Stage 3: Exploring and generating Ideas
Outcome at the end of this stage:
- As many ideas as can be generated within the activities.
- A shortlist of good ideas that be taken into the ‘focusing’ stage.
Audience: I want to start a social enterprise but I’m not sure what it would be – I want help generating an idea
Expected time commitment: Generating ideas takes time. You might only need to go through the process once to end up with several good ideas, which might take a few days or up to a week. Depending on the quality of ideas generated, you might choose to repeat the process with different stakeholders.
In the last section, you articulated your reasons for wanting to start a social enterprise. You now have an understanding of your organisation’s readiness for social enterprise. You may have begun to see how a particular social enterprise could respond to a local issue or capitalise on a particular skill or resource, but you might not yet have a clear enterprise idea.
This stage of the guide provides some tips on where to look for ideas and some suggestions about how to generate them. There are also a number of activities designed to help you generate, filter and select the best ideas to move forward with.
Remember that idea generation and development is not a linear process. Ideas need to be fleshed out through the idea development stage and then evaluated before a decision to proceed is made.
While there is no simple recipe for coming up with ideas, this section provides a selection of tools and reading to help you. Below is a summary of the content in this section:
- Where to look for ideas (Reading)
- Resource sketching (Solo or group activity)
- Idea generation via brainstorming (Group activity)
- Filter: idea grouping (Solo or group activity)
- Idea design (Solo or group activity)
- Filter: Value Effort Grid (Solo or group activity)
- Checking capacity (Solo or group activity)
- Mission check (Solo or group activity)
- Filter: ranking and selecting ideas (Solo or group activity)
Use your Purpose Statement from the previous section to assist you or your group throughout this section. The Purpose Statement takes into consideration the Root Causes identified in stage 1. The objective of this section is to come up with a few good ideas to test.
Generating ideas takes time. You may only need to go through the process once to end up with several good ideas, which might take up to a few weeks. Depending on the quality of ideas generated, you might choose to repeat the process with different stakeholders. It is common for the activities in the idea generation phase to be repeated several times before a viable solution is found.
Be aware that you might get stuck in the idea generation phase, because you are waiting for the perfect idea to emerge. Remember to balance having a sound, good idea, and to shift your tactics in order to progress.
Where to look for ideas
At the heart of any successful business lies a problem – businesses solve problems for people. For example, I don’t have enough time to clean my house – I need a business that will clean it for me. I need help running a computer – I need an IT support business. I need a way of keeping my lunch cold on a construction site – I need an esky or a car fridge. Idea generation involves identifying problems that are not being effectively addressed by others, and that people are prepared to pay to have solved.
A social enterprise also has to look at the social problem that it is trying to address and ensure that the business idea can address both problems. At this early stage it is important not to dismiss good business opportunities because you think that they may not address the social mission.
Gaps in the market
Some social enterprises are started for very similar reasons to traditional, commercial businesses – either a lack of supply, or unmet demand for a particular product or service. If you are unable to access a local tradesperson, or if you notice that you cannot buy a coffee at the local shops, and your friends have the same problems, you are seeing market opportunities.
You can also identify openings by speaking to local residents or business people and considering local economic data. It’s good to involve in the process people who have this knowledge or access to it. Turn to an industry expert or someone who has worked in the industry to identify gaps and opportunities as well as doing your own market analysis.
Sometimes, the gap could be in the form of a social need. Many social enterprise ideas came from identifying a social or community benefit. For Stirling Skills, it was refurbishing computers. Formerly known as Jobs West, the company operated a very small-scale computer refurbishing business where an individual with a disability was able to learn how to refurbish computers in a safe, welcoming environment under supervision. The enterprise did not have to make a profit to pay a dividend; it only needed to cover costs. Breaking even was the financial target of the business, because it was also providing a job to someone who was not able to get one elsewhere. – John Theoderson, CEO of Stirling Skills Training
Plugging the leaks – local economic development
Another way of looking at your local economy is to compare it to a leaky bucket. Money comes into the economy like water flowing into the bucket from a tap – salaries, pensions, business investment, income from sales, government funding for schools and hospitals, and tourist or visitor dollars are examples of this. Water leaks out of the bucket when money is spent on products and services that are not located in the community – the money leaves the community. The longer that money circulates within a community or local economy, the greater the wealth of the community. Put another way, the more water kept in the bucket (through revenues by local businesses), the healthier the local economy.
