only motivation for wanting to create social value, and
that if this was the venture`s only concern it was not going to be successful in the long run.
3.2.2. ENVIRONMENTAL AND SOCIO-POLITICAL FACTORS
The academics interviewed mentioned issues related to environmental and socio-political factors in the target
markets. One academic, who specifically worked with large scale environmental problems and related social
issues, explicitly addressed the government`s role in proving that there is potential for profit within a market.
He also stated that the government had to establish the rules of the game as well as invest in major
infrastructure, before other actors were willing to enter. The same interviewee also addressed the trade-off
between development and environment in developing countries, especially in areas where people are still
living of the fruits of the forest on a hand to mouth basis. He also stated that this was further complicated by
environmental conservation, which posed another conflict with local people’s need to extract resources from
nature, as well as with industry.
3.2.3. MARKET ENTRY
One Norwegian investor stated that his company evaluated industries and investment prospects based on how
easy it was to identify relevant measurable social impact parameters. The same investor also mentioned that
instead of collaborating with Norwegian aid organizations, they found it easier to go to markets where local
organizations were already established. Measurement and in-depth knowledge of target markets and
communities were generally mentioned by investors as key to the success of social ventures, and to the
attractiveness of an investment prospect.
16
3.3. PRODUCT
Findings regarding Product Feasibility can be sorted under three themes:
1. Understanding users and market conditions
2. Interaction with customers
3. Intellectual Property Rights (IPR)
3.3.1. UNDERSTANDING USERS AND MARKET CONDITIONS
Investors interviewed stressed the need for the entrepreneur and/or product developer to gain real insight into
the needs and lives of users, and that there are too many examples of far away innovators who believe they
can solve problems in developing countries without firsthand experience with those markets. Investors
generally wished to invest in entrepreneurs with actual firsthand experience from the target market, and one
investors also pointed explicitly to the various unexpected factors that may determine a product’s success
when put to use, underscoring the need to know that environment thoroughly. Understanding of the user
situation was emphasized, but understanding of the technological infrastructure available in the market was
also addressed specifically by the academic working with environmental issues.
One academic also pointed to the difference between treating a problem and treating the consequences,
which is an important aspect of understanding user needs. One academic with significant experience with grass
root innovators in India also stated that the poor and un-educated people often viewed as users only, must also
be regarded as a resource, and a source of knowledge and innovativeness. For this reason, he also explained,
there is tremendous potential in creating solutions which each user can tailor to his or her own needs. The risk
of underestimating customers was also addressed by one investor.
3.3.2. INTERACTION WITH CUSTOMERS
Entrepreneurs emphasized the importance of involving customers in development of solutions, and getting
feedback during the development cycle, while users expressed the need to be taken seriously by company
service staff.
3.3.3. INTELLECTUAL PROPERTY RIGHTS (IPR)
Statements regarding IPR show that several actors regard protection of products or concepts as something that
can be undesirable for ventures with a social mission, as it places limitations on the diffusion of impact creating
solutions. The overall view of trademarks, however, was that the customer should be able to rely on the origin
and quality of a product, making trademarks a good thing.
3.4. ORGANIZATION
Findings related to the organization can be divided into five main groups:
1. Stakeholders
2. The value chain and business model
3. The entrepreneur, management and team
4. The measurement of social impact
5. Scalability
3.4.1. STAKEHOLDERS
The way in which the venture affects its stakeholders was a great concern for nearly all the interviewees, and
both investors and entrepreneurs emphasized the importance of creating a socially focused organizational
culture. “The management in a company with a social mission must have the attitude that they are not there
just to make a profit, but to make sure that they are serving their customer base responsibly”, one Indian based
17
American investor stated (B30:A28). A culture of transparency with regards to profit motives was also
described as vital, particularly in the long run. The entrepreneur must never hide the fact that he or she is
starting a for-profit, scalable business. In order to preserve a good reputation, it is important to play with open
cards, so that one’s intentions will not be questioned when the venture grows.
One Indian academic stated that in order to maximize efficiency, many companies in developing countries cut
salaries, cut back on safety, cut back on social welfare and don’t pay workers benefits, and that this is an
extensive problem.
In general, the focus on affected communities, and positive dialogue and interaction with stakeholders, was
central with the individuals interviewed.
3.4.2. THE VALUE CHAIN AND BUSINESS MODEL
Academics and investors in India state that the value chain and business model of the venture must be
modeled with inclusion of social impact and stakeholder interaction in all stages. One investor stated that social
responsibility should be an integral part of core organization strategy, with assigned responsibilities and
accountability at all appropriate levels of the organization. It should be reflected in decision making and
considered when implementing new activities.
Representatives from both the investor and the academic groups explicitly addressed the problem of
middlemen, which was widely regarded as a bad thing, and should be avoided if possible.
A Scandinavian social entrepreneur stated that having production facilities and local offices in the target
markets, and employing local people to conduct R&D, sell and distribute the product , helped them understand
the end user`s problems, eased the distribution, and also helped them avoid trouble with governments.
3.4.3. THE ENTREPRENEUR, MANAGEMENT AND TEAM
A Norwegian investor argued that a well-known challenge for the technology ventures with a social mission is
attracting highly educated employees. He also stated that the entrepreneur must bring along someone with
business capabilities on the team to secure that the financial aspects are taken care of.
“It is really thanks to our leader that we are the company we are today. (…)I don’t think we would have been as
successful if we did not have such a visionary leader and if we did not have someone in the top of the company
who was willing to make the personal physical sacrifice to learn about the challenges that the least fortunate
people in the world have. Without a doubt the driving force of the company” –Scandinavian Entrepreneur
(C15:B08)
Investors interviewed agreed that the entrepreneur`s passion was a key criteria when deciding whether or not
to invest in a start-up. One Indian investor stated that “Idea is 1%, execute ability and passion is the most
important” (C15:B08). Two investors also regarded the entrepreneurial team as the most important aspect to
assess, after the quality of the product or service. Another investor argued that a vital factor for deciding
whether to fund a start-up, is the entrepreneur`s insight, network and knowledge about the local conditions.
None of the interviewees pointed to any explicit differences between a “traditional” entrepreneur and the
entrepreneur with a social objective, other than the entrepreneur`s personal beliefs and motivation. The
qualifications and the characteristics of an entrepreneur with a social mission are no different from the
“traditional” entrepreneur’s, according to two of the investors. Another investor stated that the only
difference lays in what kind of idea the entrepreneurs had come up with.
18
3.4.4. THE MEASUREMENT OF SOCIAL IMPACT
From the empirical data collected, it is apparent that the measurement of success and social impact has proven
to be a difficult and time-consuming process. One investor explained how a thorough impact study would take
three to five years, and cost a significant amount of money.
An academic in India argued that the method of measurement depends on what kind of social impact the
venture wants to create. A Norwegian investor argued that it must be better to have some data, which you
know have some weaknesses, than not having any information about the outcomes at all. The investor
continued by saying that the controversies that have occurred in microfinance lately, are a result of the
organizations’ lack of a continuous evaluation and measurement of end users wellbeing. In most cases, the
investor said, the evaluation of impact is conducted by the companies themselves. He also stated that the
current ongoing monitoring or observation of activities related to social responsibility is primarily aimed at
making sure that activities are proceeding as intended, identifying any crises or out-of-the-ordinary occurrence,
and making modifications to the way things are done. They are not, however aimed at measuring or monitoring
social impact.
The investor also warned about having too many people on the board who believe that social returns equals
high social impact. A growing number of people are interested in the concept of social business, but still not
willing to renounce maximization of returns.
3.4.5. SCALABILITY
One investor in India argued that if the venture really wants to be successful it must be scalable, as in “having a
business that’s scalable in how you operate and how you design your ability to expand, but also being able to
attract the capital to be able to expand” (C02:B04). The investor also stated that it is not enough to simply
break even, the venture must be able to handle some bumps in the road.
Both academics in India and investors in Norway mentioned that scalability was an important aspect to
consider. An Indian academic stated that an idea has to be scalable, otherwise it would be limiting.
3.5. FINANCE
Findings regarding financial feasibility primarily sorted under three themes:
1. Investment prospects and expectations
2. Attracting capital
3. Exit opportunities
3.5.1. INVESTMENT PROSPECTS AND EXPECTATIONS
Several investors talked about the expectations they would have of an investment prospect. All but one
investors interviewed were already seeing financial returns on their investments, or were working to do so in
the future. Only one had a strict social value only mandate.
Generally, investors viewed sustainability as a minimum pre-requisite. Although some were interested in
providing grants to get a new company started, that company had to be self sustained in operation. One
investor also pointed explicitly to the need for a buffer, so as to provide some security and attract further
capital.
Several investors commented that financial returns signal that a company is sustainable, but warned that one
could never say that this implies that it is reaching many people with a positive social impact. One investor
lamented, however, that many people primarily occupied with more traditional assets still view this as a valid
argument.
19
Still, it seemed that the general consensus was that nobody places their money in impact investment or
development projects because they want to make as much money as possible, but not because they simply
wish to donate it either. They want to see something that works on its own, and hopefully see their money
again, although perhaps only to reinvest it. The general view was that financial and social objectives must be
seen as complimentary.
Scalability was mentioned by investors as one of the most important aspects of a social business concept, and
as one investor stated: there is a limit to how far you can scale a concept based on donations.
3.5.2. ATTRACTING CAPITAL
Alignment of goals between entrepreneur and investor was regarded as having great importance when seeking
start-up capital. This is important for any start-up, but for one trying to combine social and financial goals there
will be a much larger spread in terms of objectives.
Should the entrepreneurs be able to fund the company themselves, however, they will be much freer in terms
of choosing less financially rewarding strategies. Organic growth can, however, take a very long time.
Findings also suggested that for technology-based entrepreneurs, there may be some difficulty in attracting
capital, as many investors who are traditionally directed towards development are not necessarily tech-savvy,
while the tech-savvy investors are often traditional and expect venture capital returns.
3.5.3. EXIT OPPORTUNITIES
The general consensus is that the there is little experience and knowledge about exits in social business.
Investors are not yet convinced by IPOs in micro finance. In addition, as one investor pointed out, many of
these companies are at quite early stages. They are not ready to go public either way.
One investor who has so far structured investments as subsidies, but is working towards more commercial
investments, stated that for the current portfolio, the exits will be in the form of withdrawal to let businesses
carry themselves. Sale to relevant industry actors was suggested as a possible exit for future investments. One
must generally be creative about the way one structures investments and look for exit opportunities. This is
also supported by investors’ interest in original business models and concepts. There is a general sense of
trying to solve old problems in new radical ways, which demands innovation across the board, not only in terms
of products or marketing, but also in terms of investment models, sources of capital, and ways to get returns.
This also makes it difficult to generalize on the subject.
3.6. CONCLUSION FROM EMPIRICAL FINDINGS
“It’s really about redesigning the way in which you think about this, it’s sort of the next generation of thinking
about how you can create this whole social win – win. Social and financial do not have to be at loggerheads,
they can really be working together, and therefore create better outcomes for companies and communities, and
this is how we’re going to have to think about 21
st
century business.” – Indian Social Investor (C11:A08)
Findings from the interviews revealed significant challenges for technology-based social ventures with regards
to the gathering and use of information. This particularly pertained to how the organization interacts with its
stakeholders, with high focus on end users and their surrounding community. With regards to customer
interaction, challenges concerning the development of functional and practical products were also thoroughly
addressed.
In order to maintain focus on the most fundamental characteristics of technology-based social ventures in the
development of analysis tools, within the boundaries of a master thesis, it is necessary to narrow the scope of
the discussion. This is proposed done by focusing on one or two of the four pillars of feasibility analysis,
selected on the basis of the following criteria:
20
1. The pillar must have been addressed thoroughly by interviewees.
2. The empirical findings must point to explicit challenges with regard to information needs, and
applications of information.
3. The empirical findings must point to ideas for potential implementation in new tools.
4. Literature and theory must exist in the area in question, or in related areas, which address potential
solutions to the challenges of gathering and using information for the development of business
concepts.
These criteria were employed to ensure that this discussion addressed the areas where the empirical findings
could form the most valuable basis for discussion and theory development.
The single most significant discovery from the interviews, however, was the apparent underlying consensus
that while everything that is important to any other start-up is also critical to a social venture, the focus on the
stakeholders and the conditions in the target market must be all-embracing, and infused in every other aspect
of the entrepreneurial process. This became evident, when the analysis of data proved challenging during the
B-round, in which findings were sorted according to the pillars of Barringer and Ireland (2008). The marketing
related findings seemed to sneak their way into every other category, as the interviewees addressed nearly all
topics by relating them to the market, end user, and creation of social value for the community in which one
operates:
“You need to think very significantly about what is that mission and how do you really infuse the culture of the
organization with that mission even as that organization grows, so that not just the founder thinks “hey, I’m not
here not just to make some profits, but to make sure I’m serving this customer base responsibly”. That that’s
really part of the organization, and you structure the way the organization is set up, how you train and
everything around that thought. You’re not fundamentally different but you’re infused with something that may
be just a little more complicated than simply “I’m here to grow my business and make profit.” – India Based
American Social Investor (C07:B30)
“There are so many of those Gyro Gearlooses sitting around, thinking “Poor people need fertilizer, they have
urin, urin can be used to make fertilizer, I’ll make a cool box that makes fertilizer out of urine”, right? And
seemingly this is really clever, because it’s entirely correct. They have this, and they need that, right? But in
between there are so many things that must be in place to commercialize it. It’s really about emphasizing the
commercialization part, given the context in which the product must function.” – Norwegian Impact Investor
(C03:B10)
The difficulty of placing findings into distinct categories is particularly visible in the amount of findings labeled
Organization or Product, which contain aspects relating to Industry and Market.
Through this discovery, it became apparent that the greatest potential for contributing to feasibility analysis for
social ventures lay not within the established analysis pillars, but in the interception between the Market and
Industry pillar, and the pillars or the Product, and the Organization respectively. Through careful studying of the
data, and application of the above stated selection criteria, three main categories of potential contribution
were identified:
1. Starting Point Assessment
The need for the entrepreneur to, first of all, assess his or her own starting position relative to the
people he or she is proposing to provide a problem solution for, with respect to knowledge about
those people and their lives. This insight must be at the very basis of concept development.
2. Product Employment Feasibility
The need for a thorough analysis of what it will take, not to design a brilliant problem solution, but to
maximize the chance of that solution actually being employed to solve the problem in the target
21
market. This category addresses the interception between Product, and Market and Industry
feasibility.
3. Impact and Stakeholder Assessment
The need for identification of all stakeholders in the realization of a venture, and the way in which
they will be affected by its realization. This pertains to social aspects, as well as environmental aspects
of bringing a new product to market through the establishment of a new organization. An
entrepreneur aiming to create a positive net impact must strive to understand how positive impact
can be achieved, and how negative impact can be avoided. This category addresses the interception
between the Organization and the Market and Industry.
This division into three main areas of contribution will be continued in the discussion, which is divided into
three chapters; Discussion Part I, Discussion Part II and Discussion Part III, addressing each area of contribution
identified above respectively.
The identified information challenges belonging to these three areas of contribution also form the basis of
theory selection, which is addressed in the next chapter.
22
4. APPLIED THEORY
4.1. INTRODUCTION
In this chapter, the applied theory is presented, as selected on the basis of information challenges identified in
the previous chapter addressing empirical findings from interviews. As previously stated, no complete
theoretical framework currently exists which addresses the field of technology-based social entrepreneurship.
There is a fragmented literature base within the broader field of social entrepreneurship, but this does not
suffice to discuss all the challenges identified. Instead, related fields of theory have been identified for each
area of challenges respectively. A table overview of this theory is presented below.
The literature presented here will be used to discuss the information challenges previously identified, over the
course of the three next chapters; Discussion Part I, Discussion Part II, and Discussion Part III. Which discussion
chapter each respective theory subject is relevant for is clearly marked in the left column of the table.
4.2 OVERVIEW OF APPLIED LITERATURE
TABLE 3: OVERVIEW OF APPLIED LITERATURE
Topic from findings Theory subject Sources
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
The mental distance between
entrepreneur and user of product
is an obstacle in product and
concept development, which
implies challenges related to
information need.
Knowledge creation
? Aristotle
? Confucious
? (Dretske, 1981)
? (Machlup, 1983)
? (Chia, 2003)
Knowledge creation in
organizations
? (Nonaka, 1994)
? (Widding, 2005)
Product development to meet
social needs
? (Fruchterman, 2008)
Innovation success factors ? (Drucker, 1985)
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
I
There is a significant information
need with regards to local
preconditions of the product
functioning as intended.
Infrastructure is a factor which
demands attention.
Strategy ? (Teece, 1986)
Product development to meet
social needs
? (Fruchterman, 2008)
There is often a difficulty of
ensuring use and purchase of the
product.
Marketing
? (Kotler and Keller, 2006)
? (Woodruff, 1997)
? (Woodruff and Gardial, 1996)
Marketing products to solve
social problems
? (Starr, 2010)
(Presentation)
TQM, Lead User Method,
User Centered Design
? (Abras et al., 2004)
? (Preece et al., 2002)
? (Kaulio, 1998)
? (Urban and von Hippel, 1988)
23
Customer identification and
Customer Value Chain analysis
? (Donaldson et al., 2006)
? (Wilson, 1993)
? (Hines et al., 2006)
Organizational Buying Behavior ? (Webster and Wind, 1972)
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
I
I
There can be significant
environmental challenges related
to such activities as production.
Environmental issues are closely
related to social issues, hence,
environmental challenges must be
analyzed.
Link between climate change and
social issues
? (Adger and Kelly, 1999)
? (Bohle et al., 1994)
Organizational change ? (Eason 1987)
Life Cycle Analysis and Life Cycle
Design
? (Ishii et al., 1994)
? (Rebitzer et al., 2004)
The activities conducted by the
business will have different effect
on a various number of
stakeholders. There are significant
information needs related to this.
Stakeholder Theory
? Mitchell and Wood (1997)
? Donaldson and Preston (1995)
? Jones (1995)
? Roberts (1992)
? Clarkson (1995)
? Freeman (1984)
Stakeholder Theory within in
field of Social Entrepreneurship
? Russo Perrini (2010)
? Munilla and Miles (2005)
? Brush (2008)
? ISO 26000
General theory within the field of
Corporate Social Responsibility
(CSR) and Social Entrepreneurship
? Roberts (1992)
? Desa and Kotha (2005)
There are information needs
related to the possibility of
designing activities to increase the
positive social impact of an
organization.
Strategy and Value Chain
? Porter (1985,1998)
? Porter and Kramer
(2002,2006,2011)
? Porter and Linde (1996)
? Vachani and Smith (2004)
? Clark et al. (2003)
? Walton et al. (1998)
? ISO 26000
There are significant challenges
relating to the monitoring and
measuring of social impact, which
entails important information
needs.
Theory within the field of CSR
? Roberts (1992)
? ISO 26000
? (Clark et al., 2003b)
24
5. DISCUSSION PART I: STARTING POINT ASSESSMENT
5.1. INTRODUCTION
The issue of mental and geographical distance between the person having a problem and the person trying to
solve it, was frequently addressed by interviewees. This distance poses a problem when the differences
between the two are so unimaginably vast that it is impossible for the entrepreneur to grasp the preconditions
of the user of a proposed product. The need to assess this difference is the topic of Discussion Part I.
The entrepreneur’s mental starting point, relative to the customer, is not specifically addressed by any of
Barringer and Ireland’s (2008) framework pillars, and is perhaps so fundamental that it can be regarded as
almost belonging to a pre-analysis stage. It therefore seems appropriate to introduce the tool relating
specifically to this subject as the first one.
Literature applied in this discussion relates to knowledge creation, both in a fundamental philosophical sense
and in a more practical perspective with regards to knowledge creation in organizations.
5.2. TOOL #1: THE PROXIMITY MATRIX
“….you should focus on the problem, not just treat the consequence. To understand the problem, you have to
live with them for a while.”
– Indian Business School Professor in charge of a practical social entrepreneurship course for MBA students
(C07:B10)
“…make sure you know your customers, and that you know how to serve them so that they’ll come back to you“
– India based American Impact Investor (C02:B04)
”…there is so much of it. Like when the Financial Times set up a panel of experts to vote over which product is
the best. They have no idea what it’s like out there. It is the wrong approach all together, to have experts sitting
in the west, or technologists sitting in the west, and having that as the driver.”
- Norwegian Impact Investor (C03:B10)
5.2.1. WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
Many of the interviewees address the lack of user understanding that often occurs when western product
developers attempt to design products intended for typical bottom of the pyramid (BOP) markets. Unforeseen
factors of culture, environment, tradition etc. causes the customers to use the product differently than what
the entrepreneur had planned for, or even not at all. For social entrepreneurs addressing marginalized groups,
and for those addressing groups across geographical distance in particular, a first step towards success must be
realizing what ones starting point is. In such cases, the socio-cultural distances to overcome can be so immense
that there is a real danger of the entrepreneur not realizing his or her shortcomings until the product flops in
the market place, as exemplified by interviewees (C03:B10). The importance of thoroughly understanding ones
customers, however, is not only paramount to social start-ups, it is a make or break issue for the success of any
knowledge based innovation (Drucker, 1985), and is particularly important in any case were an analyst wishes
to address a group of which he or she is not a part.
In short, the proposed question to be answered is:
How am I positioned in order to understand the realm I wish to enter?
25
The insight gained from answering this question can tell the analyst a lot about what the next steps must be, in
terms of recruiting and organizational development, self education, and also partnering. It is not to be
expected that an entrepreneurs him or herself will possess all the necessary knowledge to successfully sustain
innovative processes needed to realize new organizations and bring new products successfully to market
(Widding, 2005). If the analyst identifies knowledge needs, however, he or she can consciously arrange
knowledge holders within and around the organization (Widding, 2005), and also develop the organization to
crystallize and amplify the knowledge of its members to create organizational knowledge (Nonaka, 1994). This
enables the analyst to plan how the aggregated experience and knowledge of the organization can move
towards a deep understanding of the realm in which they intend to operate.
5.2.2. TOOL DEVELOPMENT
The construction of a tool that addresses the entrepreneur’s level of relevant insight demands the
establishment of two constructs;
1. A set of dimensions of knowledge relevance
2. Levels of achievement along the proposed dimensions
DIMENSIONS OF RELEVANCE
According to Nonaka (1994), the meaning of a piece of information to any given system, depends on what the
given system aims to do, its purpose or problem consciousness, and the broader environment in which that
system exists, also referred to as context. For the purpose of this discussion, the entrepreneur or
entrepreneurial team will constitute this system, a system which aims to create a technological solution to a
problem, and then bring that solution to a market. The dimensions of problem and context are easily
transferable to the entrepreneurial system addressed in this discussion, which is concerned with a technology-
based problem solution, and a market in which it must operate and succeed, and also resembles two of
Barringer and Ireland’s (2008) pillars of information needed for feasibility analysis itself; product or service, and
the market and industry. Thus, Nonaka (1994) provides a set of intuitive and discernable dimensions for the
tool. At this point, it must be noted that the term information as employed by Nonaka (1994) does not refer to
the deep understanding and insight, the need for which is emphasized in the findings from the interviews for
this thesis. The relationship between information and knowledge both within and outside the boundaries of an
organization is thoroughly discussed in management literature and philosophy, however, and forms a
promising basis for the second construct of the tool; the levels of knowledge achievement.
LEVELS OF ACHIEVEMENT
Nonaka (1994) defines knowledge as a justified true belief, as coined by Plato himself
1
. The concept of
knowledge is an ancient philosophical topic for debate, the contributions to which vary between the abstract
and the more practical. Recent contributions on the subject, however, seem to agree that information is not
knowledge, but that information contributes to the creation of knowledge through cognitive processes of
structuring and combination with other information and with previous knowledge (Machlup, 1983, Dretske,
1981, Chia, 2003), and it is reasonable to regard it as a less refined form of the same concept, which can be
processed to a higher level. Dretske (1981) argues that information is a commodity capable of yielding
knowledge, but that received information is relative to what the receiver already knows. Machlup (1983) states
that information is a flow of messages that might add to, restructure or change, knowledge also implying that
the information received must interact with existing knowledge in order to result in new knowledge.
Aristotle insisted that the ability to explain, and articulate the cause of things is what distinguishes the
knowledgeable person from the experienced one, meaning that the person of mere experience can only base
his knowledge on the symptoms of a phenomenon. Implicit in this lays a predilection for the ability to explain
rather than the ability to act. Within the realm of practice, as opposed to theory, however, the ability to
1
Plato; theTheaetetus
26
manipulate phenomena in the desired way, is often more valuable than the ability to name and explain them
causally. This bares a strong parallel to the cases of information based and experience based knowledge.
A relevant and interesting division with regards to experience and information is that between levels of
experience, as coined by Confucius
2
; I hear, I forget. I see, I remember. I do, I understand. The particular point
of interest in Confucius’ statement is the division between receiving secondhand information, witnessing
something happen, and experiencing it firsthand. There is something seductively intuitive and functional about
this division, hence it will be employed in the development of the tool.
The positioning of the analyst relative to the realm of entry, were the word realm is employed to contain both
dimensions of relevance, can be exemplified by two extremes. The firs example is a European engineering
student inventing a device that produces fertilizer from urine, meant for use by farmers in rural Africa. The
concept is based on the information that farmers need fertilizer, in combination with the knowledge that
humans produce urine. The second example is a woman in rural Africa who invents a simple mechanical fan for
driving the smoke from her cooking fire out of the hut, so as not to bother her infant. This concept is based on
firsthand experience with the problem at hand, and on knowledge about the cause of the problem and the
resources available for solving it.
It is reasonable to claim that the African woman’s product is based on a more fundamental insight into the
problem/solution, as well as the context of use, than that of the engineering student. While the engineering
student bases his concept on factual information, the woman bases hers on firsthand experience. It may very
well be that the engineering student is able to articulate the problem and its cause in a better way, but he is
not necessarily better situated to solve the problem.
5.2.3. TOOL CONSTRUCTION
Combining the conclusions from the above discussions on experience, information and knowledge, the
following levels of achievement are proposed:
1. Knowledge obtained through firsthand experience; denoted “shared “, as in shared with user.
2. Knowledge based on factual information from credible sources; denote by nothing, as it implies a gap
between needed and possessed knowledge, and therefore a lack of something as opposed to a
presence of something.
These levels can then be applied to the two dimensions of relevance, to form the following matrix:
2
Confucius 551 BC – 479
Problem Proximity
Shared Problem Innovation
An innovation based on experience with
the same problem in a different context
Peer Innovation
An invention by a user, wishing to offer the
solution to other in the vicinity experiencing
the same need.
External Innovation
An innovation based on limited or no
experience with the relevant problem,
nor context (often based solely on
technological feasibility).
Shared Context Innovation
An innovation based on experience with the
relevant context of the user, though not
with the problem at hand.
Contextual Proximity
FIGURE 1: TOOL #1: THE PROXIMITY MATRIX CONSTRUCTED I
27
PEER INNOVATION
Peer innovation is exemplified by the African woman inventing a simple fan. There is good reason to
believe that she can provide value for other women with small children living in her village, by
encouraging them to adopt this solution, based on the similarity of living conditions, of available
resources etc.
EXTERNAL INNOVATION
Is exemplified by the European engineering student, who does not have any fertilizing experience, and
who has never set foot in Africa. He bases his concept development on factual information.
SHARED PROBLEM INNOVATION
Can be exemplified by a European farmer developing a similar fertilizing device. He has extensive
firsthand experience with storing, transporting, and spreading fertilizer. He knows about the
consequences of using too much or too little, and about storing it separately from animal feed etc. He
has firsthand experience with needing fertilizer, and with using fertilizer. However, he shares with the
engineering student an acute lack of experience with farming and living in rural Africa, and is badly
positioned to foresee all the factors in the target market that will counter the use of the product.
SHARED CONTEXT INNOVATION
Can be exemplified by the rural African boy who invents a fan for drawing the smoke from the fire out
of the hut, as the woman next door is constantly complaining that it bothers her child. Living in the
same village, he knows very well which resources are available, and what infrastructure and
complementing devices are already in place to support his solution. However, he himself is the
youngest of his family, and has little experience with having infants in the hut. Also he has no
experience with cooking, as his mother performs this task. He therefore misses the target when
developing a solution that draws the smoke away, but makes a sound that keeps the child from
napping, as well as drawing the heat towards to cook, making the cooking experience excruciating. He
simply did not think of these things, as he did not have any experience with the problem.
THE MIDDLE GROUNDS
It is absurd to claim that all individuals can be said to either have firsthand experience or be practically
oblivious about a given subject. Surely a boy living in the hut with the woman and her child would
know that loud noise keeps the baby from sleeping, even though he was not a parent himself. The
possibility of gaining knowledge through observation, as described by Confucius is a useful basis from
describing the step between receiving secondhand information about something, and experiencing it
yourself. For example, this pertains to a person working at a women’s shelter, who has extensive
knowledge about the suffering of abused women, but who has not herself been abused. Although
Confucius’ statement counters the general view of Aristotle, it is interesting to observe that also
Aristotle
3
regarded seeing as the single sense which, more than all others, provides a reliable basis for
knowledge (Chia, 2003). The inclusion of another level of achievement called experience, applicable to
such cases as that of the women’s shelter worker, is therefore proposed, resulting in the following
matrix:
The simple exercise of placing him or herself in the matrix is meant to result in an insight about the
relevant distance between the analyst and the person who experiences the problem the analyst seeks
to solve. Jim Fruchterman (2008) states that a hallmark of the growing movement of people who seek
to solve social problems with new approaches is to approach these problems in partnership with the
communities one tries to help, benefiting from the inclusion of individuals with knowledge based on
3
Aristotle; Methaphysics, book Alpha 1
28
firsthand experience. Hence, finding one self in the lower left corner does not automatically mean
than the analyst should give up, but it implies a significant effort in developing and obtaining the
necessary knowledge.
5.2.4. REVIEW RESPONSE
The responses to this tool from the review are summarized in the table below:
Problem Proximity
Shared Problem Innovation
Shared Problem, Context
Experience
Peer Innovation
Problem Experience
Context and Problem
Experience
Shared Context, Problem
Experience
External Innovation Context Experience Shared Context Innovation
Contextual Proximity
FIGURE 2: TOOL #1: THE PROXIMITY MATRIX CONSTRUCTED II
TABLE 4: REVIEW RESPONSE, TOOL#1: PROXIMITY MATRIX
Respondent Positive Negative
Suggestions for
improvement
Investor
Very important
problem to address – it
is good that you have
created a framework
for this.
But can you say anything about what you should
do (as an innovator) when you find yourself in the
different cells? If not, then the framework is not
useful: “I seem to be on the lower left here, but I’ll
do my best anyway…..”
This is an interesting area
for future research. What
share of the innovators
starting in the various
cells succeed? What did
the ones who succeeded,
despite starting in the
lower left do?
Academic 1
It certainly addresses
something important.
I am not sure whether a matrix is the right tool, if
we are trying to develop a useful tool, versus
describing what is happening. I may not have
proximity with the user, but I think that is less
important than how much information I now have
about the needs of the user.
My point is that there are
many ways to get "close
to the customer" and it
might be more useful to
just assess on some scale
how well I have done
that.
Academic 2 N/A
I am not 100% sure I understand this one. By
speaking of the “reality” – a somewhat abstract
term – I am assuming you are speaking of the
context of the situation – so whether or not the
person identifying the solution really understands
the nature of the problem to solve? Hard to see
the user not understanding their own context or
situation. Wonder if this is instead the topic of
innovator working with user or not – or user being
the innovator or not…?
I think the issue of
innovators not really
understanding the
problem or situation first-
hand can be a significant
one – but I wonder if this
doesn’t fit more naturally
in a 2x2 matrix – though I
struggled with that
construct as well….
29
The general consensus among respondents is that the issue addressed by this tool is important, and very real.
Several respondents expressed that the tool was somewhat confusing, with regard to the axes, and with regard
to inconsistency and lack of intuitiveness in the use of terms and expressions.
Academic 3
The name is OK, I think.
The models seem to
belong in different
stages of the
entrepreneurial
process. The one
addressing proximity in
particular is addressing
a very fundamental and
basic issue. The subject
addressed here,
whether the
entrepreneur is really in
a place where she
understands the
domain she wishes to
enter, is very
important.
It is confusing that the word innovation is used in
some cells, and not in others.
I would think about re-
labeling the axis, to
something like technology
and social aspects. The
whole thing made more
sense to me when I
ignored the word
innovation, so I would
think about leaving it out.
User
I like the simplicity of
the design, and
appreciate how it ties
together shareholders
from both ends of the
“transaction.”
While I believe it does have some reference and
interest for shareholders, I believe there could be
some skew in that I think most innovators do not
work on problems they don’t have some kind of
personal connection with, due to a personal
experience or relationship that is likely the
precipitating factor that produces that work or
interest in finding a solution.
N/A
Student 1
Good to be aware of
this.
Left with the impression: “So what?” A bit difficult
to understand at first sight. Unclear which way the
axes are going.
Insert arrows
Student 2
I certainly acknowledge
the problem of
inventing something
“clever” in the west,
and the need to declare
ones position in the
matrix, to understand
that “I am clueless”.
The question is; What
are the implications?
The model is easy to
understand, and these
are important things to
think about. I think this
is the most significant
contribution among the
proposed tools.
I am not sure which way the axes are pointing. N/A
30
5.2.5. PROPOSED TOOL
Based on the responses from reviewers, and also on the continuously increasing maturity of the authors in this
field, some changes were made to the tool:
1. The levels of achievement were renamed:
? Shared referring to the entrepreneur sharing the user’s situation.
? Insight referring to the entrepreneur having a significant insight into the user’s situation, usually
based on observation or even participatory observation.
? Information referring to the entrepreneur basing his or her knowledge on received, factual
information.
2. The word innovation was left out, and replaced by the word entrepreneur, as the tool describes the
knowledge held by the entrepreneur, which is the basis of a concept innovation, but which the
innovation itself cannot hold.
3. Arrows were inserted to denote the increase and decrease of achievement along the two axes.
4. The shading was removed, as it did not serve any particular function.
5.3. FINAL COMMENTS
The fundamental importance of the topic addressed by this tool was confirmed by reviewers, implying real
relevance for future analysts. This tool is particularly applicable to those business ideas aiming to help people
through the core activities of a new organization, primarily through the supply of a product solution, but also
with regard to other types of market offerings.
The nest chapter, Discussion Part II addresses topics of a higher degree of practicality, namely the interception
between the Product and the Market and Industry.
Shared problem Shared problem, context
insight
Peer entrepreneur
Problem insight, context
information
Context and problem
insight
Shared context, Problem insight
External entrepreneur Context insight, problem
information
Shared Context, problem
information
FIGURE 3: TOOL #1: THE PROXIMITY MATRIX REVIEWED
Problem Proximity
Context Proximity
31
6. DISCUSSION PART II: PRODUCT EMPLOYMENT FEASIBILITY
6.1. INTRODUCTION
Product development and the interaction product/user were thoroughly addressed by interviewees. Findings
pointed towards specific information needs, regarding existing infrastructure, customer relevance in product
development, and understanding customer’s criteria for product use. These challenges are the topics for
discussion in Part II.
Barringer and Ireland (2008) address the topic of user understanding and the active involvement of users in the
analysis, through both concept testing and usability testing. These methods, however, and usability testing in
particular, demand that product design and development must have evolved beyond simply knowing what
problem to solve, and entail a number of choices which must have been made in order to obtain meaningful
feedback on sketches and prototypes. Also, it demands a physical proximity to the customers that analysts in
the very early and conceptual stages of a social concept often will not have. The challenge of overcoming this
lack of insight is addressed through the development of two tools:
? Tool #2, which addresses customer criteria for product purchase and use
? Tool #3, which addresses required infrastructure and complementing technology
Theory applied to the discussions in this chapter belongs to strategy and marketing literature, as well as
product development methodology.
6.2. TOOL #2: THE PRODUCT TRAJECTORY
“The case is very often that the technology developers have too little understanding of this [user situation], they
believe that “when I have made such a fantastic product, it will be sure to sell. I have made a sun driven cooker
that is more efficient, and heats faster than any other. Off course it will sell, we’ll just produce it, and ship it to
Africa.” And that sounds reasonable; they have sun, they need heat, it’s genius. But then it turns out that people
aren’t interested in cooking their dinner under the sun. It’s too hot and tiresome, and they are used to doing it
at night, when they have finished all the other tasks that demand sunlight. And also, the smoke from the fire or
cook stove they normally use adds a flavor to some of the dishes, which is important, and makes it taste
differently. It can be all kinds of things that prevent it from functioning in that context”
– Norwegian Impact Investor (C03:B10)
6.2.1 WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
Implicit in understanding the customer and customer needs, lies the need to understand customers’ criteria for
employing the proposed solution. This was explicitly addressed by interviewees, as something it was difficult
for entrepreneurs to gain insight into. Understanding the criteria which must be fulfilled in the market is
fundamental to product development, but also to the development of a distribution and service model and
marketing strategy. Identifying these criteria also forms a good basis for comparing the proposed solution to
competing solutions in the market, and for relative positioning along the dimensions identified. Another
implication is the suggestion of which customers should potentially be involved in the various stages of product
development, depending on the complexity and explicitness of their criteria. The question to be answered is
therefore:
What are the customers’ criteria for adopting the proposed solution to the problem?
For the purpose of this discussion it is assumed that the analyst has identified an end user in the market, and
that he or she has indentified a problem that the proposed end user needs solved. Understanding the end user
is addressed by the first tool, the proximity matrix, which holds implications for the entrepreneur’s effort to
32
truly understand the user. This next tool, however, is concerned with the challenges of winning actual
acceptance for a proposed solution. This is complicated by the fact that the event of the product being
employed by the end user is usually not dependent on that one actor alone.
6.2.2. TOOL DEVELOPMENT
In order for the acceptance criteria of the customers to be established, two issues must be addressed:
1. Identification of the various customers who’s criteria are relevant
2. Establishment of what their respective criteria are
CUSTOMER IDENTIFICATION
In order for the solution to travel from the organization to the end user, it will have to pass through a
number of actors. This is exemplified by Hines et al. (2006) who demonstrate how the external
customer of a company are not necessarily one individual, but that a series of customers can be
identified, through the example of a manufacturer of pet food:
? Intermediary # 1: Buyer for a super market chain
? Intermediary #2: Supermarket Store manager
? Intermediary #3: Super market shelf stacker
? Decision maker: Purchaser of pet food
? Intermediary #4: Person carrying the shopping bag home
? End consumer: The family dog
While a great number of downstream stakeholders can be identified, the relative importance of their
needs and expectations vary (Preece et al., 2002). While the intermediaries handle and physically
manage the product on its way to functional employment, two of these actors are particularly
important when it comes to product acceptance; The buyer, referred to by Hines et al. (2006) as the
decision maker, and the end user, referred to as the end consumer. It can be argued that the person
conducting the purchase of dog food for the super market chain is also a decision maker, however it
may be that the buyer portrayed here is simply making a re-stocking decision, after an initial supply
deal has already been made. Another example of customer identification is provided by impact
investor Kevin Starr (2010); a group of Stanford design students had identified a problem of mal
nourishment among children in Rwanda, and came up with an idea for how to get micro nutrients into
flower by using a cement mixer like device. They then modeled the chain of actors that had to buy into
this solution in order for the nutrient enhanced bread to get to the child who needed nutrients. They
identified a number of actors throughout the chain, such as the parent buying the bread, the baker
using the flower etc., all of which had to make the choice to adopt something new. Eventually, the
students dropped the project, due to the perceived impossibility of convincing all the necessary actors.
Based on the type of decision the customer has to make, the two customer types identified are:
1. Buyer
2. User
The denotation customer is used to address both, as they must both buy into the proposed solution in
one way or another. The term decision maker is not used to denote any of them, as they are both
required to make decisions in order for the product to be employed.
THE ESTABLISHMENT OF CRITERIA
The question of criteria now becomes a question of which criteria must be fulfilled in order for each
actor to make the favorable decision of buying or using, respectively. The analyst must keep in mind,
however, that individual actors in the chain can encompass both functions.
33
Use decisions, as exemplified by the solar cooker, are often dependent on factors which are difficult to
identify from a distance. This is supported by Barringer and Ireland’s (2008) inclusion of the usability
test at the prototype stage of development, and by the widespread recommendation to involve users
in product development (Urban and von Hippel, 1988, Kaulio, 1998, Abras et al., 2004, Fruchterman,
2008). Purchasing decisions, however, are often described as being particularly concerned with
product attributes, such as price, weight, and other easily describable dimensions of a product, along
which perceived value can be determined. Customers learn to value certain attributes through use
experience, where needs are translated to established corresponding attributes (Woodruff, 1997),
such as “need for mobility” translating into the attribute of low weight. However, there are other
ways to view the value on which customers base their decisions. Instead of jumping straight to
attributes, the analyst can ask the question “What do the customers value?” By employing this
question as a basis for criteria identification, the analyst may trigger a broader cognitive process and
basis for knowledge seeking.
Woodruff (Woodruff, 1997, Woodruff and Gardial, 1996) divides perceived customer value into three
levels:
1. Customers’ goals an purposes
2. Desired consequences in use situations
3. Desired product attributes and attribute performance
Goal oriented value is the product’s ability to enable the user to reach a specific goal. Level 2, the
consequence oriented level, addresses aspects of using the product which enables the user to obtain
his or her goals more efficiently, comfortably etc. It can be said to be a level of indirect goal
attainment, or of user friendliness. The third level, the attribute level, encompasses explicit, often
quantifiable or measurable aspects of the product, such as miles per gallon etc. Such attributes are
often the basis of purchasing decisions when a customer has many product solutions to choose from,
because they are measurable and enable the use of ranking and elimination methods (Kotler and
Keller, 2006). While attributes are strongly linked to purchasing decisions, goal attainment and use are
easily transferable to the use decision. The analyst should attempt to think in terms of multiple levels
when assessing customer criteria.
6.2.3. TOOL CONSTRUCTION
While each actor must be viewed separately, the way in which they influence each other must also be taken
into account. For example, if the parent expects the child to refuse to eat the bread, due to a foul smell or
strange color, the parent is not likely to buy the bread, even though the primary criteria of the parent, such as
price, availability and wholesomeness of the bread are fulfilled. In other words, the expected outcome of the
decision made by the next actor in line affects the current decision maker. This connection implies a need to
assess not only the customers, but also the order in which they make their decisions.
In order to capture the actors, their decision criteria, and the order in which decisions are made, a trajectory
model is proposed. This tool draws inspiration from the Customer Chain, a visual mapping tool used in
Customer Value Chain Analysis (CVCA), employed by product design teams to identify pertinent stakeholders,
their relationship to each other, and their role in the products life cycle. This tool helps designers define the
product, an exercise whose efficiency holds great implications for product development, and the failure of
which can strand entire products (Wilson, 1993).
In the Customer Chain, the various customers and intermediaries are mapped according to the flow of product,
money and complaints (Donaldson et al., 2006). This approaches a business model description, and for the case
of the proposed analysis tool, only the product flow will be included. While flow of material, money and
complaints is the focus of the Customer Chain, Kevin Starr (2010) suggests an exercise based on customer
34
behavior; as exemplified by the Stanford design students, he recommends to model the chain of actors who are
required to behave in a certain way in order for the product to be employed. The analyst must then consider
what will be required to make those actors behave in the desired way, for example by serving their child a
certain type of bread.
The proposed exercise is meant to be conducted as follows: Model the product trajectory backwards from the
intended end user to the point of departure from the organization. Identify users and buyers. Determine their
respective main criteria for purchase and use of the product, which determines if the product is likely to be
accepted by each actor. The below example describes a technological toy, and both design relevant criteria,
such as durability and intuitiveness, and business model relevant criteria, such as stability of supply, have been
included. All three levels of Woodruff’s (1997) hierarchy are also represented. Insight gained through this
exercise must be carried on to the planning and development processes concerning the various aspects of a
new venture respectively.
While this chain of actors is quite predictable and straight forward, a company striving to distribute its product
among a marginalized or socially excluded or isolated group may have to work hard to gain sufficient
understanding of the chain through which their product must pass to reach its user. Also, reaching such
segments may require the invention of new chains, which demands great amounts of local knowledge,
networks and creativity, in order to affect customer behavior.
Easy to understand
Fun to use alone
Fun to use with friends
Affordable
Durable
Not dangeorus
Educational
Easy to understand and explain
Proven popularity
Attractive profit margin
Stable and predictable supply
Buyer
User
Kid
Buyer
Shop
keeper
Parent
FIGURE 4: TOOL #2: THE PRODUCT TRAJECTORY CONSTRUCTED
35
6.2.4. REVIEW RESPONSE
Reviewers responses to the Product Trajectory are displayed in the table below:
TABLE 5: REVIEW RESPONSE, TOOL #5: THE PRODUCT TRAJECTORY
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
This figure is critically
important. Any business
planning process needs to
contemplate the entire decision
making process and the value
proposition of each member of
the process and channel. A
"mapping" of that can be a very
useful tool.
N/A
Don't forget to include any
governmental / regulatory players,
which are commonly involved in any
social venture.
Academic 2
An interesting concept. Does
deal with the challenges of
channels – getting from
company to end user, and the
factors that could get in the way,
which is a good thing
Not explicit enough N/A
Academic 3 This name makes sense, I guess. N/A
But this is all about the marketing. I
think the next important question
after the last one would be: Do I
understand the problem? I think this
model could make sense as more of a
situation trajectory, where you have a
current situation, and a situation that
you would like to get to, and then
there are some hurdles in between,
that you have to overcome. Really,
there is so much literature and theory
on the marketing, but this could be
for definition and problem
formulation.
User
I really do like the Product
Trajectory model. It is simple
and easy to understand, is very
poignant to a feasibility analysis.
It has a strong visual component
that aids in the process
visualization
N/A N/A
Student 1 Easy to understand
Still left with the
impression: “so what?”
Change the direction of the arrow.
Student 2
I liked it. A very relevant exercise
no matter what one is planning.
It doesn’t require a social intent.
It is important to map all stages,
and everybody who are part in
affecting the decision of
whether the product is
purchased or not.
N/A N/A
36
Most respondents agree that this tool is addressing an important aspect of understanding what will be
demanded of the product, and also the organization, in order to get the product to its intended destination.
Several respondents also comment on the visual simplicity of the tool, and that it is easy to understand. One
respondent was confused by the direction of the product flow arrow, which, is directed away from the end user
to remind the analyst to assess the flow in reverse. One respondent calls for the inclusion of regulatory players,
which often play critical roles in the introduction of new solutions to solve social problems.
6.2.5. PROPOSED TOOL
Based on the response from the review, in combination with continuous mental processing from the authors,
the following changes were made to the tool:
1. Inclusion of regulatory players. While the actors making purchasing and use decisions, are greatly
important in the chain, the case for social entrepreneurs is often dependence on the support of some
government or municipal authority, who, while perhaps not physically involved with the product must
still approve of its distribution. Such actors can be defined as gate keepers, actors who do not make
the purchasing decision, but who enables access to those who do (Webster and Wind, 1972). Other
gate keepers may for example be control agencies who perform certifications etc., as exemplified by
the need for CE – approval for a number of products when launched in the EU and EEA. The focus on
product flow, however, poses a problem for the inclusion of gate keepers, who usually do not
physically bring the product further along the flow, but rather permits the product to flow. In the tool,
they will therefore be placed off the flow line, but with a link to the gate, which will appear on the
flow line. Another unique aspect of the gate keeper is that while the buyers and users on the flow line
usually represent a greater number of individuals, there may in fact be one single actor or organization
who can and must make the gate keeper decision in question. The criteria and behavior of this actor is
therefore of critical importance. It must also be noted that in some cases, such as those of a new
venture selling a product to an NGO which hands it out to people in need in areas no one else can
reach, the buyer can also be a gate keeper. The analyst must then choose between distinguishing
between different divisions of the NGO who might handle the different functions, or by simply adding
the functions on top of each other, by stacking them vertically.
2. More emphasis on customer behavior, by inclusion of an explicit description of required behavior.
This also increases the analyst’s focus on the relationship between customers.
3. The explicit inclusion of the expectation of “next-in-line-acceptance” as a criterion for making the
desired decision, again increasing the focus on relationships.
4. The arrow was reversed, as the notion of backwards product flow may seem counter intuitive, and as
the analyst would be perfectly able to follow the flow backwards even though the arrow points
forward, in the direction the product would actually flow.
5. The employment of the product is included as a star at the end of the product flow, to illustrate that
the end user receiving the product is only the second last step, and that the user is also required to act
in a certain way for the product to be employed. The end user must in fact decide to use it, and do so.
6. The perceived value levels from the initial tool development discussion are included too spark the
analysts cognitive processes, and to systemize findings. The levels are denoted Goal, Process and
Attributes, respectively.
37
6.3. TOOL #3: THE DEPENDENCY MATRIX
“Software in India, to the extent that it is successful, it is true because of huge state investments (…….) facilities
were provided, the first internet links were provided.” – Indian Academic (C03:B11)
“We say that our solutions are almost always around adapting existing technology to a new use, with relatively
little technical risk. “Building the last social mile,” is a common phrase here. It presumes that we’re often 90 or
99% there: we need to mainly adapt and repackage existing tech to a new socially important use.” –American
Social Entrepreneur (C03:B12)
“…I saw last summer in Rajastan, places who used to get 10 hours of power now got six hours of power. So for
agriculture it means the time where you used to run your pump sets, is now time where you cannot run your
pump sets.” – Indian Academic (C03:B11)
6.3.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Another aspect of assessing the feasibility of the product actually being employed and functioning in the target
market, is considering how the proposed product must interact with other products or infrastructure to
function in practical use. Several interviewees, including both entrepreneurs, academics and users,
demonstrated the relevance of such complementing factors as technological infrastructure, as well as political
infrastructure and tax legislation. While tax legislation and politics are topics for other sections of an analysis,
the factors which directly relate to the product itself are the topic of this discussion. An example is the extreme
unreliability of power grids in parts of India, which was addressed by one interview subject as a major obstacle
for productivity and development. Factors with direct relevance to the product include:
FIGURE 5: TOOL #2: THE PROPOSED PRODUCT TRAJECTORY
Parent
decides to
buy a
present.
Birthday or
similar?
Parent
gives it to
the kid.
Shop
Keeper
keeps the
toy in his
shop, and
sells the
parent
the toy.
Shop
keeper
knows
about the
toy, and
decides to
sell the toy
in his shop.
He orders
from
supplier.
Agency
approves
the toy.
Parent
chooses
this
particular
toy. Parent
buys the
toy.
The kid
receives
the toy
from the
parent.
The kid
decides
to play
with the
toy.
Goal: Fun
Process: Easy to use
Attribute: Flashy colors
Goal: Happy kid,
Expects kid to like it
Attribute: Affordable,
curable, not dangerous,
educational
Goal: Turnover and profit, Expects
customers to want to buy
Process ease: Easy to understand
and explain to customers
Attribute: Attractive profit
margin, stable and predictable
supply
Control
Agency
Kid
Parent
Shop
Keeper
Attributes: Satisfies
requirements for
approval, correct
application
procedure
38
1. Physical infrastructure and complementing technology (e.g., rails, internet connectivity, power grid,
batteries.)
2. Geographical and environmental factors (e.g., sun, water, wind.)
3. Knowledge requirements (e.g., reading ability, understanding of the need to change batteries.)
These are conditions which an analyst entering that market must take into account. Adapting to conditions in
the market place can be viewed as limiting, or it can be viewed as a potential source of competitive advantage.
The first question to be answered is as follows:
What factors must be present in the market for the product to work properly?
While all the above mentioned factors are important, physical infrastructure and complementing technology
are distinctly different from the two others in one important way; factors of environment and geography are
usually not controlled by other organizations or individuals to any significant degree. Hence, these factors are
not likely to change as a result of some conscious reaction to a new product introduction. A similar case can be
made for knowledge; if the knowledge is not already present in the market, then the organization must provide
it or design around it, however, the knowledge is not something that is continuously supplied, or can be taken
away by other actors. The factor of physical infrastructure and complementing technology is unique in the way
it holds great implications for a new venture, not only on the product design level, but also with regard to other
aspects of concept development. The dependency relationship between the proposed product and the
surrounding technology on which it depends, is far more complex than that of the two other factors. In order
to address the aspect of relative importance of the dependency on the various other solutions, another
question must be raised.
What is the dependency relationship between the product and the other solutions on which it depends?
The answer to this question holds implications for product development, were the product may have to be
designed around challenges such as the lack or unreliability of other solutions. It also holds implications for
business model development and partnering and concept scalability, and can provide valuable insight into
where the analyst must later search for competitors, as well as dimensions along which the threat of
competitors should be evaluated.
Hence, the tool developed in the following discussion addresses the dependency relationship between the
proposed product and factors of technological infrastructure and complementing technology.
6.3.2. TOOL ASSESSMENT
In almost all cases, according to Teece (1986), of the successful commercialization of a technological
innovation, the utilization of the knowledge in question in conjunction with other capabilities or assets is
required. In some cases a proposed product may be designed as part of a system, in which other important
components must also exist. An example of this is provided by Benetech: when Jim Fruchterman worked to
develop an information sharing and reporting tool for human rights organizations, he discovered that at the
point of information input, namely the grass root groups of the organizations, though internet connectivity was
often obtainable, it was spotty and expensive. He therefore developed the system based on the principle of
local storage with instant uploading once a connection to the desired servers was obtained, rather than a direct
input into central servers at the time of data entry (Fruchterman, 2008).
In this case, the product was developed to function in combination with existing infrastructure in the target
market, on which it depended. There will also be situations in which the complementary solution is more
dependent on the new product than vice versa. In yet other cases the complementary solution and the product
may be equally interdependent, requiring some degree of tailoring from both to fit with each other. In many
cases, however, the product is dependent on generic assets, and the need for adaptation to particular solutions
39
is small or none. Teece (1986) introduces the following model to describe the relationship between a new
technology product (an innovation) and its complementary assets.
6.3.3. TOOL CONSTRUCTION
This model provides a good basis for the analyst when attempting to establish the relationship between the
product and other solutions and infrastructure in the market place. Such infrastructure could be gasoline
stations, internet connectivity, electricity, cell phone coverage etc. He or she must first establish what
infrastructure and technology is needed to make the product function. Alternatively, he or she may wish to
instead explore which factors are currently present in the market, or expected to be present in the near future,
and then shape the product offering to fit these preconditions. It many cases, however, a development process
will contain elements of both processes. The tool, a simplified version of the model is presented below.
Dependence of the asset on the
innovation
Specialized (unilateral dependence
of asset on the innovation)
Co-specialized (bilateral
dependence) e.g. container ships
and ports.
Generic
Specialized (unilateral dependence
of innovation on the asset
Dependence of the innovation on the asset
FIGURE 7: TOOL #3: THE DEPENDENCY MATRIX CONSTRUCTED
FIGURE 6: TOOL #3: TEECE`S COMPLIMENTARY ASSETS
D
e
p
e
n
d
e
n
c
e
o
f
t
h
e
a
s
s
e
t
o
n
t
h
e
i
n
n
o
v
a
t
i
o
n
Specialized (unilateral
dependence of
innovation on the asset
Specialized (unilateral
dependence of asset on
the innovation)
Generic
Co-specialized (bilateral
dependence) e.g.
container ships and ports.
Dependence of the innovation on the asset
40
6.3.4. REVIEW RESPONSE
Review responses to the Dependency Matrix inspired by Teece are displayed below:
TABLE 6: REVIEW RESPONSE, TOOL #3: THE DEPENDENCY MATRIX
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
The concept of this figure
is very important
N/A
I think a "mapping" of the dependencies
would be more useful than the
matrix. These dependencies could be
things like infrastructure and power, but
could also be things like the need for
after sales support & service (a common
problem) as well as user training.
Academic 2 N/A N/A
This matrix would benefit from a good
example. If there may be several assets a
company has – would this be applied for
every asset against every innovation?
Academic 3
This makes sense. I guess
the real question being
addressed here is Can I go
at it alone?
I overall miss something on
competition, but I think some
competitors could show up
here, if they control both
competing solutions and
infrastructure. That would
however, just be coincidental
N/A
User
Teece’s Dependency
Matrix is fine as a simple
“where does my puzzle
piece fit” assessment tool
in the asset/innovation
relationship.
N/A
It could be improved by the inclusion of
more real world examples as in the “Co-
specialized” sector of the matrix. You
may also include definite descriptors of
what constitutes an asset, and what
constitutes an innovation.
Student 1 N/A
I needed some time to think
before I really understand the
tool.
N/A
Student 2
Relates strongly to the
first model (Proximity
Matrix). Useful.
A bit difficult to understand.
Had to think a little about the
expressions used.
N/A
The expressions used seemed to complicate the matter for respondents, and several of them suggested the use
of examples to demonstrate the intended meaning of each cell. One respondent also suggested that perhaps
the mapping of complementing solutions in itself was as useful as the dependency assessment.
41
6.3.5. PROPOSED TOOL
Based on the response from the review, the following changes were made:
1. The lines of the matrix were removed, to allow the analyst to place any number of complementing
solutions along the dependency axes, thereby including a complete mapping exercise in the tool. This
way, the analyst does not simply evaluate the proposed products dependency on each solution
respectively, but also its aggregated dependency on complementing solutions in general.
2. Expressions used were exchanged for more intuitive ones.
3. An example was included to explain the tool.
Complementing solution
unilaterally dependent on
adaption to the product
Equally dependent on adaption
Generic, no adaption needed
Product
unilaterally dependent on
adaption to the complementing
solution
EXAMPLE
The use of the tool is exemplified by a cinema film projector:
Adaption dependency
of complementary
solution
Adaption dependency of product
Lense
Cinema theatre
layout
Adaption dependency
of complementary
solution
Adaption dependency of product
Screen
Movie format
Light bulbs
Local Power
supply
FIGURE 8: TOOL #3: THE PROPOSED DEPENDENCY MATRIX
FIGURE 9: TOOL #3: THE EXEMPLIFIED DEPENDENCY MATRIX
42
6.4. FINAL COMMENTS
The tools introduced in this discussion are to a larger extent than in Discussion Part I, based on existing
constructs, either through augmentation or combinations. They also address aspects of higher practicality, than
the tool developed in Part I. Like the tool from Discussion Part I, however, they are concerned with value
creation through the core activities of an organization, through a product value offering.
The next chapter, Discussion Part III, addresses the interception between the Organization and the Market and
Industry including stakeholders, and thereby opportunities of social value creation through organizational
policies and support activities. It also addresses the need to minimize negative impact, and to fully integrate a
social agenda.
43
7. DISCUSSION PART III: IMPACT AND STAKEHOLDER ASSESSMENT
7.1. INTRODUCTION
What has become apparent in the empirical data is that the start-up teams must deal with actors ranging from
large international commercial and financial actors, government and NGOs, as well as grass root users who may
for example be illiterate or otherwise prohibited from receiving or sending information in traditional ways. Due
to new and different stakeholders, connections and challenges, the empirical data has also shown that
managerial competencies and team experiences are even more important for a venture with a social focus. The
analyst must be thorough, especially with regards to the value chain, and how to measure the success of the
social impact the venture will have on its stakeholders.
The focus on the value chain is recurrent in the framework presented by Barringer and Ireland (2008), however,
this framework lacks inclusions of social value creation. In the analysis of the Market and Industry there is some
focus on the different stakeholders, but the stakeholder analysis is conducted in order to segment the market
and identify a niche market, and not with intended to provide insight into the venture`s potential impact.
Hence, there are shortcomings in the existing framework, relating to the evaluation of the potential social
impact on the various stakeholders a proposed organization.
To answer to these shortcomings, four tools are suggested;
? Tool #4, which addresses environmental impact
? Tool #5, which deals with the difficulties of measuring social impact
? Tool #6, an existing tool which helps the analyst implement social initiatives in the venture`s activities
? Tool #7, which maps the potential impact on the venture`s different stakeholders
These tools have a high level of detail, and it must be noted that the employment of these tools does not
require that all the addressed choices have already been made. Rather, the tools point to choices that should
be made in the future, important aspects to take into account when doing so, and possible alternatives for
future development. These first three tools are generally concerned more with social value creation through
support activities and organizational policies than the previously introduced tools, while the last tool addresses
the need to monitor future social impact. Theory applied in this discussion is collected from the areas of Life
Cycle Analysis and Design, the climate change debate, Strategy and Management literature, CSR literature,
Social Entrepreneurship literature and Stakeholder Theory.
7.2. TOOL #4: THE LIFE CYCLE DESCRIPTION
“…the other class of problems have to do with the question of poverty being the source of damage to the
environment. (…) … in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there would be
considerations of cost, there will be considerations of inability or some pressure to cut back on the initial capital
investment.”
-Indian Academic working with environmental issues (C12:B35)
7.2.1. WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
For any organization, the risk of damage to the environment and communities within which it operates should
be sought minimized. For a venture seeking to create a net output of positive additions to the world, however,
this should be regarded as even more pertinent. Whether environmental issues and social issues are to be
addressed as two distinct but connected subjects, or two sides of the same, is up to the entrepreneur, but the
connection between the two is well argued for (Bohle et al., 1994, Adger and Kelly, 1999). For the purpose of
tool development, however, social impact of the organization’s activities are addressed in Tool 5 and 6, while,
44
the potential environmental hazards of the product and its related processes are addressed in this discussion. It
should be noted that insights gained through the use of tool 4 can be highly relevant when employing tool 5.
Examples of environmental and social issues, such as poor manufacturing technology and conflicts between
industry and the environmental conditions of local communities, were mentioned in the findings. The question
to be answered in this part of the analysis is:
What are the potentially harmful effects of the product and its related processes?
Using this tool will cause the analyst to think thoroughly though the physical processes necessary to bring the
product to market, and what the physical effects of those processes might be. As will be demonstrated below,
this assessment is not limited to the processes that are performed within the boundaries of a proposed
organization, but rather encompasses all processes related to the proposed product, regardless of outsourcing
decisions.
7.2.2. TOOL DEVELOPMENT
The aspects of a new venture that holds potential implications for the environment are many, and vary
between ventures. For technology-based ventures, however, and particularly those involving the
manufacturing of products, there are a set of generic topics to address, mainly the materials used, the
product’s manufacturing and assembly process, the distribution of the product, the products life in use
(including service), and the retirement of the product (Ishii et al., 1994, Rebitzer et al., 2004).
In order to map the potential impact of a product and its related processes, two constructs must be
established:
1. Stages of the product’s processing and life, during which it can pose a hazard
2. Types of hazard posed by the product and its related processes
LIFE AND PROCESS STAGES
There are tools readily available for quantification of the environmental impact of all the factors stated
above. Every product has a life-span starting with design, resource extraction, going to manufacturing
and use, and ending with retirement activities, such as recycling or discarding into landfills. Over a
product’s life span it will impact the environment in different ways. Life Cycle Assessment is a
methodological framework for the assessment of the environmental impacts attributable to the life
cycle of a product or service, such as climate change, noise pollution, acidification, water usage etc. An
LCA will often also include indirect changes in other life cycles, and can be used to quantify the
potential impact of new goods and services (Rebitzer et al., 2004). The conclusion from an LCA is
quantified impact which can be summarized for a unit of a given product or service in terms of points.
Conducting an LCA, however, is a very time consuming activity, and involves a great amount of
information gathering. An array of LCA-databases has been created, which offer impact information on
common materials and processes, transport methods etc. There are also a number of dedicated
software solutions available for the conducting of LCAs, most of which are delivered with databases by
default (Rebitzer et al., 2004).
Conducting a full scale LCA-analysis for a product idea at the proposed stage of realization addressed
in this thesis is nonsensical. Still, the same process stages described are useful for an exercise of
awareness and exploration.
The issue of material choices for a new product holds environmental consequenses, as some materials
demand a lot of effort to exstract and process. Some materials, such as certain plastics, glass, paper
and metals, may be available in recycled form, and one can explore the possibility of utilizing materials
that have been used before. The account of materials used in the design demand that such decisions
45
have allready been made. For an early stage idea, however, the analyst may instead use this
opportunity to explore the major material alternatives and their assosiated environmental advantages
and disadvantages, and the manufacturing methods commonly used to processes them. When
exploring manufacturing processes especially, the analyst should pay attention to potential hazards to
employees.
The manufacturing and or assembly processes of a product depends on the respective materials
chosen, but also on the combination of these materials. Assembly is directly related to retirement
options, as disassembly of products must be performed where several types of material, demanding
different handeling, are combined (Ishii et al., 1994). The ease or difficulty of dissasembly may
determine if it is economically feasible to recycle or reuse material.
An important element of Life Cycle Design is Design for Product Retirement (DFPR), which involves
careful planning for the disposal of materials recovered from the product at the end of its life.
Different materials have different options, and for complex products consisting of components made
from different materials, disassembly and sorting of components according to their material is key.
Processes such as disassembly and reprocessing all have costs associated with them, and there is also
uncertainty as to the market demand for re-used components and recycled materials, as well as to the
availability of economical separation and reprocessing technologies (Ishii et al., 1994).
The generic options for material from retired products are (Ishii et al., 1994):
1. Re-use: Components are used as-is in another application
2. Remanufacture: Components are re-used in the same or a different application, after minor
repairs and overhauls are made.
3. Primary Recycling: Components are reprocessed into material for use in another high-value
product.
4. Secondary Recycling: Components are reprocessed into material for use in a low-value
product, such as concrete filler or fence posts.
5. Tertiary Recycling: Polymer components are chemically decomposed into their basic
elements, and processed into new plastic or other products such as petrol, heating oil or
asphalt.
6. Quaternary Recycling: Components are incinerated for the production of heat and/or
electricity.
7. Disposal: Components are eliminated without the recovery of any intrinsic value.
(Ishii et al., 1994)
Depending on the degree of recycling a material can undergo, the analyst may consider the possibility
of recycling or reusing his/her own products to some extent. This is of course also a matter that relates
directly to organizational design and market conditions.
In addition to the environmental aspects of material input, processing and retirement, a technological
product may require certain inputs and outputs during its time in use. This may for example be various
fuels, and the environmental consequences of this consumption must also be included in an
environmental assessment of the product.
TYPES OF HAZARD
When attempting to assess environmental consequences without using LCA-systems, it may be helpful
to think in terms of stages, but also in terms of types of effects. However, it is difficult to generalize
when the processes involved vary so much between products. A possible way to provide a general
division of hazards is to consider the people affected. This implies a division into groups based on the
46
seriousness of effects inflicted on the people, or possibly by their relative risk of being affected. For
the development of this construct, inspiration can be found in Eason’s (1987) three types of users of a
product:
? Primary users: Those persons who actually use the artifact.
? Secondary users: Those who occasionally use the artifact, or use it through an intermediary.
? Tertiary users: Those persons who will be affected by the use of the artifact, or make
decisions about its purchase.
Although Eason (1987) did not primarily intend this division for environmental consequences of
technological products, the division itself is quite basic and versatile, and reminds the analyst that, as
with smoking, to use an exhausted example, the product does not only affect the user, but also those
in the vicinity. In order to apply this perspective to the various stages, however, the term user may not
always be appropriate, for example when describing factory workers who have firsthand contact with
a manufacturing process. The term user is therefore exchanged for the term contact, which allows the
analyst more freedom to adapt the tool to the cycle of his/her product. Another adjustment that
needs to be made, is to the expression of use through intermediary, which may not necessarily make
sense at every stage, or for every product. Also, purchasing decisions are not considered to be of
relevance to this specific part of the assessment, and the following adjusted division is proposed:
1. Primary Contact
2. Secondary Contact
3. Tertiary Contact
Primary contact denotes first hand contact with materials and processes, while secondary contact
denotes immediate proximity to materials and processes, and/or to the individuals who experience
primary contact. Tertiary contact denotes the surrounding actors in a wider perspective.
7.2.3. TOOL CONSTRUCTION
These two dimensions of user relation and life cycle stage are well suited for a matrix-model, which illustrates
the information required in this stage of the analysis.
Although generic stages are listed in the tool, the analyst is free to design his/her own material and process
flow, and fill in the cells accordingly. The exact definition of primary, secondary and tertiary contact will also be
case-dependent, and analysts may also wish to have fewer or more tiers of contact.
47
Stage of the product’s
life cycle
Material/Process Primary contact Secondary contact Teritary
contact
Resource extraction:
Account for of the
materials utilized in the
product design, and their
associated environmental
risks with regards to
extraction and pre-
processing.
Example:
Material X,
Process Y
Example:
Worker, with first hand contact
with the resource extraction
process.
Little or no risk.
Example:
Everyone.
Increased
CO
2
emissions
Manufacturing and
assembly process: Account
for the intended
manufacturing processes,
and their associated
environmental risks,
included health risk of
workers.
Example:
Materal X,
Process W
Example:
Worker, with first hand contact
with the manufacturing process.
Danger of toxic fume inhalation.
Example:
Inhabitants of the
area where
manufacturing takes
place. danger of local
leaks of poisonous
gas.
Example:
Material X
Process P
Example:
Worker with firsthand contact
with process. Little or no risk.
Distribution: Account for
the planned distribution
methods, and potential
environmental risks
associated with these
methods.
Use: Assess the potential
environmental impact the
product will have during its
life in use.
Retirement: An assessment
of possible retirement
options for the product
Example:
Material X,
incineration
Example:
Worker, with first hand contact
with the retirement process.
Danger of toxic fume inhalation.
Example:
Everyone.
Increased
CO
2
emissions
FIGURE 10: TOOL #4: THE LIFE CYCLE DESCRIPTION CONSTRUCTED
48
7.2.4. REVIEW RESPONSE
Review responses regarding the Life Cycle Description are presented below:
TABLE 7: REVIEW RESPONSE, TOOL #4: THE LIFE CYCLE DESCRIPTION
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
I like the life cycle table, and see it as
useful tool
I am not sure it is part of the
feasibility decision, though,
so much as an important part
of the business planning
process for a socially
conscious venture. It also is
typically viewed as a relative
thing (meaning the impact
compared to the status quo)
N/A
Academic 2
An interesting concept, and an
interesting interpretation of the
concept.
N/A
It would help to have more
examples in the boxes.
For distribution, for example,
this could be a question of
dangerous loads traveling
through residential
neighborhoods, waste disposal
traffic, etc. The Use category
could speak to packaging that is
discarded or recycled, fumes the
product might give off during
use, or other elements – that
would make this more clear
Academic 3
There is nothing intrinsically wrong
with this model. It addresses
important things.
It is advanced, and I think it
belongs to a later stage. If
you spring this on an
entrepreneur first thing, he is
not likely to conduct the
analysis.
N/A
User
The Life Cycle Description is good in
that it includes an accurate
description of what it is.
N/A
You may need to take into
consideration where in the
process the end user of the
particular product is, as the type
of product or service may
change whether the end user is
primary, secondary, or tertiary
in the process. This could be a
somewhat separate
consideration from the
“manufacturing/creation”
process itself of a particular
social service.
Student 1 Understand the need for this tool. N/A
Fill it out with more examples?
It is only environmental issues,
what about social
consequences?
49
Student 2
This is something you typically care
more about if you have a social
inclination, than if you are more
straight forward profit seeking. You
HAVE to think about this if you are
starting a social venture, and this is a
simple and fair way of getting it done.
It’s basically a checklist covering
pretty much everything. It is very
important to think about alstages of
development, and that you must also
consider several tiers of people who
are affected.
Is this only environmental? I
reacted to the lack of social
inclusion.
N/A
Respondents generally understood the basics of the tool, as well as its purpose, but suggested the increased
use of examples to explain it more clearly. One respondent remarked that such an assessment would typically
be performed to evaluate a development relative to a status quo. This makes sense, as the assessment
proposed here is that between the current non-existence of an organization requiring certain processes and
materials, and its realization.
7.2.5. PROPOSED TOOL
The proposed tool is the same as the previous one, but with more extensive exemplification. The example
product used here is a matchbook.
Stage of the products life
cycle
Material/Process Primary contact Secondary contact Teritary contact
Resource extraction:
Account for the materials
utilized in the product
design, and their
associated environmental
risks included health risk
of workers with regards
to extraction and pre-
processing.
Example:
Recycled paper board
Wax
Gelatine and silicon
(binders)
Potassium Chlorite for
oxidization
Sulfur as fuel
Silica and red
phosphorous in powder
form
Glue
Non-recycled paper suited
for color print
Example:
Fully automated
processes.
Process operator:
Danger of fume
inhalation
Example:
N/A
Example:
Everyone.
Air pollution
50
Manufacturing and
assembly process:
Account for the intended
manufacturing processes,
and their associated
environmental risks,
included health risk of
workers.
Example:
Stamping and cutting
Dipping in hot wax
Oven drying
Chemicals mixing with hot
water
Dipping in chemicals
Fan drying
Mixing of silica, red
phorphorous and glue
Printing on matchbook
cover
Stroking of glue mix on to
paper
Matchbook paper cutting
Packaging
Example:
Fully automated
processes.
Process operator:
danger of fume
inhalation
Example:
Local community
Danger of
poisonous waste
emissions polluting
air and water
Example:
Increased air
pollution
Distribution: Account for
the planned distribution
methods, and potential
environmental risks
associated with these
methods.
Example:
By truck
Example:
Loading personnel
and driver. Low
risk
Example:
Local communities:
Some noise from
traffic
Example:
Everyone:
Increased CO
2
emissions
Use: Assess the potential
environmental impact the
product will have during
its life in use.
Example:
Person lighting match
Example:
User:
Low risk. Negligible
fumes.
Example:
N/A
Example:
N/A
Retirement: An
assessment of possible
retirement options for
the product
Example:
Incineration
or disposal of burned
paper stub
Example:
N/A
Example:
N/A
Example:
Everyone:
Increased CO
2
emissions
Or increased
landfills
FIGURE 11: TOOL #4: THE PROPOSED LIFE CYCLE DESCRIPTION EXEMPLIFIED
51
7.3. TOOL #5: IMPACTED STAKEHOLDERS
“it is a very very key critical part of social entrepreneurship, understanding that customer, know who you’re
serving, and that you are building your relationship to that customer and sensitive about how you serve that
customer so that you not only can be successful over time, but your perception of the community never
becomes one that you’re taking advantage of a vulnerable customer base.”
–India based American investor (C07:B10)
7.3.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
“Stakeholders are persons or groups that have claim, ownership, rights, or interests in a corporation and its
activities, past present, or future” (Clarkson, 1995). No venture operates on its own, and will require the
support and collaboration of others (Russo and Perrini, 2010), and it is widely accepted today that
organizations have a relationship with the communities in which they operate (Standard, 2010).
After the publishing of Freeman`s (1984) book, Strategic Management: a Stakeholder Approach, the concept of
“stakeholders” has become commonplace in management literature and manager`s thinking (Clarkson, 1995,
Jones, 1995, Mitchell et al., 1997, Donaldson and Preston, 1995). Looking into this extensive literature, one will
notice that the concept “stakeholder” is explained and used by various authors in very different ways
(Donaldson and Preston, 1995, Munilla and Miles, 2005). Since the field of Stakeholder Theory is not the focus
of this thesis, this will not be elaborated on any further. However, the theory will be used to discuss the
empirical data as well as the theory drawn from the field of Social Entrepreneurship.
Social problems are rarely solved independently, and often require collaboration with a variety of stakeholders
(Desa and Kotha, 2005). According to Kanter and Summers (2004) the various financial and nonfinancial
stakeholders to which a social venture is readily accountable, are also greater in number, and more varied,
than what is the case for traditional ventures. This results in greater complexity in managing these relationships
(Kanter and Summers, 1994). Managers need to figure out how to deal with this diverse set of constituents,
some of whom can sometimes be difficult to understand, predict and work with (Mitchell et al., 1997). And in
addition to being responsible for its own decisions and activities, an organization may have the ability to affect
the behavior of stakeholders with which it has relationships. This leads to the following question:
Who are the stakeholders and what impact will the organization have on the different actors?
When evaluating opportunities in the social sector, understanding what value is created, for whom and how, is
fundamental (Brush et al., 2008). Guclu (2002) argues that for an idea to be promising, the entrepreneur`s
values and commitment to addressing a particular social need must be shared by enough key stakeholders to
give the proposed venture some initial viability.
As mentioned in the findings, the management is responsible for a culture of social awareness being infused in
the venture. According to Jones (1995) the management influences the corporate culture, the examples it sets
through its behavior tend to be adopted by the employees at lower levels of the firm (Clinard, 1983). It is
therefore the manager`s role to set a culture where all the members are aware of the potential impact that
their activities will have on stakeholders (Jones, 1995).
Engaging with the stakeholders will among other things:
? increase the organization`s understanding of both the unintended and intended consequences of its
decisions and activities on the different stakeholders (Standard, 2010).
? ensure that the venture does not discriminate against anyone with whom it has contact or on whom it
can have an impact (Standard, 2010).
52
? help determine how to best increase the beneficial impacts of the venture`s decisions and activities
and how to lessen any adverse impact (Clarkson, 1995).
? help identify conflicting interests and goals among the stakeholders (Jones, 1995, Roberts, 1992).
7.3.2. TOOL DEVELOPMENT
The stakeholders are not only the intended users or clients, but also the third-party payers, donors, workers,
middle managers etc., who may have distinct and competing interests (Jones, 1995). An entrepreneur aiming
to implement a social focus should have plausible value proposition for each stakeholder group (Standard,
2010, Munilla and Miles, 2005). This is especially important when the stakeholders are dependent on the
company, which is the case in many developing countries.
When attempting to map the positive or even negative social impact following the hypothetical realization of
the business concept, the analyst should be careful not to only focus on the activities downstream from the
focal firm. Social impact will also result from supplier relationships and logistical activities, as well as internal
policies of human resource management etc. (Standard, 2010). This tool has been developed to help the
analyst assess the potential social impact on:
1. Down-stream stakeholders
2. Up-stream stakeholders
3. The environment and communities in which the various activities if the venture will take place.
The analyst can choose to address more than one community on each side of the organization, if for example
the venture will have production sites in different locations.
7.3.3. TOOL CONSTRUCTION
A venture has a significant impact on its surroundings; it can pose as a role model to other actors in the same
industry or community; it can improve the living standard for its employees, and it can support local activities
(Standard, 2010). However, it can also have a negative influence in all the same areas (Munilla and Miles,
2005). For example, community residents` interests could include the positive impacts of an organization, such
as employment, as well as the negative impacts of the same organization, such as pollution. The entrepreneurs
should therefore always monitor its impacts on the environment, and obtain deep understanding of the impact
made on the different stakeholders (Clarkson, 1995).This tool is inspired by a figure developed by ISO:26000,
however this model painted a too narrow picture of the situation. This altered version takes into consideration
that the venture might operate in several different communities and environments, and that the activities the
venture conduct will have implications both the down- and up-stream value chains. The goal of the tool is also
to identify conflicting interests among the stakeholders.
53
FIGURE 12: TOOL #5: IMPACTED STAKEHOLDERS CONSTRUCTED
54
7.3.4. REVIEW RESPONSE
Review responses to the Affected Stakeholders tool are presented below:
TABLE 8: REVIEW RESPONSE, TOOL #5: THE IMPACTED STAKEHOLDERS
Participant
Positive Negative
Suggestions for change
Academic 1
Perhaps the most important take
away for a social venture, to the
extent that they help the
entrepreneur articulate the value
proposition more comprehensively
and in a more compelling way.
N/A N/A
Academic 2 Seems relatively straightforward. N/A
Some examples
would be helpful.
Student 1 Rational exercise
Do not know if it provides me with
any more information than what is
in the explanatory text.
Very generic.
Student 2
Important exercise. Brings forward
aspects that are easy to forget. Social
part of the LcA-exersice. An analysis
of the stakeholders is extremely
important to reveal conflicting goals.
N/A N/A
Investor N/A N/A
Comments that it
might be a good idea
to first conduct a
simple analysis of the
stakeholders that will
be affected the most.
Academic 3 N/A
If you spring these on an
entrepreneur first thing, he is not
likely to conduct the analysis.
N/A
User
Powerful way to view all of the inter-
relationships of the various
stakeholders, and how an impact
upon one of these might ripple out to
impact other areas within the
construct. Could be an accurate way
to see how an organization can
improve its practices to have the
most significant effect on both
upstream and downstream
stakeholders, and thus identify
methods to improve their own role
as intermediary and increase the
effectiveness of their business model.
N/A N/A
The majority of the reviewers agree that this is a valuable tool and an important take-away for an analyst, both
in order to articulate the venture`s value proposition towards different stakeholders, and also to identify
conflicting interests. However, the review also shows that there is need for exemplification of the tool, to give
55
the analyst a guide to which of the stakeholders will be affected the most. Clarkson (1995) introduces the terms
primary and secondary stakeholder groups.
Primary stakeholders: “Groups without whose continuing participation the corporation cannot survive as a
going venture”. Where examples are employees, distributors, producers of complementary goods, customers,
and suppliers, the government and communities whose laws and regulations must be obeyed, and who provide
the markets infrastructure. There is a high level of interdependence between the venture and its primary
stakeholders (Clarkson, 1995).
Secondary stakeholders: “those who influence or affect, or are influenced or affected by the corporation and
are not essential for its survival”. Examples are the families of the employees and people living in the
communities where the venture operates and the media.
7.3.5. PROPOSED TOOL
As a result of response from the review, the tool has been altered by:
1. Implementing some examples of various stakeholders
2. Inserting examples of how the different stakeholders might be affected by the venture`s activities.
FIGURE 13: TOOL #5: THE PROPOSED IMPACTED STAKEHOLDERS
56
7.4. TOOL #6: THE SOCIAL VALUE CHAIN
“If you want to fight poverty, the best thing is to keep people involved in value earning activity. You must create
a value chain! Then some can work at this level, some at the next level etc.”
- Indian Academic working closely with grass root social entrepreneurship (C09:B20).
7.4.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Globalization, greater use of mobility and accessibility, and the growing availability of instant communication
mean that individuals and organizations around the world are finding it easier to know about the decisions and
activities of organizations in both nearby and distant locations (Standard, 2010). This means that organizations’
decisions and activities are subjects to increased scrutiny by a wide variety of groups and individuals. Keeping
track of all the activities in a venture is therefore important not only to the start-ups` stakeholders, but also in
order create a positive social impact and to maintain a good reputation (Jones, 1995). This brings about the
question:
How can the proposed venture increase it positive social impact through its activities and policies?
As this thesis addresses technology-based ventures, many of which have a very typical value chain structure, it
is suitable to draw from Porter (1985) when developing this tool. Porter and Kramer have made the value
chain concept applicable, as they have already addressed the social issues that may arise in different areas of
the value chain, and also how these may be viewed as opportunities for value creation (Porter and Kramer,
2006, Porter and Kramer, 2011). The value chain coordinates and links together value-adding activities, and is a
useful tool for defining a venture`s core competences (Porter and Kramer, 2006).
Porter and Kramer (2006) argue that some company activities will prove to offer opportunities for social and
strategic distinction, and that the venture`s margin or profit depends on its effectiveness in performing the
activities presented in the value chain. Since the value chain touches virtually every activity in an organization,
it can be used as a framework to identify the potential positive and negative social impact of those activities
(Porter 2006), ranging from hiring and layoff policies, to greenhouse gas emission.
7.4.2. TOOL ASSESSMENT
Even though Porter`s Value Chain is a familiar tool for most academics within strategy and management, the
altered version with social objectives is not as widespread. The two main activity groups in the value chain,
with their respective sub categories, will presented in the following, with elaborations, examples from the
empirical findings, and contributions from other theories, to justify its admittance among the presented tools
in this thesis.
1. Support activities comprising of:
a. Firm infrastructure
b. Human Resource management
c. Technology Development
d. Procurement
2. Primary activities comprising of:
a. Inbound Logistic
b. Operations
c. Outbound Logistic
d. Marketing and Sales
e. After Sales Service
57
SUPPORT ACTIVITIES
A) FIRM INFRASTRUCTURE:
Included in the firm infrastructure are activities like general management , governmental
affairs, accounting, finance, planning and quality management(Porter, 1998), to name a few.
Firm infrastructure can be an important segment when implementing social aspects into a
start-up, and the examples of this are many. The management can for example facilitate
access to, and where it is possible provide support and facilitate for, education and lifelong
learning for community members. The management`s focus should be to see community
goals and company goals as mutually interdependent (Carroll, 1979), and giving customer fair
value, full information, and fair guarantee.
By joining efforts with other organizations and governmental institutions, the ventures can
support respect for social and cultural rights, and also contribute to the fulfillment of these
rights (Castka and Balzarova, 2008). The venture can also decide to adapt goods or services to
the purchasing ability of poor people.
One challenge lies in the fact that all the aspects taken into consideration must be done so in
the local context (Standard, 2010). And as one could see from the stakeholder tool, there can
be multiple contexts to take into consideration.
The following points could be taken into consideration in the Social Value Chain:
? Financial reporting practices
? Transparency
? Government practices
? Use of lobbying (Porter and Kramer, 2006)
? Infuse a culture of social focus in the management
B) HUMAN RESOURCE MANAGEMENT:
As an employer, an organization contributes to one of the most widely accepted objectives of
society, namely the improvement of standards of living through full and secure employment
and decent work (Standard, 2010).
The employees should also be offered safe working conditions through training and skills
development, safety and industrial hygiene, and any policy or practice affecting conditions of
work, in particular working time and payment. With regard to safety, the analyst can benefit
from bringing any significant discoveries from the Life Cycle Description exercise into this part
of analysis.
There are differences in who are regarded as a vulnerable group. One academic interviewed,
stated that in the developing world, women and people discriminated against on the bases of
race and descent, are especially exposed groups. In countries in the developed world,
immigrants, previous drug addicts and people with criminal records are among those being
kept outside the working life. By offering these groups work and providing them with
favorable working conditions, start-ups can create important social impact.
58
The following points could be taken into consideration in the Social Value Chain:
? Education & job training
? Safe working conditions (align with Life Cycle Description findings)
? Diversity & discrimination
? Health care & other benefits (Porter and Kramer, 2006)
C) TECHNOLOGY DEVELOPMENT:
According to an academic in India, the entrepreneur could experience that the technology
used in developing countries is not at the forefront. This, he argued, often lead to the trade-
off between development and environment, where the environment in most cases lost in
developing countries. Not only does this affect the stakeholders who live in the environment,
it will also have implications for the ventures planning to have production facilities in a
developing country.
The following points could be taken into consideration in the Social Value Chain:
? Recycling
? Relationship with universities
? Ethical research practices
? Products safety
? Conservation of raw materials(Porter and Kramer, 2006)
? Assessment of the quality of the available technology
D) PROCUREMENT:
Actors within nearly all the disciplines spoken to argued that “middlemen are bad thing”
(C09:B25), and that they in the majority of cases do not share the profit with the community.
If an organization is forced to use middlemen it should use only those intermediaries who are
legally recognized (Standard, 2010). To make sure that the middlemen are not taking
advantage over the situation the organization should, where it is possible, establish
contractual obligations with suppliers and subcontractors (Eisenhardt, 1989), make
unannounced visits and inspections, and exercise due diligence on the intermediaries
(Standard, 2010).
Jones (1995) states that a “firm that has relatively few suppliers will outperform firms that
have many suppliers”, and “firms that have long-term relationships with their suppliers will
outperform firms with relatively brief relationships with their suppliers”. This, he says, is a
result of contracts built on mutual trust. For a venture with a social mission, the goal should
therefore not be to practice bargaining power toward their suppliers or buyers, the aim
should be a balanced relationship, where no part is being exploited. What should be the case
for a social venture is that the suppliers and customers are being viewed as equal partners in
the transaction, and that consumers’ rights are liberally interpreted and honored (Carroll,
1991).
The following points could be taken into consideration in the Social Value Chain:
? Procurement & Supply chain practices (e.g., bribery, child labor, goal alignment)
? Uses of particular inputs (e.g., animal fur)
59
? Utilization of natural resources (Porter and Kramer, 2006)
? Reduce the number of middlemen
PRIMARY ACTIVITIES
A) INBOUND LOGISTICS
Changes in inbound logistics processes can, according to Walten et al. (1998), have a great
economic, social and environmental impact and significantly reduce both the generated
waste and the product cost. Changes in this activity can imply everything from making the
employees aware of environmental implications of packaging and inbound logistics, to
training the venture`s customer to be sensitive to the importance of issues like disposal and
obsolescence, and the mistake of purchasing strictly based on unit price (Walton et al., 1998).
Initiatives to increase the positive social impact could be the reduction of inbound logistics
costs (e.g. by combing material delivery with another venture), the reduction of
environmental impact (e.g. reduction of pollution generated by inbound logistics through
choosing more environmental friendly distribution methods like trains), and minimization
dangerous loads travelling through residential neighborhoods.
The following points could be taken into consideration in the Social Value Chain:
? Transportation impacts (e.g., emissions, congestion, logging roads)(Porter and
Kramer, 2006)
? Combing material delivery with another venture.
? Difficulties with existing infrastructure
B) OPERATIONS
Below are some examples of aspects that an analyst should consider in regards to a venture`s
operations:
? Take precautions and implement measures aimed at preventing pollution and
waste
? Minimize the use of materials
? Utilize sustainable materials
? Emissions and waste impact assessment
? Biodiversity and ecological impact assessment
? Energy and water usage kept to a minimum.
? Worker safety and labor relations
? Avoid hazardous materials
? Use of environmentally sound technologies and practices.
Minimizing the use of materials will not only enhance the sustainability of operations, but
more importantly it can be a driver for cost reduction at the operational level (Porter and Van
der Linde, 1996).
Minimizing the damages if an accident should occur could also be an aspect to consider. By
entering into collaboration with local actors to develop an accident prevention and
preparedness program, the stakeholders will know how to act to minimize the damages.
60
The following points could be taken into consideration in the Social Value Chain:
? Emissions & Waste
? Biodiversity & ecological impacts
? Energy & water labor relations
? Hazardous materials(Porter and Kramer, 2006).
? Preparedness program
C) OUTBOUND LOGISTIC
Sustainability initiatives affecting outbound logistics can result in improvement similarly to
what described for inbound logistic. Examples in this context can be found in the reduction of
packaging dimensions, which has a direct impact on both pollution costs.
According to Kevin Starr (2010) the distribution is one of the most challenging parts of the
value chain. As mentioned under Technology Development, the existing technologies in
developing countries are often not in the forefront. An entrepreneur targeting a market
where this is the case, must be aware of that the technology and the infrastructure might be
of a poor standard and cause difficulties (Vachani and Smith, 2004). There is for example a
chance that there is no existing road connection, no electricity, or there might not be
coverage on the mobile phone etc.
In cases where the venture is operating internationally, it could work toward hiring local staff
in each target market. This will, among other things, help the venture with the distribution
through local enterprises where it is practicable. An entrepreneur explained that they have
the major relief organizations and Ministries of Health as their main customers, because this
helps them distribute the product to poor people all over the world and also within each
country. The same entrepreneur stated that they also had offices in four different countries,
and agents and distributors in every country they were active in. As a result of them hiring
local people and making their products in the developing world, they had no trust issues
neither with the government, nor the end users .
The following points could be taken into consideration in the Social Value Chain:
? Packaging use and disposals
? Transportation impacts(Porter and Kramer, 2006)
? Establishment of local offices.
? Quality of the infrastructure.
D) MARKETING & SALES
A Norwegian investor stated that the developers of technology often have a severe lack of
knowledge about the importance of the marketing and sales. The investor argued that
entrepreneurs often have the attitude: “I`ve made a remarkable product, of course it is going
to sell”. However, once the solution has been installed they realize that they have too little
knowledge about the local conditions, and the project becomes a flop.
Recent studies have shown that focusing on social impact sells (Porter and Kramer, 2002), and
ventures know how to take advantage of that. Jones (1995) states that the seller of a product
has more information about it than the buyer does, and may opportunistically misrepresent
its value, for example the quality. Fair marketing provides the customer with factual and
61
unbiased information about product and services in a manner that can be understood by each
segment of the consumers (Jones, 1995). This will allow the consumers to make informed
decisions about consumptions and purchases and to compare the characteristics of different
products and services (Standard, 2010).
Social responsibility has major implications for pricing decisions in some markets (Vachani and
Smith, 2004). They have used the term socially responsible pricing, which they define as:
“pricing that attempts to sustain or enhance social welfare”. This might involve higher prices
both for the wholesaler, and the consumer, which is the case for Fairtrade products.
Price discrimination across countries, with significantly lower prices in developing countries,
could result in increased pressure for price reductions in developed countries where
companies are constantly facing demands for lower prices from a range of buyers (Vachani
and Smith, 2004). Vachani and Smith (2008) argue that one of the risks of significant price
differences between countries, from the ventures established in the developed countries`
perspective, is the possibility of low-priced product spreading from developing countries to
developed countries. While it may be difficult to eliminate the spreading, greater attention to
the problem might help contain the risk.
The following points could be taken into consideration in the Social Value Chain:
? Marketing & advertising (e.g., truthful advertising, advertising to children)
? Price practices (e.g., discrimination among customers, anticompetitive pricing
practices, pricing policy to the poor)
? Consumer information
? Privacy (Porter and Kramer, 2006)
E) AFTER SALES SERVICES
After sales services mechanisms include proper installation, warranties and guarantees,
technical support regarding use, provisions for return, and repair and maintenance.
The switching costs related to the product may be so large, that the customer is in fact
locked-into the product (on which his income may depend) and thus dependent on the
venture. Providing service, providing information about use and ways to dispose of obsolete
products, and informing the stakeholders about the venture`s situation is therefore crucial.
The following points could be taken into consideration in the Social Value Chain:
? Disposal of obsolete products
? Handling of consumables (e.g., motor oil, printing ink)
? Service and technical support
? Customer privacy (Porter and Kramer, 2006)
7.4.3. Tool Construction
Based on this elaboration, all the points previously mentioned as possibilities for an analyst to take into
consideration, are listed in Porter and Kramer`s Value Chain 2006 edition (2006). This provides the following
tool:
62
FIGURE 14: TOOL #6: PORTER AND KRAMER’S SOCIAL VALUE CHAIN
63
7.4.4. REVIEW RESPONSE
Reviewers’ responses to the Social Value Chain are displayed below:
TABLE 9: REVIEW RESPONSE, TOOL #6: THE SOCIAL VALUE CHAIN
Participant Positive comments Negative comments Remarks on changes
Academic 1 N/A N/A N/A
Academic 2
This page seems pretty self-
explanatory and reasonably
clear.
N/A N/A
Student 1
Good tool to make the
entrepreneur aware of the
opportunities
This one is heavy
Make it more specific, not as
generic
Student 2
A framework I am familiar with,
so it is easy to use. Reasonable to
assess the impact of all the parts
of the organization.
N/A N/A
Investor N/A N/A N/A
Academic 3 Good model, well arranged.
To comprehensive for an
entrepreneur
N/A
User
Valuable tool for feasibility
analysis.
Comprehensive view, which can
be effective in terms of
developing corporate image and
branding enterprises.
Seems to be more if interest to
the “number crunchers” within
the corporate entity.
Appears to come prior to the
Impact Value Chain tool, and
seems more of a tool used to
attract investors, regulate
efficiency of production and
sales, and provide
management to keep control
over the entire corporate
entity`s process.
The feedback showed that this was a model most of the recipients were familiar with, and they thought it
would be an important contribution to the feasibility analysis. Two of the respondents mentioned that the tool
was too comprehensive, and one also commented that there were too few examples. A few alterations on the
tool were therefore conducted.
64
7.4.5. PROPOSED TOOL
Some alterations have been conducted based on the feedback:
1. The tool has been simplified to make it less discouraging
2. More suggestions have been added.
FIGURE 15: TOOL #6: THE PROPOSED SOCIAL VALUE CHAIN
65
7.5. TOOL #7: THE IMPACT VALUE CHAIN
“…it is incredibly hard to measure impact. The true impact studies take three to five years, they cost a lot of
money, much more money than a social enterprise has at the beginning”
–India based American investor (C10:A09)
7.5.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Several authors have recognized the problem of impact measurement, and have come up with innumerous
solutions (Zappalà and Lyons, 2009), but so far, no standard has been established (Achleitner et al., 2009).
