This article appeared in Issue 3#5 (July/August 2009) of Business Franchise Australia & New Zealand
For society’s benefit, the Social Entrepreneur solves problems in the world at the root cause. This article shares how those in franchising can achieve a social and commercial impact in new markets by thinking beyond the norm.
Thoughtless vs Thoughtful Consumption
Do you consider yourself a thoughtless or thoughtful consumer?
While at a shopping complex you observe a female shopper slip and pull the trolley on top of her. Some people run to help; others stand and watch, waiting for someone else to help. What do you do? Do you stand and watch or do you jump in and help? If you are someone willing to jump in and throw personal energy at the solution to this situation, are you equally willing to help a person in distress you can’t see?
Now, as a businessperson, could you throw your energy into an idea that might save other people? Right now, someone in the world is waiting for you to be innovative and help solve his or her problem. Why? Because, while they’re in survival mode, they haven’t got time to think of solutions to their problems; they need to borrow your thinking, to create opportunity for them. This is the hand up vs. the hand out you can give.
Hand Up vs Hand Out
Imagine a franchise model wrapped around a solution to a problem in the world. The innovation is funded for profit, simply achieved through hands up Vs hand out approach. Let’s look at the trends in social entrepreneurship and see how franchises can accelerate the economy and grow economic self-reliance in underdeveloped communities.
Growth trends in Social Entrepreneur networks
Around the world organisations are emerging in the Social Entrepreneur space. Corporate Social Responsibility funds provide grants via bodies to Social Entrepreneurs. This practice finds its origins in the UN Global Compact. The UN Global Compact is a set of hyper principal guidelines for Corporations on how to behave in business and impact the planet and society.
The link to franchising is that these social venture organisations speak in terms of scale-ability and replic-ability and fund philanthropic projects that benefit the community
“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionised the fishing industry.” – Bill Drayton – Ashoka
“Social entrepreneurs come from all levels of society and from communities in nearly every country of the world. They all share the same underlying drive and passion to see their ideas through. Many of them have had a huge effect on the world, yet most people have not even heard of them – a trend we hope to change!” – Jeffrey Skoll – Skoll Foundation
Savvy consumers spend where they damage the planet and society least, or better still, where they can add an improvement. Now think about Paul Newman’s salad dressings. Since 1982, all royalties and after tax profits from his products have been donated to educational and charitable purposes. Now imagine if in the 2000s the focus was enterprise or franchise education in developing communities or the third sector?
According to Rosemary Hermans, head of research with Intercept Poverty, registered charities in Australia are at an all time high. She agrees that flipping to a ‘for-profit’ model is the next step in finding a sustainable balance between commerce and philanthropy. Rosemary says:
“My research has shown there to be over 700,000 registered charities in Australia. Charities need to apply ‘for-profit’ models if they are to going to compete successfully. Donors, from the individual to the private sector and government expect transparency, accountability and efficiency so that they know their donation is being effectively used. Charities must not only accept their growing orientation to business systems but balance this with their advocacy work and truly making an indent in the road to alleviating poverty for the world’s poor.
“Community members, businesses and charities in particular must not lose sight of the need to be resourceful and creative to improve the lives of over 1.4 billion people who still live on less that $1.25US a day. New approaches are needed. It is time to try the models Tanya is suggesting, knowing that aid and handouts don’t work for the long term and many other programs and approaches have so far failed.”
Franchising an Economic Accelerant
“While the heart of the social entrepreneur is to dedicate their entrepreneurship to social impact, franchising is an economic accelerant. And when the economy needs stimulus, common sense would say to inject capital wherever possible and foster enterprise.” – Tanya Lacy.
The franchise originates solutions and seeks to commercialise the solution, leveraging its experience from the commercial world. There are many benefits to a franchise brand investing time in solving a problem in an under developed market and being a social entrepreneur.
Developing ‘Intra’ preneurs
View the franchise brand as adopting a ‘social entrepreneurship’ mantra. Individuals within the brand take the charge. These people could be regarded as ‘intra preneurs’: showing initiative; innovation; creative expression within a context; and problem solving for the benefit of many.
BoP markets and ‘BoP’reneurs
The BoP Market means the bottom or base of the pyramid. This area of the worlds market is often overlooked; yet it’s where populations are greatest. In the future, branches of franchise brands that serve this market can expect a huge opportunity and return.