For example, a community whose shops have little in the way of fresh fruit and vegetables may find that people do most of their shopping elsewhere. If fruit and vegetables were available locally, residents might start shopping closer to home, buying not only fresh produce but also other grocery items within the community. This keeps not only the grocery money in the community but also the associated jobs and the spending power of those people. The longer money stays in the local economy, the greater the benefit.
You might find it a productive exercise to identify the ‘leaks’ in your community and find ways of plugging them.
It is not only individuals who decide where to spend money, but businesses and public organisations. Changes in the spending pattern of this latter group can have an immediate and sizeable impact on a community. Plugging the leaks can also be applied to organisations and sectors and not just geographic communities. How does your organisation spend? How do not-for-profit organisations spend? How can we multiply our impact through our spending? Looking at how your organisation spends could help you identify opportunities to develop a social enterprise.
Identifying under-utilised organisation and community assets
What assets does your organisation or community have that are currently under-utilised? These opportunities could include an empty, unused building, a new housing development, a lookout, lake or other geographic feature, or specific industry expertise. All of these may form the basis for a social enterprise idea, but there must also be a way to generate income from these under-utilised assets. For example, an unused piece of land could be turned into a parking lot, or an unused building could become a temporary warehouse.
A viable social enterprise idea is likely to be a combination of these things, all considered in the light of what you are trying to achieve. Most communities and organisations can find opportunities and assets at their disposal if they know where to look and who to ask.
The seedling propagation business at CERES grew out of the interest and initiative of two young horticultural apprentices at the nursery using under-utilised assets – unused space at the park and the apprentices’ time. The resources needed to undertake such a project – space, soil, seeds and lots of care – were low, and enthusiasm to learn how to grow plants from seeds was high. The apprentices started by spending half a day a week on the project. Now, the business is profitable and the apprentices spend about two and a half days a week on it. The moral of this story is that some business ideas need a chance and some time to grow. – Chris Ennis, CERES
The following activity will guide you in identifying the community resources that are likely to help get your social enterprise off to a good start.
Every business needs customers, and many spend a lot of time and money attracting them. One way an enterprise can get a start is by securing a good contract – this can be the bread and butter of the business and a base from which to build. Getting friendly contracts from buyers that support your social objectives can be a great way to underpin the start-up of a social enterprise. For example, a catering enterprise might line up catering jobs from local businesses and residents, or win a council contract that will provide a stable, predictable income as the business develops.
Think about your networks and connections. You might find that the organisation you work for, or organisations with social values or even community-minded private businesses, would be happy to offer a contract to a social enterprise for a particular product or service. But remember to maintain these friendly contracts. You have to be able to deliver on quality, timeliness and price.
Buyers are starting to become aware of the strategic social outcomes that can be achieved through social procurement. These contracts present opportunities for social enterprises. More information on social procurement is available at http://www.socialtraders.com.au/social-procurement.
You may also find a niche by taking on small jobs for a larger contractor for whom the social enterprise solves a business problem or a corporate social responsibility (CSR) objective. For instance, doing minor home repairs and site clean-ups for a large construction contractor might suit your social enterprise objectives and provide the base revenue for building your business.
Commercialising an existing program
Neighbourhood houses, community health centres and disability providers often adopt social enterprise models because they are already providing government or philanthropic funded training or social activities that could have commercial applications. It is not a big leap from making woven baskets in a class to selling them at a local market and then using the profits to buy more materials, pay the participants or fund other programs. The viability of this activity is of course dependent on there being demand for the baskets, and on the capacity for revenue generated through the sales to exceed costs.
If you are already delivering a not-for-profit program, consider whether it could be commercialised. Could your housing association set up a real estate agency? Could your government-funded training program be turned into a fee-for-service model? Could your health centre establish a fee-for-service arm? Could your back office accounting service become a service to others? It is sensible to identify and then build on your capabilities and strengths.
One of the biggest challenges in business is winning customers. But once you’ve got them, how can you add value to your product and service so that customers will spend more time and money with you?
CERES is a destination that people visit because it has the feel of the country in the middle of the city. For many years, CERES has had the nursery business, the bike shed, the community gardens and the education centre. It offers visitors many reasons to come back – and some of these are income-generating ventures. About 10 years ago, CERES expanded its product and service offering to include a café, an organic market, events, a training centre and, more recently, an organic food home delivery service. The additional offerings have given more people more reasons to come to and to re-visit CERES, where they spend more of their time and money. As a result, a bigger ‘virtuous business cycle’ is created. This is a good example of economies of scope – growing the business by increasing its offerings. As the business grows, CERES is able to better deliver on its organisational mission.