The analyst should take into consideration that the measuring and mapping of a venture`s social impact is a
continuous process, and that it can be highly demanding in terms of time and effort. This cost can, however, be
minimized through the early assessment of options for measuring methods and parameters. This leads to the
question:
How to enable future measuring and monitoring of the proposed venture’s social impact?
The ISO 26000:2010 states that an organization is responsible for the impacts and activities over which it has
direct and indirect control. For a venture with a social focus, having control over, and being aware of, what
consequences their actions have is a necessity in order to be able to understand and measure the venture`s
ripple effects.
7.5.2. TOOL DEVELOPMENT
Depending on the resource base and operational history of a venture, there will be different ways to measure
the social impact. The ones focused on in this thesis are:
1. Goal alignment
2. Community inputs
3. Outcome: one indicator
The reason why this thesis introduces these two methods for a start-up, is because they, according to two of
the investors, allow measurement on a limited resource base, and therefore are particularly applicable to
young organizations.
7.5.3. TOOL CONSTRUCTION
To determine whether or not the potential venture has sufficient resources to move forward by developing the
product and creating the intended impact, the analyst must assess all the available resources, both the tangible
and intangible. These resources are described as inputs to the venture, and are what Barringer and Ireland
(2008) refer to as the venture`s available resources. According to Grant (1991), there are six categories of
resources: technological resources, organizational resources, reputation, human resources, physical resources
and financial resources. Unique resources and capabilities are among the most critical contributors to a
venture`s sustainability (Grant et al., 1991). According to a Scandinavian entrepreneur, finding new and
inventive ways to utilize and attract resources could be a critical success factor for a start-up with a social
mission.
In the following social impact chain model, three measure methods are implemented:
? Goal alignment.
? Community inputs
? The outcome of the community inputs with the use of one indicator
66
The goal alignment method might be best suited for companies who have been up and running for a while
since it, according to an Indian investor, takes some time before a venture sees the results from their actions.
Further, the venture must evaluate the outcome to see whether or not it has reached its goals, and in the end
also conduct changes if necessary. Using this procedure is therefore most applicable for established companies
who are evaluating whether or not to launch a new product or service, and will therefore not be elaborated
further.
The second method to be introduced is the measuring of inputs to the community, a method proposed by two
investor interviewees, independent of each other. The third method is the measurement of one single
parameter that will indicate the degree of social impact, a method introduced by Kevin Starr (2010) and Clark
et al. (2003).
FIGURE 16: TOOL #7: THE SOCIAL IMPACT CHAIN (CLARK ET AL., 2003A)
The box named Activities has already been described in the discussion of tool nr 5; Porter`s Social Value Chain.
COMMUNITY INPUTS
When using inputs to the community as a starting point for measuring impact, the quantifiable
outputs from the organization, equaling the input into the target community is what indicates the
organization’s impact. Using this technique requires, according to two of the investors interviewed,
that the analyst conducts a thorough assessment of all the inputs to the venture, the venture`s
activities, and what the quantifiably input to the community will be.
One of the investors exemplified input into a community as follows: ““In my social focus I’m going to
serve X number of communities which have this type of profile, I’m going to bring electricity to this
number of homes. I’m going to make sure that X number of people now has an actual toilet to use in
the morning.” (C17:A22). The investor stated that this was the type of measurement regarded as the
easiest to start out with for a new venture. The analyst should also seek to identify a control group.
This will capture the effects of the product, and indicate causality.
67
Using a control group is one of the more common methods used for monitoring social impacts
(Standard, 2010). A control group will help the venture obtain qualitative or quantitative information
about results or outcomes associated with the organization that is comparable and demonstrates
change over time. This will to some degree help the entrepreneur understand “what would have
happened anyway?” This must be conducted to the best of ability, but will never resemble a true
scientific experiment, because, as an investor argued: ”you can never have a true control group, you
can never say: ”this community is going to sit over here in a box without micro finance and without
any another positive or negative impacts in terms of drought or NGOs or anything else.”” (C10:A09).
OUTCOME: ONE INDICATOR
Starr (2010) argues that measuring one parameter is the most efficient way to assess impact. He
states that this way the investors get persuasive numbers that are easy to control. This method for
analyzing social impact also requires a control group, to make sure that is was in fact the venture’s
activities that caused the change (Starr, 2010).
Starr (2010) lists up three important steps in the measurement in order to get a trustworthy number.
1. The analyst must think ahead, defining at an early stage what parameter he or she wants to
measure.
2. The venture must show the ability to sustain the changes over time.
3. Sample size must be big enough to prove that an impact has occurred.
Should the analyst chose this way of measuring the potential venture`s potential social impact, the
analyst should in the feasibility analysis describe his or hers line of action.
Starr (2010) argues that the output must answer to the venture`s mission, examples are LivingGood
with the mission; “Save kids` lives in Africa” and One Acre Found with the mission “get African families
out of extreme poverty”, where the following indicators are; “decrease in child and infantile mortality
rate”, and “additional production of harvest as a result of training and information”, respectively. If
the entrepreneur sees that the inputs create positive social impact, and the ventures meet its goals, it
should according to Starr (2010) continue what it is doing.
68
7.5.4. REVIEW RESPONSE
TABLE 10: REVIEW RESPONSE, TOOL #7: THE IMPACT VALUE CHAIN
Participant Positive comments Negative comments Remarks on changes
Academic 1
Perhaps the most important take
away for a social venture, to the
extent that they help the
entrepreneur articulate the value
proposition more comprehensively
and in a more compelling way.
N/A N/A
Academic 2
The connection (and difference)
between outputs,
and outcomes is an important one –
worth emphasizing.
Somewhat challenging
time connecting the
text to the image
Should also have “what would have
happened anyway?” in the box.
Student 1 Understands cell 2
Do not understand the
tool or the explanatory
text.
N/A
Student 2 N/A
Confused by the
stippled line. Looks
difficult to use, and
hard to understand.
Is the community input box supposed to
be half way outside the “indicator-box”?
Investor N/A N/A
Insert something about community input
per resource spent. It is difficult, but data
on this area will soon be available.
Academic 3 N/A N/A N/A
User
Seems to be a valuable feasibility
analysis tool.
Clean design, allows for multiple
parameter inputs to determine what
effect each has on the projected
outcomes, and has the ability to
visually represent the outcome of
any particular modification one
introduces while in that act of
revising a process or product.
Causality is a challenge
in this model
The single parameter per chart would
allow for comparison of multiple
parameter impacts and give analysts the
opportunity to find the path to most
efficient production through this
analytical tool.
The review shows that the tool is valuable for an analyst wanting to assess social implications. However, a few
participants stated that they did not understand the explanatory text that followed the tool and some had
difficulties understanding all the features of the design and argued that it needs some exemplification.
69
7.5.5. PROPOSED TOOL
In the final version the following points have been altered:
1. The dotted line, which described the one parameter method, has been removed, since the feedback
mentioned that this only made the tool more confusing.
2. The word have has been implemented in what would have happened anyway?
3. More examples have been introduced.
4. The layout has been altered.
7.6. FINAL COMMENTS
Most of the tools developed in this discussion are of a higher degree of complexity than those developed in the
two previous discussion chapters. They are detailed, and can be used to facilitate the acquiring of insight which
forms the basis of more detailed strategic decisions concerning the value output of a proposed organization.
The tools presented point to choices which must be made, as well as possible alternatives to chose from.
In the next chapter, general conclusions aggregated from the three discussions are presented, along with
general comments made by review respondents.
FIGURE 17: TOOL #7: THE PROPOSED IMPACT VALUE CHAIN
70
8. CONCLUSIONS
In this section, general conclusions from the discussions are presented. First, however, general review
responses which did not address specific tools, but the idea in general, are presented and commented on. This
response was dominated by two academics, nr. 1 and nr. 3, who both have significant entrepreneurial
experience.
8.1. GENERAL REVIEW RESPONSE
Academic 1 commented that “Frankly, my experience with social entrepreneurs is that they will not normally
have familiarity with the kinds of models that you talk about here. Only by chance will they have had formal
business education.” Academic 3 suggested that if we wished to create tools that could provide more value for
entrepreneurs in a non-academic setting, we use only the three first methods, and adapt them more to the
major questions an entrepreneur must answer at the earliest stage. The issue of academic application is
addressed in the introduction to our thesis, but was perhaps not obvious in the document sent out on review.
Out tools are, however, intended for an academic context, as we believe this to be of an increasing relevance.
Academic 3 also underscored the need to think about what the entrepreneur would do with the insight gained
from employing the tools.
Academic 3 remarked that the proposed tools seemed to belong in different stages of the entrepreneurial
process, with the last four belonging to a later stage, perhaps even the business plan stage, as they are very
advanced. She stated that “If you spring these on an entrepreneur first thing, he is not likely to conduct the
analysis”. This corresponded with Academic 1’s suggestion of a stage gate or step-by-step structure of analysis,
were each step in the analysis proceeds another in a given order. This is a relevant concern, which should be
included in future implementation of the proposed tools in a complete framework for feasibility analysis. This is
further commented on in the implications section.
Finally, Academic 1 stated that the proposed tools were not only applicable to technology-based business
concepts with a social focus, but also to other technology-based ventures. This implies a view that all analysts
of new business concepts should strive to think in terms of social impact as well as financial returns.
8.2. FINAL CONCLUSIONS
Through the collection of new data and the discussion of existing theory, this thesis has resulted in the
introduction of seven tools for feasibility analysis of technology-based, socially focused, business concepts.
Each tool directs the attention of the analyst towards a specific challenge of realizing a venture, while raising
the analyst’s overall awareness of the overarching importance of the interaction between the activities of a
potential organization and the world in which it operates.
One of the most important conclusions from this thesis is the acknowledgement that while the division of a
traditional feasibility analysis into four distinct sections is challenging, but possible, such a distinction with
regard to analysis of social ventures seems to oppose the very fundamentals of a social venture, as it is
described by the individuals interviewed here. The success of an entrepreneur aiming to solve a social problem
with a technological solution depends to a large extent on the entrepreneur’s creativity, and ability to develop
a deep understanding of the user, and insight into the realm in which he or she operates.
While little research has been done on the feasibility analysis of social ventures in general, and on technology-
based social ventures in particular, the contributions from this thesis mark one step in the direction of a
complete and well founded analysis framework.
71
9. IMPLICATIONS
9.1. IMPLICATIONS FOR ANALYSTS
For the analyst and potential entrepreneur, a set of new tools have been provided which help to establish
important insights into the fundamentals of a proposed business concept. Hopefully, this will enable the
analyst to identify significant opportunities, as well as challenges, and improve his or her chances at succeeding
with a new venture.
9.2. IMPLICATIONS FOR FURTHER RESEARCH
The tools introduced here must be employed by the analyst in combination with other tools and questions.
Next steps of development towards a complete feasibility analysis framework which includes social value
creation, should include testing of the tools introduced in this thesis through use in actual feasibility analysis of
new ideas, and also the implementation of these tools in a complete framework, along with already existing
tools, additional new constructs, or both.
With regard to the development of additional constructs, we would like to make the following comments
regarding interesting areas of research identified during our work:
The case for technology-based ventures, as a opposed to other social ventures, is that many are dependent on
advances in science during development, before a product can be deployed in a market setting. Transforming
such ideas to marketable products require access to specialized technical expertise that most technology social
ventures do not possess (Desa and Kotha, 2006). A key challenge for technology ventures with a social mission
is therefore the attraction of highly educated employees, who have a tendency to move towards jobs with a
higher income (Desa and Kotha, 2005). The challenge of attracting competent personnel is an interesting area
for future research and tool development.
Another interesting and important challenge for social entrepreneurs is mapping the competition. This is a
complex task, as competitors will often include traditional for-profit companies, NGOs, government
organizations etc., many of which are also potential partners in some aspect or other. We believe a good tool
for mapping of competitors which took these complicated factors into account would be a valuable addition to
social feasibility analysis. Porter’s (1985) five forces model might serve as a good basis for such tool
development, and the researcher might start by examining the role of goal alignment and profit motives
between the various actors.
Various, and significant, challenges related to funding for start-up and capital investments were also discovered
during our work. The realm of funding for social ventures is under development, as topics like exit-strategies
and expected returns are the subjects of hot debates. While this area is currently characterized by uncertainty
and fragmented documentation, the area of social finance should prove interesting to follow over the next
decade, and can provide a seemingly endless array of previously unaddressed research subjects.
72
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11. Appendices
Appendix 1a: Complete Category Table .............................................................................................. 1
Appendix 1b: Complete C-categories .................................................................................................. 3
Appendix 2a: Letter of Explanation to Reviewers ............................................................................. 24
Appendix 2b: Review Slides ............................................................................................................... 26
1
Appendix 1a: Complete Category Table
A: Open search categories,
generated from findings
B: Framework search categories,
generated from theory
C: Final categories,
based on A and B
C category
contains
A01. What is Social
Entrepreneurship - What is a
Social Entrepreneur?
B01. Sources of funding C01. Trends in Social
Entrepreneurship
B24
A02. Why Social
Entrepreneurship?
B02. Originality of business model or
concept
C02. Attractiveness of
Investment Prospects
B04
A03. The Entrepreneur and
Team
B03. Scalability C03. Product B10, B11, B12,
B32
A04. Social impact examples B04. Attractiveness of Investment
Prospects
C04. IPR and Replicability B06, B07, B15
A05. Social Issues B05. EXIT Opportunities C05. Market Entry B13
A06. Ethics B06. IPR, Patents and Technology C06. Industry
Attractiveness
B17
A07. ROI B07. Replicability C07. Stakeholders A04, A14, B10,
B30, B26
A08. ROI vs. Social Impact B08. The Entrepreneur and Team C08. Segmentation A36
A09. How to measure Social
Impact
B9. Product disruptiveness and
Innovativeness
C09. The Value Chain B12,B11, B20,
B25, B26, B27,
B28, B29, B30,
B32,
A10. Social Entrepreneurship vs.
CSR
B10. Understanding User Need C10. Social impact
measurement
A20, A09
A11. Social Vs Traditional
Funding
B11. Infrastructure in target market C11. ROI vs. Social Impact A08
A12. Sources of Funding B12. Product Development C12. Environmental and
socio-political factors in
target market
B21, B34, B35
A13. Investments Terms and
Follow-up
B13. Market Entry C13. Scalability B03
A14. Investment Model B14. Triple Bottom Line, Measuring
Social Impact
C14. The Organization B19, B30
A15. Investment Criterias B15. IPR, Trademarks C15. The Entrepreneur and
Team
B08
A16. Deal origination B16. Stakeholders C16. Resources B22
A17. EXIT B17. Industry Attractiveness C17. Social Impact
Projections
A22
A18. Stuck in the middle of
financing
B18. Diamond Framework C18. Originality of business
model or concept
B02
A19. Screening of Investment
Prospects
B19. The Organization C19. Sources of Funding A12, A14, A18
A20. Importance and Reasons
for Social Impact Measurement
B20. The Value Chain in General C20. ROI A07
A21. Development in Social
Entrepreneurship
B21. Political factors in target market C21. EXIT Opportunities B05. EXIT
Opportunities
A22. Social Impact Projections B22. Resources
A23. Business Model B23. Market Timeliness
A24. Value Chain B24. Trends
A25. Scalability B25.Procurement
A26. Transparency B26. Sales and Exports
A27. Organizational
Development
B27. Distribution
A28. Organizational Culture B28. Marketing
A29. Industries of interest B29. Operations
A30. Role of the Government B30. Human Resource Management
A31. Competitive Advantage B31. Logistics
A32. Market Entry Strategy B32. Service
A33. User Involvement in B33. Economical factors in target
2
Product Development market
A34. Understanding User
Behavior and Needs
B34. Social factors in target market
A35. Reliance on Pre-Existing
Infrastructure
B35. Environmental factors in target
market
A36. Segmentation B36. Legal factors in target market
A37. Distribution
A38. End user relations
A39. IPR
3
Appendix 1b: Complete C-categories
C01. Trends in Social Entrepreneurship
B24. Trends B24 A21IKG1
Har merket en enorm forskjell blant de unge på hvor lett det er å få de med i forhold til de gamle ansatte
internt
B24 A21IKG2
Folk er mer bevisst på problemene og rettferdighet. Dette gir et økt fokus mot SE.
B24 A21IKG3
Størst interesse blant de unge på universitet osv.
B24 A01IGS1
You really need to be very very careful about what you call a social venture, as it is one of the most abused
words today.
B24 A03ANM1
Entrepreneurship has always been there in India. But people realized that doing good for yourself alone is
not enough. Personal satisfaction!
B24 A18IPD1
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
B24 A01IMB2
The answers you get to your questions will depend on what part of the market you are talking to, and
what they see as a social venture. Also be clear on your own definition! Social ventures are as diverse as all
other ventures
B24 A01IMB4
The reason they get lumped is because there is a critical shortage for some significant portion of the
population, or some failure in delivering the traditional government delivered or private sector delivered
*avenues???* that means that there is a critical need that is not being filled, that is just too large for your
traditional NGO or charitable sector to handle, or potentially too large even for a government with its
limited resources or distribution channels to handle. And that’s why it gets lumped into social venture.
B24 A13IKG1
Vi tilbyr nettverk, kompetanse og økonomisk støtte
C02. Attractiveness of Investment Prospects
B04.
Attractivenes
s of
Investment
Prospects
B04 A15IKG 1
Kun prosjekter med mulighet for inntjening. Det offentlige for ta seg av sosiale tiltak, så får vi hjelpe sosiale
bedrifter. Eksempler på sos.tiltak er festivaler for barn og unge, arbeidsledighetstiltakt, to store sektorer
uten mulighet for sustainable business, men som fremdeles vil ha stor sosial impact..
B04 A15IPD 1
punkt én er uansett at man ser at produktet kan ha en høy impact på mange mennesker. Og hvordan man
kan se det kan variere ganske mye fra tilfelle til tilfelle, det kan være at man har surveys allerede, eller at
man må tenke litt mer selv i forhold til hva kommer det her til å føre til. Det er nummer en. Og nummer to
er at teamet og organisasjonen har det som trengs for kunne levere og skalere. Det er jo sånn sett helt
analogt med en venture vurdering, med da en impact-bit på toppen.
B04 A15IPD 2
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B04 A15IVS 1
Business needs to be SUSTAINABLE.
B04 A15IMB 1
So all of the same fundamentals that go into making any type of start-up or business successful are critical.
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied, you have to have really a strong founder or team, you
have to have a solid business plan, you have be sure you know whatever the product is, and it’s unique in
terms of its structure or delivery or some other element of it to make sure that you have a spot in the
market, to make sure you know your customers, and that you know how to serve them so that they’ll
come back to you. You have to understand what others are doing to differentiate yourself. It’s all the same
element that you’ve studied in entrepreneurship that makes any entrepreneur successful.
B04 A25IMB 1
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
4
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s an
ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B04 A06IMB1
you would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
(...) whether that was a fair or healthy return for a business serving such a vulnerable or potentially
vulnerable group. So, you know, 10-15 % or even 20 % is something that I’ve heard in a lot of places as
being more reasonable when we start talking about the social enterprise
B04 A08IPD3
Vi startet med donasjoner, men vi har gradvis vært mer interessert i, og brukt mer tid på å prøve å finne ut
hvordan kan vi investere? Men, vi har vært interessert i å gjøre investeringer på en måte vi kaller ”impact
first”, der man setter det å skape høyest mulig impact forran høyest mulig avkastning. Men man må jo
selvfølgelig ha en viss avkastning for.. ja.. hvis ikke så fungerer ikke systemet, og hvis ikke så har man
sannsynligvis ikke skapt noe levedyktig heller.
B04 A03IMB1
So it’s not enough to have just a dynamic, very socially driven background, you have to have god business
model and you have to have a good team, but you also have to think about this and be ready to really
think through these challenges as you go along, and see social and financial as being really complementary
rather than in competition.
B04 A29IPD1
Vi endte opp på det initiativet her (agricultural fund) fordi vi så mange interessante forretningsmodeller
innenfor det med landbruk, som da når ut til et stort antall småbønder, skalerer fort, og er en effektiv
måte, tror vi, til å redusere fattigdom.
B04 A07IMB1
You would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
B04 A22IMB1
One of the things I would say is that it’s hard to make social projections in terms of the impact, it is easier
to make social projections around the inputs. “I’m going to make sure that X number of people now have
an actual toilet to use in the morning.” It’s those types of thing that we see are the easiest ones to start
out with.
B04 A14IVS 1
Investment criteria: I utgangspunktet: Any business is good business.
Men: Money is for startup help and growth, not running
B04 A23IMB2
you have to have god business model and you have to have a good team
C03. Product
B10.
Understandin
g User Need
B10 A34IPD1
One laptop per child. Glimrende idé, ikke sant, og alle sammen bare over seg og så fantastisk den ideen er,
og de må jo selvfølgelig få tilgang til det digitale, og da kan de bare hoppe over mange utviklingstrinn og alt
mulig sånn. Men å levere en lap top til 200 dollar til en fattig familie…
B10 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de tror
at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å få
produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig ut,
de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å stå
under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden når de
er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra bålet eller
cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det smaker helt
annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B10 A34IPD3
Det finnes mange sånne Petter Smarter rundt omkring som tenker det at fattige mennesker de trenger
gjødsel, de har urin, urin kan brukes til å lage gjødsel, her lager jeg en sånn interessant boks som lager
gjødsel av urin, ikke sant? Og så virker det innmari smart. For det er helt riktig det, de har det, og de
trenger det, ikke sant? Men mellom der så ligger utrolig mye ting som skal på plass for å få kommersialisert
det. Så det er egentlig bare det at man ønsker å legge vekt på kommersialiseringsbiten, gitt den konteksten
produktet skal fungere i.
B10 A34IPD4
det er så mye av det altså. Som når Financial Times setter opp et panel med eksperter som stemmer over
hvilket produkt som er best …De kan.. de har ikke filla peiling på hvordan et er der ute. Det blir helt feil
approach egentlig, at man skal sitte med eksperter i vesten, eller teknologer i vesten og ha det som
drivende.
5
B10 A34IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied,(…) , to make sure you know your customers, and that
you know how to serve them so that they’ll come back to you. You have to understand what others are
doing to differentiate yourself. It’s all the same element that you’ve studied in entrepreneurship that
makes any entrepreneur successful.
B10 A34IMB3
the original bottom of the pyramid is Prahalad, who I’m sure you’re all familiar with, but he was all about
dealing with the poor as customers, that there really is a market there that needs services, they will pay if
you design something they can afford and that is relevant for them. And it’s just treating them with
respect, it’s less about social business per se, which is diving straight into low cost schools or low cost
hospitals or low cost financial services where no one else will go, thinking of them as being something
which is good as well as being a business, so there’s a little difference there.
B10 A34ANM1
The west can also understand the problems, but you have to be on the ground to experience it to fully
comprehend the problems.
B10 A34ANM2
In regards to beggers, you should focus on the problem, not just treat the consequence. To understand the
problem, you have to live with them for a while.
B10 A34ATJ2
So when you see that environmental action could be positive in terms of conservation, which is some
sense is an environmentally friendly action, could impact negatively on people.
B10 A03IPD 1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B10 A33AAG1
Many think that poor and un-educated people cannot be innovative. The truth is that surviving under
these conditions requires incredible innovativeness and creativity.
B10 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B10 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustenance includes the forest as part of the matrix. It is
an obvious problem!
B10 A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that same
customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom of the
pyramid phrase, because obviously those folks really need a lot of government services, *but* that next
level up, that is working and has some form of livelihood , and therefore can make their way in paying for
the services that they need, and they are really missing access to financial services of all kinds, as well as all
types of *??* infrastructure
B10 A38IMB 1
other really key critical part of that is fully understanding your customer, now this is something that any
business that wants to be successful has to do.
But it is a very very key critical part of social entrepreneurship, understanding that customer, know who
you’re serving, and that you are building your relationship to that customer and sensitive about how you
serve that customer so that you not only can be successful over time, but your perception of the
community never becomes one that you’re taking advantage of a vulnerable customer base.
B10 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s an
ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B11.
Infrastructure
B11 A30ATJ3
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can work.
6
B11 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may not
be technology that is at the frontier of technology, the best possible available technology. So there would
be considerations of cost, there will be considerations of inability or some pressure to cut back on the
initial capital investment.
B11 A35ATJ1
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure.
B11 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B11 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human input
in terms of work is low, compared to in rural areas where human input is high, but energy consumption is
low. The takeout is that to empower rural areas, they need access to reliable, cheap energy, as well as
enabling technology.
B11 A05ATJ 9
So it’s very common for middle level cities and smaller towns and villages in *Maharasta?* for instance,
the state area, to have no power during the day in summer for 10 hours, 12 hours, 14 hours, ok? There’ll
be no power. And the similar case will be true in rural areas. There’s a power shortage. For instance, I saw
last summer in Rajastan, places who used to get 10 hours of power now get six hours of power. So for
agriculture it means the time you use to run your pump sets, that this is time where you cannot run your
pump sets
B12. Product
Development
B12 A33EVF1
We talk to the people who use our products and find out what they want. Our *product* was developed in
2005 and as we were going into the community after distributing the product and asking people who use it
what they like and what they don’t like about it. We learned that people were mostly interested in using
the *product* when they are away from home. But when they are at home, they need to purify a larger
volume of water for cooking and cleaning and washing babies and these kinds of things. They needed a
way to purify a larger volume of water, than the *product* itself could do. Based on these feedbacks we
went back to the innovation center and came up with a product called *product*, which purifies a larger
quantity of water, and is designed to be used in the homes. We listen to our customers, and we listen to
government, we listen to NGOs. We come up with a product that meets the needs of the people on the
ground.
B12 A33EJF1
Users are involved at just about every step, and a rapid update schedule (new releases every few weeks)
gives users plenty of opportunity to provide input. Our first step is engaging users to tell us stories about
their challenges, and how they might see technology making their job or life better.
B12 A34EVF1
Mostly that staff is in-house, but we do have external consultants that we bring in from time to time, to
help us come up with new products, but we do also have external independent researchers that we hire to
study our products in the field and in academic laboratory settings. Most of the people who develop our
products are in-house, but we do have some external consultants that we work with.
B12 A34IPD5
Jeg synes han Kevin Star i den filmen (link) er en av de som sier mye fornuftig om hvordan kan du tenke
rundt hvordan produktet skal skape impact. Det er rett og slett bare å gå gjennom alle stegene, fra produkt
til bruk og se hva som ligger mellom der, og hvor komplisert blir det egentlig da.
B12 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B12 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B12 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human input
in terms of work is low, compared to in rural areas where human input is high, but energy consumption is
low. The takeout is that to empower rural areas, they need access to reliable, cheap energy, as well as
7
enabling technology.
B12 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustainance includes the forest as part of the matrix. It is
an obvious problem!
C04. IPR and Replicability
B15. IPR,
Trademarks
B15 A39IPD3
det finnes en merkevarebeskyttelse av den pumpen i India, for å hindre at folk kommer med noe skit som
gir seg ut for å være det samme. Så man kan ha en viss tillit til merkevaren
B15 A39EJF1
I am a believer in trademarks in their most fundamental sense: as a mark of the origin of a product or
service, as a mark that can be relied on for quality. We have registered several of our marks, and when we
release open source software, we retain trademark control. You can take our Martus or Miradi software
source code and make changes and release it widely and freely under the GPL. But, you can’t call those
derivatives Martus or Miradi, because those products as released by us have Benetech® standing behind
them.
B15 A39EJF 3
At the same time, formal trademark registration is expensive. In the U.S., we start by asserting trademark
protection once we start publicly using a new tradename, like BLARGL™. If it gets traction, then we
consider spending the money on registration. Of course, getting the web domains and doing basic
research is essential (and cheap) as a starting point.
B06. IPR,
Patents and
Technology
B06 A39EJF2
We agree. It’s especially true for social entrepreneurs, where the mission goal is more important than
actually being the person delivering on that goal
B06 A39AAG1
IPR can be important in some cases to prevent misuse of technology, and also create wealth for the
inventor. BUT it is important to share also. If your neighbor wants to make a copy of your invention, he is
not competing for your profits. In addition, if we all can build on the same tech, we will have competition.
If IP comes in the way, we should not have it. If it helps us attract investors, we should have it!
B06 A39IPD2
IP er ikke noe jeg har tenkt ekstremt mye på, jeg ser ikke for meg at.. altså.. For noen type selskaper,
såkornselskaper så kan det kanskje være viktig å hindre at det kommer konkurrenter inn på det samme
markedet.
B07.
Replicability
B07 A39IPD1
Så den repliseringsakten er noe man skal oppfordre til, og ikke prøve å hindre som impact first investor.
Men det kan være behov for å beskytte seg mot konkurranse i lokale markeder. Eller i allefall at man
konkurrerer på like vilkår da, at alle må lage sitt eget produkt, snarere enn at en aktør lager produktet og
investerer i R&D og alle andre bare kopierer, det er jo ikke rettferdig
B07 A39ANM 1
Replicability is also important of course, but knowledge is to share. Must be shared to develop it further.
The more you give, the more you get.
B07 A39IPD 4
Og vise at det går an å lage en kjede med low cost, high quality for profit schools i slummen i Nairobi. Da
ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn til at det skal kunne gjøre det.
C05. Market Entry
B13. Market
Entry
B13 A32EJF1
I think we run into the early adopters/crossing the chasm issues, but they are less acute for us because the
alternatives are so weak due to market failure
B13 A16IPD 1
vi begynte med å snakke med en del bistandsorganisasjoner i Norge, men fant etter hvert ganske raskt ut
at det var vel så bra for oss å gå direkte ut til organisasjoner som jobber på bakken i de områdene som vi
etter hvert begynte å fokusere på, India og Øst-Afrika
B13 A31IMB3
I see less of “Hey, I’m going to be social and therefore I’ll be competitive”, what you really see instead is
Hey, I see an un-tapped market, I’m going to go for it.
B13 A20IPD3
i mange områder så er det vanskelig, i andre områder så er det litt enklere. Vi har valgt det området her
(agriculture) , fordi ting (social impact parametre) er ganske målbart
C06. Industry Attractiveness
B17. Industry
Attractiveness
B17 A10EVF1
In the bed net side our chemical company competitors really promote their interest in bed nets purely as
8
CSR, not as the soul-focus of their company like we do. So our competitors are very large and well-
funded, but I think they are in this just to promote the image of their company mostly. And that`s what
they will tell you. But for us this is our only business.
B17 A29IMB1
We felt education and health care being two of the most fundamental and therefore areas that we felt
were really key to the success of that micro finance customer.
B17 A31IMB1
If you’re there just for competitive advantage you are not necessarily going to be successful in the long
run
C07. Stakeholders
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venutre. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers->PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
B19. The
Organization
B19 A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B19 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B19 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B19 A23IPD3
I hvert fall ikke like relevant å at man kan gjøre det til en business, man kan ikke tjene penger på
påvirkningsarbeid, da skal man i alle fall være ganske kreativ. Og så er det vel noen som mener at det å
ha en ambisjon som å skape endringer i stor skala er den viktig del av den definisjonen. Og gjerne det!
Men for meg så er man forsovet en liten sosial entreprenør hvis man er en ildsjel som setter opp et eller
annet som fungerer i … ja. Kanskje, kanskje ikke. I entreprenørbegrepet så ligger det vel litt i kortene at
man skal ønske å skape noe som vokser og blir varig over tid. Dette vet dere mye mer om enn meg, dere
skal fortelle meg om det her, tror jeg.
B19 A26IMB 1
but a fundamental point for all social enterprises is know that customer, and build relationships in the
9
community in which you work, and with that customer, so that your intentions are not later questioned,
even as you grow and become successful. Never hide the fact that you are what you are which is you’re
trying to be a for-profit, scalable business, by that you are trying to do so in a way that really combines
your social impact with your financial impact, and think about that from day one, in terms of how do you
plan *innovation*, train the organization, structure the goals for your organization, communicate about
what you are doing with the community. It’s important not to *follow/fall* on that later, when you may
be too big to make a difference. You have to infuse the culture of the organization with those goals and
objectives right away.
B19 A09IPD 4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A14.
Investment
Model
A14IVS 1
Investment criteria:
· I utgangspunktet: Any business is good business.
· Men: Money is for startup help and growth, not running
A14IKG1
De får ingen eierandeler, men en kontraktsrettet plass i styret i bedriften. I så måte er de ikke investorer,
men mer et styrende fond som hjelper med støtte både finansielt, nettverk og med kompetanse, kun til
oppstarter i Norge.
A14IPD1
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
A14IVS2
No high-capital investments
A14IPD2
Yes. Det har formål som et tidsbegrenset subsidie for å få et marked til å begynne å virke. For fattige
mennesker.
A14IPD3
Så en av de tingene vi har jobbet mye med i det siste er hvordan kan vi gjøre mere kommersielle
investeringer med *gjeld og egenkapital?*-instrumenter for å fortsette å skape impact, men å gjøre det
på en måte der vi kan få penger tilbake, og bruke de på nytt, og der man kan skape virksomheter som
kan vokse gjennom at de tjener penger og reinvesterer de pengene, og kan etter hvert tiltrekke seg
større kapital.
A14IPD4
Vi vil jo kalle oss selv impact investors, og der er det jo en veldig glidende overgang, fra veldig impact
first til nesten helt vanlige investeringer, bare tilfeldigvis i en sektor som kan være litt samfunnsnyttig.
Så… ja, hva er det man vanligvis bruker? Det skal være en intensjon om å skape noe positivt for
samfunnet. Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg
mener at da skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at
man får dårlig avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige
eller finansielle kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som
kommer til å gå inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å
gjøre tregangern på de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det
definitivt kan levere en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det
overskyggende målet.
A14IPD5
Da har han bygget opp over tid, og unngått å hente inn andre investorer. Da tar det jo også litt mer tid å
vokse. Da får man en veldig fin modell for å hjelpe de menneskene.
B10.
Understanding
User Need
B10 A34IPD1
One laptop per child. Glimrende idé, ikke sant, og alle sammen bare over seg og så fantastisk den ideen
er, og de må jo selvfølgelig få tilgang til det digitale, og da kan de bare hoppe over mange utviklingstrinn
og alt mulig sånn. Men å levere en lap top til 200 dollar til en fattig familie…
B10 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de
tror at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å
få produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig
ut, de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å
stå under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden
når de er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra
bålet eller cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det
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smaker helt annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B10 A34IPD3
Det finnes mange sånne Petter Smarter rundt omkring som tenker det at fattige mennesker de trenger
gjødsel, de har urin, urin kan brukes til å lage gjødsel, her kager jeg en sånn interessant boks som lager
gjødsel av urin, ikke sant? Og så virker det innmari smart. For det er helt riktig det, de har det, og de
trenger det, ikke sant? Men mellom der så ligger utrolig mye ting som skal på plass for å få
kommersialisert det. Så det er egentlig bare det at man ønsker å legge vekt på kommersialiseringsbiten,
gitt den konteksten produktet skal fungere i.
B10 A34IPD4
det er så mye av det altså. Som når Financial Times setter opp et panel med eksperter som stemmer over
hvilket produkt som er best …De kan.. de har ikke filla peiling på hvordan et er der ute. Det blir helt feil
approach egentlig, at man skal sitte med eksperter i vesten, eller teknologer i vesten og ha det som
drivende.
B10 A34IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied,(…) , to make sure you know your customers, and that
you know how to serve them so that they’ll come back to you. You have to understand what others are
doing to differentiate yourself. It’s all the same element that you’ve studied in entrepreneurship that
makes any entrepreneur successful.
B10 A34IMB3
the original bottom of the pyramid is Prahalad, who I’m sure you’re all familiar with, but he was all about
dealing with the poor as customers, that there really is a market there that needs services, they will pay
if you design something they can afford and that is relevant for them. And it’s just treating them with
respect, it’s less about social business per se, which is diving straight into low cost schools or low cost
hospitals or low cost financial services where no one else will go, thinking of them as being something
which is good as well as being a business, so there’s a little difference there.
B10 A34ANM1
The west can also understand the problems, but you have to be on the ground to experience it to fully
comprehend the problems.
B10 A34ANM2
In regards to beggers, you should focus on the problem, not just treat the consequence. To understand
the problem, you have to live with them for a while.
B10 A34ATJ2
So when you see that environmental action could be positive in terms of conservation, which is some
sense is an environmentally friendly action, could impact negatively on people.
B10 A03IPD 1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B10 A33AAG1
Many think that poor and un-eduacated people cannot be innovative. The truth is that surviving under
these conditions requires incredible innovativeness and creativity.
B10 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B10 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustainance includes the forest as part of the matrix. It is
an obvious problem!
B10 A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that
same customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom
of the pyramid phrase, because obviously those folks really need a lot of government services, *but*
that next level up, that is working and has some form of livelihood , and therefore can make their way in
paying for the services that they need, and they are really missing access to financial services of all kinds,
as well as all types of *??* infrastructure
B10 A38IMB 1
other really key critical part of that is fully understanding your customer, now this is something that any
business that wants to be successful has to do.
11
But it is a very very key critical part of social entrepreneurship, understanding that customer, know who
you’re serving, and that you are building your relationship to that customer and sensitive about how you
serve that customer so that you not only can be successful over time, but your perception of the
community never becomes one that you’re taking advantage of a vulnerable customer base.
B10 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
A04. Social
Impact
Examples
A04ECJ 1
Better education for the children. The way of life is better. They were getting 40 rupiees from their
middlemen, now 130-150. Great social economic changes in the rural areas.
A04ECJ 2
The workers are now aware of that it is a good idea sending their children to school. Focus on the next
generation. Hygiene in the houses. Health awareness. Provide them with business sense. Without
income, understand and knowledge about competitors, they can`t survive.
A04ANM 1
Solving problems for the poor will ultimately help the rich. And people are starting to understand this.
People are starting to see the big picture. If everyone is better off, there will be peace.
Things like water, energy, climate change, are important for everyone!
C08. Segmentation
A36.
Segmentation
A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that
same customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom
of the pyramid phrase, because obviously those folks really need a lot of government services, *but*
that next level up, that is working and has some form of livelihood , and therefore can make their way in
paying for the services that they need, and they are really missing access to financial services of all kinds,
as well as all types of ** infrastructure
A36ECJ 1
Weaving is the main occupation. But essentially women are associated with this, because they have
much more free time. They sit at home, they actually can utilize that time for weaving. The man is busy
with the agriculture process or with some small scale industry or other kind of business.
The venture basically focus on remote areas, where there is no other facilities, and other resources for
income. Obviously they want to connect with us.
A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
C09. The Value Chain
B20. The Value
Chain in
General
B20 A24AAG1
The reason is,(make it affordable of course) if you want to fight poverty, the best thing is to keep people
involved in low value earning activity. You must create a value chain! Then some can work at this level,
some at the next level etc..
B25.
Procurement
B25 A04ECJ1
Better education for the children. The way of life is better. They were getting 40 rupiees from their
middlemen, now 130-150. Great social economic changes in the rural areas.
B25 A24ECJ1
Focus is to connect directly to the weavers, so that there is no need for middle men.
B25 A24ANM1
Middlemen are the bad thing. They buy for 10, sell for 1000, without doing any work.. Especially true for
Kashmir wool. Their sharing of the profits are not good
B26. Sales and
Exports
B26 A23IPD2
om Jaipur-modeller (Produkt fattig -> rik, cash rik-> fattig
Og den type forretningsmodell ser vi ganske mye av, eksport av alt fra kaffe til babymais til sukkererter
og alle mulige sånne ting. Og ofte legges det ganske mye vekt fra eksporthuset på det å lære bøndene å
produsere med god nok kvalitet, så man får en sånn kompetansehevingseffekt.
12
B26 A23IMB3
If your customer is a wealthy Indian consumer, how much money you make is not really questioned. If
your customer is not vulnerable, you don’t have to worry in that same way about profit maximization.
*…..+ If you start a school for example, you have to think about it the other way. So you will then have a
much lower earning more vulnerable customer base, and you will have to think about the profits you
make on that school business. Both can be called a social enterprise, but both are very very different,
and that’s my point; to think about why it’s a social enterprise.
B26 A37EVF2
I would say that we primarily sell to Ministries of Health. We sell to all the major relief organizations,
from; The Red Cross, Unicef, The faith-based organizations, private charities. Really to every group you
have ever heard of. MSF
B26 A37EVF1
Red Cross, government, ministry of Health. Those are our main customers, those are the groups that buy
from us and distribute to poor people around the world
B26 A24IPD1
Også en del modeller som selger mer inn mot de lokale markedene. Det kan være noe så enkelt som en
maismølle, som gjør at bøndene slipper å selge råmaisen direkte til en trader som kommer til gården for
en lav spottpris, men heller sørge for at det foregår en value ad i det lokale markedet, så det eksporteres
på en mer proff måte, mer foredlet, og legger mer verdi igjen bakover til bøndene.
B27.
Distribution
B27 A24EVF1
Are you being looked at as Masonkas?
No. We work in every country in Africa, we have offices in four countries. But we have agents and
distributors in every country. Beacause we hire local people and we make our products in the developing
world, we really have no problem with governments, and getting our products to any one country.
B27 A37EVF1
Red Cross, government, ministry of Health. Those are our main customers, those are the groups that buy
from us and distribute to poor people around the world
B27 A01IGS2
it’s really about redesigning the way in which you think about this, it’s sort of the next generation of
thinking about how you can bring this whole social win – win, social and financial do not have to be at
loggerheads, they can really be working together, and therefore create better outcomes for companies
and communities, and this is how we’re going to have to think about 21st century business.
B28. Marketing B28 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de
tror at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å
få produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig
ut, de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å
stå under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden
når de er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra
bålet eller cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det
smaker helt annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B 28 A34IPD6
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B29.
Operations
B29 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B29 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B29 A05ATJ3
So if you set up industry in various areas, they will have some different natural resources. And they
would of course, as typical to industry, maximize effiency by cutting, among other things, environmental
protection. In countries like India it’s not just environmental problems. They cut salaries, they cut back
on safety, they cut back on social welfare, they don’t pay workers benefits to government run schemes
as they should. They do a whole lot of things which are wrong. Among these is not taking care of the
13
environment
B29 A05ATJ7
I think the question of the environmental and social issues comes at a variety of levels. One, there is an
obvious, like it is known anywhere in the world; In a developing country we call it development vs.
environment. In a country like yours or Europe or Japan you call it industry vs. development. The
parameters and issues are very much the same
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venture. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers-PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
B32. Service B32 A34IMB4
You have to be ready for working in tough markets, solving problems that no one else has solved, dealing
with external stakeholders that are going to make, you know, your life harder and maybe potentially un-
savvy, although not as un-savvy as you think, customer base.
B12. Product
Development
B12 A33EVF1
We talk to the people who use our products and find out what they want. Our product was developed in
2005 and as we were going into the community after distributing the product and asking people who use
it what they like and what they don’t like about it. We learned that people were mostly interested in
using the product when they are away from home. But when they are at home, they need to purify a
larger volume of water for cooking a cleaning and washing babies and these kinds of things. They needed
a way to purify a larger volume of water, than the product itself could do. Based on these feedbacks we
went back to the innovation center and came up with a product called product, which purifies a larger
quantity of water, and is designed to be used in the homes. We listen to our customers, and we listen to
government, we listen to NGOs. We come up with a product that meets the needs of the people on the
ground.
B12 A33EJF1
Users are involved at just about every step, and a rapid update schedule (new releases every few weeks)
gives users plenty of opportunity to provide input. Our first step is engaging users to tell us stories about
their challenges, and how they might see technology making their job or life better.
B12 A34EVF1
Mostly that staff is in-house, but we do have external consultants that we bring in from time to time, to
help us come up with new products, but we do also have external independent researchers that we hire
to study our products in the field and in academic laboratory settings. Most of the people who develop
our products are in-house, but we do have some external consultants that we work with.
B12 A34IPD5
Jeg synes han Kevin Star i den filmen (link) er en av de som sier mye fornuftig om hvordan kan du tenke
rundt hvordan produktet skal skape impact. Det er rett og slett bare å gå gjennom alle stegene, fra
14
produkt til bruk og se hva som ligger mellom der, og hvor komplisert blir det egentlig da.
B12 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B12 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B12 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B12 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people whose traditional means of sustainance includes the forest as part of the matrix. It
is an obvious problem!
B11.
Infrastructure
B11 A30ATJ3
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work.
B11 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B11 A35ATJ1
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure.
B11 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B11 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B11 A05ATJ 9
So it’s very common for middle level cities and smaller towns and villages in *Maharasta* for instance,
the state area, to have no power during the day in summer for 10 hours, 12 hours, 14 hours, ok? There’ll
be no power. And the similar case will be true in rural areas. There’s a power shortage. For instance, I
saw last summer in Rajastan, places who used to get 10 hours of power now get six hours of power. So
for agriculture it means the time you use to run your pump sets, that this is time where you cannot run
your pump sets
C10. Social Impact Measurement
A20.
Importance and
Reasons for
Social Impact
Measurement
A20IPD1
det tror jeg er noe av utfordringen, og noe av grunnen kanskje til at bistandsbransjen ikke er blitt flinkere
til å måle ting enn det den er, det at ”skal vi først gjøre det så må det være så innmari perfekt”. Men vi
mener jo at det er bedre å ha noe data som du vet det er svakheter ved, men som du likevel kan
forholde deg til, og så bruke det for hva det er verdt da, enn å ikke ha noen ting. Det er bedre å ha en
60% sannhet enn å ikke ha noe informasjon i det hele tatt.
A20IPD2
dere kjenner jo sikkert til den kontroversen som har vært rundt mikrofinans i India og sånn i det siste. Jeg
mener jo at mye av det skyldes at man ikke har vært flinke nok til å fange opp informasjon om hvordan
går det med klientene? Man har hatt styringsinformasjon på den finansielle biten selvfølgelig, men ikke
på impact biten. Og da er det den finansielle biten som får fokus, det som måles det følges på en måte
opp.
15
A20IPD3
i mange områder så er det vanskelig, i andre områder så er det litt enklere. Vi har valgt det området her
(agriculture) , fordi ting (social impact parametre) er ganske målbart
A20IPD4
Det kan være en person som setter opp en human rights watch, eller en eller annen
informasjonsinnhentnings påvirkningsorganisasjon der den typen business tankegang rundt å måle og
følge opp, og levere og styre prosjekter tett og sånn ikke er fullt så relevant, selv om det sikkert er noe
som er relevant der og.
A20AAS1
I do not want to measure Social Impact
A20IPD 5
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A09. How to
measure Social
Impact
A09IMB1
Because it is incredibly hard to measure impact. The true impact studies take three to five years, they
cost a lot of money, much more money than a social enterprise has at the beginning.
A09IPD1
Så, man må jo være pragmatisk også, den studien vi gjør der er kjempedyr. Og den eneste grunnen til at
noen er villige til å putte penger i en sånn studie er at den kan bidra til en større del av
mikrofinanslitteraturen, bli publisert i tidsskrifter, og det er ikke ting man kan gjøre sånn for sin egen del
på et prosjekt.
A09IMB2
One is the is the inputs, everything from the mission and strategy and operating systems and products,
staff that go into the business. And the fact that you have a better chance at coming out with the impact,
which is the other side, the real measurable, more hard core impact.
A09IPD2
De her er egentlig et ganske standard rammeverk som vi bare har forenklet og forenklet, det er en del av
den jobben BCG gjorde for oss i 2008. Først så legger mann inn noe tid og ressurser og penger etc., man
gjør en del aktiviteter som man gjør for de pengene, og så får man en output som da er veldig konkrete
ting man som har levert for eksempel skoler man har bygget eller kursing som er blitt holdt eller lån som
er blitt gjort tilgjengelig eller sånne veldig konkrete, lette ting å forholde seg til, operasjonelle parametre.