While working with the BoP Market is different, the optimist, problem solver or ‘BoP- reneur’ will be in their element. The opportunities are literally endless.
Solution based products
Briquettes from biomass: Manufactured by compressing biomass, leaves and twigs etc are compressed into briquettes. These replace coal and eliminate noxious smoke fumes that affect villagers. This product was funded by Acumen fund and commercialised. To my mind this is a classic opportunity where micro franchising could optimise distribution and reach.
Solar torchlight: This is a portable solar light. . Designed to charge a mobile phone in a remote location, has big application in BoP markets.. Designed in the USA and funded by a venture capitalist, the social entrepreneur has done the job; now through franchising an entire business could be developed..
Solution based services
In the BoP markets of Asia, Africa and South America, many western organisations (both government and non-government) are based. Often, the local workers who provide services to these environments perform under the standard of their employer. Imagine a ready made (franchised) workforce. Wages were negotiated on behalf of the locals at good and not ridiculous rates, and the employer or client had their standards met.
Extrapolate this to Cleaners, Maids, Nannies, Drivers and Gate Keepers. At many orphanages and schools where English needs to be taught, there are opportunities for tutoring services that provide a service. Think Nursing, Midwifery, Aged Care. While these concepts would need to be tailored to the local market and models priced up accordingly, the enterprise opportunity this provides for the local BoP Market is incredible, and the intellectual property export and new market opportunity this presents to the likes of a franchise brand is extraordinary.
The formula from thought leadership to action is:
Social Entrepreneur or (intrapreneur) + Micro Franchise (scaled franchise model) + Hybrid Funding Models = Accelerated Economic Self Reliance = Accelerated Economy
Hybrid Funded Loans
In terms of finance, there is a myriad of what I call ‘hybrid’ financing models that are all for profit based that can be used to achieve these outcomes.
The start up money required at the third sector end will be dependent on the solution, product and model for repayment and royalties you design. This will be capital effective because we are talking small amounts of payback from (potentially) a large number of people. Keep an eye on my blogs for more on models.
Matching & Mentoring
The magic ingredient for the success of this is to match the appropriate skill sets, interest and expertise from the Australian side to a need in the third sector.
Imagine a bridge from the top of the pyramid market (brand) to the bottom of the pyramid market. Intellectual property is created and generated in one franchise, and exported (for the implementation and ownership) on the ground? in the bottom of the pyramid market. This has the capacity to stimulate innovation, export intellectual property, create enterprise thinkers, expand franchising and expand new markets.
It’s an economic accelerant with social and green impact. Innovation at it’s best. There are the usual franchise ideas, but think about the service ideas, think about the services that serve mankind that could be franchised. Start there.
BoP Centres for Eternal Enterprise
Eternal enterprise schools in these underdeveloped places supply a constant source of potential franchisees. Instead of these people being taught skills to get jobs, they are taught skills to be in enterprise and specifically in franchise enterprise. They are mentally prepared and skilled to look at some of these opportunities and drive them and expand them. Once again, we can export and make these happen. Intercept is trialling this right now in East Africa.
Shop and Save
I’d like to bring a new meaning to ‘shop and save’. Back to the example of Paul Newman’s dressings. The customer shops and saves but doesn’t just save money, in the long run, they save lives. This philosophy causes the average consumer to think, and think about what sits behind their purchase. Not just making a purchase consumed thoughtlessly.
Being a social entrepreneur
If being a social entrepreneur or social intrapreneur interests you, Intercept can help we can direct you to the emerging schools and trends or guide your team through the ideas stage. We are also doing foundation work for awards that showcase the incredible innovation and enterprise from the private sector.
For more visit www.interceptawards.blogspot.com
Tanya Lacy is the founder of Intercept a franchised leadership and enterprise solutions business.
Now in its 13th year, Intercept’s programs are experienced in many locations in the world.
Tanya is also co-founder of Intercept Poverty, which advocates economic self reliance for underdeveloped communities.
She writes, presents, blogs, facilitates and is emerging as a thought leader in the area of micro franchising. www.tanyalacy.blogspot.com
To know more about getting involved with Intercept’s systems and programs www.interceptexperience.com and www.interceptpoverty.org