Having spent half of my Sunday in Asia's formerly biggest mall (in 2006 when it opened, the name "Mall of Asia" remains as a statement. It's actually the 10th biggest in the world now, no. 3 and 4 of the World's largest malls are also in the Philippines...), and feeling flashed by the sheer size and offer (huge skating rink, its own tram system, marching bands, over 400 restaurants, ...) and the business concept behind this, here are some thoughts on the status of social business and profitability.
Like any successful business it should address unattended needs and leverage available resources. And it should help to address a social problem and be non-profitable, meaning being self-sustainable and re-investing. According to Mohammad Yunus (nobel peace price winner), "A charity dollar has only one life; a Social Business dollar can be invested over and over again." If you look at the social businesses we are currently supporting, they fit well into this picture:
Need: No central electrification grid; many People without electricity.
Resources: many days with regular sunlight
Solution: Bring electricity to people with solar lights. -> Solar Energy Foundation
Need: De-central financial system (both infrastructure + distribution of wealth); rural areas with no access to banks
Resources: small stores to satisfy basic needs (Sari-Sari) in rural areas; good mobile phone infrastructure
Solution: Help to facility money transfers from the cities to rural areas via Sari-Sari stores and mobile money transfers -> Happinoy
Need: People without access to education and jobs; market gap/desire for all-natural household items and cosmetics
Resources: People, recipes
Solution: Employ people to produce all-natural household products and sponsor their education -> MessyBessy
Need: Artisans without jobs; market gap/desire for high-quality local products and for social support (buy something nice & useful AND support a good cause -> good reason to buy)
Resouces: artisans, their ideas, skills and products
Solutions: Give artisans a fixed income by creating and selling articles that people like -> Rags2Riches
So if the formula is so simple, why is this not spreading like a virus? Obvious reasons are lack of initial or continous regular funding and that most people want to make money and not re-invest every penny to help someone else.
Some others are, and this is something that is common to all of our clients, the difficulties in scaling up.
1) How to get bigger and remain efficient?
2) How to get bigger and secure the livelihood of those you are supporting (e.g. get sufficient funds on a regular basis)?
3) How much to invest in "necessary evils" such as IT infrastructure, administration, marketing & sales, customer relationship management, Controlling, ... which is, in overhead costs that make a social business less attractive to employees (as they want to work in the field and help rather than filling in xls sheets and filing reports) as well as donors (as they want every cent to go directly to the needy)?
4) What is the "right" size for a social business if it's about maximizing impact and not making money? Or is making more and more money the prerequisite for maximizing the impact?
In any case, even though thousands are swamping the big malls on a Sunday, the Filipinos still have lots of needs (basic needs for quality of life, power/traffic/economic infrastructure, creating middle class businesses and demand, ...) , but they also have a huge pool of resources (qualified workforce, social media and BPO, low labor cost, natural resources, ...).
Only a few pics today:
Like any successful business it should address unattended needs and leverage available resources. And it should help to address a social problem and be non-profitable, meaning being self-sustainable and re-investing. According to Mohammad Yunus (nobel peace price winner), "A charity dollar has only one life; a Social Business dollar can be invested over and over again." If you look at the social businesses we are currently supporting, they fit well into this picture:
Need: No central electrification grid; many People without electricity.
Resources: many days with regular sunlight
Solution: Bring electricity to people with solar lights. -> Solar Energy Foundation
Need: De-central financial system (both infrastructure + distribution of wealth); rural areas with no access to banks
Resources: small stores to satisfy basic needs (Sari-Sari) in rural areas; good mobile phone infrastructure
Solution: Help to facility money transfers from the cities to rural areas via Sari-Sari stores and mobile money transfers -> Happinoy
Need: People without access to education and jobs; market gap/desire for all-natural household items and cosmetics
Resources: People, recipes
Solution: Employ people to produce all-natural household products and sponsor their education -> MessyBessy
Need: Artisans without jobs; market gap/desire for high-quality local products and for social support (buy something nice & useful AND support a good cause -> good reason to buy)
Resouces: artisans, their ideas, skills and products
Solutions: Give artisans a fixed income by creating and selling articles that people like -> Rags2Riches
So if the formula is so simple, why is this not spreading like a virus? Obvious reasons are lack of initial or continous regular funding and that most people want to make money and not re-invest every penny to help someone else.
Some others are, and this is something that is common to all of our clients, the difficulties in scaling up.
1) How to get bigger and remain efficient?
2) How to get bigger and secure the livelihood of those you are supporting (e.g. get sufficient funds on a regular basis)?
3) How much to invest in "necessary evils" such as IT infrastructure, administration, marketing & sales, customer relationship management, Controlling, ... which is, in overhead costs that make a social business less attractive to employees (as they want to work in the field and help rather than filling in xls sheets and filing reports) as well as donors (as they want every cent to go directly to the needy)?
4) What is the "right" size for a social business if it's about maximizing impact and not making money? Or is making more and more money the prerequisite for maximizing the impact?
In any case, even though thousands are swamping the big malls on a Sunday, the Filipinos still have lots of needs (basic needs for quality of life, power/traffic/economic infrastructure, creating middle class businesses and demand, ...) , but they also have a huge pool of resources (qualified workforce, social media and BPO, low labor cost, natural resources, ...).
Only a few pics today: