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  •  When Operations = Value Creation

    Tuesday, Feb. 10, 2015

    From 2003 to 2010, I worked closely with the World Bank Development Marketplace (WBDM) as a workshop presenter or judge of social enterprises for award recognition. Through these years, however, my primary purpose was to identify finalists who were a good potential fit for the Global Social Benefit Institute (GSBI®) at Santa Clara University. One day, while tallying my notes on WBDM finalists, sorting through social entrepreneur grant applications, I had an epiphany.

    Here I was, a guy from Silicon Valley, and I realized less than ten percent of more than a hundred finalists represented organizations with innovations that had anything to do with technology. A few, like Smallholders Farmers Rural Radio in Nigeria, a GSBI 2009 alum, had localized technologies that were not leading edge—in this instance a combination of radio and internet for communicating indigenous and scientific knowledge, but what distinguished finalist candidates was for the most part process innovation. Less than thirty percent had developed what could be considered product or service innovations, while fully sixty percent of finalists represented ventures that were essentially selected on the basis of process innovations. In many instances their efforts involved bricolage or the use of locally available resources and low skill labor.

    One could posit that this involves making due by improvising within enormously constrained environments. In reality what we were witnessing then and in the example of a small number of enterprises like Smallholders Radio was just the beginning of new waves of innovation driven by constraints. Fast-forward to the GSBI Accelerator in 2014 and observe the work of organizations like Esoko, Medical Technology Transfer Services (MTTS), and iKure. What we see today is significantly greater levels of applied technology innovation through networks that combine global and local knowledge.

    For example, Esoko is making use of technology to significantly enhance African farmer incomes. MTTS is designing affordable medical technologies to drastically reduce infant mortality in Southeast Asia. iKure is integrating systems to connect the poor to quality health delivery systems in rural India. In each instance, process innovation in operations is the lynchpin in value creation.

    Business models are important, but in reality they are derived from bundles of value creating processes. Put succinctly, operations = value creation in each of these exemplary ventures. There are numerous and well documented voids that exist in Bottom of the Pyramid (BoP) markets and their associated ecosystems—from the lack of established supplier networks or financing, to distribution, and the transaction capacity of one-to-one market exchange mechanisms in the informal economy. These voids require process innovation up and down value chains. They often require BoP ventures to become far more vertically integrated than their counterparts in developed markets.

    For instance, organizations like Grameen Shaktee and Iluméxico that provide solar home systems to individuals who are off the grid must develop processes for gathering primary market intelligence data, product definition, partner selection, component acquisition, assembly, distribution, social marketing, sales, micro-financing customers, and after-market service.

    The list of process innovations required for the delivery of affordable eye care is similarly long for providers like Aravind and Sankara.They must innovate across processes for: community and patient outreach; high volume screening, surgery, and recovery; the recruitment, training, and integration of para-skilled staff in radically re-engineered workflows; and, tiered pricing models that enable the delivery of world class surgery to a majority of patients for free.

    In addition, they must develop medical research partnerships, manufacturing and supplier alliances to reduce the costs of lenses, ophthalmology technology, and medical supplies, and university collaborations to develop information technology applications for increasing the reach of delivery systems through telemedicine. As in off-grid energy, sustainable and scalable business models in healthcare can only be derived from value creation in these and other operations.

    From the examination of numerous cases across other vertical sectors a similar story emerges. The DNA of successful BoP organizations can be found in innovative operating routines and their associated metrics and systems of accountability. These routines combine the efficiency and reliability of repeatable processes with the capacity for continuous improvement. They are executed by individuals who are carefully selected for fit with the organization’s mission—perhaps the most important value creating operating process of all.

    This leaves us with some fundamental questions for examining the degree to which operations contribute to the sustainability and scalability of an organization:

    • Does each operation add value for beneficiaries?

    • Does each operation contribute to declining costs with volume?

    • Do boundary spanning operations that involve partnerships or alliances create value or lower costs?

    • Can operating routines be replicated in different locations or by different personnel with the same or better price/performance results?

    If your organization can answer questions like these in the affirmative, then it’s likely your operations are creating value that can lead to sustainability at scale and perhaps long term competitive advantage as you chart a path that catalyzes markets where none existed before.

  •  A New Solidarity

    Tuesday, Sep. 2, 2014

    James L. Koch

    Senior Founding Fellow, Center for Science, Technology, and Society

    Don C. Dodon Distinguished Service Professor of Management
    Twelve years ago I joined small group of approximately 40 mayors, international NGO leaders, and senior World Bank officials for a meeting with Pope John Paul II.  It was five years after the founding of the Center for Science, Technology, and Society at Santa Clara University and six months after the launching of the Tech Awards—Technology Benefiting Humanity.  It was also just eight months after September 11, 2001. For me, the takeaways from this Rome meeting mirrored the sense of humility and hope embodied in the network of inventors, corporate leaders, venture capitalists, pioneering practitioners, and World Bank Development Marketplace officials that had been drawn to the mission of the STS Center back home in Silicon Valley.
    In this meeting Pope John Paul called for a new solidarity as an essential condition for human progress in the context of mass global migrations to cities. Today, after more than a decade of work vetting thousands of technology innovations for their potential social benefit impact, hands on mentoring with hundreds of social entrepreneurs, and continuous engagement with a global network of practitioners, the broad outlines of a new solidarity are beginning to emerge.  But first, Pope John Paul II, in his own words from May of 2002:
    “A city is much more than a territory, and economic productive zone, a political reality. It is above all a community of people, and especially of families with their children.  It is a living, historically rooted, culturally distinct, human experience. Those who exercise administrative and political control over it have weight responsibilities for the common good of the people, human beings graced with inalienable dignity and rights; just as citizens have important duties toward the community.
    The ethos of a city should be marked by one characteristic above others, solidarity. Every one of you faces serious social and economic problems which will not be solved unless a new style of human solidarity is created.  Institutions and social organizations at different levels, as well as the state, must share in promoting a general movement of solidarity between all sectors of the population, with special attention to the weak and marginalized.  This is not just a matter of convenience.  It is a necessity of the moral order, to which all people need to be educated, and to which those with influence of one kind or another must be committed as a matter of conscience.
    The goal of solidarity must be the advancement of a more human world for all, a world in which every individual will be able to participate in a positive and fruitful way, and in which the wealth of some will no longer be an obstacle to the development of others, but a help.”
    A new style of human solidarity and a general movement of solidarity between multiple sectors for the advancement of a more human world for all are now visible across the 2014 landscape. The messy process of entrepreneurial activity focused on the development of sustainable market-based solutions to the most daunting and urgent issues of our time is a transformative change in business mindsets—one that values human progress and social impact over short-term profits. 
    This bottom up process is part of a powerful convergence of three trends:  triple bottom line business mindsets; friendlier government policies like B-corporation statutes; and, a growing consensus in development economics that aide and welfare without human agency and market mechanism are insufficient to alleviate global poverty. While not to diminish the shrill headlines of regional crises and human suffering, several factors provide encouraging evidence of a general movement of solidarity between all sectors for the advancement of a more human world for all.  
    The BoP movement framed by the pioneering work of C.K. Prahalad and subsequently documented as a market opportunity by Al Hammond and his colleagues has evolved since 2002 from small number of case studies to literally thousands of bottom up experiments around the world.  There are over 3,000 Ahsoka fellows alone. 
    Through formalization of the tacit knowledge from this bottom-up experimentation radically new approaches to technology and business model innovation are being diffused to practitioners, universities, and businesses around the world.  The network effects of this diffusion is spreading viable solutions, creating the economies of scale to stimulate new and complimentary capabilities up and down previously nonexistent value chains.  For example, in the off-grid energy space, Beyond the Grid, a joint US-Africa initiative is leveraging the falling cost of renewable energy generation, advances in storage, smart meter and mobile payment technology, innovative business models, and new distributed energy companies.
    The current Fourth Sector Mapping Initiative of the Urban Institute is documenting the emergence of new models of shared value enterprise—from pay for performance public-private partnerships, to hybrid social businesses, community based co-ops, and B-Corporations.  In May of 2002, there were no B-Corporations; today there are more than 1,000.
    Sector wide collaborations are focusing resources on the need to catalyze ecosystems and develop holistic solutions.  The previously mentioned Beyond the Grid initiative has brought together 27 private sector partners to expand access to clean, affordable energy to 240 million people in the rural and peri-urban communities of Africa.  This collaboration spans investors like Capricorn, Gray Ghost, and Khosla Impact, as well as companies like Schneider Electric, and distribution businesses like Solar Sister which is expanding its last mile network of women entrepreneurs to provide energy access to more than 400,000 homes.
    There is an increased readiness on the part of financially strapped local governments to embrace public-private partnership and pay-for-performance social business solutions as more cost effective alternatives to the provision of essential government services.
    Innovations in social sector finance are facilitating the aggregation of capital to support the growth financing needs of promising social mission enterprises and leveraging network effects to expand geographic reach or deepen penetration in regional markets.  Of particular note here is the work of John Kohler in the Center for Science, Technology, and Society at Santa Clara University.
    The Social Progress Index, developed under the leadership of Michael Porter, was launched in 2013 as a common way of measuring multi-dimensional progress in human well-being across nation states and over time.  It is a robust and empirical measure of the degree to which our institutions are adapting to address the complex and urgent needs of humanity.  In some respects it is a proxy for our collective intelligence about how to live more sustainably, justly and peacefully on this earth.  In a number of instances these and other measures, like the World Bank’s poverty line threshold of $1.25 a day, suggest that our trajectory of learning and progress is increasing.  By the latter measure the United Nations 2014 Millennium Development Goals Report concludes that the portion of the world’s population living in extreme poverty halved between 1990 and 2010. 
    However, when medical research on minimum nutrition requirements, to say nothing of education, clothing, shelter, and transportation, are taken into consideration this penury baseline guarantees at best a wretched existence. 
    “In his 2013 book “The Great Escape,” the Princeton economist Angus Deaton argues that poverty measurement is ultimately a question of democratic consensus, not scientific calibration—a continuing exercise based on what is acceptable to policy makers and the public, including the poor themselves” .
    Answering the question of how to advance “a more human world for all, a world in which every individual will be able to participate in a positive and fruitful way, and in which the wealth of some will no longer be an obstacle to the development of others, but a help” (Pope John Paul, II, May 2002) is a moral imperative of the highest order. 
    While the hope of a new solidarity may appear to be within our grasp, progress will depend on our ability to muster the financial, human and social capital needed to address complex challenges both on the ground, in the pioneering work of social entrepreneurs, and at institutional levels. While much has been learned, so much more remains to be learned.  Ultimately, we may find that humility and the subtle processes of consensus building, collaboration, and humble inquiry will be our greatest assets.


  •  GSBI Welcomes Pears Challenge

    Thursday, Feb. 27, 2014

    There are 3.7 billion people in the world living under $3 a day, representing a largely untapped market with an estimated $5 trillion in purchasing power waiting for quality products that improve their lives. Israel’s entrepreneurs are admired all over the world for their ability to innovate beyond their borders, and it is the marriage of this innovativeness and desire to serve others that has led the Pears Innovation for International Development Program at the Hartog School of Government and Policy at Tel Aviv University to launch the "Pears Challenge" in partnership with GSBI.

    The Pears Challenge seeks to identify, support, and nurture the talent of entrepreneurs devoted to alleviating poverty in the developing world through innovation. The Challenge will support up to ten teams of Israeli entrepreneurs addressing challenges rooted in the fields of health care, education, agriculture, water, energy, and ICT.

    Over the course of the three-month program in Tel Aviv, the teams of entrepreneurs will gain valuable insights on building a sustainable and financially successful business that will impact the world's poorest people. Then, select participants will win trips to the developing world to further implementation of their innovations.

    Rather than designing their program from scratch, The Pears Challenge decided to join the GSBI Network and leverage the proven GSBI Online curriculum and platform.  Thanks to the financial support of Grand Challenges Canada, the GSBI team has been working with the Pears Challenge to develop a program that will be delivered from March to June. GSBI Director of Strategic Alliances, Pamela Roussos, will travel to Israel in April to contribute as a mentor and subject matter expert.

    We are pleased to share our first-hand experience and in-person guidance to propel this noble effort forward.  Together, we take another step towards meeting the needs of all.

  •  eBay Partners with the Center to Benefit Social Enterprises in Bay Area and around the World

    Tuesday, Dec. 17, 2013

    Last week, the Center for Science, Technology, and Society formalized a deeper partnership with the eBay Foundation to scale the impact of high-potential social entrepreneurs through the Center’s Global Social Benefit Institute (GSBI®).

    The eBay Foundation will sponsor two social entrepreneurs in the soon-to-be announced 2014 GSBI Accelerator program as well as 15-20 earlier stage social entrepreneurs in a custom built 2014 GSBI Online cohort. The social entrepreneurs receiving eBay support will be selected for their potential to maximize social impact through increased income generation, access to markets, and local employment. Given eBay's goals, there will be a focus on entrepreneurs from Brazil, India, and China. With hands-on mentorship and a refined curriculum, the Center will take social entrepreneurs to the next level, help them scale their enterprises, and attract funding.

    Additionally, with eBay Foundation’s support, the Center will begin to work with local social enterprises. The Center will pilot a GSBI “Boot Camp” for Bay Area Social Entrepreneurs. This will be comprehensive two-day training for 8-12 social enterprises, which are dedicated to improving the livelihoods of the disadvantaged or underrepresented populations in the Bay Area. The boot camp will help them grow their enterprises in a financially stable and sustainable way.

    More information about these programs will be forthcoming in 2014.


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