Så kommer vi da til outcome og impact, jeg vet ikke om dere har sett noe særlig på definisjonene av det.
Men vi gjør for enkelthets skyld, når vi snakker til folk rundt oss som ikke vet noe særlig om det her, så
bare slår vi det sammen for enkelthets skyld og kaller det impact, og sier at det er den mer brede
utviklingseffekten det her fører til. Her er for eksempel det antall vannpumper vi har solgt til fattige
mennesker, her er det som skjer med de familiene som følge av det. Økt inntekt, økt levestandard, og
forhåpentligvis flere barn på skolen og den type ting
A09IPD3
Men i hvert fall at man har en survey-mekanisme som fanger opp utviklingseffektene. Man tar en base-
line kort etter at man har solgt en pumpe, så kommer man og spør ”hvordan har du det nå?”. Så kommer
man tilbake et år senere og spør ”hva har skjedd siden sist?”.
A09ANM1
The measurements depend on the social impact you want to create.
A09IVS1
Social impact metrics: Number of companies started and number of employment created in a
commercially viable way. VERY easy to measure. (“Don’t even need an excel sheet.”)
A09IPD4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A09IKG1
Veldig få ting kan måles, hvordan måler man "bedre liv"?
Trivsel f.eks.
Antall skoler, antall elever. Lett og måle.
I tillegg har mange skoler trivselsundersøkelser. Viktig med benchmark, for så å følge opp.
A09IPD5
Man greier jo ikke å vitenskapelig bevise de greiene her 100% i alle de tilfellene….
A09IM3
you can never have a true control and impacted group. You can never say “this community is going to sit
16
over here in a box without micro finance and without any other positive or negative impacts in terms of
drought or NGOs or anything else. And you can never say “here’s a community that gets just micro
finance and none of the other positive or negative things that happens for development or like life has it
with nature and you know. And so it’s incredibly hard to after three or five years to say what really is the
impact, what are the positive or negative impacts, and how are you sure even if you see impact, that
that was all the about micro finance input or some other input.
A09IMB5
There are many initiatives currently active within the measuring of social impact, however, this is a
difficult subject for a number of reasons
A09IKG2
Finne sos.impact i NOK?
Ikke noe for oss. vi trenger ikke vite det..
Foreløpig kun en kvalitativ, hva er det de gjør, approach.
1 MNOK vs 20.000 glade barn, er det verdt det?
A09IPD5
å regner vi det ofte om til en total samfunnsmessig avkastning i monetære termer. Og det betyr jo at det
er noe som mistes derfra til dit, ikke sant, hvis kvinner som får tilgang til lån får sterkere selvtillitt og står
mer fram og tar mer tak og bestemmer mer hjemme og sånn, det greier du ikke å regne om til penger og
få med her. Så vårt formål med det har vært at det bør i alle fall være en kjerne av impacts eller
outcomes som kan regnes om, som gjør at man ser at kun basert på de så får man igjen noen ganger de
pengene man legger inn her, og så er det veldig bra selvfølgelig om det finnes andre mer indirekte ting
eller vanskelig kvantifiserbare ting på toppen
A09IPD6
I et av prosjektene så har vi kontrollgrupper, med veldig avansert måte å jobbe statistisk for å finne
landsbyer som matcher hverandre sosioøkonomisk så man tror det er en valid kontrollgruppe. Og det må
man jo ha, hvis man skal si at man har funnet noen impact. I et annet prosjekt så har vi ikke noen
kontrollgrupper.
C11. ROI vs. Social Impact
A08. ROI vs.
Social Impact
A08IPD1
….. og det er fortsatt mange som sitter litt og tenker det at selvfølgelig, jo bedre de selskapene lykkes
finansielt, des flere mennesker har de nådd, og des større endringer har de skapt. Og akkurat det er den
underliggende tankegangen med mikrofinansbransjens store vekst, men også nå kontrovers. Og hvis det
blir veldig mange stemmer da, som hevder de argumentene der i de ulike sammenhengene der man
sitter og diskuterer så kan det fort danne seg en sånn følelse i gruppa at det tross alt er ROI-en som er
den viktigste indikatoren.
A08IPD2
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
A08IPD3
Vi startet med donasjoner, men vi har gradvis vært mer interessert i, og brukt mer tid på å prøve å finne
ut hvordan kan vi investere? Men, vi har vært interessert i å gjøre investeringer på en måte vi kaller
”impact first”, der man setter det å skape høyest mulig impact forran høyest mulig avkastning. Men man
må jo selvfølgelig ha en viss avkastning for.. ja.. hvis ikke så fungerer ikke systemet, og hvis ikke så har
man sannsynligvis ikke skapt noe levedyktig heller.
A08IPD4
Hele asset management bransjen er gira veldig opp mot å skape høyest mulig risk adjusted return, og det
er varierende vilje til å sette seg inn i hva impact egentlig er. Så den dimensjonen kommer til å være den
svakeste i veldig mange sammenhenger.
A08IPD5
(Om å bruke all profitt på å hjelpe arbeiderne gjennom diverse tjenester som helseforsikring og skole for
barna) Så det er jo mulig, hvis du selger et produkt i et ordentlig high value marked med gode marginer,
og eieren er motivert first and foremost av å hjelpe de menneskene.
A08IMB1
Because the reality is, even the global development finance institutes, although they are social-
commercial, they’re not doing this as charity, they’re not giving the money away and nor do they want
zero percent return
A08IMB2
Most of our investors are development finance institutions. and European development finance
organizations.
They understand the fact that we are not looking to just maximize profits. We are looking to develop
strong businesses which serve customers, and that therefore our returns will be different than the purely
17
profit maximizing folks.
A08IMB3
you also have to think about this and be ready to really think through these challenges as you go along,
and see social and financial as being really complementary rather than in competition.
A08IMB4
On the other hand you can’t make yourself a simply break-even business who can’t handle bumps in the
road, because people will not invest in you, and you will not be able to scale, and therefore the impact
you can have will be limited.
A08EJF1
Customers love us. The skeptics were more Silicon Valley types who felt that if it didn’t make maximum
profits, it clearly wasn’t worth doing.
A08IKG1
Vi er ikke ute etter ROI, kun sosialt!
A08IKG2
"Hvis du ikke er opptatt av penger, vil du ikke lykkes!" bold statement, men som har noe sannhet i seg
A08IGS1
it’s really about redesigning the way in which you think about this, it’s sort of the next generation of
thinking about how you can bring this whole social win – win, social and financial do not have to be at
loggerheads, they can really be working together, and therefore create better outcomes for companies
and communities, and this is how we’re going to have to think about 21st century business.
A08IPD 6
Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg mener at da
skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at man får dårlig
avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige eller finansielle
kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som kommer til å gå
inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å gjøre tregangern på
de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det definitivt kan levere
en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det overskyggende målet.
C12. Environmental and Sociopolitical Factors in Target Market
B21. Political
factors
B21 A25ATJ 1
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work.
B21 A30ATJ2
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure
B21 A30ANM1
one of the reasons for social entrepreneurship in India is that the “government is not able to deliver
what they are supposed to; people will start taking charge, taking ownership, and doing something
about it.” One example of this is Sulabh toilets.
B21 A30ATJ6
You see the point is that guaranteeing access to water requires the intervention of the state.
B21 A30ATJ4
Software in India, to the extent that it is successful, it is true because of huge state investments in
engineering education and huge state investments in these so-called “software technology parks”, were
you know, facilities were provided, the first internet links were provided.
B34. Social
factors
B34 A36ECJ 1
Weaving is the main occupation. But essentially women are associated with this, because they have
much more free time. They sit at home, they actually can utilize that time for weaving. The man is busy
with the agriculture process or with some small scale industry or other kind of business.
The venture basically focus on remote areas, where there is no other facilities, and other resources for
income. Obviously they want to connect with us.
B34 A05ANM 2
If I’m happy, and also you are happy, there will be less crime. If I have three cars, and you have none,
there will be anger and violence. The differences is a lot of the reason for the criminal problems, so how
do you bridge the gap?
B34 A03ATJ1
It is true that in the absence of the state we cannot starve and die, so we have to do something to
survive, so survival is a necessity. So that pushes people.
B34 A05ANM 1
The caste system is very much alive in the country. The entire political systems is based on castes.
B34 A05ATJ 6
So the withdrawal of the state where it has been replaced by entrepreneurship in all these issues has
18
resulted in a dual system where the private sector caters to the need of the wealthy who can afford to
pay for it and the government does here and there a little bit for the poor.
B35.
Environmental
factors
B35 A05ATJ 3
So if you set up industry in various areas, they will have some different natural resources. And they
would of course, as typical to industry, maximize effiency by cutting, among other things, environmental
protection. In countries like India it’s not just environmental problems. They cut salaries, they cut back
on safety, they cut back on social welfare, they don’t pay workers benefits to government run schemes
as they should. They do a whole lot of things which are wrong. Among these is not taking care of the
environment
B35 A05ATJ 5
The other class of problems have to do with the question of poverty being the source of damage to the
environment.
B35 A05ATJ 7
I think the question of the environmental and social issues comes at a variety of levels. One, there is an
obvious, like it is known anywhere in the world; In a developing country we call it development vs.
environment. In a country like yours or Europe or Japan you call it industry vs. development. The
parameters and issues are very much the same
B35 A05ATJ 8
At the same time this direct first order dependence, not even agriculture, but the collecting of leaves,
the collecting of forest produce the collecting of you know wood for fuel. You know the whole variety of
such things, hunting for small animals as a nutritional addition to food “receivials”, there’s a whole
variety of such direct dependence on natural resources.
C13. Scalability
B03. Scalability B03 A25IPD1
Men det vi også har lært er at de kommer ikke til å skalere videre på en sånn hockeystick-aktig måte
etter at vi er ute.
B03 A25IKG1
Tenker også på internasjonalisering, men foreløpig gjøre Norge så bra som de kan. Hvis de skal
internasjonalt, vil de bruke det eksisterende nettverket.
B03 A25ANM1
An idea has to be scalable, if not it is limiting! Replicability is also important of course, but knowledge is
to share. Must be shared to develop it further. The more you give, the more you get.
B03 A25ATJ 1
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work. It is in the nature of Indian capital that it never believes that volumes will work. It’s a state of
mind.
B03 A25IPD2
Og vise at det går an å lage en kjede med low cost, high quality for profit schools i slummen i Nairobi. Da
ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn til at det skal kunne gjøre det.
B03 A25IMB1
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B03 A25IPD3
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
B03 A01IPD2
Og så er det vel noen som mener at det å ha en ambisjon som å skape endringer i stor skala er den viktig
del av den definisjonen. Og gjerne det! Men for meg så er man forsovet en liten sosial entreprenør hvis
man er en ildsjel som setter opp et eller annet som fungerer i … ja. Kanskje, kanskje ikke. I
entreprenørbegrepet så ligger det vel litt i kortene at man skal ønske å skape noe som vokser og blir
varig over tid.
B03 A08IMB4
On the other hand you can’t make yourself a simply break-even business who can’t handle bumps in the
road, because people will not invest in you, and you will not be able to scale, and therefore the impact
you can have will be limited.
C14. The Organization
B19. The
Organization
B19 A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
19
B19 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B19 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B19 A23IPD3
I hvert fall ikke like relevant å at man kan gjøre det til en business, man kan ikke tjene penger på
påvirkningsarbeid, da skal man i alle fall være ganske kreativ. Og så er det vel noen som mener at det å
ha en ambisjon som å skape endringer i stor skala er den viktig del av den definisjonen. Og gjerne det!
Men for meg så er man forsovet en liten sosial entreprenør hvis man er en ildsjel som setter opp et eller
annet som fungerer i … ja. Kanskje, kanskje ikke. I entreprenørbegrepet så ligger det vel litt i kortene at
man skal ønske å skape noe som vokser og blir varig over tid. Dette vet dere mye mer om enn meg, dere
skal fortelle meg om det her, tror jeg.
B19 A26IMB 1
but a fundamental point for all social enterprises is know that customer, and build relationships in the
community in which you work, and with that customer, so that your intentions are not later questioned,
even as you grow and become successful. Never hide the fact that you are what you are which is you’re
trying to be a for-profit, scalable business, by that you are trying to do so in a way that really combines
your social impact with your financial impact, and think about that from day one, in terms of how do you
plan *innovation*, train the organization, structure the goals for your organization, communicate about
what you are doing with the community. It’s important not to *follow/fall* on that later, when you may
be too big to make a difference. You have to infuse the culture of the organization with those goals and
objectives right away.
B19 A09IPD 4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venture. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers-PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
C15. The Entrepreneur and Team
20
B08. The
Entrepreneur
and Team
B08 A03IKG1
Entreprenører er veldig like mtp drivet som trengs, kan virke som om flere "vanlige" entreprenører er
sosiale pga dette
B08 A03IKG2
Vanlige gründere og sosiale gründere er veldig like. Eneste forskjellen er på hva de har fått ideen sin på.
Sosiale: Fikse samfunnet. Vanlige: Fokus på ny teknologi osv.. Begge må ha samme driven for å kunne
lyktes!
B08 A03IMB1
So it’s not enough to have just a dynamic, very socially driven background, you have to have god
business model and you have to have a good team, but you also have to think about this and be ready to
really think through these challenges as you go along, and see social and financial as being really
complementary rather than in competition.
B08 A03EVF1
Our leader, a very driven leader who LOVEs to go to Africa and go to rural and poor communities and
stay there and learn about their problems, and try to come up with a way to make a difference in
people`s lives. For us I don’t think we would have been AS successful if we did not have such a visionary
leader and if we did not have someone in the top of the company who was willing to make the personal
physical sacrifice to learn about the challenges that the least fortunate people in the world have. And
come up with a way to both make a difference in their lives, but also to make a profit and create a
business that is successful and employs a lot of people of around the world and makes a difference in the
lives of real people. It is really thanks to (main founder) that we are the company we are today. Without
a doubt the driving force of the company.
B08 A03IPD1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B08 A03IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied, you have to have really a strong founder or
team(…)It’s all the same element that you’ve studied in entrepreneurship that makes any entrepreneur
successful.
B08 A08IKG2
"Hvis du ikke er opptatt av penger, vil du ikke lykkes!" bold statement, men som har noe sannhet i seg
B08 A15IVS2
Idea is 1%, executability and passion is the most important
B08 A15IVS3
Preferably entrepreneur with experience in the relevant field as well as entrepreneurial experience
B08 A15IVS4
Team is also important: Always bring someone with business capability along!
C16. Resources
B22. Resources B22 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B22 A16IVS 1
Most investment objects found through networking
B22 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B22 A12ERB1
But since the last two years, from the district administration, we have not received a single penny. A very
small amount of money we collected from the local add. Third one is DA`s internal projects where they
need communication support, for their projects and create awareness generation and information
generation in their projects areas, they approach us. And we produce programs, and radio spots for
them, and they pay us.
C17. Social Impact Projections
A22. Social
Impact
Projections
A22IMB1
One of the things I would say is that it’s hard to make social projections in terms of the impact, it is
easier to make social projections around the inputs.
21
“I’m going to make sure that X number of people now have an actual toilet to use in the morning.” It’s
those types of thing that we see are the easiest ones to start out with.
C18. Originality of Business Model or Concept
B02. Originality
of business
model or
concept
B02 A11IPD1
Men noe av det som er veldig viktig, synes jeg, med impact first investering generelt er jo at man bidrar
til å bevise nye forretningsmodeller. Og vise at det går an å lage en kjede med low cost, high quality for
profit schools i slummen i Nairobi. Da ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn
til at det skal kunne gjøre det.
B02 A01IMB3
before you even talk about some of the common elements of social venture I’ll say that they are as
diverse as starting a business in all those different areas, it’s not like starting a social venture in health
and education are exactly the same thing, they are just as hard an different as starting a health or
education business anywhere else in the world and making sure they’re successful.
B02 A34IMB4
You have to be ready for working in tough markets, solving problems that no one else has solved, dealing
with external stakeholders that are going to make, you know, your life harder and maybe potentially un-
savvy, although not as un-savvy as you think, customer base
C19. Sources of Funding
A12. Sources of
Funding
C20 A12IMB1
social ventures actually need some soft money to begin with, which is some long term low-interest
loans, or some grant money to get over a hurdle in some particular areas before they go out and look for
investors, but they really should look for investors that are likeminded with themselves so there aren’t
those conflicts early as the organization is really trying to solve you know, the key challenges of going
from being a small company or start-up to a successful medium sized or large company, and these are
issues than any company has.
C20 A12ERB1
But since the last two years, from the district administration, we have not received a single penny. A very
small amount of money we collected from the local add. Third one is DA`s internal projects where they
need communication support, for their projects and create awareness generation and information
generation in their projects areas, they approach us. And we produce programs, and radio spots for
them, and they pay us.
C20 A12ERB2
One source of funding is local market, one source of funding is internal projects. Internal projects has
need for origination. And a third is, we are approaching some other external funding agencies also, those
funding agencies are also giving some funds to us.
C20 A12IVS1
Money comes from founders.
C20 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
C20 A12IMB3
this is also a big consideration for an entrepreneur when they are looking to raise funds, because this is
something that has been questioned in the micro finance industry, is that you want to make sure that
the goals of your investor are aligned with the goals of your organization, so when you face these hard
choices that it doesn’t become a trade-off, it becomes something where you can find the best choice for
the organization without having to be at odds with your investors, essentially get voted down eventually
on how you run your business. So it is very important for social entrepreneurs to think about who they
bring in, especially early days
A14.
Investment
Model
C20 A14IVS1
Investment criteria:
· I utgangspunktet: Any business is good business.
· Men: Money is for startup help and growth, not running
C20 A14IKG1
De får ingen eierandeler, men en kontraktsrettet plass i styret i bedriften. I så måte er de ikke investorer,
men mer et styrende fond som hjelper med støtte både finansielt, nettverk og med kompetanse, kun til
oppstarter i Norge.
C20 A14IPD1
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
22
C20 A14IVS2
No high-capital investments
C20 A14IPD2
Yes. Det har formål som et tidsbegrenset subsidie for å få et marked til å begynne å virke. For fattige
mennesker.
C20 A14IPD3
Så en av de tingene vi har jobbet mye med i det siste er hvordan kan vi gjøre mere kommersielle
investeringer med *gjeld og egenkapital*-instrumenter for å fortsette å skape impact, men å gjøre det
på en måte der vi kan få penger tilbake, og bruke de på nytt, og der man kan skape virksomheter som
kan vokse gjennom at de tjener penger og reinvesterer de pengene, og kan etter hvert tiltrekke seg
større kapital.
C20 A14IPD 4
Vi vil jo kalle oss selv impact investors, og der er det jo en veldig glidende overgang, fra veldig impact
first til nesten helt vanlige investeringer, bare tilfeldigvis i en sektor som kan være litt samfunnsnyttig.
Så… ja, hva er det man vanligvis bruker? Det skal være en intensjon om å skape noe positivt for
samfunnet. Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg
mener at da skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at
man får dårlig avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige
eller finansielle kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som
kommer til å gå inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å
gjøre tregangern på de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det
definitivt kan levere en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det
overskyggende målet.
C20 A14IPD5
Da har han bygget opp over tid, og unngått å hente inn andre investorer. Da tar det jo også litt mer tid å
vokse. Da får man en veldig fin modell for å hjelpe de menneskene.
A18. Stuck in
the middle of
financing
C20 A18EJF 1
Unrestricted/risk funding is our main challenge. We’re a tech company that doesn’t offer venture capital
financial returns. Donors aren’t used to investing in new technology. Much easier to sell our tech once
it’s built and operating
C20 A18IPD1
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
C20. ROI
A07. ROI A07IMB1
You would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
A07IMB2
whereas if you’re truly into these earlier stage impact investments, you may have to be in there for ten
years before you start to see returns and the complete return on your investment and the profits you’re
thinking about, and the secondary network to by your shares at some price that you feel is going to give
your investors a reasonable return.
C21. EXIT Opportunities
B05. EXIT
Opportunities
B05 A17IPD1
EXIT-markedet er såpass dårlig at man kan liksom ikke regne med det på en hel portofølje. Så derfor
investerer vi i instrumenter som betaler seg tilbake, dvs. for kanskje et lån med en konverteringsrettighet
til egenkapital i tilfelle salg. Men hvis det ikke blir et salg, så får man i alle fall tilbakebetalt investeringen
sin med rente. Og hvor man kan legge inn standardmekanismer også for å få en viss oppside på det her,
selv om det ikke blir et salg av selskapet. Så det er tankegangen der, så det er egentlig å hente… Hvis
selskapet går bra finnes det da nok cash i selskapet til å kunne tilbakebetale de investeringene ikke sant.
B05 A17IPD2
Det er et interessant tema, for det er ikke lett å få omsatt den her typen typen selskaper som vi snakker
om, det er ganske tidlig fase selskaper. Som ikke er modne for å gå på børs for å si det sånn. De kommer
nok fortsatt til å være litt for små, mange av dem, innen den tidsrammen vi opererer med til at de kan
tiltrekke seg kommersiell private equity *?*. Så ja, det vil komme til å være EXITs i form av salg til *?*
eller til industrielle spillere i noen tilfeller
B05 A17IPD3
Ja. I enda større grad en i grant portoføljen, for her vi en forpliktelse til å levere penger tilbake til
investorene, og da er vi nødt til å ha veldig klare tanker om hvordan pengene skal komme ut igjen fra
23
selskapet.
B05 A17IMB1
Micro finance is really struggling at the moment, which seems to have shed some doubt on whether IPO
is a suitable exit for a social venture. Exits in social entrepreneurship is still a major question.
B05 A17IKG1
En EXIT, er derfor ikke et salg av konseptet, men målet er at de skal kunne drive selv. Ferd skal ikke tjene
penger på prosjektene!
B05 A17IKG2
Kun to av de 7 prosjektene som har noen som helst mulighet til en tradisjonell exit..
B05 A17IMB2
This is the number one question in India right now. What are those exits? You started to see that with
the first IPO of micro finance in India, that created a lot of backlash. There have been some secondary
purchases so early investors selling off to later private equity firms in micro finance, but this is a huge
question in social business.
B05 A17IMB3
And think about the fact that there will at least be a secondary market for that part of the company as it
grows and becomes successful, even if it never goes on the public market
B05 A07IMB2
whereas if you’re truly into these earlier stage impact investments, you may have to be in there for ten
years before you start to see returns and the complete return on your investment and the profits you’re
thinking about, and the secondary network to by your shares at some price that you feel is going to give
your investors a reasonable return.
24
Appendix 2a: Letter of Explanation to Reviewers
Background
As proposed and recommended by management literature, lecturers, consultants and practitioners
worldwide, the first step towards realizing any business idea should be to conduct a preliminary
feasibility analysis, the conclusion to which will be one of two outcomes; 1) Carry on, usually the next
step will be a more thorough analysis and business plan; or 2) Rethink or discard the idea. The analyst
can choose to employ a number of existing models and tools, and the focus is primarily on the
financial feasibility of a proposed concept.
Concept
It is the fundamental premise of our Master Thesis that new tools are needed to assess the feasibility
of technology based social business concepts, ranging from non-profits to for-profits and everything
in between, in order to capture intended non-monetary value creation. This presumption is based in
theory as well as empirical findings from interviews we have conducted in India, Norway and also the
US (via internet). Our findings revealed that social entrepreneurs need to address the following
topics more thoroughly than what is common among entrepreneurs today:
? The differentness of the target market as opposed to the reality of the entrepreneur and/or
innovator, including the need to fully understand the problem to be solved, and the context
and preconditions of the user.
? The creation of non-monetary value in interaction with all stakeholders, not only the
customers and investors, but whole communities within which the organization operates.
? The measurability of the social impact of the organization.
? Potential hazards of the proposed business concept.
We therefore propose 7 models and tables to facilitate feasibility analysis of technology based social
business concepts. These models vary in complexity, as well as foundation. Some models are existing
models we have borrowed from established academics and placed in a new context. Some are
combinations of existing models and theoretical constructs, while a few are models of our own
design, based on empirical findings as well as theory. For our thesis, we have chosen to focus on the
areas of technology/product, and organization, and less on the market/industry and finance. The
overlaps between these areas and our focus areas are, however, significant.
Status quo at the time of analysis may differ greatly, from napkin sketch stage, to having a
functioning technology and exploring ways to commercialize it, to having launched a new
organization, and wishing to take a step back and evaluate ones options. The relevance of each tool
will therefore vary between analysts. However, as we are predominately experienced in early stage
analysis, and also intend these tools for early stage analysis by other students of technology based
entrepreneurship, this has been the main focus of our development.
25
Review
We sincerely hope that you find the above stated concept interesting enough to have a look at the 5
slides included, which show the proposed analysis tools. The slides include short accounts of
theoretical grounding for each model. We kindly ask you to do one or more of the following:
? Examine the models and determine whether they
o Make sense to you
o Add value to a feasibility analysis
o Have obvious strengths and weaknesses
? Suggest changes and improvements to the models
o Through written descriptions
o Through sketching on the slides either digitally, or by printing and scanning
o Through recommending alternative literature, websites or other references
? Suggest other areas of feasibility analysis that are in need of innovation
We are very grateful for all contributions to our Thesis, and hope you have the time to provide us
with feedback on our work so far. Due to dead-lines placed upon us by the university, we must ask
you to send us your response via e-mail ([email protected] or [email protected]) as soon as you
are able, and preferably before May 20
th
. We apologize for the short response time.
Best regards
Ida Eikvåg Groth and Line Magnussen
Graduate Students
NTNU School of Entrepreneurship
26
Appendix 2b: Review Slides
27
28
29
30
doc_247144050.pdf
During this brief information related to social entrepreneurship framework for feasibility analysis of social business concepts.
NTNU School of Entrepreneurship
May 2011
Lars Øystein Widding, IØT
Submission date:
Supervisor:
Norwegian University of Science and Technology
Department of Industrial Economics and Technology Management
Social Entrepreneurship
Framework for feasibility analysis of social business concepts
Ida Eikvåg Groth
Line Magnussen
ORIGINAL TITLE AND PROBLEM DESCRIPTION:
SOCIAL ENTREPRENEURSHIP
FRAMEWORK FOR FEASIBILITY ANALYSIS OF SOCIAL BUSINESS CONCEPTS
In this master thesis an existing framework for feasibility analysis of business
concepts is evaluated in a social entrepreneurship context. Weaknesses and
lacks in the framework with regard to this application are revealed through
theory and research.
A proposed framework for feasibility analysis of social business concepts is
then developed and presented as a tool for future analysis.
FEASIBILITY ANALYSIS OF TECHNOLOGY-BASED
SOCIAL BUSINESS IDEAS
- TOOL DEVELOPMENT-
MASTER THESIS
NTNU SCHOOL OF ENTREPRENEURSHIP
SPRING 2011
CANDIDATES: IDA EIKVÅG GROTH & LINE MAGNUSSEN
[email protected] | [email protected]
SUPERVISOR: LARS ØYSTEIN WIDDING
ABSTRACT
PURPOSE
With the increased interest in social entrepreneurship demonstrated within business
schools and academic environments, the adaption of existing academic entrepreneurial
constructs for social entrepreneurship applications becomes relevant. The purpose of this
thesis is to develop additional tools to the traditional feasibility analysis. The tools will be
specifically directed at technology-based concepts, due to the increased employment of
technology-based products to solve social problems, in combination with the authors’
engineering background, and the lack of academic contributions in this area.
APPROACH
A grounded theory approach is employed, in which unstructured interviews are used to
collect data on the topic of social entrepreneurship from practitioners and academics.
New theory is then developed through a discussion divided into three distinct parts, on
the basis of empirical findings and existing literature, before new data is collected through
a review of the proposed tools.
CONCLUSIONS
A total of seven analysis tools are introduced, where some are new constructs, while
others are based on existing ideas, or even existing models introduced into a new context.
A main characteristic of the tools is that they are not concerned with previously
established and distinct sections of feasibility analysis, but rather address the interception
between the established analysis components. This is the result of the discovery that the
success of social business ideas seem to depend on the ability of the entrepreneur to
maintain an overarching market and customer focus, which is infused in every aspect of
the proposed venture, thus erasing the division between the Market and Industry section
and other established sections of analysis.
IMPLICATIONS
The main implication for analysts is the opportunity to discover fundamental
opportunities and challenges in the process of solving a social problem by bringing a new
product to market through the establishment of a new organization.
FURTHER RESEARCH
Further research should include testing of the new tools in actual analysis of new ideas, as
well as implementation in a complete analysis framework
TRONDHEIM, MAY 29
TH
2011
PREFACE
The title and problem description of this thesis were adjusted after original registration, to
revolve around the development of new tools that would supplement, not replace, existing
analysis tools. In accordance with this, there is also less focus on the detailed lacks in the
existing framework than originally suggested. In addition, focus has been narrowed to
address technology-based social business ideas in particular. This choice is elaborated on in
the introduction.
The main subject of the thesis has, however, always remained the development of
feasibility analysis tools for social business ideas.
Throughout the process of writing this thesis, we have experienced an overwhelming
amount of goodwill and interest from our surroundings. There are more people deserving of
thanks than we will be able to mention here, but we will attempt to address the most
significant contributors.
We wish to thank our supervisor, Associate Professor Lars Øystein Widding, who enabled us
to travel to India to experience amazing acts of entrepreneurship, and who also provided us
with honest and brutal critique in the writing process, enabling us to stear clear of several
academic quagmires along the way.
We wish to thank Prof. Lars Groth at the University of Oslo for his advice and input on
structure, method and language during the final laps of our work. Thank you Dad.
We also wish to thank everyone who willingly (or unwillingly) gave us their time, as
interviewees, reviewers or both. Your cooperation has made a world of difference in our
work.
Lastly, we want to express our sincere gratitude and appreciation for our classmates and
travel companions in India; Gøran Berntsen, the knight in shining armor, and Bård Gamnes,
the indefatigable source of positive energy and strange ideas. Thank you both for being
yourselves.
Ida Eikvåg Groth Line Magnussen
0
TABLE OF CONTENTS
List of Figures .......................................................................................................................................................... 2
List of Tables............................................................................................................................................................ 2
1. Introduction ........................................................................................................................................................ 4
1.1. Background .................................................................................................................................................. 4
1.2. Purpose ........................................................................................................................................................ 4
1.3. Research Question ....................................................................................................................................... 6
1.4. Definitions and Clarifications ....................................................................................................................... 6
1.5. Thesis Structure ........................................................................................................................................... 7
2. Method ................................................................................................................................................................ 8
2.1. Introduction ................................................................................................................................................. 8
2.2. Research Design ........................................................................................................................................... 8
2.3. Weaknesses and Reliability ........................................................................................................................ 14
3. Empirical Findings ............................................................................................................................................. 15
3.1. Introduction ............................................................................................................................................... 15
3.2. Market and Industry .................................................................................................................................. 15
3.3. Product ...................................................................................................................................................... 16
3.4. Organization .............................................................................................................................................. 16
3.5. Finance ....................................................................................................................................................... 18
3.6. Conclusion from Empirical Findings ........................................................................................................... 19
4. Applied Theory .................................................................................................................................................. 22
4.1. Introduction ............................................................................................................................................... 22
4.2 Overview of Applied Literature ................................................................................................................... 22
5. Discussion Part I: Starting Point Assessment .................................................................................................... 24
5.1. Introduction ............................................................................................................................................... 24
5.2. Tool #1: The Proximity Matrix ................................................................................................................... 24
5.3. Final Comments ......................................................................................................................................... 30
6. Discussion Part II: Product Employment Feasibility .......................................................................................... 31
6.1. Introduction ............................................................................................................................................... 31
6.2. Tool #2: The Product Trajectory ................................................................................................................ 31
6.3. Tool #3: The Dependency Matrix ............................................................................................................... 37
6.4. Final Comments ......................................................................................................................................... 42
7. Discussion Part III: Impact and Stakeholder Assessment .................................................................................. 43
7.1. Introduction ............................................................................................................................................... 43
1
7.2. Tool #4: The Life Cycle Description ............................................................................................................ 43
7.3. Tool #5: Impacted Stakeholders ................................................................................................................ 51
7.4. Tool #6: The Social Value Chain ................................................................................................................. 56
7.5. Tool #7: The Impact Value Chain ............................................................................................................... 65
7.6. Final Comments ......................................................................................................................................... 69
8. Conclusions ....................................................................................................................................................... 70
8.1. General Review Response ......................................................................................................................... 70
8.2. Final Conclusions ....................................................................................................................................... 70
9. Implications ....................................................................................................................................................... 71
9.1. Implications for Analysts ............................................................................................................................ 71
9.2. Implications for Further Research ............................................................................................................. 71
10. References....................................................................................................................................................... 72
11. Appendices ...................................................................................................................................................... 76
2
LIST OF FIGURES
Figure 1: Tool #1: The Proximity Matrix Constructed I ......................................................................................... 26
Figure 2: Tool #1: The Proximity Matrix Constructed II ........................................................................................ 28
Figure 3: Tool #1: The Proximity Matrix Reviewed ............................................................................................... 30
Figure 4: Tool #2: The Product Trajectory Constructed ........................................................................................ 34
Figure 5: Tool #2: The Proposed Product Trajectory ............................................................................................ 37
Figure 7: Tool #3: The Dependency Matrix Constructed ...................................................................................... 39
Figure 6: Tool #3: Teece`s Complimentary Assets ................................................................................................ 39
Figure 8: Tool #3: The Proposed Dependency Matrix ........................................................................................... 41
Figure 9: Tool #3: The Exemplified Dependency Matrix ....................................................................................... 41
Figure 10: Tool #4: The Life Cycle Description Constructed .................................................................................. 47
Figure 11: Tool #4: The Proposed Life Cycle Description Exemplified .................................................................. 50
Figure 12: Tool #5: Impacted Stakeholders Constructed ...................................................................................... 53
Figure 13: Tool #5: The Proposed Impacted Stakeholders.................................................................................... 55
Figure 14: Tool #6: Porter and Kramer’s Social Value Chain ................................................................................. 62
Figure 15: Tool #6: The Proposed Social Value Chain .......................................................................................... 64
Figure 16: Tool #7: The Social Impact Chain (Clark et al., 2003a) ......................................................................... 66
Figure 17: Tool #7: The Proposed Impact Value Chain ......................................................................................... 69
LIST OF TABLES
Table 1: Overview of Interviewees ........................................................................................................................ 10
Table 2: Overview of Reviewers ............................................................................................................................ 13
Table 3: Overview of Applied Literature ............................................................................................................... 22
Table 4: Review Response, Tool#1: Proximity Matrix ........................................................................................... 28
Table 5: Review Response, Tool #5: The Product Trajectory ................................................................................ 35
Table 6: Review Response, Tool #3: The Dependency Matrix .............................................................................. 40
Table 7: Review Response, Tool #4: The Life Cycle Description ............................................................................ 48
Table 8: Review Response, Tool #5: The Impacted Stakeholders ........................................................................ 54
Table 9: Review Response, Tool #6: The Social Value Chain ................................................................................ 63
Table 10: Review Response, Tool #7: The Impact Value Chain ............................................................................. 68
3
4
1. INTRODUCTION
1.1. BACKGROUND
Feasibility analysis can be viewed as a basis for a go/no-go –decision on the realization of new business
concepts. It is a central tool in the academic approach to entrepreneurship which has evolved in business
schools (Wyckham and Wedley, 1990), and there are a number of tools available for this purpose, such as
Porter’s five forces, a well-known tool for industry assessment.
When conducting a feasibility analysis, the analyst must collect a significant amount of information about the
proposed market, about similar ventures, about the industry and competition, etc. (Mcgrath and Macmillan,
1995). The purpose of the analysis tools is to point to information needs, and help the analyst structure, and
make sense of, collected information. From this, the analyst must estimate the tangible, intangible and
financial resources needed to realize the proposed concept. The object of the analysis is to reveal the concept’s
viability and potential prior to any extensive resource commitment is made (Barringer and Ireland, 2008). A
feasibility analysis can be seen in a stage-gate perspective, where an early stage feasibility analysis can be
employed as step one, with a subsequent gate decision (Cooper et al., 2002). It is equally possible to divide the
analysis into separate stages, requiring that the market potential for the solution to a given problem is
confirmed, before devoting time and effort to analyzing the feasibility of a proposed solution (Barringer and
Ireland, 2008).
The outcome of the analysis is not necessarily a yes or a no, it may also be a rethink the concept, followed by
repeated analysis after changes have been made. The question is then whether realizing the proposed business
concept it is worth the risk and uncertainty. For most analysts this will be a question of financial returns, and a
go/no-go decision will be based on whether the venture will be competitive in the market, and whether it can
gain a necessary market share at an acceptable profit margin, thus creating financial value for entrepreneurs
and investors.
In the last decade, however, the interest in socially motivated business concepts has increased within academia
(Vurro, 2006). This can easily be verified by the social entrepreneurship classes springing up in MBA programs,
and social entrepreneurship fellowships established, in renowned institutions like Babson College, Boston
University, and Harvard Business School. The need for such dedicated classes suggests that there are
considerable differences between “traditional” entrepreneurship and so called social entrepreneurship, and
that these differences must be addressed explicitly.
This is complicated, however, by the debate on the meaning of the term social when used in an entrepreneurial
or business context, and also by the lack of agreement on the term entrepreneurship itself (Seelos and Mair,
2004, Austin et al., 2006, Gartner, 1985, Weerawardena and Mort, 2006). Social Entrepreneurship is a widely
used, and some say widely abused, term, applied to both for-profit and non-profit ventures, offering a wide
range of solutions affecting end users and other stakeholders in a variety of ways. Between the extremes of
traditional for-profit ventures, and non-profit NGO’s, an array of organizations are emerging (Vurro, 2006,
Perrini, 2006, Weerawardena and Mort, 2006), which employ a great variety of funding structures to create
value along social and financial dimensions at various ratios (Davis, 1997, Dees, 1998).
1.2. PURPOSE
As the focus on social aspects within business makes its way into the business school environment, where
feasibility analysis is an established step in business development, the subject of feasibility analysis which
includes social aspects becomes relevant.
5
The objective of this thesis is to provide analytical tools for students of entrepreneurship, who, while
conducting a feasibility analysis, seek to explore both economic and social aspects of a business idea.
The fundamental premise of this thesis is as follows:
1. There are significant differences between NGO’s and traditional ventures, however, an array of hybrid
concepts are emerging, hence, an entire spectrum exists between the two. Such expressions as social
entrepreneurship/ventures/business/enterprise address this realm, although there is little agreement
on the boundaries of these constructs (Martin and Osberg, 2007).
2. The increased interest in social ventures among students of entrepreneurship and business calls for
adaption of established approaches to suit such ventures (Peredo and McLean, 2006).
3. The perceived differences between traditional and social entrepreneurship imply that feasibility
analysis for social entrepreneurship demands the inclusion of new or altered information needs (Dees
et al., 2001).
4. This implies a need to develop feasibility analysis to address the characteristic features of social
business concepts (Peredo and McLean, 2006). This analysis must not be based on a strict definition of
social, but rather address proposed business concepts aimed at social value creation in some form.
Due to the lack of an established definition of social, no space in this thesis will be devoted to the discussion of
boundaries, neither of social entrepreneurship nor CSR. The owners of a company may choose to spend their
profits on whichever social or even antisocial projects they like. If those projects are not intended to create any
other value for the firm than a potential image improvement, and if they are conducted independently of the
firms value crating and support activities, then they have no place in a feasibility analysis, simply because they
are in no way required to be strategically aligned with company activities, and do not affect the feasibility of
the firm. It is as relevant to the firm feasibility as whether or not the entrepreneur spends the first million
earned on a sailboat or simply donates the entire sum to doctors without borders. The latter is a noble deed,
but not really interesting in this context.
Instead, for the purpose of this thesis, we will employ a very wide definition of social, which does not exclude
any of the new organization forms in the above mentioned spectrum. In this thesis, social is defined as
employed in the following definition of Social Enterprise:
“Competitive firms that are owned and traded for a social purpose”
This definition is employed for research purposes by Smallbone et al. (2011), who’s research domain includes
both for profit and not for profit organizations. This implies that the definition can also include hybrids of the
two. The term social purpose is not elaborated on in this definition. The term will, for the purpose of this thesis,
be employed as referring to an intent to create social value through core activities, such as the distribution of a
unique product, or through support activities and organizational policies, such as Human Resource
Management.
Upon conclusion of the analysis, it is up to the individual entrepreneur to officially label the proposed business
concept as “social” or not, according to which ever definition he or she chooses.
The theory development in this thesis will focus around the social venture sub-segment of technology based
social ventures. The background of this focus is an increased employment of technology products to solve
social problems (Desa and Kotha, 2005) in combination with the lack of theory development in the field. The
authors’ background in engineering and technology based entrepreneurship studies also makes this a relevant
field of research for a master thesis. In addition, these ventures are characterized by particular activities, such
as production, physical distribution, product development, etc., which are interesting in a social perspective.
6
1.3. RESEARCH QUESTION
The research question established for this thesis is as follows:
How can academic feasibility analysis of early stage business ideas address technology based business ideas
aimed at social value creation through key activities or support activities and organizational policies?
We choose to answer this research question through the development of analysis tools addressing the
common and characteristic challenges of such ventures with regards to information needs. We propose to do
so through three steps:
1. Identification of common characteristic challenges with regards to information need for early stage
technology-based social ventures
2. Identification and collection of relevant input for the development of tools to address these needs.
3. The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology based business ideas aimed at social value creation.
It must be underscored that the tools developed in this thesis will not constitute a complete framework for
feasibility analysis of early stage business ideas, but rather be introduced as additions to existing tools. This is
due to the fact that many general information needs, such as estimated market size and estimated capital
need, are shared by all new ventures, and already included in existing tools. Hence, new tools are primarily
needed to address the specific challenges of social business concepts.
1.4. DEFINITIONS AND CLARIFICATIONS
In order to avoid misunderstanding, some clarification regarding the term analysis is required. Feasibility
analysis and feasibility study are two terms being used interchangeably within the field of business
development. In the Oxford dictionary, however, the word analysis is defined as “detailed examination of the
elements or structure of something” (Oxford, 2010a) whereas the term study is defined as: “the devotion of
time and attention to acquiring knowledge on an academic subject, especially by means of books” (Oxford,
2010b). This implies that the conducting of an analysis may be an integral part of a study. For the purpose of
this thesis, the term feasibility analysis is employed.
In accordance with this, the term analyst will be employed to refer to the individual conducting the analysis.
This is also in accordance with the intended application of the proposed tools, which is in academic
environments. The term entrepreneur will, however, be employed to refer to the role of the entrepreneur
when discussing entrepreneurial challenges and activities.
After having conducted a theory search, on both feasibility analysis and feasibility study in databases including
Bibsys, Google Scholar and ProQuest, few acknowledged references were identified that specifically described
the process of either. Barringer and Ireland`s feasibility analysis, as presented in the textbook Entrepreneurship:
Successfully launching new ventures, proved the most detailed and updated source. Their framework is based
on the articles How to Write a Winning Business Plan and The Origin and Evolution of New Businesses, authored
by Sahlman (1992) and Bhide (2000) respectively. Thus, Barringer and Ireland (2008) provide the point of
departure for the theoretical discussion.
The tools developed here will, however, differ from those in the framework proposed by Barringer and Ireland
(2008) in three ways:
1. By inclusion of social value creation
2. By focusing on early stage concepts, implying that they are pre-business plan, but that the
entrepreneur has an idea about what problem he or she wishes to solve, who is experiencing the
problem, and what the solution might be. This implies an element of opportunity discovery and
7
exploration, as opposed to pure evaluation, in the analysis, which in turn can enable the entrepreneur
to further develop the identified opportunity (Ardichvili et al., 2003).
3. By focusing on technology based ventures.
The division employed by Barringer and Ireland (2008) has four central pillars of analysis; The Product or
Service; The Industry and Market; The organization; and Finance. This structure is similar to the structure
employed by Schneider (1998) as the outline of a sound business plan; Market analysis and marketing plan,
Production plan, Organization and Management plans, and Financial analysis. This is also similar to the model
introduced by Mcgrath and Macmillan (1995) to identify where the venture will have to match existing industry
standard and where it has to excel. The structure is also found as a basic premise of the concept of
entrepreneurial knowledge reservoirs, were necessary business knowledge is divided into Market, Product,
Organization and Finance (Widding, 2005). Schneider (1998) proposes to include a summary and concept
description as a separated section proceeding the other parts of the business plan. Barringer and Ireland (2008)
suggest the same inclusion, but places the concept description under the Product or Service feasibility. For the
purpose of this thesis, the following structure will be employed:
1. Product feasibility
2. Market and Industry feasibility
3. Organizational feasibility
4. Financial Projections
The aim of the proposed analysis tools will be to point to information needs, and to facilitate the structuring of
information, so that the insight gained from performing the analysis may serve as a valuable basis for strategic
decisions. The task of the analyst employing the tools is defined as: to search for and collect relevant
information from the sources available to him or her at the time of analysis. The analyst must decide how
thoroughly he or she wishes to conduct the analysis, based on the current stage of business concept
development. In what manner the information is gathered will also be up to the analyst to decide.
1.5. THESIS STRUCTURE
The structure of this thesis is as follows: First, the employed research method is described, followed by a
review of the most significant empirical findings in each of the above mentioned analysis pillars, and the
identified challenges to be addressed. Next, a table overview provides a presentation of the theoretical
subjects which relate to identified challenges, and the literature used in the discussions. The traditional theory
review has in this thesis been infused in the discussions and thus the development of the respective tools. This
is due the significant thematic variation between discussions. The subsequent discussion is divided into three
chapters for the same reason. Each discussion chapter comprises of one or more tool development discussions,
and also includes responses from a review of the proposed tools, followed by final changes. Last, a general
conclusion and implications are presented.
8
2. METHOD
2.1. INTRODUCTION
The object of this thesis is the development of analysis tools for feasibility analysis of technology-based social
ventures. These tools are to serve as facilitating constructs to help the analyst recognize information needs,
and also to help the analyst structure the information, so it can serve as a basis for subsequent strategic
decisions.
The establishment of these tools is based on three steps:
1. Identification of common characteristic challenges with regards to information need for early stage
technology-based social ventures
2. Identification and collection of relevant input for the development of tools to address these needs.
3. The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology-based business ideas aimed at social value creation.
This chapter describes the employed research approach in detail, and includes comments on the weaknesses
and reliability of the approach.
2.2. RESEARCH DESIGN
Social entrepreneurship in general, and technology-based social entrepreneurship in particular, are relatively
new research fields. Hence, the research approach employed had to encompass this newness, and compensate
for the lack of established theoretical frameworks.
The amount of literature in the field of social entrepreneurship is increasing, but there is still no consensus on
the boundaries of the construct, and the literature is still fragmented (Weerawardena and Mort, 2006). The
sub-category of technology-based social entrepreneurship, however, suffers from a great lack of academic
attention, in addition to the uncertainty of the definition of social itself (Desa and Kotha, 2005). To further
complicate matters, while the field of social entrepreneurship is developing in academia, it is also in rapid
development in practice (Weerawardena and Mort, 2006, Dees, 1998), causing the relevance of academic
works to decline within a short period of their publication.
In order to gain insight into what the common information challenges of entrepreneurs with a social intent
actually are, it was appropriate to employ an inductive approach, starting with a thorough submersion into the
real world phenomenon of solving social problems with an entrepreneurial approach. An inductive approach is
often recommended for the investigation of uncharted territory (Glaser and Strauss, 1967).
The research design employed in this thesis is highly inductive, and started in a real world setting, were current
experiences and opinions were gathered from people on the ground. As no complete theoretical framework
exists on which interview questions could be based, data gathering was conducted in the form of unstructured
interviews. The aim of this first step was to understand what is really going on in social entrepreneurship, and
what the common challenges of such ventures really are.
Findings from these interviews were then coded and analyzed, and lifted to a more abstract level when
discussed in relation with existing theory. The applied theory was collected from the field of social
entrepreneurship, but also from other research fields with relevance to each identified challenge respectively,
as no complete body of theory exists on the subject of technology-based social entrepreneurship.
9
The discussions of findings and existing theory resulted in the development of new theory, namely the
proposed analysis tools. In order to ensure the relevance and usability of the tools, the proposed tools were
then reinserted into a more practical setting, through a review, were they were evaluated by investors,
academics, business students, and also one user of socially intended technological products. The responses
from this review then formed the basis of final theory development, where adjustments were made to the
proposed tools. This approach can be described in six steps, corresponding to the three steps described above:
Identification of common and characteristic challenges of stage technology-based social ventures in general
and challenges relating to information need in particular:
1. Data gathering through unstructured interviews with experts and practitioners
2. Analysis of findings from the interviews
Identification and collection of relevant input for the development of tools to address these needs.
3. Theory search in the field of social entrepreneurship and other fields of relevance
The development of a set of distinct analysis tools, which address the challenges most characteristic of
technology-based business ideas aimed at social value creation.
4. New theory development on the basis of existing theory and empirical findings
5. Review of the proposed new theory
6. Final theory development on the basis of review response
As described by Widding (2006), the process of data gathering and the development of theoretical
understanding were overlapping, and parallel, for a period, an approach described as theoretical sampling
(Widding, 2006, Eisenhardt and Graebner, 2007).
2.2.1. UNSTRUCTURED INTERVIEWS
The unstructured interview format was chosen in order to maintain open mindedness when approaching the
loosely defined subject of social entrepreneurship. As the object of the data gathering was the identification of
common information challenges for entrepreneurs with a social intent, the aim of the interviews was to get
interviewees to talk about the subject of social entrepreneurship in general, and challenges related to
information needs for early stage technology-based social ventures in particular. This was not to enable the
researchers to conclude on which challenges were faced by all such entrepreneurs, but rather on which
challenges were considered relevant for such ventures in general.
SELECTION
The need for some degree of generalization required interviewees to represent different perspectives
and experiences with social entrepreneurship, to provide breadth in the data. As student researchers,
limited in terms of funds and range, aspects of practicality posed a challenge in this area, however, the
opportunity to gather data in India presented itself through a larger university project. As India is a
society of great social differences and tremendous social challenges, and known to be at the forefront
of what is generally referred to as social entrepreneurship, this was a great opportunity. Thus, large
parts of the data gathering were conducted across several Indian cities and villages over a period of 17
days in January/February 2011.
In order to counteract a “cultural perspective” bias, data was later gathered in Scandinavia, as well as
through e-mail and Skype in the US, to triangulate results.
Interviewees were chosen through several methods. In India, academics were mostly identified on the
basis of prior connections with other members of the project delegation, while entrepreneurs and
10
investors to a large extent were identified through a snow-balling technique, following introductions
at a social entrepreneurship conference at XLRI in Jamshedpur late January 2011. Interviewees in
Scandinavia and the US were identified through prior knowledge and media search.
For subsequent analysis of the gathered data, interviewees were divided into groups depending on the
nature of their involvement in social entrepreneurship;
1. Investors
2. Academics
3. Entrepreneurs
4. Users/Customers
5. Facilitating organizations
Investors are a particularly interesting group with regards to feasibility analysis, as they spend much of
their time conducting due diligence on business concepts which they consider funding. This implies
that investors generally have opinions and experiences relating to all aspects of the analysis, and also a
more practical view of the relevant issues than do most academics. Investors also generally have
experience from a wide range of business cases, while entrepreneurs usually have experience from
one, or in the case of serial entrepreneurs, a small number of ventures.
The 21 interviewees comprised of:
QUESTIONS
Interviews were conducted over a period of three months, during which the focus of the research and
the maturity of the researchers developed considerably. As these interviews were unstructured, there
was no prescribed interview guide with standardized questions. The questions asked were part
questions prepared prior to the interviews, depending on the actor in question as well at the stage of
research, and part spontaneous questions concerning things that were brought up during interviews,
which generally took the form of quite natural conversations.
TABLE 1: OVERVIEW OF INTERVIEWEES
Numbers Status and experience Nationality Group
5 Social or impact investors
Two Indian, two Scandinavian
and one India based American
I
4
Academics working with social
entrepreneurship and social
entrepreneurs
Indian A
1
Academic working with
environmental challenges and
corresponding social issues
Indian A
4 Social entrepreneurs
Two Indian, One American, One
Scandinavian
E
6 Users/customers Two Indian, Four American U
1
Representative for a facilitating
organization for social
entrepreneurship in India
Indian O
11
DOCUMENTATION
The methods of documentation used were also influenced by the aspect of practicality. While sound
recording and video were widely used to capture interviews, external conditions sometimes prevented
the use of such technology. The most pressing problem were encountered in India, in the form of
noise from the surroundings, usually present in the form of traffic and ventilation. This resulted in the
use of handwritten notes as documentation for a small number of interviews, however, the presence
of a minimum of two interviewers at every meeting to some degree countered flaws in the
documentation.
Most interviews were transcribed verbatim. The exception was the small number of manually
documented interviews conducted in India, which were documented as summaries, including main
points and selected relevant quotes.
2.2.2. ANALYSIS
After transcribing the interviews, the transcripts and the few written responses were de-constructed into
quotes regarding a great variety of subjects. These were then analyzed in three steps, based on the abstraction
stages described by Widding (2006). This method of analysis was employed to ensure that no topics were lost
in analysis. The basic principle is to code data twice; Once based on topics identified in the data pool itself,
implying that new categories are generated until every finding has been placed in a category, either by itself, or
with others; and once based on a theoretical framework, in this case the analysis framework presented by
Barringer and Ireland (2008), as well as some categories generated from social entrepreneurship literature,
addressing the trade-off between ROI and social value creation. This implies that a finite number of categories
were generated, into which all findings were attempted sorted. Not all findings could be placed in a category,
and not all categories had data placed in them. These two sorting steps then formed the basis of a final sorting.
Below, the process is described in more detail for each of the three steps:
Step 1: All quotes were sorted into categories derived from the quotes themselves. These categories were
denoted A-categories, and a total of 39 such categories were created to include all quotes. Although the
categories were derived from unique themes revealed in the data, several quotes were placed in more
than one A-category. Each category did, however, have a unique composition of quotes, and no one
category was fully included in another. Each category was given a number. In addition, each quote was
given an identification code to denote whether it came from an investor (I), and entrepreneur (E), and
academic (A), a facilitating organization (O), or an end user (U), along with a two-letter code identifying the
individual interviewee. Finally, each quote received a number denoting its place in the sequence of quotes
from the same source within one category. The code was then on the format of the following example:
A12IPD2, were the letter I denotes that the interviewee is an investor, and the letter A implies that this is a
code generated in the A-round.
Step 2: New categories were established, this time with basis in the pillars of feasibility analysis employed
by Barringer and Ireland (2008), as well as key challenges outlined in social entrepreneurship literature,
mainly concerning trade-offs between ROI and social value creation. These 36 new categories were
denoted B. While keeping their A-codes, all quotes were collected from their A-categories and mixed.
They were then pulled in random order, and placed into the B-category most suitable. Several quotes were
placed in more than one B-category. There were some quotes for which no B-categories were applicable.
These were discarded as irrelevant for this round. There were also B-categories to which no quotes were
ascribed. These were also discarded.
12
Step 3: Finally, 21 C -categories were generated. These were based on a thorough evaluation of the B and
A-categories, and include most B-categories, as well as some A-categories, were the data generated A-
categories were considered as ;
a. Having revealed a relevant subject that had not been suggested by theory
b. Having revealed a more practical division or structure of a subject, than had the
corresponding B-categories.
The purpose of this method is to tie the empirical findings to the theoretical framework, so as to relate
to the themes from the theory discussion, without missing any relevant new themes that could be
derived from the findings themselves. Each C-category contains one or a number of A or B-categories,
however, each C-category has a unique composition of quotes, and no one category is in its entirety
included in another. A complete overview of the code categories, as well as the complete C-codes, can
be found in Appendix 1.
2.2.3. THEORY SEARCH AND SELECTION
Currently there is no framework available which offers relevant underpinnings for a debate on the subject of
technology based social entrepreneurship in general (Desa and Kotha, 2005), making a full scale literature
review of the field infeasible. However, several of the topics for tool development, which were revealed in the
empirical findings, relate to substantial bodies of literature in such fields as strategy, stakeholder theory,
product development methodology and even philosophy. As students working in a relatively new research
area, we are required to seek relevant theory from other areas, even those of peripheral interest (Bruce, 2001).
The theory search followed the data collection, with a period of overlap, as theory was chosen on the basis of
challenges identified in the empirical findings. Some literature was even chosen on the grounds that it served
as a basic introduction to topics suggested by interviewees themselves. After the review of the proposed tools,
a limited need for additional literature became apparent.
Based on the feedback, additional literature was identified within the same theory subjects, to answer to
suggested shortcomings. A complete table of theory and sources and can found in chapter 4, Applied Theory.
2.2.4. THEORY DEVELOPMENT
Theory development was conducted through the discussion of empirical findings in relation to literature from
related fields. The discussion is divided into three distinct parts, due to the spread of the identified challenges.
One tool is developed in the first discussion, while the subsequent discussions result in the introduction of two
and four proposed tools, respectively.
The ratio of empirical versus theoretical grounding vary between the proposed tools, depending on the degree
to which solutions were suggested in the findings, as well as the relevance of existing literature. The variation
in the foundation between the different tools, both with regards to findings versus theory, but also with
regards to the field from which the respective theory is drawn, has also resulted in significant variation in the
format of the proposed tools.
2.2.5. REVIEW
The review of the proposed tools was conducted between May 13
th
and 20
th
2011. Reviewers were e-mailed
slides with proposed tools, which included theoretical backing and practical relevance of each tool. An
introductory letter explaining the goal of the thesis was included in the e-mails. This letter and the
accompanying slides can be found in Appendix 2.
The exception to the distribution by e-mail was the review conducted by two graduate students of technology-
based entrepreneurship, and one academic (No. 3). This exception was made for practical reasons as these
13
actors were situated on the authors’ university campus, and could be reached in person. Their responses were
documented through the respondents’ own notes, and the notes of the authors, which were subsequently
approved by the respective reviewers.
For the purpose of the review of the tools, it was appropriate to mainly include actors who had extensive
experience conducting feasibility analysis of business concepts. The experience with social entrepreneurship
per se therefore varied among the participants.
A total of seven individuals participated in the review:
Numbers
Status and
experience
Background, basis for sense making Nationality
Interviewed
during initial
data
gathering?
1
Social or impact
investor
Background from industrial economics studies, and
a previous career in management consulting.
Scandinavian Yes
1
User of a social
technology
product
7th Grade IRR Teacher, Language Arts & Social
Studies, facilitates the use of study aids for
students with disabilities. Familiar with the
challenges of technological aids from a user
perspective.
American Yes
3
Academics
working with,
and/or teaching,
entrepreneurship
and business
development.
Nr 1: Harvard MBA, Executive-in-Residence,
Entrepreneurship and Strategy, and Director of
Entrepreneurship Programs for the Institute of
Technology Entrepreneurship & Commercialization
at a US University. Previously the CEO of a
technology company, and current board and
advisory board member for a number of
commercial and non-profit organizations.
Nr 2: Harvard MBA, Lecturer/Executive-in-
Residence, Strategy and Innovation at a US
university. Previous experience from management
consulting, strategy and marketing, and as founder
of two companies.
Nr 3: American BSc in Chemistry and MBA,
currently Post-doc in the Globalization Program,
Global Production and Communications of NTNU.
Previous experience as a two time entrepreneur
within technology-based start-ups.
All American,
one currently
Norwegian
based.
No
2
Graduate students
of technology-
based
entrepreneurship
and engineering.
Both graduate students in industrial economics and
technology-based entrepreneurship at NTNU, with
previous MBAs from a US university. Experienced in
conducting feasibility analysis for technology-based
and non-technology-based business concepts in
both Norway and the US.
Scandinavian
No
TABLE 2: OVERVIEW OF REVIEWERS
14
2.2.6. FINAL THEORY DEVELOPMENT
Based on response from the reviews, final changes were made to the proposed analysis tools. Due to
continuous exposure to literature, researchers and the real world phenomenon of social entrepreneurship, the
maturity of the authors also progressed, resulting in some additional changes not directly related to the review
responses, but rather to increased maturity and widened perspective.
2.3. WEAKNESSES AND RELIABILITY
2.3.1. WEAKNESSES
The weaknesses of the employed approach are mainly concerned with the process of data gathering, and the
most dominant obstacles for data gathering were, not surprisingly, encountered in India. Language, as well as
cultural factors such as codes of conduct and symbolic meaning of expressions and objects, presented great
difficulty when conducting interviews. This was particularly pressing when interviewing entrepreneurs and end
users, who did not necessarily have the English skills and business vocabulary shared by most actors in the
three remaining subject groups. The need to use translators presented additional problems, which were
enhanced by the fact that translation was performed by the most skilled or eager individual present at any
given point in time. While the language skills of the translators themselves varied, so did the pre-existing
relationship between the translator and the subjects, which undoubtedly must have influenced the responses
in some cases.
Another possible weakness in the research is the background and grounding of the authors, both graduate
students of mechanical engineering and technology-based entrepreneurship at the Norwegian University of
Science and Technology, and subjected to a limited regime with regards to feasibility analysis. Both authors
have, however, also attended one semester of entrepreneurship courses at the School of Management at an
American university, which implies at least some degree of alternative inspiration.
2.3.2. RELIABILITY
The object of this research is not the development of analysis tools addressing challenges faced by all
entrepreneurs with a social intent, but rather the development of tools which address common challenges,
which for many are relevant to consider in the earliest stage of development. We do not state that the
challenges identified in our data gathering are the only relevant challenges. As such, the limited number of
interviewees does not present a problem, and we believe that if the employed approach is replicated, findings
will not resemble our findings exactly, but are likely to overlap to a large degree, as many of the subjects
discussed can be considered quite general and fundamental.
In order to ensure a basis for some degree of generalization, results have been sought triangulated, through
three steps:
1. Triangulation in terms of representation from five distinct groups of interviewees, based on the nature
of their involvement with entrepreneurship.
2. Triangulation in terms of selection of interviewees from three continents.
3. Triangulation in terms of the subjection of constructs to additional empirical input after initial theory
development has been conducted.
As a result of these efforts, we are certain that the proposed tools hold some relevance to the early stage
exploration and planning for many technology-based ventures addressing social issues.
15
3. EMPIRICAL FINDINGS
3.1. INTRODUCTION
In this chapter, the main features of the empirical findings from interviews are presented. These findings serve
as the basis of identification of main challenges relating to information needs, which again serve as basis for
theory selection. A complete table overview of applied theory is presented in the next chapter, linking
theoretic fields to the respective challenges identified in the conclusion of this chapter.
Interviewees in general, and investors in particular, stated that all aspects that were important to start-ups in
general were also important in social start-ups, but that the concept described had to be based on a
fundamental knowledge about the target market. In general, the findings suggest that practitioners and
academics working with social entrepreneurship are generally very attentive to the critical importance of
including stakeholder and customer perspectives in every aspect of a proposed venture. This was confirmed
when findings were summarized for each pillar of analysis respectively:
3.2. MARKET AND INDUSTRY
Reoccurring subjects related to the market and industry can be summed up the following categories:
1. Trends
2. Environmental and Socio-political Factors
3. Market Entry
3.2.1. TRENDS
Both academics and investors stated that there was a clear trend in business in general to think more in terms
of social value creation. A Norwegian investor also argued that it was among newly-hired employees and
students currently attending universities that the interest was most evident. One investor in India argued that
competitive advantage could not be an entrepreneurs only motivation for wanting to create social value, and
that if this was the venture`s only concern it was not going to be successful in the long run.
3.2.2. ENVIRONMENTAL AND SOCIO-POLITICAL FACTORS
The academics interviewed mentioned issues related to environmental and socio-political factors in the target
markets. One academic, who specifically worked with large scale environmental problems and related social
issues, explicitly addressed the government`s role in proving that there is potential for profit within a market.
He also stated that the government had to establish the rules of the game as well as invest in major
infrastructure, before other actors were willing to enter. The same interviewee also addressed the trade-off
between development and environment in developing countries, especially in areas where people are still
living of the fruits of the forest on a hand to mouth basis. He also stated that this was further complicated by
environmental conservation, which posed another conflict with local people’s need to extract resources from
nature, as well as with industry.
3.2.3. MARKET ENTRY
One Norwegian investor stated that his company evaluated industries and investment prospects based on how
easy it was to identify relevant measurable social impact parameters. The same investor also mentioned that
instead of collaborating with Norwegian aid organizations, they found it easier to go to markets where local
organizations were already established. Measurement and in-depth knowledge of target markets and
communities were generally mentioned by investors as key to the success of social ventures, and to the
attractiveness of an investment prospect.
16
3.3. PRODUCT
Findings regarding Product Feasibility can be sorted under three themes:
1. Understanding users and market conditions
2. Interaction with customers
3. Intellectual Property Rights (IPR)
3.3.1. UNDERSTANDING USERS AND MARKET CONDITIONS
Investors interviewed stressed the need for the entrepreneur and/or product developer to gain real insight into
the needs and lives of users, and that there are too many examples of far away innovators who believe they
can solve problems in developing countries without firsthand experience with those markets. Investors
generally wished to invest in entrepreneurs with actual firsthand experience from the target market, and one
investors also pointed explicitly to the various unexpected factors that may determine a product’s success
when put to use, underscoring the need to know that environment thoroughly. Understanding of the user
situation was emphasized, but understanding of the technological infrastructure available in the market was
also addressed specifically by the academic working with environmental issues.
One academic also pointed to the difference between treating a problem and treating the consequences,
which is an important aspect of understanding user needs. One academic with significant experience with grass
root innovators in India also stated that the poor and un-educated people often viewed as users only, must also
be regarded as a resource, and a source of knowledge and innovativeness. For this reason, he also explained,
there is tremendous potential in creating solutions which each user can tailor to his or her own needs. The risk
of underestimating customers was also addressed by one investor.
3.3.2. INTERACTION WITH CUSTOMERS
Entrepreneurs emphasized the importance of involving customers in development of solutions, and getting
feedback during the development cycle, while users expressed the need to be taken seriously by company
service staff.
3.3.3. INTELLECTUAL PROPERTY RIGHTS (IPR)
Statements regarding IPR show that several actors regard protection of products or concepts as something that
can be undesirable for ventures with a social mission, as it places limitations on the diffusion of impact creating
solutions. The overall view of trademarks, however, was that the customer should be able to rely on the origin
and quality of a product, making trademarks a good thing.
3.4. ORGANIZATION
Findings related to the organization can be divided into five main groups:
1. Stakeholders
2. The value chain and business model
3. The entrepreneur, management and team
4. The measurement of social impact
5. Scalability
3.4.1. STAKEHOLDERS
The way in which the venture affects its stakeholders was a great concern for nearly all the interviewees, and
both investors and entrepreneurs emphasized the importance of creating a socially focused organizational
culture. “The management in a company with a social mission must have the attitude that they are not there
just to make a profit, but to make sure that they are serving their customer base responsibly”, one Indian based
17
American investor stated (B30:A28). A culture of transparency with regards to profit motives was also
described as vital, particularly in the long run. The entrepreneur must never hide the fact that he or she is
starting a for-profit, scalable business. In order to preserve a good reputation, it is important to play with open
cards, so that one’s intentions will not be questioned when the venture grows.
One Indian academic stated that in order to maximize efficiency, many companies in developing countries cut
salaries, cut back on safety, cut back on social welfare and don’t pay workers benefits, and that this is an
extensive problem.
In general, the focus on affected communities, and positive dialogue and interaction with stakeholders, was
central with the individuals interviewed.
3.4.2. THE VALUE CHAIN AND BUSINESS MODEL
Academics and investors in India state that the value chain and business model of the venture must be
modeled with inclusion of social impact and stakeholder interaction in all stages. One investor stated that social
responsibility should be an integral part of core organization strategy, with assigned responsibilities and
accountability at all appropriate levels of the organization. It should be reflected in decision making and
considered when implementing new activities.
Representatives from both the investor and the academic groups explicitly addressed the problem of
middlemen, which was widely regarded as a bad thing, and should be avoided if possible.
A Scandinavian social entrepreneur stated that having production facilities and local offices in the target
markets, and employing local people to conduct R&D, sell and distribute the product , helped them understand
the end user`s problems, eased the distribution, and also helped them avoid trouble with governments.
3.4.3. THE ENTREPRENEUR, MANAGEMENT AND TEAM
A Norwegian investor argued that a well-known challenge for the technology ventures with a social mission is
attracting highly educated employees. He also stated that the entrepreneur must bring along someone with
business capabilities on the team to secure that the financial aspects are taken care of.
“It is really thanks to our leader that we are the company we are today. (…)I don’t think we would have been as
successful if we did not have such a visionary leader and if we did not have someone in the top of the company
who was willing to make the personal physical sacrifice to learn about the challenges that the least fortunate
people in the world have. Without a doubt the driving force of the company” –Scandinavian Entrepreneur
(C15:B08)
Investors interviewed agreed that the entrepreneur`s passion was a key criteria when deciding whether or not
to invest in a start-up. One Indian investor stated that “Idea is 1%, execute ability and passion is the most
important” (C15:B08). Two investors also regarded the entrepreneurial team as the most important aspect to
assess, after the quality of the product or service. Another investor argued that a vital factor for deciding
whether to fund a start-up, is the entrepreneur`s insight, network and knowledge about the local conditions.
None of the interviewees pointed to any explicit differences between a “traditional” entrepreneur and the
entrepreneur with a social objective, other than the entrepreneur`s personal beliefs and motivation. The
qualifications and the characteristics of an entrepreneur with a social mission are no different from the
“traditional” entrepreneur’s, according to two of the investors. Another investor stated that the only
difference lays in what kind of idea the entrepreneurs had come up with.
18
3.4.4. THE MEASUREMENT OF SOCIAL IMPACT
From the empirical data collected, it is apparent that the measurement of success and social impact has proven
to be a difficult and time-consuming process. One investor explained how a thorough impact study would take
three to five years, and cost a significant amount of money.
An academic in India argued that the method of measurement depends on what kind of social impact the
venture wants to create. A Norwegian investor argued that it must be better to have some data, which you
know have some weaknesses, than not having any information about the outcomes at all. The investor
continued by saying that the controversies that have occurred in microfinance lately, are a result of the
organizations’ lack of a continuous evaluation and measurement of end users wellbeing. In most cases, the
investor said, the evaluation of impact is conducted by the companies themselves. He also stated that the
current ongoing monitoring or observation of activities related to social responsibility is primarily aimed at
making sure that activities are proceeding as intended, identifying any crises or out-of-the-ordinary occurrence,
and making modifications to the way things are done. They are not, however aimed at measuring or monitoring
social impact.
The investor also warned about having too many people on the board who believe that social returns equals
high social impact. A growing number of people are interested in the concept of social business, but still not
willing to renounce maximization of returns.
3.4.5. SCALABILITY
One investor in India argued that if the venture really wants to be successful it must be scalable, as in “having a
business that’s scalable in how you operate and how you design your ability to expand, but also being able to
attract the capital to be able to expand” (C02:B04). The investor also stated that it is not enough to simply
break even, the venture must be able to handle some bumps in the road.
Both academics in India and investors in Norway mentioned that scalability was an important aspect to
consider. An Indian academic stated that an idea has to be scalable, otherwise it would be limiting.
3.5. FINANCE
Findings regarding financial feasibility primarily sorted under three themes:
1. Investment prospects and expectations
2. Attracting capital
3. Exit opportunities
3.5.1. INVESTMENT PROSPECTS AND EXPECTATIONS
Several investors talked about the expectations they would have of an investment prospect. All but one
investors interviewed were already seeing financial returns on their investments, or were working to do so in
the future. Only one had a strict social value only mandate.
Generally, investors viewed sustainability as a minimum pre-requisite. Although some were interested in
providing grants to get a new company started, that company had to be self sustained in operation. One
investor also pointed explicitly to the need for a buffer, so as to provide some security and attract further
capital.
Several investors commented that financial returns signal that a company is sustainable, but warned that one
could never say that this implies that it is reaching many people with a positive social impact. One investor
lamented, however, that many people primarily occupied with more traditional assets still view this as a valid
argument.
19
Still, it seemed that the general consensus was that nobody places their money in impact investment or
development projects because they want to make as much money as possible, but not because they simply
wish to donate it either. They want to see something that works on its own, and hopefully see their money
again, although perhaps only to reinvest it. The general view was that financial and social objectives must be
seen as complimentary.
Scalability was mentioned by investors as one of the most important aspects of a social business concept, and
as one investor stated: there is a limit to how far you can scale a concept based on donations.
3.5.2. ATTRACTING CAPITAL
Alignment of goals between entrepreneur and investor was regarded as having great importance when seeking
start-up capital. This is important for any start-up, but for one trying to combine social and financial goals there
will be a much larger spread in terms of objectives.
Should the entrepreneurs be able to fund the company themselves, however, they will be much freer in terms
of choosing less financially rewarding strategies. Organic growth can, however, take a very long time.
Findings also suggested that for technology-based entrepreneurs, there may be some difficulty in attracting
capital, as many investors who are traditionally directed towards development are not necessarily tech-savvy,
while the tech-savvy investors are often traditional and expect venture capital returns.
3.5.3. EXIT OPPORTUNITIES
The general consensus is that the there is little experience and knowledge about exits in social business.
Investors are not yet convinced by IPOs in micro finance. In addition, as one investor pointed out, many of
these companies are at quite early stages. They are not ready to go public either way.
One investor who has so far structured investments as subsidies, but is working towards more commercial
investments, stated that for the current portfolio, the exits will be in the form of withdrawal to let businesses
carry themselves. Sale to relevant industry actors was suggested as a possible exit for future investments. One
must generally be creative about the way one structures investments and look for exit opportunities. This is
also supported by investors’ interest in original business models and concepts. There is a general sense of
trying to solve old problems in new radical ways, which demands innovation across the board, not only in terms
of products or marketing, but also in terms of investment models, sources of capital, and ways to get returns.
This also makes it difficult to generalize on the subject.
3.6. CONCLUSION FROM EMPIRICAL FINDINGS
“It’s really about redesigning the way in which you think about this, it’s sort of the next generation of thinking
about how you can create this whole social win – win. Social and financial do not have to be at loggerheads,
they can really be working together, and therefore create better outcomes for companies and communities, and
this is how we’re going to have to think about 21
st
century business.” – Indian Social Investor (C11:A08)
Findings from the interviews revealed significant challenges for technology-based social ventures with regards
to the gathering and use of information. This particularly pertained to how the organization interacts with its
stakeholders, with high focus on end users and their surrounding community. With regards to customer
interaction, challenges concerning the development of functional and practical products were also thoroughly
addressed.
In order to maintain focus on the most fundamental characteristics of technology-based social ventures in the
development of analysis tools, within the boundaries of a master thesis, it is necessary to narrow the scope of
the discussion. This is proposed done by focusing on one or two of the four pillars of feasibility analysis,
selected on the basis of the following criteria:
20
1. The pillar must have been addressed thoroughly by interviewees.
2. The empirical findings must point to explicit challenges with regard to information needs, and
applications of information.
3. The empirical findings must point to ideas for potential implementation in new tools.
4. Literature and theory must exist in the area in question, or in related areas, which address potential
solutions to the challenges of gathering and using information for the development of business
concepts.
These criteria were employed to ensure that this discussion addressed the areas where the empirical findings
could form the most valuable basis for discussion and theory development.
The single most significant discovery from the interviews, however, was the apparent underlying consensus
that while everything that is important to any other start-up is also critical to a social venture, the focus on the
stakeholders and the conditions in the target market must be all-embracing, and infused in every other aspect
of the entrepreneurial process. This became evident, when the analysis of data proved challenging during the
B-round, in which findings were sorted according to the pillars of Barringer and Ireland (2008). The marketing
related findings seemed to sneak their way into every other category, as the interviewees addressed nearly all
topics by relating them to the market, end user, and creation of social value for the community in which one
operates:
“You need to think very significantly about what is that mission and how do you really infuse the culture of the
organization with that mission even as that organization grows, so that not just the founder thinks “hey, I’m not
here not just to make some profits, but to make sure I’m serving this customer base responsibly”. That that’s
really part of the organization, and you structure the way the organization is set up, how you train and
everything around that thought. You’re not fundamentally different but you’re infused with something that may
be just a little more complicated than simply “I’m here to grow my business and make profit.” – India Based
American Social Investor (C07:B30)
“There are so many of those Gyro Gearlooses sitting around, thinking “Poor people need fertilizer, they have
urin, urin can be used to make fertilizer, I’ll make a cool box that makes fertilizer out of urine”, right? And
seemingly this is really clever, because it’s entirely correct. They have this, and they need that, right? But in
between there are so many things that must be in place to commercialize it. It’s really about emphasizing the
commercialization part, given the context in which the product must function.” – Norwegian Impact Investor
(C03:B10)
The difficulty of placing findings into distinct categories is particularly visible in the amount of findings labeled
Organization or Product, which contain aspects relating to Industry and Market.
Through this discovery, it became apparent that the greatest potential for contributing to feasibility analysis for
social ventures lay not within the established analysis pillars, but in the interception between the Market and
Industry pillar, and the pillars or the Product, and the Organization respectively. Through careful studying of the
data, and application of the above stated selection criteria, three main categories of potential contribution
were identified:
1. Starting Point Assessment
The need for the entrepreneur to, first of all, assess his or her own starting position relative to the
people he or she is proposing to provide a problem solution for, with respect to knowledge about
those people and their lives. This insight must be at the very basis of concept development.
2. Product Employment Feasibility
The need for a thorough analysis of what it will take, not to design a brilliant problem solution, but to
maximize the chance of that solution actually being employed to solve the problem in the target
21
market. This category addresses the interception between Product, and Market and Industry
feasibility.
3. Impact and Stakeholder Assessment
The need for identification of all stakeholders in the realization of a venture, and the way in which
they will be affected by its realization. This pertains to social aspects, as well as environmental aspects
of bringing a new product to market through the establishment of a new organization. An
entrepreneur aiming to create a positive net impact must strive to understand how positive impact
can be achieved, and how negative impact can be avoided. This category addresses the interception
between the Organization and the Market and Industry.
This division into three main areas of contribution will be continued in the discussion, which is divided into
three chapters; Discussion Part I, Discussion Part II and Discussion Part III, addressing each area of contribution
identified above respectively.
The identified information challenges belonging to these three areas of contribution also form the basis of
theory selection, which is addressed in the next chapter.
22
4. APPLIED THEORY
4.1. INTRODUCTION
In this chapter, the applied theory is presented, as selected on the basis of information challenges identified in
the previous chapter addressing empirical findings from interviews. As previously stated, no complete
theoretical framework currently exists which addresses the field of technology-based social entrepreneurship.
There is a fragmented literature base within the broader field of social entrepreneurship, but this does not
suffice to discuss all the challenges identified. Instead, related fields of theory have been identified for each
area of challenges respectively. A table overview of this theory is presented below.
The literature presented here will be used to discuss the information challenges previously identified, over the
course of the three next chapters; Discussion Part I, Discussion Part II, and Discussion Part III. Which discussion
chapter each respective theory subject is relevant for is clearly marked in the left column of the table.
4.2 OVERVIEW OF APPLIED LITERATURE
TABLE 3: OVERVIEW OF APPLIED LITERATURE
Topic from findings Theory subject Sources
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
The mental distance between
entrepreneur and user of product
is an obstacle in product and
concept development, which
implies challenges related to
information need.
Knowledge creation
? Aristotle
? Confucious
? (Dretske, 1981)
? (Machlup, 1983)
? (Chia, 2003)
Knowledge creation in
organizations
? (Nonaka, 1994)
? (Widding, 2005)
Product development to meet
social needs
? (Fruchterman, 2008)
Innovation success factors ? (Drucker, 1985)
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
I
There is a significant information
need with regards to local
preconditions of the product
functioning as intended.
Infrastructure is a factor which
demands attention.
Strategy ? (Teece, 1986)
Product development to meet
social needs
? (Fruchterman, 2008)
There is often a difficulty of
ensuring use and purchase of the
product.
Marketing
? (Kotler and Keller, 2006)
? (Woodruff, 1997)
? (Woodruff and Gardial, 1996)
Marketing products to solve
social problems
? (Starr, 2010)
(Presentation)
TQM, Lead User Method,
User Centered Design
? (Abras et al., 2004)
? (Preece et al., 2002)
? (Kaulio, 1998)
? (Urban and von Hippel, 1988)
23
Customer identification and
Customer Value Chain analysis
? (Donaldson et al., 2006)
? (Wilson, 1993)
? (Hines et al., 2006)
Organizational Buying Behavior ? (Webster and Wind, 1972)
D
i
s
c
u
s
s
i
o
n
P
a
r
t
I
I
I
There can be significant
environmental challenges related
to such activities as production.
Environmental issues are closely
related to social issues, hence,
environmental challenges must be
analyzed.
Link between climate change and
social issues
? (Adger and Kelly, 1999)
? (Bohle et al., 1994)
Organizational change ? (Eason 1987)
Life Cycle Analysis and Life Cycle
Design
? (Ishii et al., 1994)
? (Rebitzer et al., 2004)
The activities conducted by the
business will have different effect
on a various number of
stakeholders. There are significant
information needs related to this.
Stakeholder Theory
? Mitchell and Wood (1997)
? Donaldson and Preston (1995)
? Jones (1995)
? Roberts (1992)
? Clarkson (1995)
? Freeman (1984)
Stakeholder Theory within in
field of Social Entrepreneurship
? Russo Perrini (2010)
? Munilla and Miles (2005)
? Brush (2008)
? ISO 26000
General theory within the field of
Corporate Social Responsibility
(CSR) and Social Entrepreneurship
? Roberts (1992)
? Desa and Kotha (2005)
There are information needs
related to the possibility of
designing activities to increase the
positive social impact of an
organization.
Strategy and Value Chain
? Porter (1985,1998)
? Porter and Kramer
(2002,2006,2011)
? Porter and Linde (1996)
? Vachani and Smith (2004)
? Clark et al. (2003)
? Walton et al. (1998)
? ISO 26000
There are significant challenges
relating to the monitoring and
measuring of social impact, which
entails important information
needs.
Theory within the field of CSR
? Roberts (1992)
? ISO 26000
? (Clark et al., 2003b)
24
5. DISCUSSION PART I: STARTING POINT ASSESSMENT
5.1. INTRODUCTION
The issue of mental and geographical distance between the person having a problem and the person trying to
solve it, was frequently addressed by interviewees. This distance poses a problem when the differences
between the two are so unimaginably vast that it is impossible for the entrepreneur to grasp the preconditions
of the user of a proposed product. The need to assess this difference is the topic of Discussion Part I.
The entrepreneur’s mental starting point, relative to the customer, is not specifically addressed by any of
Barringer and Ireland’s (2008) framework pillars, and is perhaps so fundamental that it can be regarded as
almost belonging to a pre-analysis stage. It therefore seems appropriate to introduce the tool relating
specifically to this subject as the first one.
Literature applied in this discussion relates to knowledge creation, both in a fundamental philosophical sense
and in a more practical perspective with regards to knowledge creation in organizations.
5.2. TOOL #1: THE PROXIMITY MATRIX
“….you should focus on the problem, not just treat the consequence. To understand the problem, you have to
live with them for a while.”
– Indian Business School Professor in charge of a practical social entrepreneurship course for MBA students
(C07:B10)
“…make sure you know your customers, and that you know how to serve them so that they’ll come back to you“
– India based American Impact Investor (C02:B04)
”…there is so much of it. Like when the Financial Times set up a panel of experts to vote over which product is
the best. They have no idea what it’s like out there. It is the wrong approach all together, to have experts sitting
in the west, or technologists sitting in the west, and having that as the driver.”
- Norwegian Impact Investor (C03:B10)
5.2.1. WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
Many of the interviewees address the lack of user understanding that often occurs when western product
developers attempt to design products intended for typical bottom of the pyramid (BOP) markets. Unforeseen
factors of culture, environment, tradition etc. causes the customers to use the product differently than what
the entrepreneur had planned for, or even not at all. For social entrepreneurs addressing marginalized groups,
and for those addressing groups across geographical distance in particular, a first step towards success must be
realizing what ones starting point is. In such cases, the socio-cultural distances to overcome can be so immense
that there is a real danger of the entrepreneur not realizing his or her shortcomings until the product flops in
the market place, as exemplified by interviewees (C03:B10). The importance of thoroughly understanding ones
customers, however, is not only paramount to social start-ups, it is a make or break issue for the success of any
knowledge based innovation (Drucker, 1985), and is particularly important in any case were an analyst wishes
to address a group of which he or she is not a part.
In short, the proposed question to be answered is:
How am I positioned in order to understand the realm I wish to enter?
25
The insight gained from answering this question can tell the analyst a lot about what the next steps must be, in
terms of recruiting and organizational development, self education, and also partnering. It is not to be
expected that an entrepreneurs him or herself will possess all the necessary knowledge to successfully sustain
innovative processes needed to realize new organizations and bring new products successfully to market
(Widding, 2005). If the analyst identifies knowledge needs, however, he or she can consciously arrange
knowledge holders within and around the organization (Widding, 2005), and also develop the organization to
crystallize and amplify the knowledge of its members to create organizational knowledge (Nonaka, 1994). This
enables the analyst to plan how the aggregated experience and knowledge of the organization can move
towards a deep understanding of the realm in which they intend to operate.
5.2.2. TOOL DEVELOPMENT
The construction of a tool that addresses the entrepreneur’s level of relevant insight demands the
establishment of two constructs;
1. A set of dimensions of knowledge relevance
2. Levels of achievement along the proposed dimensions
DIMENSIONS OF RELEVANCE
According to Nonaka (1994), the meaning of a piece of information to any given system, depends on what the
given system aims to do, its purpose or problem consciousness, and the broader environment in which that
system exists, also referred to as context. For the purpose of this discussion, the entrepreneur or
entrepreneurial team will constitute this system, a system which aims to create a technological solution to a
problem, and then bring that solution to a market. The dimensions of problem and context are easily
transferable to the entrepreneurial system addressed in this discussion, which is concerned with a technology-
based problem solution, and a market in which it must operate and succeed, and also resembles two of
Barringer and Ireland’s (2008) pillars of information needed for feasibility analysis itself; product or service, and
the market and industry. Thus, Nonaka (1994) provides a set of intuitive and discernable dimensions for the
tool. At this point, it must be noted that the term information as employed by Nonaka (1994) does not refer to
the deep understanding and insight, the need for which is emphasized in the findings from the interviews for
this thesis. The relationship between information and knowledge both within and outside the boundaries of an
organization is thoroughly discussed in management literature and philosophy, however, and forms a
promising basis for the second construct of the tool; the levels of knowledge achievement.
LEVELS OF ACHIEVEMENT
Nonaka (1994) defines knowledge as a justified true belief, as coined by Plato himself
1
. The concept of
knowledge is an ancient philosophical topic for debate, the contributions to which vary between the abstract
and the more practical. Recent contributions on the subject, however, seem to agree that information is not
knowledge, but that information contributes to the creation of knowledge through cognitive processes of
structuring and combination with other information and with previous knowledge (Machlup, 1983, Dretske,
1981, Chia, 2003), and it is reasonable to regard it as a less refined form of the same concept, which can be
processed to a higher level. Dretske (1981) argues that information is a commodity capable of yielding
knowledge, but that received information is relative to what the receiver already knows. Machlup (1983) states
that information is a flow of messages that might add to, restructure or change, knowledge also implying that
the information received must interact with existing knowledge in order to result in new knowledge.
Aristotle insisted that the ability to explain, and articulate the cause of things is what distinguishes the
knowledgeable person from the experienced one, meaning that the person of mere experience can only base
his knowledge on the symptoms of a phenomenon. Implicit in this lays a predilection for the ability to explain
rather than the ability to act. Within the realm of practice, as opposed to theory, however, the ability to
1
Plato; theTheaetetus
26
manipulate phenomena in the desired way, is often more valuable than the ability to name and explain them
causally. This bares a strong parallel to the cases of information based and experience based knowledge.
A relevant and interesting division with regards to experience and information is that between levels of
experience, as coined by Confucius
2
; I hear, I forget. I see, I remember. I do, I understand. The particular point
of interest in Confucius’ statement is the division between receiving secondhand information, witnessing
something happen, and experiencing it firsthand. There is something seductively intuitive and functional about
this division, hence it will be employed in the development of the tool.
The positioning of the analyst relative to the realm of entry, were the word realm is employed to contain both
dimensions of relevance, can be exemplified by two extremes. The firs example is a European engineering
student inventing a device that produces fertilizer from urine, meant for use by farmers in rural Africa. The
concept is based on the information that farmers need fertilizer, in combination with the knowledge that
humans produce urine. The second example is a woman in rural Africa who invents a simple mechanical fan for
driving the smoke from her cooking fire out of the hut, so as not to bother her infant. This concept is based on
firsthand experience with the problem at hand, and on knowledge about the cause of the problem and the
resources available for solving it.
It is reasonable to claim that the African woman’s product is based on a more fundamental insight into the
problem/solution, as well as the context of use, than that of the engineering student. While the engineering
student bases his concept on factual information, the woman bases hers on firsthand experience. It may very
well be that the engineering student is able to articulate the problem and its cause in a better way, but he is
not necessarily better situated to solve the problem.
5.2.3. TOOL CONSTRUCTION
Combining the conclusions from the above discussions on experience, information and knowledge, the
following levels of achievement are proposed:
1. Knowledge obtained through firsthand experience; denoted “shared “, as in shared with user.
2. Knowledge based on factual information from credible sources; denote by nothing, as it implies a gap
between needed and possessed knowledge, and therefore a lack of something as opposed to a
presence of something.
These levels can then be applied to the two dimensions of relevance, to form the following matrix:
2
Confucius 551 BC – 479
Problem Proximity
Shared Problem Innovation
An innovation based on experience with
the same problem in a different context
Peer Innovation
An invention by a user, wishing to offer the
solution to other in the vicinity experiencing
the same need.
External Innovation
An innovation based on limited or no
experience with the relevant problem,
nor context (often based solely on
technological feasibility).
Shared Context Innovation
An innovation based on experience with the
relevant context of the user, though not
with the problem at hand.
Contextual Proximity
FIGURE 1: TOOL #1: THE PROXIMITY MATRIX CONSTRUCTED I
27
PEER INNOVATION
Peer innovation is exemplified by the African woman inventing a simple fan. There is good reason to
believe that she can provide value for other women with small children living in her village, by
encouraging them to adopt this solution, based on the similarity of living conditions, of available
resources etc.
EXTERNAL INNOVATION
Is exemplified by the European engineering student, who does not have any fertilizing experience, and
who has never set foot in Africa. He bases his concept development on factual information.
SHARED PROBLEM INNOVATION
Can be exemplified by a European farmer developing a similar fertilizing device. He has extensive
firsthand experience with storing, transporting, and spreading fertilizer. He knows about the
consequences of using too much or too little, and about storing it separately from animal feed etc. He
has firsthand experience with needing fertilizer, and with using fertilizer. However, he shares with the
engineering student an acute lack of experience with farming and living in rural Africa, and is badly
positioned to foresee all the factors in the target market that will counter the use of the product.
SHARED CONTEXT INNOVATION
Can be exemplified by the rural African boy who invents a fan for drawing the smoke from the fire out
of the hut, as the woman next door is constantly complaining that it bothers her child. Living in the
same village, he knows very well which resources are available, and what infrastructure and
complementing devices are already in place to support his solution. However, he himself is the
youngest of his family, and has little experience with having infants in the hut. Also he has no
experience with cooking, as his mother performs this task. He therefore misses the target when
developing a solution that draws the smoke away, but makes a sound that keeps the child from
napping, as well as drawing the heat towards to cook, making the cooking experience excruciating. He
simply did not think of these things, as he did not have any experience with the problem.
THE MIDDLE GROUNDS
It is absurd to claim that all individuals can be said to either have firsthand experience or be practically
oblivious about a given subject. Surely a boy living in the hut with the woman and her child would
know that loud noise keeps the baby from sleeping, even though he was not a parent himself. The
possibility of gaining knowledge through observation, as described by Confucius is a useful basis from
describing the step between receiving secondhand information about something, and experiencing it
yourself. For example, this pertains to a person working at a women’s shelter, who has extensive
knowledge about the suffering of abused women, but who has not herself been abused. Although
Confucius’ statement counters the general view of Aristotle, it is interesting to observe that also
Aristotle
3
regarded seeing as the single sense which, more than all others, provides a reliable basis for
knowledge (Chia, 2003). The inclusion of another level of achievement called experience, applicable to
such cases as that of the women’s shelter worker, is therefore proposed, resulting in the following
matrix:
The simple exercise of placing him or herself in the matrix is meant to result in an insight about the
relevant distance between the analyst and the person who experiences the problem the analyst seeks
to solve. Jim Fruchterman (2008) states that a hallmark of the growing movement of people who seek
to solve social problems with new approaches is to approach these problems in partnership with the
communities one tries to help, benefiting from the inclusion of individuals with knowledge based on
3
Aristotle; Methaphysics, book Alpha 1
28
firsthand experience. Hence, finding one self in the lower left corner does not automatically mean
than the analyst should give up, but it implies a significant effort in developing and obtaining the
necessary knowledge.
5.2.4. REVIEW RESPONSE
The responses to this tool from the review are summarized in the table below:
Problem Proximity
Shared Problem Innovation
Shared Problem, Context
Experience
Peer Innovation
Problem Experience
Context and Problem
Experience
Shared Context, Problem
Experience
External Innovation Context Experience Shared Context Innovation
Contextual Proximity
FIGURE 2: TOOL #1: THE PROXIMITY MATRIX CONSTRUCTED II
TABLE 4: REVIEW RESPONSE, TOOL#1: PROXIMITY MATRIX
Respondent Positive Negative
Suggestions for
improvement
Investor
Very important
problem to address – it
is good that you have
created a framework
for this.
But can you say anything about what you should
do (as an innovator) when you find yourself in the
different cells? If not, then the framework is not
useful: “I seem to be on the lower left here, but I’ll
do my best anyway…..”
This is an interesting area
for future research. What
share of the innovators
starting in the various
cells succeed? What did
the ones who succeeded,
despite starting in the
lower left do?
Academic 1
It certainly addresses
something important.
I am not sure whether a matrix is the right tool, if
we are trying to develop a useful tool, versus
describing what is happening. I may not have
proximity with the user, but I think that is less
important than how much information I now have
about the needs of the user.
My point is that there are
many ways to get "close
to the customer" and it
might be more useful to
just assess on some scale
how well I have done
that.
Academic 2 N/A
I am not 100% sure I understand this one. By
speaking of the “reality” – a somewhat abstract
term – I am assuming you are speaking of the
context of the situation – so whether or not the
person identifying the solution really understands
the nature of the problem to solve? Hard to see
the user not understanding their own context or
situation. Wonder if this is instead the topic of
innovator working with user or not – or user being
the innovator or not…?
I think the issue of
innovators not really
understanding the
problem or situation first-
hand can be a significant
one – but I wonder if this
doesn’t fit more naturally
in a 2x2 matrix – though I
struggled with that
construct as well….
29
The general consensus among respondents is that the issue addressed by this tool is important, and very real.
Several respondents expressed that the tool was somewhat confusing, with regard to the axes, and with regard
to inconsistency and lack of intuitiveness in the use of terms and expressions.
Academic 3
The name is OK, I think.
The models seem to
belong in different
stages of the
entrepreneurial
process. The one
addressing proximity in
particular is addressing
a very fundamental and
basic issue. The subject
addressed here,
whether the
entrepreneur is really in
a place where she
understands the
domain she wishes to
enter, is very
important.
It is confusing that the word innovation is used in
some cells, and not in others.
I would think about re-
labeling the axis, to
something like technology
and social aspects. The
whole thing made more
sense to me when I
ignored the word
innovation, so I would
think about leaving it out.
