Entries in business model (28)


Mutuality reading recommendations

Mutuality is a concept that many are exploring, from various angles and under diverse names. We are interested in exploring the work of those outside of Catalyst who are applying their knowledge and efforts to develop these ideas.  Two authors have recently been recommended to us:

  1. Peter J. Boettke  is the Deputy Director of the James M. Buchanan Center for Political Economy, a Senior Research Fellow at the Mercatus Center, and a professor in the economics department at George Mason University.  Boettke is particularly interested in interdisciplinary work integrating politics, philosophy and economics.  He is associated with the Global Prosperity Initiative (GPI), which was founded to explore through ethnography and economic theory why some nations prosper while others are poor.  In addition to his published books and articles, his commentary can also be found here.
  2. Harry Barkema is a professor of management at the London School of Economics. Professor Barkema is also the founding Director of the Innovation Co-Creation Lab (ICCL) where currently 20 people work on fundamental research and teaching (MSc, PhD, Executive education). This research includes; how to design innovative teams, innovation communities around websites, innovative science parks & corporate campuses, and successful business model innovation in close cooperation with companies. One set of new initiatives focuses on business model innovation at the base of the pyramid (BOP), in cooperation with multinational corporations, NGOs, and local businesses in South East Asia, Sub-Saharan Africa, and South America.

-- Bruno Roche


Social entrepreneurship – new management theory or new marketing buzzword?

Social entrepreneurs, social enterprises – you’d be hard-pressed not to find these terms in recent headlines. Many businesses are starting to turn their attention and their dollars towards making a social impact. But are these terms simply new marketing buzzwords or part of a new management theory set to transform the corporate world?

In a recent Forbes article, Willy Foote, CEO and founder of Root Capital, a non-profit agricultural lender building rural prosperity in developing markets, set out to determine the difference between social entrepreneurship as a marketing buzzword and as a true management theory.

Foote turns to Sally Osberg and Roger Martin, experts in the field. Osberg, president and CEO of the Skoll Foundation, and Martin, a former dean of the University of Toronto’s Rotman School of Management and a Skoll Foundation board member, co-authored the book Getting Beyond Better: How Social Entrepreneurship Works.

The book explains that in its true form, social entrepreneurship doesn’t aim to replace an existing broken system. Rather, the enterprise takes direct action by leaving the broken system in place, with the ultimate goal being to transform it permanently into a superior and stable system. Take small-scale farmers in developing markets for example. A true social enterprise doesn’t aim to replace the existing system of workers, operations and supply chain management. Rather, the goal becomes providing financing and training so jobs are created and incomes increased, and as a result, related issues such as food insecurity, emigration and youth unemployment are addressed. A true social enterprise recognizes that challenges won't be solved overnight and that changing equilibrium takes time and patience. To become a true social enterprise, Osberg and Martin offer the following four-step management-style approach:

•    Understand the system in its current state;

•    Envision a future state;

•    Build a sustainable model for achieving the future state; and

•    Scale the model appropriately.



Google and Tata approach the last mile

A common hurdle for businesses--or initiatives of any sort--seeking to reach the broad base of consumers at the middle of the economic diamond is reaching people who have been isolated due to location, mobility issues, cultural barriers, or a combination of factors. You can have an outstanding product or service, but if your intended audience can't access it, it will fail in the "last mile" of distribution.

Google and the Tata Trusts recently rolled out a new initiative to overcome the barriers to women in rural India accessing and utilizing the Internet. I enjoyed this description of the project, “Internet Saathi” (saathi meaning friend in Hindi) at Tech In Asia.

In this case the keys to the approach are a fleet of bicycles, a cadre of trainers from local NGOs, and free advice to individual clusters of rural villages provided for several days a week over a period of months. Internet Saathi hopes to reach 45,000 villages and 5,000,000 women in rural communities over the next 18 months, and we will be interested to watch it's progress. In the meantime, we'd love to know your ideas about ways to overcome the last mile barriers you are familiar with.

Image source: Tech In Asia

-- Clara Shen


Monitoring and evaluation at the middle of the diamond

A business model shouldn't remain theoretical; if it's to be successful, it's costs, production and impact must be accurately measured. This applies to models meant to work at the middle of the economic diamond -- with emerging consumers worldwide -- as much as with new digital business models deployed in developed economies.

I enjoyed a recent NextBillion piece on measurement and evaluation because it reminds us that you need to take the time to develop the right metrics in order to get the most value from them.  In it, Heather Esper, program manager of impact assessment at the William Davidson Institute at the University of Michigan, reviews nine tips for M&E for "base of the pyramid" business models. These include:

  1. Metrics are essential to inform decision-making, understand impact, monitor progress toward targets and identify areas of opportunity.
  2. Many professionals now accept all assessment types (impact, process, performance, etc.) and methods (qualitative and quantitative) and use a range of these to incorporate multiple perspectives and types of indicators depending on their organizational needs and budget.
  3. Using assessment to create value works best when it is driven by the business or organization being assessed, as it ensures reporting is relative and in line with organizational goals.  
  4. Evolve with your metrics – as you grow and your metrics grow, they can become more robust and complex. Think big, start small. Focus on collecting data to answer priority questions and build your data collection from there.
  5. Be clear in the goals of data collection and the value you expect to extract from that data so that focus and clarity is maintained as you acquire data and use it.
  6. Assess only what you will use and what will bring value to the organization. This means you should have the capabilities to analyze the data, and be able to share the findings in a way that resonates with different audiences. This is a critical component to reaping the most value from assessment.
  7. Measure what you can actually affect – don’t measure for the sake of measuring, but ensure you’re measuring with good reason and in an area in which you can intervene. Having a theory of change can guide you in what to collect and what you don’t need to collect.
  8. Collected information can be valuable to internal and external organizations (data collected for a particular purpose can also be used to create value in other ways).
  9. Pay special attention to opportunities to deliver value to the research subjects through data collection. Do not merely extract data.

Image source:

-- Yan Toh



Another view on sustainable social business

We are very interested in the work that Erik Simanis is doing in the sphere of social business and new business models. Erik is passionate about social impact, and with an MBA and PhD in business strategy and sustainability, he has guided start-ups, green-field ventures, and product teams in Eastern Europe, Africa, India, and South America over the past 20 years.

As his work makes clear, he is not interested in vague notions of social responsibility or “shared value” that have no foundation in real-world business principles. We recommend two papers (both published in the Harvard Business Review) for an overview of Semanis' outlook and approach (click on titles for the full text):

  • Reality Check at the Bottom of the Pyramid -- "If companies wish to launch flourishing ventures capable of transforming the lives of millions of low-income people across the developing world, they must get back to basic business tenets. However laudable its mission, a business built on unrealistic expectations will fail just as surely at the bottom of the pyramid as in a developed market."
  • Profits at the Bottom of the Pyramid -- "Blinded by devotion to social missions, too many companies with grand ambitions overlook profitable opportunities that match their resources and skills and jump into ventures that overwhelm their capabilities. A more realistic assessment of the challenges at the bottom of the pyramid can help companies generate the profits that will make socially beneficial businesses sustainable over the long term."

While we may approach some of the practical challenges from a different direction, we share a commitment to rigorous measurement and building an approach to social business that is sustainable for the long term.

-- Bruno Roche and Clara Shen