Challenge conventional methods or thinking
New ideas can also come from doing the same thing a different way. Just because something has always been done a certain way doesn’t mean it’s the best way to do things.
Current industry practice in demolition is to demolish a building and transport the rubble to landfill where it is buried. At the beginning of 2010, the Resource Work Cooperative (RWC) developed another income source when it completed a major deconstruction on two buildings. The deconstruction work performed by RWC involves pulling apart buildings slowly and by hand so that materials can be sorted for recycling or reusing. The alternative that RWC offers not only reduces waste that goes into landfill, encourages reuse of materials, and results in the production of less new material, but also creates jobs. This is a new way of doing things that creates more value than the conventional way. – Andy Vagg of Resource Work Cooperative
Acquisition, franchising and replicating
An alternative to starting up a social enterprise is to acquire an existing business and transform it into a social enterprise. In acquiring a business, you are paying to mitigate the risks attached to start-ups, and to achieve a predictable return on investment. An established business has a proven track record. Keep in mind that not all businesses will be suited to the social mission that you have in mind, so you need to have some clear social criteria as well as undertaking business due diligence.
Bonsai the Imagination Tree was a successfully trading nursery, supplying bonsai trees to large retailers such as Bunnings and Kmart. Social Firms Australia (SoFA) is a not-for-profit organisation dedicated to creating social firms: businesses that provide job opportunities for people with a disability, particularly people with a psychiatric disability.
When looking at businesses that would be appropriate to purchase and run as a social firm, SoFA applied both a social and an economic ‘screen’. Bonsai the Imagination Tree with its therapeutic and nurturing environment for staff, and robust business contracts already in place, was a perfect fit.
Over nine months, the owner of the business worked closely with SoFA to convert the existing business to the social firm model, staying involved as a director of the board when the transaction was complete. The social firm employs nine staff, three of whom have a mental illness. All the original staff were retained and have found the new structure as a social firm an exciting development.
Franchising is the practice of purchasing and using another firm’s successful business model. In a franchising relationship, the franchisor (the original owner of the business providing the model) assigns to independent people (the franchisee) the right to market and distribute the franchisor’s goods or service and to use the business name for a fixed period of time. Franchises are much more likely to succeed than start-ups because they are based on a tested formula. When investing in a franchise, you are paying for the intellectual property of operations, support, brand and customers. However, being a franchisee can also limit the operations of a business, such as the branding process and products/service that you might offer.
The Bendigo Community Bank franchise is one of the most successful social enterprise franchises in Australia. With over 264 community bank branches nationwide, the model has successfully demonstrated the ability to generate and employ capital in ways that continue to enhance local economies.
Imitation, as they say, is the sincerest form of flattery – and very common in the commercial market. While there is value in being first, you can avoid much risk by waiting to see what happens to the first mover. This is a common strategy for big corporations. Replication can also occur through licensing agreements, which have similarities to franchises. It can be helpful to see where others have come from when initiating a social enterprise. Revisit Stage 2 (Social Enterprise Inspiration) to learn where others’ ideas came from.
Idea Generation Activities
Having understood how ideas are generated, consider the following set of activities to help you generate, rank and select ideas. The five activities below can be grouped into three stages: idea generation, assessment, and selection.
We would recommend that you start with brainstorming to generate as many social enterprise ideas as possible. After brainstorming, you will then filter these ideas systematically to reduce them to a manageable few. Finally, you will select the ideas with the highest potential to explore further in Stage 4 (Focusing your ideas). Below we have inserted some figures to help demonstrate the filtering process – don’t worry if you come up with higher or lower numbers than these.
There are dozens of ways to come up with great ideas for your social enterprise. Brainstorming is one way to generate a lot of ideas in a short time. It is an opportunity to open your mind and ask: ‘Why not?’ This stage does not last long, so enjoy thinking big for a while; you will bring things back to earth soon enough. Sometimes it is the seemingly crazy ideas that turn out to contain the seed of a great idea.
It is important that the general attitude and atmosphere for brainstorming is positive and upbeat. This is a high energy, high passion activity, which uses the creative parts of our brains. The group may need ‘warming up’ with a quick, playful activity, just to get the creative juices flowing. Brainstorming is also a ‘team sport’, with people bouncing ideas off each other.
Activity: Grouping your ideas
From the brainstorming activity you will have generated many potential ideas. Some will be large, bold concepts that immediately suggest a way forward. Others will be less clear or not fully articulated and
may just seem odd or ridiculous. Some may just be thought-bites or concepts.
Next, apply the first filter to all the ideas that have been generated so that you have a more manageable number of ideas to bring to the next stage.
Classify each idea generated into one of the three categories below:
- Loopy – This idea is not going to work.
- Maybe – Not sure about the potential. Keep for now.
- On to something – Definite potential.
Once the ideas have been ranked, you can decide which to bring into the next stage, where the ideas will be fleshed out. Aim to have no more than 10 ideas to take into the Idea Design activity.
Don’t completely discard any ideas until the group has made a final decision on which idea to pursue in the next stage: Focusing. Sometimes sifting back through ideas can (with some lateral thinking or brainstorming) turn a silly idea into a potential enterprise.
The filter activities require consensus. People who are attached to an idea may feel deflated if their
ideas do not pass the filter process – it’s important that people are honest but respectful. That may mean really teasing ideas out so that there is a fuller understanding of what’s on the table and how ‘do-able’ it is.
Activity: Idea Design
The first step in this process is to clearly describe your idea and what it is about. While we understand that you are probably driven by the social mission of your idea, you need to put on your business hat when completing this activity. To begin with, state your business idea (the non-social problem your enterprise is aiming to solve) and describe the products and/or services that your enterprise will be providing and then work through the sections on customer and beneficiaries.
Distinguishing customers and beneficiaries
Customers are people or organisations who will buy from you.
Beneficiaries are the group or individual that benefit from the existence of your social enterprise. It is essential to distinguish your customers from your beneficiaries. Although your customers and beneficiaries can be the same, in many cases they are different groups that require different approaches.
If your beneficiary and customer are different, it is critical that you develop a customer focus for your business. Without customers, your organisation is unable to generate revenues, which puts the survival of your enterprise at risk.
Stirling Skills Training, formerly known as Jobs West, used to own and operate a social enterprise that recycled and refurbished used computers. While this enterprise is now closed down for different reasons, it was a good model that could have been quite successful if not for mismanagement. Jobs West’s customers were low-income households who bought refurbished computers at low cost. The beneficiary of this social enterprise was the technician who worked at Jobs West refurbishing computers. The technician had a learning disability and would have otherwise had difficulty finding employment. At Jobs West, this employee was able to receive training and develop skills that were transferable to other jobs. In the case of Jobs West, a secondary beneficiary was the customer, who would not have been able to afford a computer otherwise. A third group of beneficiaries were the donors of the computers who would otherwise have had to pay a disposal fee to get rid of their computers.
Activity: Value-Effort Grid
Experience shows that at this stage it is very hard to tell which ideas will work in practice or if the benefits justify the investment. Ideally you would investigate and design every ‘good’ idea that you came up with. Unfortunately most groups do not have the time, energy or resources to do this, so try a filtering process to reduce the list of ideas to a manageable number.
You may also come up with really good ideas that are not social enterprise ideas. If you think these are the best ideas for addressing your mission, then they may well be worth pursuing as a commercial business rather than developing as a social enterprise. However, you may also want to put these ideas aside and consider them separately, so you can focus on ideas that could be run as social enterprises.
In this stage, we will apply a filter to the ideas that you have developed. This Value-Effort grid provides a tool for assessing the value of each idea against the effort required to implement it. In practice you should be able to reduce the list of ideas to about five to take through the next filter.
Activity: Capacity Check
The next filter we will apply to the set of ideas you have developed addresses your capacity to further develop these ideas into social enterprises. Consider the resources you would need to start up each of your enterprises: time, money, skills, equipment and infrastructure.
Before you can evaluate these ideas against each other, have the group members consider the organisational, human resources, finance and infrastructure capacity currently available to your group. Use the resource map in the Sketching Resources Activity as a starting point, and then use the Checking your Capacity worksheet below.
Activity: Mission Check
To bring it back full circle, we will now list your best ideas and evaluate how well each achieves your social mission. The aim of this activity is to evaluate the enterprise idea based on the social benefits achieved to avoid mission drift.
Activity: Ranking and selecting ideas
The challenge now is to select the most practical idea that can be taken through to the next step, which is further design of the idea. Use the provided framework to evaluate the potential of your ideas.