User
I like the simplicity of
the design, and
appreciate how it ties
together shareholders
from both ends of the
“transaction.”
While I believe it does have some reference and
interest for shareholders, I believe there could be
some skew in that I think most innovators do not
work on problems they don’t have some kind of
personal connection with, due to a personal
experience or relationship that is likely the
precipitating factor that produces that work or
interest in finding a solution.
N/A
Student 1
Good to be aware of
this.
Left with the impression: “So what?” A bit difficult
to understand at first sight. Unclear which way the
axes are going.
Insert arrows
Student 2
I certainly acknowledge
the problem of
inventing something
“clever” in the west,
and the need to declare
ones position in the
matrix, to understand
that “I am clueless”.
The question is; What
are the implications?
The model is easy to
understand, and these
are important things to
think about. I think this
is the most significant
contribution among the
proposed tools.
I am not sure which way the axes are pointing. N/A
30
5.2.5. PROPOSED TOOL
Based on the responses from reviewers, and also on the continuously increasing maturity of the authors in this
field, some changes were made to the tool:
1. The levels of achievement were renamed:
? Shared referring to the entrepreneur sharing the user’s situation.
? Insight referring to the entrepreneur having a significant insight into the user’s situation, usually
based on observation or even participatory observation.
? Information referring to the entrepreneur basing his or her knowledge on received, factual
information.
2. The word innovation was left out, and replaced by the word entrepreneur, as the tool describes the
knowledge held by the entrepreneur, which is the basis of a concept innovation, but which the
innovation itself cannot hold.
3. Arrows were inserted to denote the increase and decrease of achievement along the two axes.
4. The shading was removed, as it did not serve any particular function.
5.3. FINAL COMMENTS
The fundamental importance of the topic addressed by this tool was confirmed by reviewers, implying real
relevance for future analysts. This tool is particularly applicable to those business ideas aiming to help people
through the core activities of a new organization, primarily through the supply of a product solution, but also
with regard to other types of market offerings.
The nest chapter, Discussion Part II addresses topics of a higher degree of practicality, namely the interception
between the Product and the Market and Industry.
Shared problem Shared problem, context
insight
Peer entrepreneur
Problem insight, context
information
Context and problem
insight
Shared context, Problem insight
External entrepreneur Context insight, problem
information
Shared Context, problem
information
FIGURE 3: TOOL #1: THE PROXIMITY MATRIX REVIEWED
Problem Proximity
Context Proximity
31
6. DISCUSSION PART II: PRODUCT EMPLOYMENT FEASIBILITY
6.1. INTRODUCTION
Product development and the interaction product/user were thoroughly addressed by interviewees. Findings
pointed towards specific information needs, regarding existing infrastructure, customer relevance in product
development, and understanding customer’s criteria for product use. These challenges are the topics for
discussion in Part II.
Barringer and Ireland (2008) address the topic of user understanding and the active involvement of users in the
analysis, through both concept testing and usability testing. These methods, however, and usability testing in
particular, demand that product design and development must have evolved beyond simply knowing what
problem to solve, and entail a number of choices which must have been made in order to obtain meaningful
feedback on sketches and prototypes. Also, it demands a physical proximity to the customers that analysts in
the very early and conceptual stages of a social concept often will not have. The challenge of overcoming this
lack of insight is addressed through the development of two tools:
? Tool #2, which addresses customer criteria for product purchase and use
? Tool #3, which addresses required infrastructure and complementing technology
Theory applied to the discussions in this chapter belongs to strategy and marketing literature, as well as
product development methodology.
6.2. TOOL #2: THE PRODUCT TRAJECTORY
“The case is very often that the technology developers have too little understanding of this [user situation], they
believe that “when I have made such a fantastic product, it will be sure to sell. I have made a sun driven cooker
that is more efficient, and heats faster than any other. Off course it will sell, we’ll just produce it, and ship it to
Africa.” And that sounds reasonable; they have sun, they need heat, it’s genius. But then it turns out that people
aren’t interested in cooking their dinner under the sun. It’s too hot and tiresome, and they are used to doing it
at night, when they have finished all the other tasks that demand sunlight. And also, the smoke from the fire or
cook stove they normally use adds a flavor to some of the dishes, which is important, and makes it taste
differently. It can be all kinds of things that prevent it from functioning in that context”
– Norwegian Impact Investor (C03:B10)
6.2.1 WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
Implicit in understanding the customer and customer needs, lies the need to understand customers’ criteria for
employing the proposed solution. This was explicitly addressed by interviewees, as something it was difficult
for entrepreneurs to gain insight into. Understanding the criteria which must be fulfilled in the market is
fundamental to product development, but also to the development of a distribution and service model and
marketing strategy. Identifying these criteria also forms a good basis for comparing the proposed solution to
competing solutions in the market, and for relative positioning along the dimensions identified. Another
implication is the suggestion of which customers should potentially be involved in the various stages of product
development, depending on the complexity and explicitness of their criteria. The question to be answered is
therefore:
What are the customers’ criteria for adopting the proposed solution to the problem?
For the purpose of this discussion it is assumed that the analyst has identified an end user in the market, and
that he or she has indentified a problem that the proposed end user needs solved. Understanding the end user
is addressed by the first tool, the proximity matrix, which holds implications for the entrepreneur’s effort to
32
truly understand the user. This next tool, however, is concerned with the challenges of winning actual
acceptance for a proposed solution. This is complicated by the fact that the event of the product being
employed by the end user is usually not dependent on that one actor alone.
6.2.2. TOOL DEVELOPMENT
In order for the acceptance criteria of the customers to be established, two issues must be addressed:
1. Identification of the various customers who’s criteria are relevant
2. Establishment of what their respective criteria are
CUSTOMER IDENTIFICATION
In order for the solution to travel from the organization to the end user, it will have to pass through a
number of actors. This is exemplified by Hines et al. (2006) who demonstrate how the external
customer of a company are not necessarily one individual, but that a series of customers can be
identified, through the example of a manufacturer of pet food:
? Intermediary # 1: Buyer for a super market chain
? Intermediary #2: Supermarket Store manager
? Intermediary #3: Super market shelf stacker
? Decision maker: Purchaser of pet food
? Intermediary #4: Person carrying the shopping bag home
? End consumer: The family dog
While a great number of downstream stakeholders can be identified, the relative importance of their
needs and expectations vary (Preece et al., 2002). While the intermediaries handle and physically
manage the product on its way to functional employment, two of these actors are particularly
important when it comes to product acceptance; The buyer, referred to by Hines et al. (2006) as the
decision maker, and the end user, referred to as the end consumer. It can be argued that the person
conducting the purchase of dog food for the super market chain is also a decision maker, however it
may be that the buyer portrayed here is simply making a re-stocking decision, after an initial supply
deal has already been made. Another example of customer identification is provided by impact
investor Kevin Starr (2010); a group of Stanford design students had identified a problem of mal
nourishment among children in Rwanda, and came up with an idea for how to get micro nutrients into
flower by using a cement mixer like device. They then modeled the chain of actors that had to buy into
this solution in order for the nutrient enhanced bread to get to the child who needed nutrients. They
identified a number of actors throughout the chain, such as the parent buying the bread, the baker
using the flower etc., all of which had to make the choice to adopt something new. Eventually, the
students dropped the project, due to the perceived impossibility of convincing all the necessary actors.
Based on the type of decision the customer has to make, the two customer types identified are:
1. Buyer
2. User
The denotation customer is used to address both, as they must both buy into the proposed solution in
one way or another. The term decision maker is not used to denote any of them, as they are both
required to make decisions in order for the product to be employed.
THE ESTABLISHMENT OF CRITERIA
The question of criteria now becomes a question of which criteria must be fulfilled in order for each
actor to make the favorable decision of buying or using, respectively. The analyst must keep in mind,
however, that individual actors in the chain can encompass both functions.
33
Use decisions, as exemplified by the solar cooker, are often dependent on factors which are difficult to
identify from a distance. This is supported by Barringer and Ireland’s (2008) inclusion of the usability
test at the prototype stage of development, and by the widespread recommendation to involve users
in product development (Urban and von Hippel, 1988, Kaulio, 1998, Abras et al., 2004, Fruchterman,
2008). Purchasing decisions, however, are often described as being particularly concerned with
product attributes, such as price, weight, and other easily describable dimensions of a product, along
which perceived value can be determined. Customers learn to value certain attributes through use
experience, where needs are translated to established corresponding attributes (Woodruff, 1997),
such as “need for mobility” translating into the attribute of low weight. However, there are other
ways to view the value on which customers base their decisions. Instead of jumping straight to
attributes, the analyst can ask the question “What do the customers value?” By employing this
question as a basis for criteria identification, the analyst may trigger a broader cognitive process and
basis for knowledge seeking.
Woodruff (Woodruff, 1997, Woodruff and Gardial, 1996) divides perceived customer value into three
levels:
1. Customers’ goals an purposes
2. Desired consequences in use situations
3. Desired product attributes and attribute performance
Goal oriented value is the product’s ability to enable the user to reach a specific goal. Level 2, the
consequence oriented level, addresses aspects of using the product which enables the user to obtain
his or her goals more efficiently, comfortably etc. It can be said to be a level of indirect goal
attainment, or of user friendliness. The third level, the attribute level, encompasses explicit, often
quantifiable or measurable aspects of the product, such as miles per gallon etc. Such attributes are
often the basis of purchasing decisions when a customer has many product solutions to choose from,
because they are measurable and enable the use of ranking and elimination methods (Kotler and
Keller, 2006). While attributes are strongly linked to purchasing decisions, goal attainment and use are
easily transferable to the use decision. The analyst should attempt to think in terms of multiple levels
when assessing customer criteria.
6.2.3. TOOL CONSTRUCTION
While each actor must be viewed separately, the way in which they influence each other must also be taken
into account. For example, if the parent expects the child to refuse to eat the bread, due to a foul smell or
strange color, the parent is not likely to buy the bread, even though the primary criteria of the parent, such as
price, availability and wholesomeness of the bread are fulfilled. In other words, the expected outcome of the
decision made by the next actor in line affects the current decision maker. This connection implies a need to
assess not only the customers, but also the order in which they make their decisions.
In order to capture the actors, their decision criteria, and the order in which decisions are made, a trajectory
model is proposed. This tool draws inspiration from the Customer Chain, a visual mapping tool used in
Customer Value Chain Analysis (CVCA), employed by product design teams to identify pertinent stakeholders,
their relationship to each other, and their role in the products life cycle. This tool helps designers define the
product, an exercise whose efficiency holds great implications for product development, and the failure of
which can strand entire products (Wilson, 1993).
In the Customer Chain, the various customers and intermediaries are mapped according to the flow of product,
money and complaints (Donaldson et al., 2006). This approaches a business model description, and for the case
of the proposed analysis tool, only the product flow will be included. While flow of material, money and
complaints is the focus of the Customer Chain, Kevin Starr (2010) suggests an exercise based on customer
34
behavior; as exemplified by the Stanford design students, he recommends to model the chain of actors who are
required to behave in a certain way in order for the product to be employed. The analyst must then consider
what will be required to make those actors behave in the desired way, for example by serving their child a
certain type of bread.
The proposed exercise is meant to be conducted as follows: Model the product trajectory backwards from the
intended end user to the point of departure from the organization. Identify users and buyers. Determine their
respective main criteria for purchase and use of the product, which determines if the product is likely to be
accepted by each actor. The below example describes a technological toy, and both design relevant criteria,
such as durability and intuitiveness, and business model relevant criteria, such as stability of supply, have been
included. All three levels of Woodruff’s (1997) hierarchy are also represented. Insight gained through this
exercise must be carried on to the planning and development processes concerning the various aspects of a
new venture respectively.
While this chain of actors is quite predictable and straight forward, a company striving to distribute its product
among a marginalized or socially excluded or isolated group may have to work hard to gain sufficient
understanding of the chain through which their product must pass to reach its user. Also, reaching such
segments may require the invention of new chains, which demands great amounts of local knowledge,
networks and creativity, in order to affect customer behavior.
Easy to understand
Fun to use alone
Fun to use with friends
Affordable
Durable
Not dangeorus
Educational
Easy to understand and explain
Proven popularity
Attractive profit margin
Stable and predictable supply
Buyer
User
Kid
Buyer
Shop
keeper
Parent
FIGURE 4: TOOL #2: THE PRODUCT TRAJECTORY CONSTRUCTED
35
6.2.4. REVIEW RESPONSE
Reviewers responses to the Product Trajectory are displayed in the table below:
TABLE 5: REVIEW RESPONSE, TOOL #5: THE PRODUCT TRAJECTORY
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
This figure is critically
important. Any business
planning process needs to
contemplate the entire decision
making process and the value
proposition of each member of
the process and channel. A
"mapping" of that can be a very
useful tool.
N/A
Don't forget to include any
governmental / regulatory players,
which are commonly involved in any
social venture.
Academic 2
An interesting concept. Does
deal with the challenges of
channels – getting from
company to end user, and the
factors that could get in the way,
which is a good thing
Not explicit enough N/A
Academic 3 This name makes sense, I guess. N/A
But this is all about the marketing. I
think the next important question
after the last one would be: Do I
understand the problem? I think this
model could make sense as more of a
situation trajectory, where you have a
current situation, and a situation that
you would like to get to, and then
there are some hurdles in between,
that you have to overcome. Really,
there is so much literature and theory
on the marketing, but this could be
for definition and problem
formulation.
User
I really do like the Product
Trajectory model. It is simple
and easy to understand, is very
poignant to a feasibility analysis.
It has a strong visual component
that aids in the process
visualization
N/A N/A
Student 1 Easy to understand
Still left with the
impression: “so what?”
Change the direction of the arrow.
Student 2
I liked it. A very relevant exercise
no matter what one is planning.
It doesn’t require a social intent.
It is important to map all stages,
and everybody who are part in
affecting the decision of
whether the product is
purchased or not.
N/A N/A
36
Most respondents agree that this tool is addressing an important aspect of understanding what will be
demanded of the product, and also the organization, in order to get the product to its intended destination.
Several respondents also comment on the visual simplicity of the tool, and that it is easy to understand. One
respondent was confused by the direction of the product flow arrow, which, is directed away from the end user
to remind the analyst to assess the flow in reverse. One respondent calls for the inclusion of regulatory players,
which often play critical roles in the introduction of new solutions to solve social problems.
6.2.5. PROPOSED TOOL
Based on the response from the review, in combination with continuous mental processing from the authors,
the following changes were made to the tool:
1. Inclusion of regulatory players. While the actors making purchasing and use decisions, are greatly
important in the chain, the case for social entrepreneurs is often dependence on the support of some
government or municipal authority, who, while perhaps not physically involved with the product must
still approve of its distribution. Such actors can be defined as gate keepers, actors who do not make
the purchasing decision, but who enables access to those who do (Webster and Wind, 1972). Other
gate keepers may for example be control agencies who perform certifications etc., as exemplified by
the need for CE – approval for a number of products when launched in the EU and EEA. The focus on
product flow, however, poses a problem for the inclusion of gate keepers, who usually do not
physically bring the product further along the flow, but rather permits the product to flow. In the tool,
they will therefore be placed off the flow line, but with a link to the gate, which will appear on the
flow line. Another unique aspect of the gate keeper is that while the buyers and users on the flow line
usually represent a greater number of individuals, there may in fact be one single actor or organization
who can and must make the gate keeper decision in question. The criteria and behavior of this actor is
therefore of critical importance. It must also be noted that in some cases, such as those of a new
venture selling a product to an NGO which hands it out to people in need in areas no one else can
reach, the buyer can also be a gate keeper. The analyst must then choose between distinguishing
between different divisions of the NGO who might handle the different functions, or by simply adding
the functions on top of each other, by stacking them vertically.
2. More emphasis on customer behavior, by inclusion of an explicit description of required behavior.
This also increases the analyst’s focus on the relationship between customers.
3. The explicit inclusion of the expectation of “next-in-line-acceptance” as a criterion for making the
desired decision, again increasing the focus on relationships.
4. The arrow was reversed, as the notion of backwards product flow may seem counter intuitive, and as
the analyst would be perfectly able to follow the flow backwards even though the arrow points
forward, in the direction the product would actually flow.
5. The employment of the product is included as a star at the end of the product flow, to illustrate that
the end user receiving the product is only the second last step, and that the user is also required to act
in a certain way for the product to be employed. The end user must in fact decide to use it, and do so.
6. The perceived value levels from the initial tool development discussion are included too spark the
analysts cognitive processes, and to systemize findings. The levels are denoted Goal, Process and
Attributes, respectively.
37
6.3. TOOL #3: THE DEPENDENCY MATRIX
“Software in India, to the extent that it is successful, it is true because of huge state investments (…….) facilities
were provided, the first internet links were provided.” – Indian Academic (C03:B11)
“We say that our solutions are almost always around adapting existing technology to a new use, with relatively
little technical risk. “Building the last social mile,” is a common phrase here. It presumes that we’re often 90 or
99% there: we need to mainly adapt and repackage existing tech to a new socially important use.” –American
Social Entrepreneur (C03:B12)
“…I saw last summer in Rajastan, places who used to get 10 hours of power now got six hours of power. So for
agriculture it means the time where you used to run your pump sets, is now time where you cannot run your
pump sets.” – Indian Academic (C03:B11)
6.3.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Another aspect of assessing the feasibility of the product actually being employed and functioning in the target
market, is considering how the proposed product must interact with other products or infrastructure to
function in practical use. Several interviewees, including both entrepreneurs, academics and users,
demonstrated the relevance of such complementing factors as technological infrastructure, as well as political
infrastructure and tax legislation. While tax legislation and politics are topics for other sections of an analysis,
the factors which directly relate to the product itself are the topic of this discussion. An example is the extreme
unreliability of power grids in parts of India, which was addressed by one interview subject as a major obstacle
for productivity and development. Factors with direct relevance to the product include:
FIGURE 5: TOOL #2: THE PROPOSED PRODUCT TRAJECTORY
Parent
decides to
buy a
present.
Birthday or
similar?
Parent
gives it to
the kid.
Shop
Keeper
keeps the
toy in his
shop, and
sells the
parent
the toy.
Shop
keeper
knows
about the
toy, and
decides to
sell the toy
in his shop.
He orders
from
supplier.
Agency
approves
the toy.
Parent
chooses
this
particular
toy. Parent
buys the
toy.
The kid
receives
the toy
from the
parent.
The kid
decides
to play
with the
toy.
Goal: Fun
Process: Easy to use
Attribute: Flashy colors
Goal: Happy kid,
Expects kid to like it
Attribute: Affordable,
curable, not dangerous,
educational
Goal: Turnover and profit, Expects
customers to want to buy
Process ease: Easy to understand
and explain to customers
Attribute: Attractive profit
margin, stable and predictable
supply
Control
Agency
Kid
Parent
Shop
Keeper
Attributes: Satisfies
requirements for
approval, correct
application
procedure
38
1. Physical infrastructure and complementing technology (e.g., rails, internet connectivity, power grid,
batteries.)
2. Geographical and environmental factors (e.g., sun, water, wind.)
3. Knowledge requirements (e.g., reading ability, understanding of the need to change batteries.)
These are conditions which an analyst entering that market must take into account. Adapting to conditions in
the market place can be viewed as limiting, or it can be viewed as a potential source of competitive advantage.
The first question to be answered is as follows:
What factors must be present in the market for the product to work properly?
While all the above mentioned factors are important, physical infrastructure and complementing technology
are distinctly different from the two others in one important way; factors of environment and geography are
usually not controlled by other organizations or individuals to any significant degree. Hence, these factors are
not likely to change as a result of some conscious reaction to a new product introduction. A similar case can be
made for knowledge; if the knowledge is not already present in the market, then the organization must provide
it or design around it, however, the knowledge is not something that is continuously supplied, or can be taken
away by other actors. The factor of physical infrastructure and complementing technology is unique in the way
it holds great implications for a new venture, not only on the product design level, but also with regard to other
aspects of concept development. The dependency relationship between the proposed product and the
surrounding technology on which it depends, is far more complex than that of the two other factors. In order
to address the aspect of relative importance of the dependency on the various other solutions, another
question must be raised.
What is the dependency relationship between the product and the other solutions on which it depends?
The answer to this question holds implications for product development, were the product may have to be
designed around challenges such as the lack or unreliability of other solutions. It also holds implications for
business model development and partnering and concept scalability, and can provide valuable insight into
where the analyst must later search for competitors, as well as dimensions along which the threat of
competitors should be evaluated.
Hence, the tool developed in the following discussion addresses the dependency relationship between the
proposed product and factors of technological infrastructure and complementing technology.
6.3.2. TOOL ASSESSMENT
In almost all cases, according to Teece (1986), of the successful commercialization of a technological
innovation, the utilization of the knowledge in question in conjunction with other capabilities or assets is
required. In some cases a proposed product may be designed as part of a system, in which other important
components must also exist. An example of this is provided by Benetech: when Jim Fruchterman worked to
develop an information sharing and reporting tool for human rights organizations, he discovered that at the
point of information input, namely the grass root groups of the organizations, though internet connectivity was
often obtainable, it was spotty and expensive. He therefore developed the system based on the principle of
local storage with instant uploading once a connection to the desired servers was obtained, rather than a direct
input into central servers at the time of data entry (Fruchterman, 2008).
In this case, the product was developed to function in combination with existing infrastructure in the target
market, on which it depended. There will also be situations in which the complementary solution is more
dependent on the new product than vice versa. In yet other cases the complementary solution and the product
may be equally interdependent, requiring some degree of tailoring from both to fit with each other. In many
cases, however, the product is dependent on generic assets, and the need for adaptation to particular solutions
39
is small or none. Teece (1986) introduces the following model to describe the relationship between a new
technology product (an innovation) and its complementary assets.
6.3.3. TOOL CONSTRUCTION
This model provides a good basis for the analyst when attempting to establish the relationship between the
product and other solutions and infrastructure in the market place. Such infrastructure could be gasoline
stations, internet connectivity, electricity, cell phone coverage etc. He or she must first establish what
infrastructure and technology is needed to make the product function. Alternatively, he or she may wish to
instead explore which factors are currently present in the market, or expected to be present in the near future,
and then shape the product offering to fit these preconditions. It many cases, however, a development process
will contain elements of both processes. The tool, a simplified version of the model is presented below.
Dependence of the asset on the
innovation
Specialized (unilateral dependence
of asset on the innovation)
Co-specialized (bilateral
dependence) e.g. container ships
and ports.
Generic
Specialized (unilateral dependence
of innovation on the asset
Dependence of the innovation on the asset
FIGURE 7: TOOL #3: THE DEPENDENCY MATRIX CONSTRUCTED
FIGURE 6: TOOL #3: TEECE`S COMPLIMENTARY ASSETS
D
e
p
e
n
d
e
n
c
e
o
f
t
h
e
a
s
s
e
t
o
n
t
h
e
i
n
n
o
v
a
t
i
o
n
Specialized (unilateral
dependence of
innovation on the asset
Specialized (unilateral
dependence of asset on
the innovation)
Generic
Co-specialized (bilateral
dependence) e.g.
container ships and ports.
Dependence of the innovation on the asset
40
6.3.4. REVIEW RESPONSE
Review responses to the Dependency Matrix inspired by Teece are displayed below:
TABLE 6: REVIEW RESPONSE, TOOL #3: THE DEPENDENCY MATRIX
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
The concept of this figure
is very important
N/A
I think a "mapping" of the dependencies
would be more useful than the
matrix. These dependencies could be
things like infrastructure and power, but
could also be things like the need for
after sales support & service (a common
problem) as well as user training.
Academic 2 N/A N/A
This matrix would benefit from a good
example. If there may be several assets a
company has – would this be applied for
every asset against every innovation?
Academic 3
This makes sense. I guess
the real question being
addressed here is Can I go
at it alone?
I overall miss something on
competition, but I think some
competitors could show up
here, if they control both
competing solutions and
infrastructure. That would
however, just be coincidental
N/A
User
Teece’s Dependency
Matrix is fine as a simple
“where does my puzzle
piece fit” assessment tool
in the asset/innovation
relationship.
N/A
It could be improved by the inclusion of
more real world examples as in the “Co-
specialized” sector of the matrix. You
may also include definite descriptors of
what constitutes an asset, and what
constitutes an innovation.
Student 1 N/A
I needed some time to think
before I really understand the
tool.
N/A
Student 2
Relates strongly to the
first model (Proximity
Matrix). Useful.
A bit difficult to understand.
Had to think a little about the
expressions used.
N/A
The expressions used seemed to complicate the matter for respondents, and several of them suggested the use
of examples to demonstrate the intended meaning of each cell. One respondent also suggested that perhaps
the mapping of complementing solutions in itself was as useful as the dependency assessment.
41
6.3.5. PROPOSED TOOL
Based on the response from the review, the following changes were made:
1. The lines of the matrix were removed, to allow the analyst to place any number of complementing
solutions along the dependency axes, thereby including a complete mapping exercise in the tool. This
way, the analyst does not simply evaluate the proposed products dependency on each solution
respectively, but also its aggregated dependency on complementing solutions in general.
2. Expressions used were exchanged for more intuitive ones.
3. An example was included to explain the tool.
Complementing solution
unilaterally dependent on
adaption to the product
Equally dependent on adaption
Generic, no adaption needed
Product
unilaterally dependent on
adaption to the complementing
solution
EXAMPLE
The use of the tool is exemplified by a cinema film projector:
Adaption dependency
of complementary
solution
Adaption dependency of product
Lense
Cinema theatre
layout
Adaption dependency
of complementary
solution
Adaption dependency of product
Screen
Movie format
Light bulbs
Local Power
supply
FIGURE 8: TOOL #3: THE PROPOSED DEPENDENCY MATRIX
FIGURE 9: TOOL #3: THE EXEMPLIFIED DEPENDENCY MATRIX
42
6.4. FINAL COMMENTS
The tools introduced in this discussion are to a larger extent than in Discussion Part I, based on existing
constructs, either through augmentation or combinations. They also address aspects of higher practicality, than
the tool developed in Part I. Like the tool from Discussion Part I, however, they are concerned with value
creation through the core activities of an organization, through a product value offering.
The next chapter, Discussion Part III, addresses the interception between the Organization and the Market and
Industry including stakeholders, and thereby opportunities of social value creation through organizational
policies and support activities. It also addresses the need to minimize negative impact, and to fully integrate a
social agenda.
43
7. DISCUSSION PART III: IMPACT AND STAKEHOLDER ASSESSMENT
7.1. INTRODUCTION
What has become apparent in the empirical data is that the start-up teams must deal with actors ranging from
large international commercial and financial actors, government and NGOs, as well as grass root users who may
for example be illiterate or otherwise prohibited from receiving or sending information in traditional ways. Due
to new and different stakeholders, connections and challenges, the empirical data has also shown that
managerial competencies and team experiences are even more important for a venture with a social focus. The
analyst must be thorough, especially with regards to the value chain, and how to measure the success of the
social impact the venture will have on its stakeholders.
The focus on the value chain is recurrent in the framework presented by Barringer and Ireland (2008), however,
this framework lacks inclusions of social value creation. In the analysis of the Market and Industry there is some
focus on the different stakeholders, but the stakeholder analysis is conducted in order to segment the market
and identify a niche market, and not with intended to provide insight into the venture`s potential impact.
Hence, there are shortcomings in the existing framework, relating to the evaluation of the potential social
impact on the various stakeholders a proposed organization.
To answer to these shortcomings, four tools are suggested;
? Tool #4, which addresses environmental impact
? Tool #5, which deals with the difficulties of measuring social impact
? Tool #6, an existing tool which helps the analyst implement social initiatives in the venture`s activities
? Tool #7, which maps the potential impact on the venture`s different stakeholders
These tools have a high level of detail, and it must be noted that the employment of these tools does not
require that all the addressed choices have already been made. Rather, the tools point to choices that should
be made in the future, important aspects to take into account when doing so, and possible alternatives for
future development. These first three tools are generally concerned more with social value creation through
support activities and organizational policies than the previously introduced tools, while the last tool addresses
the need to monitor future social impact. Theory applied in this discussion is collected from the areas of Life
Cycle Analysis and Design, the climate change debate, Strategy and Management literature, CSR literature,
Social Entrepreneurship literature and Stakeholder Theory.
7.2. TOOL #4: THE LIFE CYCLE DESCRIPTION
“…the other class of problems have to do with the question of poverty being the source of damage to the
environment. (…) … in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there would be
considerations of cost, there will be considerations of inability or some pressure to cut back on the initial capital
investment.”
-Indian Academic working with environmental issues (C12:B35)
7.2.1. WHAT IS THE QUESTION, AND WHY IS IT IMPORTANT?
For any organization, the risk of damage to the environment and communities within which it operates should
be sought minimized. For a venture seeking to create a net output of positive additions to the world, however,
this should be regarded as even more pertinent. Whether environmental issues and social issues are to be
addressed as two distinct but connected subjects, or two sides of the same, is up to the entrepreneur, but the
connection between the two is well argued for (Bohle et al., 1994, Adger and Kelly, 1999). For the purpose of
tool development, however, social impact of the organization’s activities are addressed in Tool 5 and 6, while,
44
the potential environmental hazards of the product and its related processes are addressed in this discussion. It
should be noted that insights gained through the use of tool 4 can be highly relevant when employing tool 5.
Examples of environmental and social issues, such as poor manufacturing technology and conflicts between
industry and the environmental conditions of local communities, were mentioned in the findings. The question
to be answered in this part of the analysis is:
What are the potentially harmful effects of the product and its related processes?
Using this tool will cause the analyst to think thoroughly though the physical processes necessary to bring the
product to market, and what the physical effects of those processes might be. As will be demonstrated below,
this assessment is not limited to the processes that are performed within the boundaries of a proposed
organization, but rather encompasses all processes related to the proposed product, regardless of outsourcing
decisions.
7.2.2. TOOL DEVELOPMENT
The aspects of a new venture that holds potential implications for the environment are many, and vary
between ventures. For technology-based ventures, however, and particularly those involving the
manufacturing of products, there are a set of generic topics to address, mainly the materials used, the
product’s manufacturing and assembly process, the distribution of the product, the products life in use
(including service), and the retirement of the product (Ishii et al., 1994, Rebitzer et al., 2004).
In order to map the potential impact of a product and its related processes, two constructs must be
established:
1. Stages of the product’s processing and life, during which it can pose a hazard
2. Types of hazard posed by the product and its related processes
LIFE AND PROCESS STAGES
There are tools readily available for quantification of the environmental impact of all the factors stated
above. Every product has a life-span starting with design, resource extraction, going to manufacturing
and use, and ending with retirement activities, such as recycling or discarding into landfills. Over a
product’s life span it will impact the environment in different ways. Life Cycle Assessment is a
methodological framework for the assessment of the environmental impacts attributable to the life
cycle of a product or service, such as climate change, noise pollution, acidification, water usage etc. An
LCA will often also include indirect changes in other life cycles, and can be used to quantify the
potential impact of new goods and services (Rebitzer et al., 2004). The conclusion from an LCA is
quantified impact which can be summarized for a unit of a given product or service in terms of points.
Conducting an LCA, however, is a very time consuming activity, and involves a great amount of
information gathering. An array of LCA-databases has been created, which offer impact information on
common materials and processes, transport methods etc. There are also a number of dedicated
software solutions available for the conducting of LCAs, most of which are delivered with databases by
default (Rebitzer et al., 2004).
Conducting a full scale LCA-analysis for a product idea at the proposed stage of realization addressed
in this thesis is nonsensical. Still, the same process stages described are useful for an exercise of
awareness and exploration.
The issue of material choices for a new product holds environmental consequenses, as some materials
demand a lot of effort to exstract and process. Some materials, such as certain plastics, glass, paper
and metals, may be available in recycled form, and one can explore the possibility of utilizing materials
that have been used before. The account of materials used in the design demand that such decisions
45
have allready been made. For an early stage idea, however, the analyst may instead use this
opportunity to explore the major material alternatives and their assosiated environmental advantages
and disadvantages, and the manufacturing methods commonly used to processes them. When
exploring manufacturing processes especially, the analyst should pay attention to potential hazards to
employees.
The manufacturing and or assembly processes of a product depends on the respective materials
chosen, but also on the combination of these materials. Assembly is directly related to retirement
options, as disassembly of products must be performed where several types of material, demanding
different handeling, are combined (Ishii et al., 1994). The ease or difficulty of dissasembly may
determine if it is economically feasible to recycle or reuse material.
An important element of Life Cycle Design is Design for Product Retirement (DFPR), which involves
careful planning for the disposal of materials recovered from the product at the end of its life.
Different materials have different options, and for complex products consisting of components made
from different materials, disassembly and sorting of components according to their material is key.
Processes such as disassembly and reprocessing all have costs associated with them, and there is also
uncertainty as to the market demand for re-used components and recycled materials, as well as to the
availability of economical separation and reprocessing technologies (Ishii et al., 1994).
The generic options for material from retired products are (Ishii et al., 1994):
1. Re-use: Components are used as-is in another application
2. Remanufacture: Components are re-used in the same or a different application, after minor
repairs and overhauls are made.
3. Primary Recycling: Components are reprocessed into material for use in another high-value
product.
4. Secondary Recycling: Components are reprocessed into material for use in a low-value
product, such as concrete filler or fence posts.
5. Tertiary Recycling: Polymer components are chemically decomposed into their basic
elements, and processed into new plastic or other products such as petrol, heating oil or
asphalt.
6. Quaternary Recycling: Components are incinerated for the production of heat and/or
electricity.
7. Disposal: Components are eliminated without the recovery of any intrinsic value.
(Ishii et al., 1994)
Depending on the degree of recycling a material can undergo, the analyst may consider the possibility
of recycling or reusing his/her own products to some extent. This is of course also a matter that relates
directly to organizational design and market conditions.
In addition to the environmental aspects of material input, processing and retirement, a technological
product may require certain inputs and outputs during its time in use. This may for example be various
fuels, and the environmental consequences of this consumption must also be included in an
environmental assessment of the product.
TYPES OF HAZARD
When attempting to assess environmental consequences without using LCA-systems, it may be helpful
to think in terms of stages, but also in terms of types of effects. However, it is difficult to generalize
when the processes involved vary so much between products. A possible way to provide a general
division of hazards is to consider the people affected. This implies a division into groups based on the
46
seriousness of effects inflicted on the people, or possibly by their relative risk of being affected. For
the development of this construct, inspiration can be found in Eason’s (1987) three types of users of a
product:
? Primary users: Those persons who actually use the artifact.
? Secondary users: Those who occasionally use the artifact, or use it through an intermediary.
? Tertiary users: Those persons who will be affected by the use of the artifact, or make
decisions about its purchase.
Although Eason (1987) did not primarily intend this division for environmental consequences of
technological products, the division itself is quite basic and versatile, and reminds the analyst that, as
with smoking, to use an exhausted example, the product does not only affect the user, but also those
in the vicinity. In order to apply this perspective to the various stages, however, the term user may not
always be appropriate, for example when describing factory workers who have firsthand contact with
a manufacturing process. The term user is therefore exchanged for the term contact, which allows the
analyst more freedom to adapt the tool to the cycle of his/her product. Another adjustment that
needs to be made, is to the expression of use through intermediary, which may not necessarily make
sense at every stage, or for every product. Also, purchasing decisions are not considered to be of
relevance to this specific part of the assessment, and the following adjusted division is proposed:
1. Primary Contact
2. Secondary Contact
3. Tertiary Contact
Primary contact denotes first hand contact with materials and processes, while secondary contact
denotes immediate proximity to materials and processes, and/or to the individuals who experience
primary contact. Tertiary contact denotes the surrounding actors in a wider perspective.
7.2.3. TOOL CONSTRUCTION
These two dimensions of user relation and life cycle stage are well suited for a matrix-model, which illustrates
the information required in this stage of the analysis.
Although generic stages are listed in the tool, the analyst is free to design his/her own material and process
flow, and fill in the cells accordingly. The exact definition of primary, secondary and tertiary contact will also be
case-dependent, and analysts may also wish to have fewer or more tiers of contact.
47
Stage of the product’s
life cycle
Material/Process Primary contact Secondary contact Teritary
contact
Resource extraction:
Account for of the
materials utilized in the
product design, and their
associated environmental
risks with regards to
extraction and pre-
processing.
Example:
Material X,
Process Y
Example:
Worker, with first hand contact
with the resource extraction
process.
Little or no risk.
Example:
Everyone.
Increased
CO
2
emissions
Manufacturing and
assembly process: Account
for the intended
manufacturing processes,
and their associated
environmental risks,
included health risk of
workers.
Example:
Materal X,
Process W
Example:
Worker, with first hand contact
with the manufacturing process.
Danger of toxic fume inhalation.
Example:
Inhabitants of the
area where
manufacturing takes
place. danger of local
leaks of poisonous
gas.
Example:
Material X
Process P
Example:
Worker with firsthand contact
with process. Little or no risk.
Distribution: Account for
the planned distribution
methods, and potential
environmental risks
associated with these
methods.
Use: Assess the potential
environmental impact the
product will have during its
life in use.
Retirement: An assessment
of possible retirement
options for the product
Example:
Material X,
incineration
Example:
Worker, with first hand contact
with the retirement process.
Danger of toxic fume inhalation.
Example:
Everyone.
Increased
CO
2
emissions
FIGURE 10: TOOL #4: THE LIFE CYCLE DESCRIPTION CONSTRUCTED
48
7.2.4. REVIEW RESPONSE
Review responses regarding the Life Cycle Description are presented below:
TABLE 7: REVIEW RESPONSE, TOOL #4: THE LIFE CYCLE DESCRIPTION
Respondent Positive Negative Suggestions for improvement
Investor N/A N/A N/A
Academic 1
I like the life cycle table, and see it as
useful tool
I am not sure it is part of the
feasibility decision, though,
so much as an important part
of the business planning
process for a socially
conscious venture. It also is
typically viewed as a relative
thing (meaning the impact
compared to the status quo)
N/A
Academic 2
An interesting concept, and an
interesting interpretation of the
concept.
N/A
It would help to have more
examples in the boxes.
For distribution, for example,
this could be a question of
dangerous loads traveling
through residential
neighborhoods, waste disposal
traffic, etc. The Use category
could speak to packaging that is
discarded or recycled, fumes the
product might give off during
use, or other elements – that
would make this more clear
Academic 3
There is nothing intrinsically wrong
with this model. It addresses
important things.
It is advanced, and I think it
belongs to a later stage. If
you spring this on an
entrepreneur first thing, he is
not likely to conduct the
analysis.
N/A
User
The Life Cycle Description is good in
that it includes an accurate
description of what it is.
N/A
You may need to take into
consideration where in the
process the end user of the
particular product is, as the type
of product or service may
change whether the end user is
primary, secondary, or tertiary
in the process. This could be a
somewhat separate
consideration from the
“manufacturing/creation”
process itself of a particular
social service.
Student 1 Understand the need for this tool. N/A
Fill it out with more examples?
It is only environmental issues,
what about social
consequences?
49
Student 2
This is something you typically care
more about if you have a social
inclination, than if you are more
straight forward profit seeking. You
HAVE to think about this if you are
starting a social venture, and this is a
simple and fair way of getting it done.
It’s basically a checklist covering
pretty much everything. It is very
important to think about alstages of
development, and that you must also
consider several tiers of people who
are affected.
Is this only environmental? I
reacted to the lack of social
inclusion.
N/A
Respondents generally understood the basics of the tool, as well as its purpose, but suggested the increased
use of examples to explain it more clearly. One respondent remarked that such an assessment would typically
be performed to evaluate a development relative to a status quo. This makes sense, as the assessment
proposed here is that between the current non-existence of an organization requiring certain processes and
materials, and its realization.
7.2.5. PROPOSED TOOL
The proposed tool is the same as the previous one, but with more extensive exemplification. The example
product used here is a matchbook.
Stage of the products life
cycle
Material/Process Primary contact Secondary contact Teritary contact
Resource extraction:
Account for the materials
utilized in the product
design, and their
associated environmental
risks included health risk
of workers with regards
to extraction and pre-
processing.
Example:
Recycled paper board
Wax
Gelatine and silicon
(binders)
Potassium Chlorite for
oxidization
Sulfur as fuel
Silica and red
phosphorous in powder
form
Glue
Non-recycled paper suited
for color print
Example:
Fully automated
processes.
Process operator:
Danger of fume
inhalation
Example:
N/A
Example:
Everyone.
Air pollution
50
Manufacturing and
assembly process:
Account for the intended
manufacturing processes,
and their associated
environmental risks,
included health risk of
workers.
Example:
Stamping and cutting
Dipping in hot wax
Oven drying
Chemicals mixing with hot
water
Dipping in chemicals
Fan drying
Mixing of silica, red
phorphorous and glue
Printing on matchbook
cover
Stroking of glue mix on to
paper
Matchbook paper cutting
Packaging
Example:
Fully automated
processes.
Process operator:
danger of fume
inhalation
Example:
Local community
Danger of
poisonous waste
emissions polluting
air and water
Example:
Increased air
pollution
Distribution: Account for
the planned distribution
methods, and potential
environmental risks
associated with these
methods.
Example:
By truck
Example:
Loading personnel
and driver. Low
risk
Example:
Local communities:
Some noise from
traffic
Example:
Everyone:
Increased CO
2
emissions
Use: Assess the potential
environmental impact the
product will have during
its life in use.
Example:
Person lighting match
Example:
User:
Low risk. Negligible
fumes.
Example:
N/A
Example:
N/A
Retirement: An
assessment of possible
retirement options for
the product
Example:
Incineration
or disposal of burned
paper stub
Example:
N/A
Example:
N/A
Example:
Everyone:
Increased CO
2
emissions
Or increased
landfills
FIGURE 11: TOOL #4: THE PROPOSED LIFE CYCLE DESCRIPTION EXEMPLIFIED
51
7.3. TOOL #5: IMPACTED STAKEHOLDERS
“it is a very very key critical part of social entrepreneurship, understanding that customer, know who you’re
serving, and that you are building your relationship to that customer and sensitive about how you serve that
customer so that you not only can be successful over time, but your perception of the community never
becomes one that you’re taking advantage of a vulnerable customer base.”
–India based American investor (C07:B10)
7.3.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
“Stakeholders are persons or groups that have claim, ownership, rights, or interests in a corporation and its
activities, past present, or future” (Clarkson, 1995). No venture operates on its own, and will require the
support and collaboration of others (Russo and Perrini, 2010), and it is widely accepted today that
organizations have a relationship with the communities in which they operate (Standard, 2010).
After the publishing of Freeman`s (1984) book, Strategic Management: a Stakeholder Approach, the concept of
“stakeholders” has become commonplace in management literature and manager`s thinking (Clarkson, 1995,
Jones, 1995, Mitchell et al., 1997, Donaldson and Preston, 1995). Looking into this extensive literature, one will
notice that the concept “stakeholder” is explained and used by various authors in very different ways
(Donaldson and Preston, 1995, Munilla and Miles, 2005). Since the field of Stakeholder Theory is not the focus
of this thesis, this will not be elaborated on any further. However, the theory will be used to discuss the
empirical data as well as the theory drawn from the field of Social Entrepreneurship.
Social problems are rarely solved independently, and often require collaboration with a variety of stakeholders
(Desa and Kotha, 2005). According to Kanter and Summers (2004) the various financial and nonfinancial
stakeholders to which a social venture is readily accountable, are also greater in number, and more varied,
than what is the case for traditional ventures. This results in greater complexity in managing these relationships
(Kanter and Summers, 1994). Managers need to figure out how to deal with this diverse set of constituents,
some of whom can sometimes be difficult to understand, predict and work with (Mitchell et al., 1997). And in
addition to being responsible for its own decisions and activities, an organization may have the ability to affect
the behavior of stakeholders with which it has relationships. This leads to the following question:
Who are the stakeholders and what impact will the organization have on the different actors?
When evaluating opportunities in the social sector, understanding what value is created, for whom and how, is
fundamental (Brush et al., 2008). Guclu (2002) argues that for an idea to be promising, the entrepreneur`s
values and commitment to addressing a particular social need must be shared by enough key stakeholders to
give the proposed venture some initial viability.
As mentioned in the findings, the management is responsible for a culture of social awareness being infused in
the venture. According to Jones (1995) the management influences the corporate culture, the examples it sets
through its behavior tend to be adopted by the employees at lower levels of the firm (Clinard, 1983). It is
therefore the manager`s role to set a culture where all the members are aware of the potential impact that
their activities will have on stakeholders (Jones, 1995).
Engaging with the stakeholders will among other things:
? increase the organization`s understanding of both the unintended and intended consequences of its
decisions and activities on the different stakeholders (Standard, 2010).
? ensure that the venture does not discriminate against anyone with whom it has contact or on whom it
can have an impact (Standard, 2010).
52
? help determine how to best increase the beneficial impacts of the venture`s decisions and activities
and how to lessen any adverse impact (Clarkson, 1995).
? help identify conflicting interests and goals among the stakeholders (Jones, 1995, Roberts, 1992).
7.3.2. TOOL DEVELOPMENT
The stakeholders are not only the intended users or clients, but also the third-party payers, donors, workers,
middle managers etc., who may have distinct and competing interests (Jones, 1995). An entrepreneur aiming
to implement a social focus should have plausible value proposition for each stakeholder group (Standard,
2010, Munilla and Miles, 2005). This is especially important when the stakeholders are dependent on the
company, which is the case in many developing countries.
When attempting to map the positive or even negative social impact following the hypothetical realization of
the business concept, the analyst should be careful not to only focus on the activities downstream from the
focal firm. Social impact will also result from supplier relationships and logistical activities, as well as internal
policies of human resource management etc. (Standard, 2010). This tool has been developed to help the
analyst assess the potential social impact on:
1. Down-stream stakeholders
2. Up-stream stakeholders
3. The environment and communities in which the various activities if the venture will take place.
The analyst can choose to address more than one community on each side of the organization, if for example
the venture will have production sites in different locations.
7.3.3. TOOL CONSTRUCTION
A venture has a significant impact on its surroundings; it can pose as a role model to other actors in the same
industry or community; it can improve the living standard for its employees, and it can support local activities
(Standard, 2010). However, it can also have a negative influence in all the same areas (Munilla and Miles,
2005). For example, community residents` interests could include the positive impacts of an organization, such
as employment, as well as the negative impacts of the same organization, such as pollution. The entrepreneurs
should therefore always monitor its impacts on the environment, and obtain deep understanding of the impact
made on the different stakeholders (Clarkson, 1995).This tool is inspired by a figure developed by ISO:26000,
however this model painted a too narrow picture of the situation. This altered version takes into consideration
that the venture might operate in several different communities and environments, and that the activities the
venture conduct will have implications both the down- and up-stream value chains. The goal of the tool is also
to identify conflicting interests among the stakeholders.
53
FIGURE 12: TOOL #5: IMPACTED STAKEHOLDERS CONSTRUCTED
54
7.3.4. REVIEW RESPONSE
Review responses to the Affected Stakeholders tool are presented below:
TABLE 8: REVIEW RESPONSE, TOOL #5: THE IMPACTED STAKEHOLDERS
Participant
Positive Negative
Suggestions for change
Academic 1
Perhaps the most important take
away for a social venture, to the
extent that they help the
entrepreneur articulate the value
proposition more comprehensively
and in a more compelling way.
N/A N/A
Academic 2 Seems relatively straightforward. N/A
Some examples
would be helpful.
Student 1 Rational exercise
Do not know if it provides me with
any more information than what is
in the explanatory text.
Very generic.
Student 2
Important exercise. Brings forward
aspects that are easy to forget. Social
part of the LcA-exersice. An analysis
of the stakeholders is extremely
important to reveal conflicting goals.
N/A N/A
Investor N/A N/A
Comments that it
might be a good idea
to first conduct a
simple analysis of the
stakeholders that will
be affected the most.
Academic 3 N/A
If you spring these on an
entrepreneur first thing, he is not
likely to conduct the analysis.
