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What is a Social Venture?

cca_logo On Saturday night, Steve Diller, a founding faculty member of the Design for MBA program at the California College of the Arts, hosted their annual Social Ventures dinner and  invited myself,  Adam Elmaghraby, Director of Social Invention at Kumu and Leticia Landa, Programs and Development Manager at La Cocina, a business incubation program for immigrant women in the food service industry, to participate in a panel fundamentally asking the question “What is a Social Venture?”. The conversation was really interesting given the degree of participation by the students in the audience and the unique experiences of my fellow panelists.   What follows are outtakes from that discussion:

QUESTION: Broadly speaking, what is a social venture? 

A business with social benefit as a lens for developing products and services designed for transactional consumption and the single source of business revenue.  Social benefit equates to serving a population that is otherwise marginalized to the extent it is unable to realize their potential as a participant in a community’s eco-system.

QUESTION: How has it changed as a concept over the years?

Market forces have created both the demand and the opportunity for a social enterprise to become self-sustaining.  We live in a time where our social problems are more evident.  We have a talent pool who sees opportunity and in some cases have been forced into creating businesses that differ from traditional models.  Institutional aid and business frameworks (such as agricultural subsidies that effect school lunch programs and banks that rely on their fees and services as revenue sources, while simultaneously contributing to the inequality gap) are missing broad slices of the widening economic gap.  With unique and more widespread access to funding via crowdfunding platforms and venture capitalists who are looking for innovative ideas, we’ve created a market place that is supporting the momentum behind thinking about social enterprise differently.

QUESTION: Is this the future of social enterprise?

Not exclusively.  Organizations like La Cocina are leveraging their 501c3 status to provide much needed opportunities to help develop and build the skills of their clientele.  Their business model is sound in that it earns over 50% of their revenue, minimizing dependencies on fluctuating donor contributions and grants and providing more predictive growth for their programs.

QUESTION:  Provide an example of a social venture that represents the future of this type of thinking.

Revolution Foods started in schools to get health, kid-designed lunches into every kid’s day.  They serve 1 million meals a week and 80% are going to kids who are on free and reduced cost meal programs.  The lunges work within the school’s cost structure and they’ve even been able to start packing the lunches for grocery stores.

QUESTION: How central is the idea of “under-resourced” or “disenfranchised” groups of people to the idea of social ventures?

100% central.  It’s the singular lens for social wealth creation, looking at disenfranchised audiences as either labor pools or as the audience for goods and services.

QUESTION: What makes for a successful social venture?

Products and services for sale.  Understanding the needs of the target audience in developing the product.  And a relentless focus on the performance of the product or service as the key driver of purchase.  We need to act as if the target audience has a choice and engage them as much as we do with a “traditional commercial product”, like a Nike shoe or your favorite brand of lotion, to deliver consumer value.  Revolution Foods could have just created healthy lunches but their goal was to create lunches that kids liked.  One of their core tenants was “kid-designed”.  This is understanding your audience and thinking like a competitive product.

QUESTION: It could be argued that Grameen’s business models were not bullet-proof to scaling, can social ventures scale and still be effective?

New legal and accounting metrics help to protect the values and operational integrity of a company with a social mission.  However, La Cocina does not want to scale so perhaps this is not the right way to look at the impact that a social venture can have on the economy.

QUESTION:  What stands in the way of being successful?

Getting trapped in the charity mindset. Social ventures do not need to succeed simply because they have social value.  It’s important for those running the business to seek relentless performance attributes in their products.   Creating a product that is competitive is critical.

QUESTION: Where are the greatest opportunities for social ventures to have an impact? 

Domestically and abroad the answers are virtually the same.  Healthcare – programs to help people proactively manage their health issues, prevent the conditions before they start, childhood obesity, affordable nutrition and healthy habit lifestyle products that target economically challenged urban and rural populations.  Also education and job training, targeting slivers of the population that don’t have access to education,  job training and financial planning or resources.   Basically looking at fundamental areas that help return dignity and a sense of ownership over their own futures.

It was a fun night with a clearly engaged group of 4,5 and 6 year design cohorts that chose to come spend a precious Saturday evening with us.