N/A
User
Powerful way to view all of the inter-
relationships of the various
stakeholders, and how an impact
upon one of these might ripple out to
impact other areas within the
construct. Could be an accurate way
to see how an organization can
improve its practices to have the
most significant effect on both
upstream and downstream
stakeholders, and thus identify
methods to improve their own role
as intermediary and increase the
effectiveness of their business model.
N/A N/A
The majority of the reviewers agree that this is a valuable tool and an important take-away for an analyst, both
in order to articulate the venture`s value proposition towards different stakeholders, and also to identify
conflicting interests. However, the review also shows that there is need for exemplification of the tool, to give
55
the analyst a guide to which of the stakeholders will be affected the most. Clarkson (1995) introduces the terms
primary and secondary stakeholder groups.
Primary stakeholders: “Groups without whose continuing participation the corporation cannot survive as a
going venture”. Where examples are employees, distributors, producers of complementary goods, customers,
and suppliers, the government and communities whose laws and regulations must be obeyed, and who provide
the markets infrastructure. There is a high level of interdependence between the venture and its primary
stakeholders (Clarkson, 1995).
Secondary stakeholders: “those who influence or affect, or are influenced or affected by the corporation and
are not essential for its survival”. Examples are the families of the employees and people living in the
communities where the venture operates and the media.
7.3.5. PROPOSED TOOL
As a result of response from the review, the tool has been altered by:
1. Implementing some examples of various stakeholders
2. Inserting examples of how the different stakeholders might be affected by the venture`s activities.
FIGURE 13: TOOL #5: THE PROPOSED IMPACTED STAKEHOLDERS
56
7.4. TOOL #6: THE SOCIAL VALUE CHAIN
“If you want to fight poverty, the best thing is to keep people involved in value earning activity. You must create
a value chain! Then some can work at this level, some at the next level etc.”
- Indian Academic working closely with grass root social entrepreneurship (C09:B20).
7.4.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Globalization, greater use of mobility and accessibility, and the growing availability of instant communication
mean that individuals and organizations around the world are finding it easier to know about the decisions and
activities of organizations in both nearby and distant locations (Standard, 2010). This means that organizations’
decisions and activities are subjects to increased scrutiny by a wide variety of groups and individuals. Keeping
track of all the activities in a venture is therefore important not only to the start-ups` stakeholders, but also in
order create a positive social impact and to maintain a good reputation (Jones, 1995). This brings about the
question:
How can the proposed venture increase it positive social impact through its activities and policies?
As this thesis addresses technology-based ventures, many of which have a very typical value chain structure, it
is suitable to draw from Porter (1985) when developing this tool. Porter and Kramer have made the value
chain concept applicable, as they have already addressed the social issues that may arise in different areas of
the value chain, and also how these may be viewed as opportunities for value creation (Porter and Kramer,
2006, Porter and Kramer, 2011). The value chain coordinates and links together value-adding activities, and is a
useful tool for defining a venture`s core competences (Porter and Kramer, 2006).
Porter and Kramer (2006) argue that some company activities will prove to offer opportunities for social and
strategic distinction, and that the venture`s margin or profit depends on its effectiveness in performing the
activities presented in the value chain. Since the value chain touches virtually every activity in an organization,
it can be used as a framework to identify the potential positive and negative social impact of those activities
(Porter 2006), ranging from hiring and layoff policies, to greenhouse gas emission.
7.4.2. TOOL ASSESSMENT
Even though Porter`s Value Chain is a familiar tool for most academics within strategy and management, the
altered version with social objectives is not as widespread. The two main activity groups in the value chain,
with their respective sub categories, will presented in the following, with elaborations, examples from the
empirical findings, and contributions from other theories, to justify its admittance among the presented tools
in this thesis.
1. Support activities comprising of:
a. Firm infrastructure
b. Human Resource management
c. Technology Development
d. Procurement
2. Primary activities comprising of:
a. Inbound Logistic
b. Operations
c. Outbound Logistic
d. Marketing and Sales
e. After Sales Service
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SUPPORT ACTIVITIES
A) FIRM INFRASTRUCTURE:
Included in the firm infrastructure are activities like general management , governmental
affairs, accounting, finance, planning and quality management(Porter, 1998), to name a few.
Firm infrastructure can be an important segment when implementing social aspects into a
start-up, and the examples of this are many. The management can for example facilitate
access to, and where it is possible provide support and facilitate for, education and lifelong
learning for community members. The management`s focus should be to see community
goals and company goals as mutually interdependent (Carroll, 1979), and giving customer fair
value, full information, and fair guarantee.
By joining efforts with other organizations and governmental institutions, the ventures can
support respect for social and cultural rights, and also contribute to the fulfillment of these
rights (Castka and Balzarova, 2008). The venture can also decide to adapt goods or services to
the purchasing ability of poor people.
One challenge lies in the fact that all the aspects taken into consideration must be done so in
the local context (Standard, 2010). And as one could see from the stakeholder tool, there can
be multiple contexts to take into consideration.
The following points could be taken into consideration in the Social Value Chain:
? Financial reporting practices
? Transparency
? Government practices
? Use of lobbying (Porter and Kramer, 2006)
? Infuse a culture of social focus in the management
B) HUMAN RESOURCE MANAGEMENT:
As an employer, an organization contributes to one of the most widely accepted objectives of
society, namely the improvement of standards of living through full and secure employment
and decent work (Standard, 2010).
The employees should also be offered safe working conditions through training and skills
development, safety and industrial hygiene, and any policy or practice affecting conditions of
work, in particular working time and payment. With regard to safety, the analyst can benefit
from bringing any significant discoveries from the Life Cycle Description exercise into this part
of analysis.
There are differences in who are regarded as a vulnerable group. One academic interviewed,
stated that in the developing world, women and people discriminated against on the bases of
race and descent, are especially exposed groups. In countries in the developed world,
immigrants, previous drug addicts and people with criminal records are among those being
kept outside the working life. By offering these groups work and providing them with
favorable working conditions, start-ups can create important social impact.
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The following points could be taken into consideration in the Social Value Chain:
? Education & job training
? Safe working conditions (align with Life Cycle Description findings)
? Diversity & discrimination
? Health care & other benefits (Porter and Kramer, 2006)
C) TECHNOLOGY DEVELOPMENT:
According to an academic in India, the entrepreneur could experience that the technology
used in developing countries is not at the forefront. This, he argued, often lead to the trade-
off between development and environment, where the environment in most cases lost in
developing countries. Not only does this affect the stakeholders who live in the environment,
it will also have implications for the ventures planning to have production facilities in a
developing country.
The following points could be taken into consideration in the Social Value Chain:
? Recycling
? Relationship with universities
? Ethical research practices
? Products safety
? Conservation of raw materials(Porter and Kramer, 2006)
? Assessment of the quality of the available technology
D) PROCUREMENT:
Actors within nearly all the disciplines spoken to argued that “middlemen are bad thing”
(C09:B25), and that they in the majority of cases do not share the profit with the community.
If an organization is forced to use middlemen it should use only those intermediaries who are
legally recognized (Standard, 2010). To make sure that the middlemen are not taking
advantage over the situation the organization should, where it is possible, establish
contractual obligations with suppliers and subcontractors (Eisenhardt, 1989), make
unannounced visits and inspections, and exercise due diligence on the intermediaries
(Standard, 2010).
Jones (1995) states that a “firm that has relatively few suppliers will outperform firms that
have many suppliers”, and “firms that have long-term relationships with their suppliers will
outperform firms with relatively brief relationships with their suppliers”. This, he says, is a
result of contracts built on mutual trust. For a venture with a social mission, the goal should
therefore not be to practice bargaining power toward their suppliers or buyers, the aim
should be a balanced relationship, where no part is being exploited. What should be the case
for a social venture is that the suppliers and customers are being viewed as equal partners in
the transaction, and that consumers’ rights are liberally interpreted and honored (Carroll,
1991).
The following points could be taken into consideration in the Social Value Chain:
? Procurement & Supply chain practices (e.g., bribery, child labor, goal alignment)
? Uses of particular inputs (e.g., animal fur)
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? Utilization of natural resources (Porter and Kramer, 2006)
? Reduce the number of middlemen
PRIMARY ACTIVITIES
A) INBOUND LOGISTICS
Changes in inbound logistics processes can, according to Walten et al. (1998), have a great
economic, social and environmental impact and significantly reduce both the generated
waste and the product cost. Changes in this activity can imply everything from making the
employees aware of environmental implications of packaging and inbound logistics, to
training the venture`s customer to be sensitive to the importance of issues like disposal and
obsolescence, and the mistake of purchasing strictly based on unit price (Walton et al., 1998).
Initiatives to increase the positive social impact could be the reduction of inbound logistics
costs (e.g. by combing material delivery with another venture), the reduction of
environmental impact (e.g. reduction of pollution generated by inbound logistics through
choosing more environmental friendly distribution methods like trains), and minimization
dangerous loads travelling through residential neighborhoods.
The following points could be taken into consideration in the Social Value Chain:
? Transportation impacts (e.g., emissions, congestion, logging roads)(Porter and
Kramer, 2006)
? Combing material delivery with another venture.
? Difficulties with existing infrastructure
B) OPERATIONS
Below are some examples of aspects that an analyst should consider in regards to a venture`s
operations:
? Take precautions and implement measures aimed at preventing pollution and
waste
? Minimize the use of materials
? Utilize sustainable materials
? Emissions and waste impact assessment
? Biodiversity and ecological impact assessment
? Energy and water usage kept to a minimum.
? Worker safety and labor relations
? Avoid hazardous materials
? Use of environmentally sound technologies and practices.
Minimizing the use of materials will not only enhance the sustainability of operations, but
more importantly it can be a driver for cost reduction at the operational level (Porter and Van
der Linde, 1996).
Minimizing the damages if an accident should occur could also be an aspect to consider. By
entering into collaboration with local actors to develop an accident prevention and
preparedness program, the stakeholders will know how to act to minimize the damages.
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The following points could be taken into consideration in the Social Value Chain:
? Emissions & Waste
? Biodiversity & ecological impacts
? Energy & water labor relations
? Hazardous materials(Porter and Kramer, 2006).
? Preparedness program
C) OUTBOUND LOGISTIC
Sustainability initiatives affecting outbound logistics can result in improvement similarly to
what described for inbound logistic. Examples in this context can be found in the reduction of
packaging dimensions, which has a direct impact on both pollution costs.
According to Kevin Starr (2010) the distribution is one of the most challenging parts of the
value chain. As mentioned under Technology Development, the existing technologies in
developing countries are often not in the forefront. An entrepreneur targeting a market
where this is the case, must be aware of that the technology and the infrastructure might be
of a poor standard and cause difficulties (Vachani and Smith, 2004). There is for example a
chance that there is no existing road connection, no electricity, or there might not be
coverage on the mobile phone etc.
In cases where the venture is operating internationally, it could work toward hiring local staff
in each target market. This will, among other things, help the venture with the distribution
through local enterprises where it is practicable. An entrepreneur explained that they have
the major relief organizations and Ministries of Health as their main customers, because this
helps them distribute the product to poor people all over the world and also within each
country. The same entrepreneur stated that they also had offices in four different countries,
and agents and distributors in every country they were active in. As a result of them hiring
local people and making their products in the developing world, they had no trust issues
neither with the government, nor the end users .
The following points could be taken into consideration in the Social Value Chain:
? Packaging use and disposals
? Transportation impacts(Porter and Kramer, 2006)
? Establishment of local offices.
? Quality of the infrastructure.
D) MARKETING & SALES
A Norwegian investor stated that the developers of technology often have a severe lack of
knowledge about the importance of the marketing and sales. The investor argued that
entrepreneurs often have the attitude: “I`ve made a remarkable product, of course it is going
to sell”. However, once the solution has been installed they realize that they have too little
knowledge about the local conditions, and the project becomes a flop.
Recent studies have shown that focusing on social impact sells (Porter and Kramer, 2002), and
ventures know how to take advantage of that. Jones (1995) states that the seller of a product
has more information about it than the buyer does, and may opportunistically misrepresent
its value, for example the quality. Fair marketing provides the customer with factual and
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unbiased information about product and services in a manner that can be understood by each
segment of the consumers (Jones, 1995). This will allow the consumers to make informed
decisions about consumptions and purchases and to compare the characteristics of different
products and services (Standard, 2010).
Social responsibility has major implications for pricing decisions in some markets (Vachani and
Smith, 2004). They have used the term socially responsible pricing, which they define as:
“pricing that attempts to sustain or enhance social welfare”. This might involve higher prices
both for the wholesaler, and the consumer, which is the case for Fairtrade products.
Price discrimination across countries, with significantly lower prices in developing countries,
could result in increased pressure for price reductions in developed countries where
companies are constantly facing demands for lower prices from a range of buyers (Vachani
and Smith, 2004). Vachani and Smith (2008) argue that one of the risks of significant price
differences between countries, from the ventures established in the developed countries`
perspective, is the possibility of low-priced product spreading from developing countries to
developed countries. While it may be difficult to eliminate the spreading, greater attention to
the problem might help contain the risk.
The following points could be taken into consideration in the Social Value Chain:
? Marketing & advertising (e.g., truthful advertising, advertising to children)
? Price practices (e.g., discrimination among customers, anticompetitive pricing
practices, pricing policy to the poor)
? Consumer information
? Privacy (Porter and Kramer, 2006)
E) AFTER SALES SERVICES
After sales services mechanisms include proper installation, warranties and guarantees,
technical support regarding use, provisions for return, and repair and maintenance.
The switching costs related to the product may be so large, that the customer is in fact
locked-into the product (on which his income may depend) and thus dependent on the
venture. Providing service, providing information about use and ways to dispose of obsolete
products, and informing the stakeholders about the venture`s situation is therefore crucial.
The following points could be taken into consideration in the Social Value Chain:
? Disposal of obsolete products
? Handling of consumables (e.g., motor oil, printing ink)
? Service and technical support
? Customer privacy (Porter and Kramer, 2006)
7.4.3. Tool Construction
Based on this elaboration, all the points previously mentioned as possibilities for an analyst to take into
consideration, are listed in Porter and Kramer`s Value Chain 2006 edition (2006). This provides the following
tool:
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FIGURE 14: TOOL #6: PORTER AND KRAMER’S SOCIAL VALUE CHAIN
63
7.4.4. REVIEW RESPONSE
Reviewers’ responses to the Social Value Chain are displayed below:
TABLE 9: REVIEW RESPONSE, TOOL #6: THE SOCIAL VALUE CHAIN
Participant Positive comments Negative comments Remarks on changes
Academic 1 N/A N/A N/A
Academic 2
This page seems pretty self-
explanatory and reasonably
clear.
N/A N/A
Student 1
Good tool to make the
entrepreneur aware of the
opportunities
This one is heavy
Make it more specific, not as
generic
Student 2
A framework I am familiar with,
so it is easy to use. Reasonable to
assess the impact of all the parts
of the organization.
N/A N/A
Investor N/A N/A N/A
Academic 3 Good model, well arranged.
To comprehensive for an
entrepreneur
N/A
User
Valuable tool for feasibility
analysis.
Comprehensive view, which can
be effective in terms of
developing corporate image and
branding enterprises.
Seems to be more if interest to
the “number crunchers” within
the corporate entity.
Appears to come prior to the
Impact Value Chain tool, and
seems more of a tool used to
attract investors, regulate
efficiency of production and
sales, and provide
management to keep control
over the entire corporate
entity`s process.
The feedback showed that this was a model most of the recipients were familiar with, and they thought it
would be an important contribution to the feasibility analysis. Two of the respondents mentioned that the tool
was too comprehensive, and one also commented that there were too few examples. A few alterations on the
tool were therefore conducted.
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7.4.5. PROPOSED TOOL
Some alterations have been conducted based on the feedback:
1. The tool has been simplified to make it less discouraging
2. More suggestions have been added.
FIGURE 15: TOOL #6: THE PROPOSED SOCIAL VALUE CHAIN
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7.5. TOOL #7: THE IMPACT VALUE CHAIN
“…it is incredibly hard to measure impact. The true impact studies take three to five years, they cost a lot of
money, much more money than a social enterprise has at the beginning”
–India based American investor (C10:A09)
7.5.1. WHAT IS THE QUESTION AND WHY IS IT IMPORTANT?
Several authors have recognized the problem of impact measurement, and have come up with innumerous
solutions (Zappalà and Lyons, 2009), but so far, no standard has been established (Achleitner et al., 2009).
The analyst should take into consideration that the measuring and mapping of a venture`s social impact is a
continuous process, and that it can be highly demanding in terms of time and effort. This cost can, however, be
minimized through the early assessment of options for measuring methods and parameters. This leads to the
question:
How to enable future measuring and monitoring of the proposed venture’s social impact?
The ISO 26000:2010 states that an organization is responsible for the impacts and activities over which it has
direct and indirect control. For a venture with a social focus, having control over, and being aware of, what
consequences their actions have is a necessity in order to be able to understand and measure the venture`s
ripple effects.
7.5.2. TOOL DEVELOPMENT
Depending on the resource base and operational history of a venture, there will be different ways to measure
the social impact. The ones focused on in this thesis are:
1. Goal alignment
2. Community inputs
3. Outcome: one indicator
The reason why this thesis introduces these two methods for a start-up, is because they, according to two of
the investors, allow measurement on a limited resource base, and therefore are particularly applicable to
young organizations.
7.5.3. TOOL CONSTRUCTION
To determine whether or not the potential venture has sufficient resources to move forward by developing the
product and creating the intended impact, the analyst must assess all the available resources, both the tangible
and intangible. These resources are described as inputs to the venture, and are what Barringer and Ireland
(2008) refer to as the venture`s available resources. According to Grant (1991), there are six categories of
resources: technological resources, organizational resources, reputation, human resources, physical resources
and financial resources. Unique resources and capabilities are among the most critical contributors to a
venture`s sustainability (Grant et al., 1991). According to a Scandinavian entrepreneur, finding new and
inventive ways to utilize and attract resources could be a critical success factor for a start-up with a social
mission.
In the following social impact chain model, three measure methods are implemented:
? Goal alignment.
? Community inputs
? The outcome of the community inputs with the use of one indicator
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The goal alignment method might be best suited for companies who have been up and running for a while
since it, according to an Indian investor, takes some time before a venture sees the results from their actions.
Further, the venture must evaluate the outcome to see whether or not it has reached its goals, and in the end
also conduct changes if necessary. Using this procedure is therefore most applicable for established companies
who are evaluating whether or not to launch a new product or service, and will therefore not be elaborated
further.
The second method to be introduced is the measuring of inputs to the community, a method proposed by two
investor interviewees, independent of each other. The third method is the measurement of one single
parameter that will indicate the degree of social impact, a method introduced by Kevin Starr (2010) and Clark
et al. (2003).
FIGURE 16: TOOL #7: THE SOCIAL IMPACT CHAIN (CLARK ET AL., 2003A)
The box named Activities has already been described in the discussion of tool nr 5; Porter`s Social Value Chain.
COMMUNITY INPUTS
When using inputs to the community as a starting point for measuring impact, the quantifiable
outputs from the organization, equaling the input into the target community is what indicates the
organization’s impact. Using this technique requires, according to two of the investors interviewed,
that the analyst conducts a thorough assessment of all the inputs to the venture, the venture`s
activities, and what the quantifiably input to the community will be.
One of the investors exemplified input into a community as follows: ““In my social focus I’m going to
serve X number of communities which have this type of profile, I’m going to bring electricity to this
number of homes. I’m going to make sure that X number of people now has an actual toilet to use in
the morning.” (C17:A22). The investor stated that this was the type of measurement regarded as the
easiest to start out with for a new venture. The analyst should also seek to identify a control group.
This will capture the effects of the product, and indicate causality.
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Using a control group is one of the more common methods used for monitoring social impacts
(Standard, 2010). A control group will help the venture obtain qualitative or quantitative information
about results or outcomes associated with the organization that is comparable and demonstrates
change over time. This will to some degree help the entrepreneur understand “what would have
happened anyway?” This must be conducted to the best of ability, but will never resemble a true
scientific experiment, because, as an investor argued: ”you can never have a true control group, you
can never say: ”this community is going to sit over here in a box without micro finance and without
any another positive or negative impacts in terms of drought or NGOs or anything else.”” (C10:A09).
OUTCOME: ONE INDICATOR
Starr (2010) argues that measuring one parameter is the most efficient way to assess impact. He
states that this way the investors get persuasive numbers that are easy to control. This method for
analyzing social impact also requires a control group, to make sure that is was in fact the venture’s
activities that caused the change (Starr, 2010).
Starr (2010) lists up three important steps in the measurement in order to get a trustworthy number.
1. The analyst must think ahead, defining at an early stage what parameter he or she wants to
measure.
2. The venture must show the ability to sustain the changes over time.
3. Sample size must be big enough to prove that an impact has occurred.
Should the analyst chose this way of measuring the potential venture`s potential social impact, the
analyst should in the feasibility analysis describe his or hers line of action.
Starr (2010) argues that the output must answer to the venture`s mission, examples are LivingGood
with the mission; “Save kids` lives in Africa” and One Acre Found with the mission “get African families
out of extreme poverty”, where the following indicators are; “decrease in child and infantile mortality
rate”, and “additional production of harvest as a result of training and information”, respectively. If
the entrepreneur sees that the inputs create positive social impact, and the ventures meet its goals, it
should according to Starr (2010) continue what it is doing.
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7.5.4. REVIEW RESPONSE
TABLE 10: REVIEW RESPONSE, TOOL #7: THE IMPACT VALUE CHAIN
Participant Positive comments Negative comments Remarks on changes
Academic 1
Perhaps the most important take
away for a social venture, to the
extent that they help the
entrepreneur articulate the value
proposition more comprehensively
and in a more compelling way.
N/A N/A
Academic 2
The connection (and difference)
between outputs,
and outcomes is an important one –
worth emphasizing.
Somewhat challenging
time connecting the
text to the image
Should also have “what would have
happened anyway?” in the box.
Student 1 Understands cell 2
Do not understand the
tool or the explanatory
text.
N/A
Student 2 N/A
Confused by the
stippled line. Looks
difficult to use, and
hard to understand.
Is the community input box supposed to
be half way outside the “indicator-box”?
Investor N/A N/A
Insert something about community input
per resource spent. It is difficult, but data
on this area will soon be available.
Academic 3 N/A N/A N/A
User
Seems to be a valuable feasibility
analysis tool.
Clean design, allows for multiple
parameter inputs to determine what
effect each has on the projected
outcomes, and has the ability to
visually represent the outcome of
any particular modification one
introduces while in that act of
revising a process or product.
Causality is a challenge
in this model
The single parameter per chart would
allow for comparison of multiple
parameter impacts and give analysts the
opportunity to find the path to most
efficient production through this
analytical tool.
The review shows that the tool is valuable for an analyst wanting to assess social implications. However, a few
participants stated that they did not understand the explanatory text that followed the tool and some had
difficulties understanding all the features of the design and argued that it needs some exemplification.
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7.5.5. PROPOSED TOOL
In the final version the following points have been altered:
1. The dotted line, which described the one parameter method, has been removed, since the feedback
mentioned that this only made the tool more confusing.
2. The word have has been implemented in what would have happened anyway?
3. More examples have been introduced.
4. The layout has been altered.
7.6. FINAL COMMENTS
Most of the tools developed in this discussion are of a higher degree of complexity than those developed in the
two previous discussion chapters. They are detailed, and can be used to facilitate the acquiring of insight which
forms the basis of more detailed strategic decisions concerning the value output of a proposed organization.
The tools presented point to choices which must be made, as well as possible alternatives to chose from.
In the next chapter, general conclusions aggregated from the three discussions are presented, along with
general comments made by review respondents.
FIGURE 17: TOOL #7: THE PROPOSED IMPACT VALUE CHAIN
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8. CONCLUSIONS
In this section, general conclusions from the discussions are presented. First, however, general review
responses which did not address specific tools, but the idea in general, are presented and commented on. This
response was dominated by two academics, nr. 1 and nr. 3, who both have significant entrepreneurial
experience.
8.1. GENERAL REVIEW RESPONSE
Academic 1 commented that “Frankly, my experience with social entrepreneurs is that they will not normally
have familiarity with the kinds of models that you talk about here. Only by chance will they have had formal
business education.” Academic 3 suggested that if we wished to create tools that could provide more value for
entrepreneurs in a non-academic setting, we use only the three first methods, and adapt them more to the
major questions an entrepreneur must answer at the earliest stage. The issue of academic application is
addressed in the introduction to our thesis, but was perhaps not obvious in the document sent out on review.
Out tools are, however, intended for an academic context, as we believe this to be of an increasing relevance.
Academic 3 also underscored the need to think about what the entrepreneur would do with the insight gained
from employing the tools.
Academic 3 remarked that the proposed tools seemed to belong in different stages of the entrepreneurial
process, with the last four belonging to a later stage, perhaps even the business plan stage, as they are very
advanced. She stated that “If you spring these on an entrepreneur first thing, he is not likely to conduct the
analysis”. This corresponded with Academic 1’s suggestion of a stage gate or step-by-step structure of analysis,
were each step in the analysis proceeds another in a given order. This is a relevant concern, which should be
included in future implementation of the proposed tools in a complete framework for feasibility analysis. This is
further commented on in the implications section.
Finally, Academic 1 stated that the proposed tools were not only applicable to technology-based business
concepts with a social focus, but also to other technology-based ventures. This implies a view that all analysts
of new business concepts should strive to think in terms of social impact as well as financial returns.
8.2. FINAL CONCLUSIONS
Through the collection of new data and the discussion of existing theory, this thesis has resulted in the
introduction of seven tools for feasibility analysis of technology-based, socially focused, business concepts.
Each tool directs the attention of the analyst towards a specific challenge of realizing a venture, while raising
the analyst’s overall awareness of the overarching importance of the interaction between the activities of a
potential organization and the world in which it operates.
One of the most important conclusions from this thesis is the acknowledgement that while the division of a
traditional feasibility analysis into four distinct sections is challenging, but possible, such a distinction with
regard to analysis of social ventures seems to oppose the very fundamentals of a social venture, as it is
described by the individuals interviewed here. The success of an entrepreneur aiming to solve a social problem
with a technological solution depends to a large extent on the entrepreneur’s creativity, and ability to develop
a deep understanding of the user, and insight into the realm in which he or she operates.
While little research has been done on the feasibility analysis of social ventures in general, and on technology-
based social ventures in particular, the contributions from this thesis mark one step in the direction of a
complete and well founded analysis framework.
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9. IMPLICATIONS
9.1. IMPLICATIONS FOR ANALYSTS
For the analyst and potential entrepreneur, a set of new tools have been provided which help to establish
important insights into the fundamentals of a proposed business concept. Hopefully, this will enable the
analyst to identify significant opportunities, as well as challenges, and improve his or her chances at succeeding
with a new venture.
9.2. IMPLICATIONS FOR FURTHER RESEARCH
The tools introduced here must be employed by the analyst in combination with other tools and questions.
Next steps of development towards a complete feasibility analysis framework which includes social value
creation, should include testing of the tools introduced in this thesis through use in actual feasibility analysis of
new ideas, and also the implementation of these tools in a complete framework, along with already existing
tools, additional new constructs, or both.
With regard to the development of additional constructs, we would like to make the following comments
regarding interesting areas of research identified during our work:
The case for technology-based ventures, as a opposed to other social ventures, is that many are dependent on
advances in science during development, before a product can be deployed in a market setting. Transforming
such ideas to marketable products require access to specialized technical expertise that most technology social
ventures do not possess (Desa and Kotha, 2006). A key challenge for technology ventures with a social mission
is therefore the attraction of highly educated employees, who have a tendency to move towards jobs with a
higher income (Desa and Kotha, 2005). The challenge of attracting competent personnel is an interesting area
for future research and tool development.
Another interesting and important challenge for social entrepreneurs is mapping the competition. This is a
complex task, as competitors will often include traditional for-profit companies, NGOs, government
organizations etc., many of which are also potential partners in some aspect or other. We believe a good tool
for mapping of competitors which took these complicated factors into account would be a valuable addition to
social feasibility analysis. Porter’s (1985) five forces model might serve as a good basis for such tool
development, and the researcher might start by examining the role of goal alignment and profit motives
between the various actors.
Various, and significant, challenges related to funding for start-up and capital investments were also discovered
during our work. The realm of funding for social ventures is under development, as topics like exit-strategies
and expected returns are the subjects of hot debates. While this area is currently characterized by uncertainty
and fragmented documentation, the area of social finance should prove interesting to follow over the next
decade, and can provide a seemingly endless array of previously unaddressed research subjects.
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10. REFERENCES
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PREECE, J. 2004. User-Centered
Design. Sage Publications.
ACHLEITNER, A. K., BASSEN, A. & RODER, B.
Year. An integrative framework for
reporting in social entrepreneurship.
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11. Appendices
Appendix 1a: Complete Category Table .............................................................................................. 1
Appendix 1b: Complete C-categories .................................................................................................. 3
Appendix 2a: Letter of Explanation to Reviewers ............................................................................. 24
Appendix 2b: Review Slides ............................................................................................................... 26
1
Appendix 1a: Complete Category Table
A: Open search categories,
generated from findings
B: Framework search categories,
generated from theory
C: Final categories,
based on A and B
C category
contains
A01. What is Social
Entrepreneurship - What is a
Social Entrepreneur?
B01. Sources of funding C01. Trends in Social
Entrepreneurship
B24
A02. Why Social
Entrepreneurship?
B02. Originality of business model or
concept
C02. Attractiveness of
Investment Prospects
B04
A03. The Entrepreneur and
Team
B03. Scalability C03. Product B10, B11, B12,
B32
A04. Social impact examples B04. Attractiveness of Investment
Prospects
C04. IPR and Replicability B06, B07, B15
A05. Social Issues B05. EXIT Opportunities C05. Market Entry B13
A06. Ethics B06. IPR, Patents and Technology C06. Industry
Attractiveness
B17
A07. ROI B07. Replicability C07. Stakeholders A04, A14, B10,
B30, B26
A08. ROI vs. Social Impact B08. The Entrepreneur and Team C08. Segmentation A36
A09. How to measure Social
Impact
B9. Product disruptiveness and
Innovativeness
C09. The Value Chain B12,B11, B20,
B25, B26, B27,
B28, B29, B30,
B32,
A10. Social Entrepreneurship vs.
CSR
B10. Understanding User Need C10. Social impact
measurement
A20, A09
A11. Social Vs Traditional
Funding
B11. Infrastructure in target market C11. ROI vs. Social Impact A08
A12. Sources of Funding B12. Product Development C12. Environmental and
socio-political factors in
target market
B21, B34, B35
A13. Investments Terms and
Follow-up
B13. Market Entry C13. Scalability B03
A14. Investment Model B14. Triple Bottom Line, Measuring
Social Impact
C14. The Organization B19, B30
A15. Investment Criterias B15. IPR, Trademarks C15. The Entrepreneur and
Team
B08
A16. Deal origination B16. Stakeholders C16. Resources B22
A17. EXIT B17. Industry Attractiveness C17. Social Impact
Projections
A22
A18. Stuck in the middle of
financing
B18. Diamond Framework C18. Originality of business
model or concept
B02
A19. Screening of Investment
Prospects
B19. The Organization C19. Sources of Funding A12, A14, A18
A20. Importance and Reasons
for Social Impact Measurement
B20. The Value Chain in General C20. ROI A07
A21. Development in Social
Entrepreneurship
B21. Political factors in target market C21. EXIT Opportunities B05. EXIT
Opportunities
A22. Social Impact Projections B22. Resources
A23. Business Model B23. Market Timeliness
A24. Value Chain B24. Trends
A25. Scalability B25.Procurement
A26. Transparency B26. Sales and Exports
A27. Organizational
Development
B27. Distribution
A28. Organizational Culture B28. Marketing
A29. Industries of interest B29. Operations
A30. Role of the Government B30. Human Resource Management
A31. Competitive Advantage B31. Logistics
A32. Market Entry Strategy B32. Service
A33. User Involvement in B33. Economical factors in target
2
Product Development market
A34. Understanding User
Behavior and Needs
B34. Social factors in target market
A35. Reliance on Pre-Existing
Infrastructure
B35. Environmental factors in target
market
A36. Segmentation B36. Legal factors in target market
A37. Distribution
A38. End user relations
A39. IPR
3
Appendix 1b: Complete C-categories
C01. Trends in Social Entrepreneurship
B24. Trends B24 A21IKG1
Har merket en enorm forskjell blant de unge på hvor lett det er å få de med i forhold til de gamle ansatte
internt
B24 A21IKG2
Folk er mer bevisst på problemene og rettferdighet. Dette gir et økt fokus mot SE.
B24 A21IKG3
Størst interesse blant de unge på universitet osv.
B24 A01IGS1
You really need to be very very careful about what you call a social venture, as it is one of the most abused
words today.
B24 A03ANM1
Entrepreneurship has always been there in India. But people realized that doing good for yourself alone is
not enough. Personal satisfaction!
B24 A18IPD1
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
B24 A01IMB2
The answers you get to your questions will depend on what part of the market you are talking to, and
what they see as a social venture. Also be clear on your own definition! Social ventures are as diverse as all
other ventures
B24 A01IMB4
The reason they get lumped is because there is a critical shortage for some significant portion of the
population, or some failure in delivering the traditional government delivered or private sector delivered
*avenues???* that means that there is a critical need that is not being filled, that is just too large for your
traditional NGO or charitable sector to handle, or potentially too large even for a government with its
limited resources or distribution channels to handle. And that’s why it gets lumped into social venture.
B24 A13IKG1
Vi tilbyr nettverk, kompetanse og økonomisk støtte
C02. Attractiveness of Investment Prospects
B04.
Attractivenes
s of
Investment
Prospects
B04 A15IKG 1
Kun prosjekter med mulighet for inntjening. Det offentlige for ta seg av sosiale tiltak, så får vi hjelpe sosiale
bedrifter. Eksempler på sos.tiltak er festivaler for barn og unge, arbeidsledighetstiltakt, to store sektorer
uten mulighet for sustainable business, men som fremdeles vil ha stor sosial impact..
B04 A15IPD 1
punkt én er uansett at man ser at produktet kan ha en høy impact på mange mennesker. Og hvordan man
kan se det kan variere ganske mye fra tilfelle til tilfelle, det kan være at man har surveys allerede, eller at
man må tenke litt mer selv i forhold til hva kommer det her til å føre til. Det er nummer en. Og nummer to
er at teamet og organisasjonen har det som trengs for kunne levere og skalere. Det er jo sånn sett helt
analogt med en venture vurdering, med da en impact-bit på toppen.
B04 A15IPD 2
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B04 A15IVS 1
Business needs to be SUSTAINABLE.
B04 A15IMB 1
So all of the same fundamentals that go into making any type of start-up or business successful are critical.
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied, you have to have really a strong founder or team, you
have to have a solid business plan, you have be sure you know whatever the product is, and it’s unique in
terms of its structure or delivery or some other element of it to make sure that you have a spot in the
market, to make sure you know your customers, and that you know how to serve them so that they’ll
come back to you. You have to understand what others are doing to differentiate yourself. It’s all the same
element that you’ve studied in entrepreneurship that makes any entrepreneur successful.
B04 A25IMB 1
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
4
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s an
ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B04 A06IMB1
you would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
(...) whether that was a fair or healthy return for a business serving such a vulnerable or potentially
vulnerable group. So, you know, 10-15 % or even 20 % is something that I’ve heard in a lot of places as
being more reasonable when we start talking about the social enterprise
B04 A08IPD3
Vi startet med donasjoner, men vi har gradvis vært mer interessert i, og brukt mer tid på å prøve å finne ut
hvordan kan vi investere? Men, vi har vært interessert i å gjøre investeringer på en måte vi kaller ”impact
first”, der man setter det å skape høyest mulig impact forran høyest mulig avkastning. Men man må jo
selvfølgelig ha en viss avkastning for.. ja.. hvis ikke så fungerer ikke systemet, og hvis ikke så har man
sannsynligvis ikke skapt noe levedyktig heller.
B04 A03IMB1
So it’s not enough to have just a dynamic, very socially driven background, you have to have god business
model and you have to have a good team, but you also have to think about this and be ready to really
think through these challenges as you go along, and see social and financial as being really complementary
rather than in competition.
B04 A29IPD1
Vi endte opp på det initiativet her (agricultural fund) fordi vi så mange interessante forretningsmodeller
innenfor det med landbruk, som da når ut til et stort antall småbønder, skalerer fort, og er en effektiv
måte, tror vi, til å redusere fattigdom.
B04 A07IMB1
You would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
B04 A22IMB1
One of the things I would say is that it’s hard to make social projections in terms of the impact, it is easier
to make social projections around the inputs. “I’m going to make sure that X number of people now have
an actual toilet to use in the morning.” It’s those types of thing that we see are the easiest ones to start
out with.
B04 A14IVS 1
Investment criteria: I utgangspunktet: Any business is good business.
Men: Money is for startup help and growth, not running
B04 A23IMB2
you have to have god business model and you have to have a good team
C03. Product
B10.
Understandin
g User Need
B10 A34IPD1
One laptop per child. Glimrende idé, ikke sant, og alle sammen bare over seg og så fantastisk den ideen er,
og de må jo selvfølgelig få tilgang til det digitale, og da kan de bare hoppe over mange utviklingstrinn og alt
mulig sånn. Men å levere en lap top til 200 dollar til en fattig familie…
B10 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de tror
at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å få
produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig ut,
de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å stå
under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden når de
er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra bålet eller
cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det smaker helt
annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B10 A34IPD3
Det finnes mange sånne Petter Smarter rundt omkring som tenker det at fattige mennesker de trenger
gjødsel, de har urin, urin kan brukes til å lage gjødsel, her lager jeg en sånn interessant boks som lager
gjødsel av urin, ikke sant? Og så virker det innmari smart. For det er helt riktig det, de har det, og de
trenger det, ikke sant? Men mellom der så ligger utrolig mye ting som skal på plass for å få kommersialisert
det. Så det er egentlig bare det at man ønsker å legge vekt på kommersialiseringsbiten, gitt den konteksten
produktet skal fungere i.
B10 A34IPD4
det er så mye av det altså. Som når Financial Times setter opp et panel med eksperter som stemmer over
hvilket produkt som er best …De kan.. de har ikke filla peiling på hvordan et er der ute. Det blir helt feil
approach egentlig, at man skal sitte med eksperter i vesten, eller teknologer i vesten og ha det som
drivende.
5
B10 A34IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied,(…) , to make sure you know your customers, and that
you know how to serve them so that they’ll come back to you. You have to understand what others are
doing to differentiate yourself. It’s all the same element that you’ve studied in entrepreneurship that
makes any entrepreneur successful.
B10 A34IMB3
the original bottom of the pyramid is Prahalad, who I’m sure you’re all familiar with, but he was all about
dealing with the poor as customers, that there really is a market there that needs services, they will pay if
you design something they can afford and that is relevant for them. And it’s just treating them with
respect, it’s less about social business per se, which is diving straight into low cost schools or low cost
hospitals or low cost financial services where no one else will go, thinking of them as being something
which is good as well as being a business, so there’s a little difference there.
B10 A34ANM1
The west can also understand the problems, but you have to be on the ground to experience it to fully
comprehend the problems.
B10 A34ANM2
In regards to beggers, you should focus on the problem, not just treat the consequence. To understand the
problem, you have to live with them for a while.
B10 A34ATJ2
So when you see that environmental action could be positive in terms of conservation, which is some
sense is an environmentally friendly action, could impact negatively on people.
B10 A03IPD 1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B10 A33AAG1
Many think that poor and un-educated people cannot be innovative. The truth is that surviving under
these conditions requires incredible innovativeness and creativity.
B10 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B10 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustenance includes the forest as part of the matrix. It is
an obvious problem!
B10 A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that same
customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom of the
pyramid phrase, because obviously those folks really need a lot of government services, *but* that next
level up, that is working and has some form of livelihood , and therefore can make their way in paying for
the services that they need, and they are really missing access to financial services of all kinds, as well as all
types of *??* infrastructure
B10 A38IMB 1
other really key critical part of that is fully understanding your customer, now this is something that any
business that wants to be successful has to do.
But it is a very very key critical part of social entrepreneurship, understanding that customer, know who
you’re serving, and that you are building your relationship to that customer and sensitive about how you
serve that customer so that you not only can be successful over time, but your perception of the
community never becomes one that you’re taking advantage of a vulnerable customer base.
B10 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s an
ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B11.
Infrastructure
B11 A30ATJ3
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can work.
6
B11 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may not
be technology that is at the frontier of technology, the best possible available technology. So there would
be considerations of cost, there will be considerations of inability or some pressure to cut back on the
initial capital investment.
B11 A35ATJ1
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure.
B11 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B11 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human input
in terms of work is low, compared to in rural areas where human input is high, but energy consumption is
low. The takeout is that to empower rural areas, they need access to reliable, cheap energy, as well as
enabling technology.
B11 A05ATJ 9
So it’s very common for middle level cities and smaller towns and villages in *Maharasta?* for instance,
the state area, to have no power during the day in summer for 10 hours, 12 hours, 14 hours, ok? There’ll
be no power. And the similar case will be true in rural areas. There’s a power shortage. For instance, I saw
last summer in Rajastan, places who used to get 10 hours of power now get six hours of power. So for
agriculture it means the time you use to run your pump sets, that this is time where you cannot run your
pump sets
B12. Product
Development
B12 A33EVF1
We talk to the people who use our products and find out what they want. Our *product* was developed in
2005 and as we were going into the community after distributing the product and asking people who use it
what they like and what they don’t like about it. We learned that people were mostly interested in using
the *product* when they are away from home. But when they are at home, they need to purify a larger
volume of water for cooking and cleaning and washing babies and these kinds of things. They needed a
way to purify a larger volume of water, than the *product* itself could do. Based on these feedbacks we
went back to the innovation center and came up with a product called *product*, which purifies a larger
quantity of water, and is designed to be used in the homes. We listen to our customers, and we listen to
government, we listen to NGOs. We come up with a product that meets the needs of the people on the
ground.
B12 A33EJF1
Users are involved at just about every step, and a rapid update schedule (new releases every few weeks)
gives users plenty of opportunity to provide input. Our first step is engaging users to tell us stories about
their challenges, and how they might see technology making their job or life better.
B12 A34EVF1
Mostly that staff is in-house, but we do have external consultants that we bring in from time to time, to
help us come up with new products, but we do also have external independent researchers that we hire to
study our products in the field and in academic laboratory settings. Most of the people who develop our
products are in-house, but we do have some external consultants that we work with.
B12 A34IPD5
Jeg synes han Kevin Star i den filmen (link) er en av de som sier mye fornuftig om hvordan kan du tenke
rundt hvordan produktet skal skape impact. Det er rett og slett bare å gå gjennom alle stegene, fra produkt
til bruk og se hva som ligger mellom der, og hvor komplisert blir det egentlig da.
B12 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B12 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B12 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human input
in terms of work is low, compared to in rural areas where human input is high, but energy consumption is
low. The takeout is that to empower rural areas, they need access to reliable, cheap energy, as well as
7
enabling technology.
B12 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustainance includes the forest as part of the matrix. It is
an obvious problem!
C04. IPR and Replicability
B15. IPR,
Trademarks
B15 A39IPD3
det finnes en merkevarebeskyttelse av den pumpen i India, for å hindre at folk kommer med noe skit som
gir seg ut for å være det samme. Så man kan ha en viss tillit til merkevaren
B15 A39EJF1
I am a believer in trademarks in their most fundamental sense: as a mark of the origin of a product or
service, as a mark that can be relied on for quality. We have registered several of our marks, and when we
release open source software, we retain trademark control. You can take our Martus or Miradi software
source code and make changes and release it widely and freely under the GPL. But, you can’t call those
derivatives Martus or Miradi, because those products as released by us have Benetech® standing behind
them.
B15 A39EJF 3
At the same time, formal trademark registration is expensive. In the U.S., we start by asserting trademark
protection once we start publicly using a new tradename, like BLARGL™. If it gets traction, then we
consider spending the money on registration. Of course, getting the web domains and doing basic
research is essential (and cheap) as a starting point.
B06. IPR,
Patents and
Technology
B06 A39EJF2
We agree. It’s especially true for social entrepreneurs, where the mission goal is more important than
actually being the person delivering on that goal
B06 A39AAG1
IPR can be important in some cases to prevent misuse of technology, and also create wealth for the
inventor. BUT it is important to share also. If your neighbor wants to make a copy of your invention, he is
not competing for your profits. In addition, if we all can build on the same tech, we will have competition.
If IP comes in the way, we should not have it. If it helps us attract investors, we should have it!
B06 A39IPD2
IP er ikke noe jeg har tenkt ekstremt mye på, jeg ser ikke for meg at.. altså.. For noen type selskaper,
såkornselskaper så kan det kanskje være viktig å hindre at det kommer konkurrenter inn på det samme
markedet.
B07.
Replicability
B07 A39IPD1
Så den repliseringsakten er noe man skal oppfordre til, og ikke prøve å hindre som impact first investor.
Men det kan være behov for å beskytte seg mot konkurranse i lokale markeder. Eller i allefall at man
konkurrerer på like vilkår da, at alle må lage sitt eget produkt, snarere enn at en aktør lager produktet og
investerer i R&D og alle andre bare kopierer, det er jo ikke rettferdig
B07 A39ANM 1
Replicability is also important of course, but knowledge is to share. Must be shared to develop it further.
The more you give, the more you get.
B07 A39IPD 4
Og vise at det går an å lage en kjede med low cost, high quality for profit schools i slummen i Nairobi. Da
ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn til at det skal kunne gjøre det.
C05. Market Entry
B13. Market
Entry
B13 A32EJF1
I think we run into the early adopters/crossing the chasm issues, but they are less acute for us because the
alternatives are so weak due to market failure
B13 A16IPD 1
vi begynte med å snakke med en del bistandsorganisasjoner i Norge, men fant etter hvert ganske raskt ut
at det var vel så bra for oss å gå direkte ut til organisasjoner som jobber på bakken i de områdene som vi
etter hvert begynte å fokusere på, India og Øst-Afrika
B13 A31IMB3
I see less of “Hey, I’m going to be social and therefore I’ll be competitive”, what you really see instead is
Hey, I see an un-tapped market, I’m going to go for it.
B13 A20IPD3
i mange områder så er det vanskelig, i andre områder så er det litt enklere. Vi har valgt det området her
(agriculture) , fordi ting (social impact parametre) er ganske målbart
C06. Industry Attractiveness
B17. Industry
Attractiveness
B17 A10EVF1
In the bed net side our chemical company competitors really promote their interest in bed nets purely as
8
CSR, not as the soul-focus of their company like we do. So our competitors are very large and well-
funded, but I think they are in this just to promote the image of their company mostly. And that`s what
they will tell you. But for us this is our only business.
B17 A29IMB1
We felt education and health care being two of the most fundamental and therefore areas that we felt
were really key to the success of that micro finance customer.
B17 A31IMB1
If you’re there just for competitive advantage you are not necessarily going to be successful in the long
run
C07. Stakeholders
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venutre. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers->PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
B19. The
Organization
B19 A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B19 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B19 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B19 A23IPD3
I hvert fall ikke like relevant å at man kan gjøre det til en business, man kan ikke tjene penger på
påvirkningsarbeid, da skal man i alle fall være ganske kreativ. Og så er det vel noen som mener at det å
ha en ambisjon som å skape endringer i stor skala er den viktig del av den definisjonen. Og gjerne det!
Men for meg så er man forsovet en liten sosial entreprenør hvis man er en ildsjel som setter opp et eller
annet som fungerer i … ja. Kanskje, kanskje ikke. I entreprenørbegrepet så ligger det vel litt i kortene at
man skal ønske å skape noe som vokser og blir varig over tid. Dette vet dere mye mer om enn meg, dere
skal fortelle meg om det her, tror jeg.
B19 A26IMB 1
but a fundamental point for all social enterprises is know that customer, and build relationships in the
9
community in which you work, and with that customer, so that your intentions are not later questioned,
even as you grow and become successful. Never hide the fact that you are what you are which is you’re
trying to be a for-profit, scalable business, by that you are trying to do so in a way that really combines
your social impact with your financial impact, and think about that from day one, in terms of how do you
plan *innovation*, train the organization, structure the goals for your organization, communicate about
what you are doing with the community. It’s important not to *follow/fall* on that later, when you may
be too big to make a difference. You have to infuse the culture of the organization with those goals and
objectives right away.
B19 A09IPD 4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A14.
Investment
Model
A14IVS 1
Investment criteria:
· I utgangspunktet: Any business is good business.
· Men: Money is for startup help and growth, not running
A14IKG1
De får ingen eierandeler, men en kontraktsrettet plass i styret i bedriften. I så måte er de ikke investorer,
men mer et styrende fond som hjelper med støtte både finansielt, nettverk og med kompetanse, kun til
oppstarter i Norge.
A14IPD1
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
A14IVS2
No high-capital investments
A14IPD2
Yes. Det har formål som et tidsbegrenset subsidie for å få et marked til å begynne å virke. For fattige
mennesker.
A14IPD3
Så en av de tingene vi har jobbet mye med i det siste er hvordan kan vi gjøre mere kommersielle
investeringer med *gjeld og egenkapital?*-instrumenter for å fortsette å skape impact, men å gjøre det
på en måte der vi kan få penger tilbake, og bruke de på nytt, og der man kan skape virksomheter som
kan vokse gjennom at de tjener penger og reinvesterer de pengene, og kan etter hvert tiltrekke seg
større kapital.
A14IPD4
Vi vil jo kalle oss selv impact investors, og der er det jo en veldig glidende overgang, fra veldig impact
first til nesten helt vanlige investeringer, bare tilfeldigvis i en sektor som kan være litt samfunnsnyttig.
Så… ja, hva er det man vanligvis bruker? Det skal være en intensjon om å skape noe positivt for
samfunnet. Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg
mener at da skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at
man får dårlig avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige
eller finansielle kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som
kommer til å gå inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å
gjøre tregangern på de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det
definitivt kan levere en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det
overskyggende målet.
A14IPD5
Da har han bygget opp over tid, og unngått å hente inn andre investorer. Da tar det jo også litt mer tid å
vokse. Da får man en veldig fin modell for å hjelpe de menneskene.
B10.
Understanding
User Need
B10 A34IPD1
One laptop per child. Glimrende idé, ikke sant, og alle sammen bare over seg og så fantastisk den ideen
er, og de må jo selvfølgelig få tilgang til det digitale, og da kan de bare hoppe over mange utviklingstrinn
og alt mulig sånn. Men å levere en lap top til 200 dollar til en fattig familie…
B10 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de
tror at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å
få produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig
ut, de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å
stå under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden
når de er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra
bålet eller cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det
10
smaker helt annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B10 A34IPD3
Det finnes mange sånne Petter Smarter rundt omkring som tenker det at fattige mennesker de trenger
gjødsel, de har urin, urin kan brukes til å lage gjødsel, her kager jeg en sånn interessant boks som lager
gjødsel av urin, ikke sant? Og så virker det innmari smart. For det er helt riktig det, de har det, og de
trenger det, ikke sant? Men mellom der så ligger utrolig mye ting som skal på plass for å få
kommersialisert det. Så det er egentlig bare det at man ønsker å legge vekt på kommersialiseringsbiten,
gitt den konteksten produktet skal fungere i.
B10 A34IPD4
det er så mye av det altså. Som når Financial Times setter opp et panel med eksperter som stemmer over
hvilket produkt som er best …De kan.. de har ikke filla peiling på hvordan et er der ute. Det blir helt feil
approach egentlig, at man skal sitte med eksperter i vesten, eller teknologer i vesten og ha det som
drivende.
B10 A34IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied,(…) , to make sure you know your customers, and that
you know how to serve them so that they’ll come back to you. You have to understand what others are
doing to differentiate yourself. It’s all the same element that you’ve studied in entrepreneurship that
makes any entrepreneur successful.
B10 A34IMB3
the original bottom of the pyramid is Prahalad, who I’m sure you’re all familiar with, but he was all about
dealing with the poor as customers, that there really is a market there that needs services, they will pay
if you design something they can afford and that is relevant for them. And it’s just treating them with
respect, it’s less about social business per se, which is diving straight into low cost schools or low cost
hospitals or low cost financial services where no one else will go, thinking of them as being something
which is good as well as being a business, so there’s a little difference there.
B10 A34ANM1
The west can also understand the problems, but you have to be on the ground to experience it to fully
comprehend the problems.
B10 A34ANM2
In regards to beggers, you should focus on the problem, not just treat the consequence. To understand
the problem, you have to live with them for a while.
B10 A34ATJ2
So when you see that environmental action could be positive in terms of conservation, which is some
sense is an environmentally friendly action, could impact negatively on people.
B10 A03IPD 1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B10 A33AAG1
Many think that poor and un-eduacated people cannot be innovative. The truth is that surviving under
these conditions requires incredible innovativeness and creativity.
B10 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B10 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people who’s traditional means of sustainance includes the forest as part of the matrix. It is
an obvious problem!
B10 A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that
same customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom
of the pyramid phrase, because obviously those folks really need a lot of government services, *but*
that next level up, that is working and has some form of livelihood , and therefore can make their way in
paying for the services that they need, and they are really missing access to financial services of all kinds,
as well as all types of *??* infrastructure
B10 A38IMB 1
other really key critical part of that is fully understanding your customer, now this is something that any
business that wants to be successful has to do.
11
But it is a very very key critical part of social entrepreneurship, understanding that customer, know who
you’re serving, and that you are building your relationship to that customer and sensitive about how you
serve that customer so that you not only can be successful over time, but your perception of the
community never becomes one that you’re taking advantage of a vulnerable customer base.
B10 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
A04. Social
Impact
Examples
A04ECJ 1
Better education for the children. The way of life is better. They were getting 40 rupiees from their
middlemen, now 130-150. Great social economic changes in the rural areas.
A04ECJ 2
The workers are now aware of that it is a good idea sending their children to school. Focus on the next
generation. Hygiene in the houses. Health awareness. Provide them with business sense. Without
income, understand and knowledge about competitors, they can`t survive.
A04ANM 1
Solving problems for the poor will ultimately help the rich. And people are starting to understand this.
People are starting to see the big picture. If everyone is better off, there will be peace.
Things like water, energy, climate change, are important for everyone!
C08. Segmentation
A36.
Segmentation
A36IMB 1
So we’ve done a lot of work over the last year and a half really now, to expand from looking at micro
finance to see what else it would be reasonable and synergistic for us to do to *really* support that
same customer, the micro finance customer, which is not the very bottom of the pyramid, to use bottom
of the pyramid phrase, because obviously those folks really need a lot of government services, *but*
that next level up, that is working and has some form of livelihood , and therefore can make their way in
paying for the services that they need, and they are really missing access to financial services of all kinds,
as well as all types of ** infrastructure
A36ECJ 1
Weaving is the main occupation. But essentially women are associated with this, because they have
much more free time. They sit at home, they actually can utilize that time for weaving. The man is busy
with the agriculture process or with some small scale industry or other kind of business.
The venture basically focus on remote areas, where there is no other facilities, and other resources for
income. Obviously they want to connect with us.
A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
C09. The Value Chain
B20. The Value
Chain in
General
B20 A24AAG1
The reason is,(make it affordable of course) if you want to fight poverty, the best thing is to keep people
involved in low value earning activity. You must create a value chain! Then some can work at this level,
some at the next level etc..
B25.
Procurement
B25 A04ECJ1
Better education for the children. The way of life is better. They were getting 40 rupiees from their
middlemen, now 130-150. Great social economic changes in the rural areas.
B25 A24ECJ1
Focus is to connect directly to the weavers, so that there is no need for middle men.
B25 A24ANM1
Middlemen are the bad thing. They buy for 10, sell for 1000, without doing any work.. Especially true for
Kashmir wool. Their sharing of the profits are not good
B26. Sales and
Exports
B26 A23IPD2
om Jaipur-modeller (Produkt fattig -> rik, cash rik-> fattig
Og den type forretningsmodell ser vi ganske mye av, eksport av alt fra kaffe til babymais til sukkererter
og alle mulige sånne ting. Og ofte legges det ganske mye vekt fra eksporthuset på det å lære bøndene å
produsere med god nok kvalitet, så man får en sånn kompetansehevingseffekt.
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B26 A23IMB3
If your customer is a wealthy Indian consumer, how much money you make is not really questioned. If
your customer is not vulnerable, you don’t have to worry in that same way about profit maximization.
*…..+ If you start a school for example, you have to think about it the other way. So you will then have a
much lower earning more vulnerable customer base, and you will have to think about the profits you
make on that school business. Both can be called a social enterprise, but both are very very different,
and that’s my point; to think about why it’s a social enterprise.
B26 A37EVF2
I would say that we primarily sell to Ministries of Health. We sell to all the major relief organizations,
from; The Red Cross, Unicef, The faith-based organizations, private charities. Really to every group you
have ever heard of. MSF
B26 A37EVF1
Red Cross, government, ministry of Health. Those are our main customers, those are the groups that buy
from us and distribute to poor people around the world
B26 A24IPD1
Også en del modeller som selger mer inn mot de lokale markedene. Det kan være noe så enkelt som en
maismølle, som gjør at bøndene slipper å selge råmaisen direkte til en trader som kommer til gården for
en lav spottpris, men heller sørge for at det foregår en value ad i det lokale markedet, så det eksporteres
på en mer proff måte, mer foredlet, og legger mer verdi igjen bakover til bøndene.
B27.
Distribution
B27 A24EVF1
Are you being looked at as Masonkas?
No. We work in every country in Africa, we have offices in four countries. But we have agents and
distributors in every country. Beacause we hire local people and we make our products in the developing
world, we really have no problem with governments, and getting our products to any one country.
B27 A37EVF1
Red Cross, government, ministry of Health. Those are our main customers, those are the groups that buy
from us and distribute to poor people around the world
B27 A01IGS2
it’s really about redesigning the way in which you think about this, it’s sort of the next generation of
thinking about how you can bring this whole social win – win, social and financial do not have to be at
loggerheads, they can really be working together, and therefore create better outcomes for companies
and communities, and this is how we’re going to have to think about 21st century business.
B28. Marketing B28 A34IPD2
Det er jo veldig ofte sånn at teknologutviklerne har litt for lite forståelse for viktigheten den biten, de
tror at ”nå når jeg har laget et så fantastisk produkt, selvfølgelig kommer det til å selge. Jeg har laget en
solkoker som er mer effektiv og varmer raskere enn noen andre. Selvfølgelig skal det selge, det er bare å
få produsert det og sende ned til Afrika, og så kommer det til å selge.” Og så høres det jo veldig fornuftig
ut, de har sol og så trenger de varme, og det er genialt. Men, så ser man det at folk ikke er interssert i å
stå under sola og koke middagen sin. Alt for varmt og slitsomt, og de er vant til å gjøre det på kvelden
når de er ferdige med alle andre oppgave som må gjøres i dagslys, ikke sant. Og dessuten, røyken fra
bålet eller cook stoven som de bruker gir en smak til noen av rettene som er en viktig bit, og gjør at det
smaker helt annerledes, det kan være alle mulige ting som gjør at det ikke fungerer i den konteksten.
B 28 A34IPD6
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B29.
Operations
B29 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B29 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B29 A05ATJ3
So if you set up industry in various areas, they will have some different natural resources. And they
would of course, as typical to industry, maximize effiency by cutting, among other things, environmental
protection. In countries like India it’s not just environmental problems. They cut salaries, they cut back
on safety, they cut back on social welfare, they don’t pay workers benefits to government run schemes
as they should. They do a whole lot of things which are wrong. Among these is not taking care of the
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environment
B29 A05ATJ7
I think the question of the environmental and social issues comes at a variety of levels. One, there is an
obvious, like it is known anywhere in the world; In a developing country we call it development vs.
environment. In a country like yours or Europe or Japan you call it industry vs. development. The
parameters and issues are very much the same
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venture. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers-PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
B32. Service B32 A34IMB4
You have to be ready for working in tough markets, solving problems that no one else has solved, dealing
with external stakeholders that are going to make, you know, your life harder and maybe potentially un-
savvy, although not as un-savvy as you think, customer base.
B12. Product
Development
B12 A33EVF1
We talk to the people who use our products and find out what they want. Our product was developed in
2005 and as we were going into the community after distributing the product and asking people who use
it what they like and what they don’t like about it. We learned that people were mostly interested in
using the product when they are away from home. But when they are at home, they need to purify a
larger volume of water for cooking a cleaning and washing babies and these kinds of things. They needed
a way to purify a larger volume of water, than the product itself could do. Based on these feedbacks we
went back to the innovation center and came up with a product called product, which purifies a larger
quantity of water, and is designed to be used in the homes. We listen to our customers, and we listen to
government, we listen to NGOs. We come up with a product that meets the needs of the people on the
ground.
B12 A33EJF1
Users are involved at just about every step, and a rapid update schedule (new releases every few weeks)
gives users plenty of opportunity to provide input. Our first step is engaging users to tell us stories about
their challenges, and how they might see technology making their job or life better.
B12 A34EVF1
Mostly that staff is in-house, but we do have external consultants that we bring in from time to time, to
help us come up with new products, but we do also have external independent researchers that we hire
to study our products in the field and in academic laboratory settings. Most of the people who develop
our products are in-house, but we do have some external consultants that we work with.
B12 A34IPD5
Jeg synes han Kevin Star i den filmen (link) er en av de som sier mye fornuftig om hvordan kan du tenke
rundt hvordan produktet skal skape impact. Det er rett og slett bare å gå gjennom alle stegene, fra
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produkt til bruk og se hva som ligger mellom der, og hvor komplisert blir det egentlig da.
B12 A33AAG2
You should develop solutions fitting to each niche. Corporations won’t do this. So you have to have user
driven innovation, you give them a cloth, and the user will tailor it to his needs. Windows have several
hundreds of functions, I only use a few. My mobile phone has hundreds of application, I only use a few.
But you pay for all of them. The finished product should be made by the small users, then you will get
variation.
B12 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B12 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B12 A05ATJ 4
You know people who are into conservation, they want preserve animal life, and they want to preserve
wild life etc. Then you fence off the forest, and the moment you start fencing off the forest you create
problems for people whose traditional means of sustainance includes the forest as part of the matrix. It
is an obvious problem!
B11.
Infrastructure
B11 A30ATJ3
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work.
B11 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B11 A35ATJ1
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure.
B11 A35EJF1
We say that our solutions are almost always around adapting existing technology to a new use, with
relatively little technical risk. “Building the last social mile,” is a common phrase here. It presumes that
we’re often 90 or 99% there: we need to mainly adapt and repackage existing tech to a new socially
important use.
B11 A05ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B11 A05ATJ 9
So it’s very common for middle level cities and smaller towns and villages in *Maharasta* for instance,
the state area, to have no power during the day in summer for 10 hours, 12 hours, 14 hours, ok? There’ll
be no power. And the similar case will be true in rural areas. There’s a power shortage. For instance, I
saw last summer in Rajastan, places who used to get 10 hours of power now get six hours of power. So
for agriculture it means the time you use to run your pump sets, that this is time where you cannot run
your pump sets
C10. Social Impact Measurement
A20.
Importance and
Reasons for
Social Impact
Measurement
A20IPD1
det tror jeg er noe av utfordringen, og noe av grunnen kanskje til at bistandsbransjen ikke er blitt flinkere
til å måle ting enn det den er, det at ”skal vi først gjøre det så må det være så innmari perfekt”. Men vi
mener jo at det er bedre å ha noe data som du vet det er svakheter ved, men som du likevel kan
forholde deg til, og så bruke det for hva det er verdt da, enn å ikke ha noen ting. Det er bedre å ha en
60% sannhet enn å ikke ha noe informasjon i det hele tatt.
A20IPD2
dere kjenner jo sikkert til den kontroversen som har vært rundt mikrofinans i India og sånn i det siste. Jeg
mener jo at mye av det skyldes at man ikke har vært flinke nok til å fange opp informasjon om hvordan
går det med klientene? Man har hatt styringsinformasjon på den finansielle biten selvfølgelig, men ikke
på impact biten. Og da er det den finansielle biten som får fokus, det som måles det følges på en måte
opp.
15
A20IPD3
i mange områder så er det vanskelig, i andre områder så er det litt enklere. Vi har valgt det området her
(agriculture) , fordi ting (social impact parametre) er ganske målbart
A20IPD4
Det kan være en person som setter opp en human rights watch, eller en eller annen
informasjonsinnhentnings påvirkningsorganisasjon der den typen business tankegang rundt å måle og
følge opp, og levere og styre prosjekter tett og sånn ikke er fullt så relevant, selv om det sikkert er noe
som er relevant der og.
A20AAS1
I do not want to measure Social Impact
A20IPD 5
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A09. How to
measure Social
Impact
A09IMB1
Because it is incredibly hard to measure impact. The true impact studies take three to five years, they
cost a lot of money, much more money than a social enterprise has at the beginning.
A09IPD1
Så, man må jo være pragmatisk også, den studien vi gjør der er kjempedyr. Og den eneste grunnen til at
noen er villige til å putte penger i en sånn studie er at den kan bidra til en større del av
mikrofinanslitteraturen, bli publisert i tidsskrifter, og det er ikke ting man kan gjøre sånn for sin egen del
på et prosjekt.
A09IMB2
One is the is the inputs, everything from the mission and strategy and operating systems and products,
staff that go into the business. And the fact that you have a better chance at coming out with the impact,
which is the other side, the real measurable, more hard core impact.
A09IPD2
De her er egentlig et ganske standard rammeverk som vi bare har forenklet og forenklet, det er en del av
den jobben BCG gjorde for oss i 2008. Først så legger mann inn noe tid og ressurser og penger etc., man
gjør en del aktiviteter som man gjør for de pengene, og så får man en output som da er veldig konkrete
ting man som har levert for eksempel skoler man har bygget eller kursing som er blitt holdt eller lån som
er blitt gjort tilgjengelig eller sånne veldig konkrete, lette ting å forholde seg til, operasjonelle parametre.
Så kommer vi da til outcome og impact, jeg vet ikke om dere har sett noe særlig på definisjonene av det.
Men vi gjør for enkelthets skyld, når vi snakker til folk rundt oss som ikke vet noe særlig om det her, så
bare slår vi det sammen for enkelthets skyld og kaller det impact, og sier at det er den mer brede
utviklingseffekten det her fører til. Her er for eksempel det antall vannpumper vi har solgt til fattige
mennesker, her er det som skjer med de familiene som følge av det. Økt inntekt, økt levestandard, og
forhåpentligvis flere barn på skolen og den type ting
A09IPD3
Men i hvert fall at man har en survey-mekanisme som fanger opp utviklingseffektene. Man tar en base-
line kort etter at man har solgt en pumpe, så kommer man og spør ”hvordan har du det nå?”. Så kommer
man tilbake et år senere og spør ”hva har skjedd siden sist?”.
A09ANM1
The measurements depend on the social impact you want to create.
A09IVS1
Social impact metrics: Number of companies started and number of employment created in a
commercially viable way. VERY easy to measure. (“Don’t even need an excel sheet.”)
A09IPD4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
A09IKG1
Veldig få ting kan måles, hvordan måler man "bedre liv"?
Trivsel f.eks.
Antall skoler, antall elever. Lett og måle.
I tillegg har mange skoler trivselsundersøkelser. Viktig med benchmark, for så å følge opp.
A09IPD5
Man greier jo ikke å vitenskapelig bevise de greiene her 100% i alle de tilfellene….
A09IM3
you can never have a true control and impacted group. You can never say “this community is going to sit
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over here in a box without micro finance and without any other positive or negative impacts in terms of
drought or NGOs or anything else. And you can never say “here’s a community that gets just micro
finance and none of the other positive or negative things that happens for development or like life has it
with nature and you know. And so it’s incredibly hard to after three or five years to say what really is the
impact, what are the positive or negative impacts, and how are you sure even if you see impact, that
that was all the about micro finance input or some other input.
A09IMB5
There are many initiatives currently active within the measuring of social impact, however, this is a
difficult subject for a number of reasons
A09IKG2
Finne sos.impact i NOK?
Ikke noe for oss. vi trenger ikke vite det..
Foreløpig kun en kvalitativ, hva er det de gjør, approach.
1 MNOK vs 20.000 glade barn, er det verdt det?
A09IPD5
å regner vi det ofte om til en total samfunnsmessig avkastning i monetære termer. Og det betyr jo at det
er noe som mistes derfra til dit, ikke sant, hvis kvinner som får tilgang til lån får sterkere selvtillitt og står
mer fram og tar mer tak og bestemmer mer hjemme og sånn, det greier du ikke å regne om til penger og
få med her. Så vårt formål med det har vært at det bør i alle fall være en kjerne av impacts eller
outcomes som kan regnes om, som gjør at man ser at kun basert på de så får man igjen noen ganger de
pengene man legger inn her, og så er det veldig bra selvfølgelig om det finnes andre mer indirekte ting
eller vanskelig kvantifiserbare ting på toppen
A09IPD6
I et av prosjektene så har vi kontrollgrupper, med veldig avansert måte å jobbe statistisk for å finne
landsbyer som matcher hverandre sosioøkonomisk så man tror det er en valid kontrollgruppe. Og det må
man jo ha, hvis man skal si at man har funnet noen impact. I et annet prosjekt så har vi ikke noen
kontrollgrupper.
C11. ROI vs. Social Impact
A08. ROI vs.
Social Impact
A08IPD1
….. og det er fortsatt mange som sitter litt og tenker det at selvfølgelig, jo bedre de selskapene lykkes
finansielt, des flere mennesker har de nådd, og des større endringer har de skapt. Og akkurat det er den
underliggende tankegangen med mikrofinansbransjens store vekst, men også nå kontrovers. Og hvis det
blir veldig mange stemmer da, som hevder de argumentene der i de ulike sammenhengene der man
sitter og diskuterer så kan det fort danne seg en sånn følelse i gruppa at det tross alt er ROI-en som er
den viktigste indikatoren.
A08IPD2
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
A08IPD3
Vi startet med donasjoner, men vi har gradvis vært mer interessert i, og brukt mer tid på å prøve å finne
ut hvordan kan vi investere? Men, vi har vært interessert i å gjøre investeringer på en måte vi kaller
”impact first”, der man setter det å skape høyest mulig impact forran høyest mulig avkastning. Men man
må jo selvfølgelig ha en viss avkastning for.. ja.. hvis ikke så fungerer ikke systemet, og hvis ikke så har
man sannsynligvis ikke skapt noe levedyktig heller.
A08IPD4
Hele asset management bransjen er gira veldig opp mot å skape høyest mulig risk adjusted return, og det
er varierende vilje til å sette seg inn i hva impact egentlig er. Så den dimensjonen kommer til å være den
svakeste i veldig mange sammenhenger.
A08IPD5
(Om å bruke all profitt på å hjelpe arbeiderne gjennom diverse tjenester som helseforsikring og skole for
barna) Så det er jo mulig, hvis du selger et produkt i et ordentlig high value marked med gode marginer,
og eieren er motivert first and foremost av å hjelpe de menneskene.
A08IMB1
Because the reality is, even the global development finance institutes, although they are social-
commercial, they’re not doing this as charity, they’re not giving the money away and nor do they want
zero percent return
A08IMB2
Most of our investors are development finance institutions. and European development finance
organizations.
They understand the fact that we are not looking to just maximize profits. We are looking to develop
strong businesses which serve customers, and that therefore our returns will be different than the purely
17
profit maximizing folks.
A08IMB3
you also have to think about this and be ready to really think through these challenges as you go along,
and see social and financial as being really complementary rather than in competition.
A08IMB4
On the other hand you can’t make yourself a simply break-even business who can’t handle bumps in the
road, because people will not invest in you, and you will not be able to scale, and therefore the impact
you can have will be limited.
A08EJF1
Customers love us. The skeptics were more Silicon Valley types who felt that if it didn’t make maximum
profits, it clearly wasn’t worth doing.
A08IKG1
Vi er ikke ute etter ROI, kun sosialt!
A08IKG2
"Hvis du ikke er opptatt av penger, vil du ikke lykkes!" bold statement, men som har noe sannhet i seg
A08IGS1
it’s really about redesigning the way in which you think about this, it’s sort of the next generation of
thinking about how you can bring this whole social win – win, social and financial do not have to be at
loggerheads, they can really be working together, and therefore create better outcomes for companies
and communities, and this is how we’re going to have to think about 21st century business.
A08IPD 6
Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg mener at da
skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at man får dårlig
avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige eller finansielle
kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som kommer til å gå
inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å gjøre tregangern på
de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det definitivt kan levere
en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det overskyggende målet.
C12. Environmental and Sociopolitical Factors in Target Market
B21. Political
factors
B21 A25ATJ 1
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work.
B21 A30ATJ2
The state entered tourism in a big way in the 70s. They actively entered by building the infrastructure
B21 A30ANM1
one of the reasons for social entrepreneurship in India is that the “government is not able to deliver
what they are supposed to; people will start taking charge, taking ownership, and doing something
about it.” One example of this is Sulabh toilets.
B21 A30ATJ6
You see the point is that guaranteeing access to water requires the intervention of the state.
B21 A30ATJ4
Software in India, to the extent that it is successful, it is true because of huge state investments in
engineering education and huge state investments in these so-called “software technology parks”, were
you know, facilities were provided, the first internet links were provided.
B34. Social
factors
B34 A36ECJ 1
Weaving is the main occupation. But essentially women are associated with this, because they have
much more free time. They sit at home, they actually can utilize that time for weaving. The man is busy
with the agriculture process or with some small scale industry or other kind of business.
The venture basically focus on remote areas, where there is no other facilities, and other resources for
income. Obviously they want to connect with us.
B34 A05ANM 2
If I’m happy, and also you are happy, there will be less crime. If I have three cars, and you have none,
there will be anger and violence. The differences is a lot of the reason for the criminal problems, so how
do you bridge the gap?
B34 A03ATJ1
It is true that in the absence of the state we cannot starve and die, so we have to do something to
survive, so survival is a necessity. So that pushes people.
B34 A05ANM 1
The caste system is very much alive in the country. The entire political systems is based on castes.
B34 A05ATJ 6
So the withdrawal of the state where it has been replaced by entrepreneurship in all these issues has
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resulted in a dual system where the private sector caters to the need of the wealthy who can afford to
pay for it and the government does here and there a little bit for the poor.
B35.
Environmental
factors
B35 A05ATJ 3
So if you set up industry in various areas, they will have some different natural resources. And they
would of course, as typical to industry, maximize effiency by cutting, among other things, environmental
protection. In countries like India it’s not just environmental problems. They cut salaries, they cut back
on safety, they cut back on social welfare, they don’t pay workers benefits to government run schemes
as they should. They do a whole lot of things which are wrong. Among these is not taking care of the
environment
B35 A05ATJ 5
The other class of problems have to do with the question of poverty being the source of damage to the
environment.
B35 A05ATJ 7
I think the question of the environmental and social issues comes at a variety of levels. One, there is an
obvious, like it is known anywhere in the world; In a developing country we call it development vs.
environment. In a country like yours or Europe or Japan you call it industry vs. development. The
parameters and issues are very much the same
B35 A05ATJ 8
At the same time this direct first order dependence, not even agriculture, but the collecting of leaves,
the collecting of forest produce the collecting of you know wood for fuel. You know the whole variety of
such things, hunting for small animals as a nutritional addition to food “receivials”, there’s a whole
variety of such direct dependence on natural resources.
C13. Scalability
B03. Scalability B03 A25IPD1
Men det vi også har lært er at de kommer ikke til å skalere videre på en sånn hockeystick-aktig måte
etter at vi er ute.
B03 A25IKG1
Tenker også på internasjonalisering, men foreløpig gjøre Norge så bra som de kan. Hvis de skal
internasjonalt, vil de bruke det eksisterende nettverket.
B03 A25ANM1
An idea has to be scalable, if not it is limiting! Replicability is also important of course, but knowledge is
to share. Must be shared to develop it further. The more you give, the more you get.
B03 A25ATJ 1
It is not possible that everything in a country like India is to be delivered by the state. But the state has to
go in, pry open the market, it has to establish the rules of the game. It has to show that volumes can
work. It is in the nature of Indian capital that it never believes that volumes will work. It’s a state of
mind.
B03 A25IPD2
Og vise at det går an å lage en kjede med low cost, high quality for profit schools i slummen i Nairobi. Da
ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn til at det skal kunne gjøre det.
B03 A25IMB1
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
B03 A25IPD3
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
B03 A01IPD2
Og så er det vel noen som mener at det å ha en ambisjon som å skape endringer i stor skala er den viktig
del av den definisjonen. Og gjerne det! Men for meg så er man forsovet en liten sosial entreprenør hvis
man er en ildsjel som setter opp et eller annet som fungerer i … ja. Kanskje, kanskje ikke. I
entreprenørbegrepet så ligger det vel litt i kortene at man skal ønske å skape noe som vokser og blir
varig over tid.
B03 A08IMB4
On the other hand you can’t make yourself a simply break-even business who can’t handle bumps in the
road, because people will not invest in you, and you will not be able to scale, and therefore the impact
you can have will be limited.
C14. The Organization
B19. The
Organization
B19 A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
19
B19 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B19 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B19 A23IPD3
I hvert fall ikke like relevant å at man kan gjøre det til en business, man kan ikke tjene penger på
påvirkningsarbeid, da skal man i alle fall være ganske kreativ. Og så er det vel noen som mener at det å
ha en ambisjon som å skape endringer i stor skala er den viktig del av den definisjonen. Og gjerne det!
Men for meg så er man forsovet en liten sosial entreprenør hvis man er en ildsjel som setter opp et eller
annet som fungerer i … ja. Kanskje, kanskje ikke. I entreprenørbegrepet så ligger det vel litt i kortene at
man skal ønske å skape noe som vokser og blir varig over tid. Dette vet dere mye mer om enn meg, dere
skal fortelle meg om det her, tror jeg.
B19 A26IMB 1
but a fundamental point for all social enterprises is know that customer, and build relationships in the
community in which you work, and with that customer, so that your intentions are not later questioned,
even as you grow and become successful. Never hide the fact that you are what you are which is you’re
trying to be a for-profit, scalable business, by that you are trying to do so in a way that really combines
your social impact with your financial impact, and think about that from day one, in terms of how do you
plan *innovation*, train the organization, structure the goals for your organization, communicate about
what you are doing with the community. It’s important not to *follow/fall* on that later, when you may
be too big to make a difference. You have to infuse the culture of the organization with those goals and
objectives right away.
B19 A09IPD 4
For man ser ofte i denne sektoren at det er veldig mye selvrapportering, man rapporterer selv, henter
selv inn dataen og rapporterer ”se hvor flinke vi er og hvor mange vi har nådd” og sånn. Veldig lite
uavhengig verifikasjon på den typen løpende rapportering. Det gjøres mye uavhengig evaluering, sånn i
etterkant eller retrospektivt ofte, men lite verifisering av løpende
B30. Human
Resource
Management
B30A28ECJ1
We are trying to create a culture of empathy. So we have a deep understanding of the weaver and a
deep understanding of the customers too. And innovation should continue.
B30 A28ECJ2
We are making it the culture of the venture. We are transferring this into the staff also. How we can
create a culture of performance, a culture of empathy. Because empathy is the biggest thing, to obtain
anything. Create empathy in the government, things will go up, the development will go up”.
B30 A28IMB1
you need to think very significantly about what is that mission and how do you really infuse the culture
of the organization with that mission even as that organization grows, so that not just the founder thinks
“hey, I’m not here not just to make some profits, but to make sure I’m serving this customer base
responsibly”. That that’s really part of the organization, and you structure the way the organization is set
up, how you train and everything around that thought. You’re not fundamentally different but you’re
infused with something that may be just a little more complicated than simply “I’m here to grow my
business and make profit.”
B30 A28IMB 2
It’s important not to fall on that later, when you may be too big to make a difference. You have to infuse
the culture of the organization with those goals and objectives right away.
B30 A27IKG1
Brukte eksempel fra Asbergers-PC prosjektet de har vært involvert i, der de trenger topp-folk fra
bransjen, og lønningene må dermed være deretter. Kan være kroken på døren for en tidlig oppstart
B30 A27IPD1
(On HR) Det her kommer til å være veldig businesstankegang på det, der man leverer en opplæring som
gjør at, akkurat som man lærer opp arbeidere i en fabrikk, for å sette det på spissen.. Så det kommer ikke
til å være noen veldig stor grad av leveranser av spesialtjenester til arbeiderne, det tror jeg de
virksomhetene kommer til å være alt for små og svake til å håndtere.
B30 A23ECJ1
Paid two times in a month, so that they can survive continuously.
C15. The Entrepreneur and Team
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B08. The
Entrepreneur
and Team
B08 A03IKG1
Entreprenører er veldig like mtp drivet som trengs, kan virke som om flere "vanlige" entreprenører er
sosiale pga dette
B08 A03IKG2
Vanlige gründere og sosiale gründere er veldig like. Eneste forskjellen er på hva de har fått ideen sin på.
Sosiale: Fikse samfunnet. Vanlige: Fokus på ny teknologi osv.. Begge må ha samme driven for å kunne
lyktes!
B08 A03IMB1
So it’s not enough to have just a dynamic, very socially driven background, you have to have god
business model and you have to have a good team, but you also have to think about this and be ready to
really think through these challenges as you go along, and see social and financial as being really
complementary rather than in competition.
B08 A03EVF1
Our leader, a very driven leader who LOVEs to go to Africa and go to rural and poor communities and
stay there and learn about their problems, and try to come up with a way to make a difference in
people`s lives. For us I don’t think we would have been AS successful if we did not have such a visionary
leader and if we did not have someone in the top of the company who was willing to make the personal
physical sacrifice to learn about the challenges that the least fortunate people in the world have. And
come up with a way to both make a difference in their lives, but also to make a profit and create a
business that is successful and employs a lot of people of around the world and makes a difference in the
lives of real people. It is really thanks to (main founder) that we are the company we are today. Without
a doubt the driving force of the company.
B08 A03IPD1
Vi ønsker å jobbe med folk som er på bakken og som kjenner forholdene, og som viser at produktet
fungerer i markedet
B08 A03IMB2
So really the most critical thing is you should make sure you have a successful business, and all the
elements of that which you have probably studied, you have to have really a strong founder or
team(…)It’s all the same element that you’ve studied in entrepreneurship that makes any entrepreneur
successful.
B08 A08IKG2
"Hvis du ikke er opptatt av penger, vil du ikke lykkes!" bold statement, men som har noe sannhet i seg
B08 A15IVS2
Idea is 1%, executability and passion is the most important
B08 A15IVS3
Preferably entrepreneur with experience in the relevant field as well as entrepreneurial experience
B08 A15IVS4
Team is also important: Always bring someone with business capability along!
C16. Resources
B22. Resources B22 A05ATJ1
One is that in a developing country, the technology that is deployed, in many cases, but not in all, may
not be technology that is at the frontier of technology, the best possible available technology. So there
would be considerations of cost, there will be considerations of inability or some pressure to cut back on
the initial capital investment.
B22 A16IVS 1
Most investment objects found through networking
B22 A36ODV 1
In urban areas energy consumption is high. The same is the value addition created, while the human
input in terms of work is low, compared to in rural areas where human input is high, but energy
consumption is low. The takeout is that to empower rural areas, they need access to reliable, cheap
energy, as well as enabling technology.
B22 A12ERB1
But since the last two years, from the district administration, we have not received a single penny. A very
small amount of money we collected from the local add. Third one is DA`s internal projects where they
need communication support, for their projects and create awareness generation and information
generation in their projects areas, they approach us. And we produce programs, and radio spots for
them, and they pay us.
C17. Social Impact Projections
A22. Social
Impact
Projections
A22IMB1
One of the things I would say is that it’s hard to make social projections in terms of the impact, it is
easier to make social projections around the inputs.
21
“I’m going to make sure that X number of people now have an actual toilet to use in the morning.” It’s
those types of thing that we see are the easiest ones to start out with.
C18. Originality of Business Model or Concept
B02. Originality
of business
model or
concept
B02 A11IPD1
Men noe av det som er veldig viktig, synes jeg, med impact first investering generelt er jo at man bidrar
til å bevise nye forretningsmodeller. Og vise at det går an å lage en kjede med low cost, high quality for
profit schools i slummen i Nairobi. Da ser folk at jøss, går det kanskje i Bombay også, det er ingen grunn
til at det skal kunne gjøre det.
B02 A01IMB3
before you even talk about some of the common elements of social venture I’ll say that they are as
diverse as starting a business in all those different areas, it’s not like starting a social venture in health
and education are exactly the same thing, they are just as hard an different as starting a health or
education business anywhere else in the world and making sure they’re successful.
B02 A34IMB4
You have to be ready for working in tough markets, solving problems that no one else has solved, dealing
with external stakeholders that are going to make, you know, your life harder and maybe potentially un-
savvy, although not as un-savvy as you think, customer base
C19. Sources of Funding
A12. Sources of
Funding
C20 A12IMB1
social ventures actually need some soft money to begin with, which is some long term low-interest
loans, or some grant money to get over a hurdle in some particular areas before they go out and look for
investors, but they really should look for investors that are likeminded with themselves so there aren’t
those conflicts early as the organization is really trying to solve you know, the key challenges of going
from being a small company or start-up to a successful medium sized or large company, and these are
issues than any company has.
C20 A12ERB1
But since the last two years, from the district administration, we have not received a single penny. A very
small amount of money we collected from the local add. Third one is DA`s internal projects where they
need communication support, for their projects and create awareness generation and information
generation in their projects areas, they approach us. And we produce programs, and radio spots for
them, and they pay us.
C20 A12ERB2
One source of funding is local market, one source of funding is internal projects. Internal projects has
need for origination. And a third is, we are approaching some other external funding agencies also, those
funding agencies are also giving some funds to us.
C20 A12IVS1
Money comes from founders.
C20 A12IMB2
If you really want to be successful you must have a good model, you must know your customer, but you
also must be scalable, that means having a business that’s scalable in how you operate and how you
design your ability to expand, but also being able to attract the capital to be able to expand. And so it’s
an ongoing conversation, and one that gets trickier over time, depending on what business you’re in.
C20 A12IMB3
this is also a big consideration for an entrepreneur when they are looking to raise funds, because this is
something that has been questioned in the micro finance industry, is that you want to make sure that
the goals of your investor are aligned with the goals of your organization, so when you face these hard
choices that it doesn’t become a trade-off, it becomes something where you can find the best choice for
the organization without having to be at odds with your investors, essentially get voted down eventually
on how you run your business. So it is very important for social entrepreneurs to think about who they
bring in, especially early days
A14.
Investment
Model
C20 A14IVS1
Investment criteria:
· I utgangspunktet: Any business is good business.
· Men: Money is for startup help and growth, not running
C20 A14IKG1
De får ingen eierandeler, men en kontraktsrettet plass i styret i bedriften. I så måte er de ikke investorer,
men mer et styrende fond som hjelper med støtte både finansielt, nettverk og med kompetanse, kun til
oppstarter i Norge.
C20 A14IPD1
Og det er noen ulemper med å bruke donasjoner, ikke sant, at hvis man jobber med modeller som
trenger kontinuerlig påfyll av donasjoner for å fortsette å vokse, så begrenser det hvor store de kan bli.
22
C20 A14IVS2
No high-capital investments
C20 A14IPD2
Yes. Det har formål som et tidsbegrenset subsidie for å få et marked til å begynne å virke. For fattige
mennesker.
C20 A14IPD3
Så en av de tingene vi har jobbet mye med i det siste er hvordan kan vi gjøre mere kommersielle
investeringer med *gjeld og egenkapital*-instrumenter for å fortsette å skape impact, men å gjøre det
på en måte der vi kan få penger tilbake, og bruke de på nytt, og der man kan skape virksomheter som
kan vokse gjennom at de tjener penger og reinvesterer de pengene, og kan etter hvert tiltrekke seg
større kapital.
C20 A14IPD 4
Vi vil jo kalle oss selv impact investors, og der er det jo en veldig glidende overgang, fra veldig impact
first til nesten helt vanlige investeringer, bare tilfeldigvis i en sektor som kan være litt samfunnsnyttig.
Så… ja, hva er det man vanligvis bruker? Det skal være en intensjon om å skape noe positivt for
samfunnet. Jeg tror kanskje det interessante begrepet for meg er det med ”impact first investor” der jeg
mener at da skal man være villig til å gi avkall på avkastning for å skape en impact. Ikke nødvendigvis at
man får dårlig avkastning, men at man er villig til gå inn i ting som målt utifra rent investeringsmessige
eller finansielle kriterier ikke ville vært fullt godt nok. Og sånn er jo fondet vårt også, det er ingen som
kommer til å gå inn i det her primært fordi de skal tjene mest mulig penger. Ingen som kommer til å
gjøre tregangern på de pengene, og risikoen, nedsiden, er stor. Samtidig så er det disiplinert nok at det
definitivt kan levere en positiv avkastning, men ikke sant, man skal ha det som mål, men ikke som det
overskyggende målet.
C20 A14IPD5
Da har han bygget opp over tid, og unngått å hente inn andre investorer. Da tar det jo også litt mer tid å
vokse. Da får man en veldig fin modell for å hjelpe de menneskene.
A18. Stuck in
the middle of
financing
C20 A18EJF 1
Unrestricted/risk funding is our main challenge. We’re a tech company that doesn’t offer venture capital
financial returns. Donors aren’t used to investing in new technology. Much easier to sell our tech once
it’s built and operating
C20 A18IPD1
mye av den interessen rundt impact investing kommer jo fra veldig sånn kommersielt tenkende miljøer,
pensjonsfond som tenker at ”våre kunder har sikkert lyst til å begynne å allokere noe av sin
pensjonssparing inn i den typen produkter etter hvert”. Men, de skal jo ha høyest mulig avkastning!
C20. ROI
A07. ROI A07IMB1
You would find in good, healthy micro finance businesses that it was not hard to get a good 20 – 25%
return.
A07IMB2
whereas if you’re truly into these earlier stage impact investments, you may have to be in there for ten
years before you start to see returns and the complete return on your investment and the profits you’re
thinking about, and the secondary network to by your shares at some price that you feel is going to give
your investors a reasonable return.
C21. EXIT Opportunities
B05. EXIT
Opportunities
B05 A17IPD1
EXIT-markedet er såpass dårlig at man kan liksom ikke regne med det på en hel portofølje. Så derfor
investerer vi i instrumenter som betaler seg tilbake, dvs. for kanskje et lån med en konverteringsrettighet
til egenkapital i tilfelle salg. Men hvis det ikke blir et salg, så får man i alle fall tilbakebetalt investeringen
sin med rente. Og hvor man kan legge inn standardmekanismer også for å få en viss oppside på det her,
selv om det ikke blir et salg av selskapet. Så det er tankegangen der, så det er egentlig å hente… Hvis
selskapet går bra finnes det da nok cash i selskapet til å kunne tilbakebetale de investeringene ikke sant.
B05 A17IPD2
Det er et interessant tema, for det er ikke lett å få omsatt den her typen typen selskaper som vi snakker
om, det er ganske tidlig fase selskaper. Som ikke er modne for å gå på børs for å si det sånn. De kommer
nok fortsatt til å være litt for små, mange av dem, innen den tidsrammen vi opererer med til at de kan
tiltrekke seg kommersiell private equity *?*. Så ja, det vil komme til å være EXITs i form av salg til *?*
eller til industrielle spillere i noen tilfeller
B05 A17IPD3
Ja. I enda større grad en i grant portoføljen, for her vi en forpliktelse til å levere penger tilbake til
investorene, og da er vi nødt til å ha veldig klare tanker om hvordan pengene skal komme ut igjen fra
23
selskapet.
B05 A17IMB1
Micro finance is really struggling at the moment, which seems to have shed some doubt on whether IPO
is a suitable exit for a social venture. Exits in social entrepreneurship is still a major question.
B05 A17IKG1
En EXIT, er derfor ikke et salg av konseptet, men målet er at de skal kunne drive selv. Ferd skal ikke tjene
penger på prosjektene!
B05 A17IKG2
Kun to av de 7 prosjektene som har noen som helst mulighet til en tradisjonell exit..
B05 A17IMB2
This is the number one question in India right now. What are those exits? You started to see that with
the first IPO of micro finance in India, that created a lot of backlash. There have been some secondary
purchases so early investors selling off to later private equity firms in micro finance, but this is a huge
question in social business.
B05 A17IMB3
And think about the fact that there will at least be a secondary market for that part of the company as it
grows and becomes successful, even if it never goes on the public market
B05 A07IMB2
whereas if you’re truly into these earlier stage impact investments, you may have to be in there for ten
years before you start to see returns and the complete return on your investment and the profits you’re
thinking about, and the secondary network to by your shares at some price that you feel is going to give
your investors a reasonable return.
24
Appendix 2a: Letter of Explanation to Reviewers
Background
As proposed and recommended by management literature, lecturers, consultants and practitioners
worldwide, the first step towards realizing any business idea should be to conduct a preliminary
feasibility analysis, the conclusion to which will be one of two outcomes; 1) Carry on, usually the next
step will be a more thorough analysis and business plan; or 2) Rethink or discard the idea. The analyst
can choose to employ a number of existing models and tools, and the focus is primarily on the
financial feasibility of a proposed concept.
Concept
It is the fundamental premise of our Master Thesis that new tools are needed to assess the feasibility
of technology based social business concepts, ranging from non-profits to for-profits and everything
in between, in order to capture intended non-monetary value creation. This presumption is based in
theory as well as empirical findings from interviews we have conducted in India, Norway and also the
US (via internet). Our findings revealed that social entrepreneurs need to address the following
topics more thoroughly than what is common among entrepreneurs today:
? The differentness of the target market as opposed to the reality of the entrepreneur and/or
innovator, including the need to fully understand the problem to be solved, and the context
and preconditions of the user.
? The creation of non-monetary value in interaction with all stakeholders, not only the
customers and investors, but whole communities within which the organization operates.
? The measurability of the social impact of the organization.
? Potential hazards of the proposed business concept.
We therefore propose 7 models and tables to facilitate feasibility analysis of technology based social
business concepts. These models vary in complexity, as well as foundation. Some models are existing
models we have borrowed from established academics and placed in a new context. Some are
combinations of existing models and theoretical constructs, while a few are models of our own
design, based on empirical findings as well as theory. For our thesis, we have chosen to focus on the
areas of technology/product, and organization, and less on the market/industry and finance. The
overlaps between these areas and our focus areas are, however, significant.
Status quo at the time of analysis may differ greatly, from napkin sketch stage, to having a
functioning technology and exploring ways to commercialize it, to having launched a new
organization, and wishing to take a step back and evaluate ones options. The relevance of each tool
will therefore vary between analysts. However, as we are predominately experienced in early stage
analysis, and also intend these tools for early stage analysis by other students of technology based
entrepreneurship, this has been the main focus of our development.
25
Review
We sincerely hope that you find the above stated concept interesting enough to have a look at the 5
slides included, which show the proposed analysis tools. The slides include short accounts of
theoretical grounding for each model. We kindly ask you to do one or more of the following:
? Examine the models and determine whether they
o Make sense to you
o Add value to a feasibility analysis
o Have obvious strengths and weaknesses
? Suggest changes and improvements to the models
o Through written descriptions
o Through sketching on the slides either digitally, or by printing and scanning
o Through recommending alternative literature, websites or other references
? Suggest other areas of feasibility analysis that are in need of innovation
We are very grateful for all contributions to our Thesis, and hope you have the time to provide us
with feedback on our work so far. Due to dead-lines placed upon us by the university, we must ask
you to send us your response via e-mail ([email protected] or [email protected]) as soon as you
are able, and preferably before May 20
th
. We apologize for the short response time.
Best regards
Ida Eikvåg Groth and Line Magnussen
Graduate Students
NTNU School of Entrepreneurship
26
Appendix 2b: Review Slides
27
28
29
30
doc_247144050.pdf