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THRIVE enterprises search for the social enterprise magic: feasibility

May 8, 2014

The inaugural year of Social Traders’ THRIVE program is well underway. THRIVE is a program for social enterprises that are looking to improve their financial viability and grow their social impact.

The 12-month THRIVE program began in December with 12 social enterprises being supported to review their social purpose and business model and assess the ‘feasibility’ of their current operation. Social enterprise feasibility is how the purpose and business model fit together to deliver sustainable social impact.

During this phase, THRIVE social enterprises have used a diagnostic tool specifically developed by Social Traders; the tool highlights the strengths and weaknesses of different areas of an enterprise’s strategy and operations.

As we are moving into Phase 2 of THRIVE – finalising the diagnostic for each social enterprise and starting to translate these findings into an ‘Improvement Plan’ – it has struck me how important the feasibility component of a social enterprise model is.

Social purpose is the reason a social enterprise exists. We encourage THRIVE enterprises to explore the need for the social enterprise, the impact they make and the beneficiaries of that impact.

To assist the THRIVE enterprises to think about their business model in a structured way we use a framework that has gained a lot of attention of late: the Business Model Canvas.

In isolation, social purpose and business model are relatively easy to get your head around. There is an added layer of complexity in social enterprise because you use your business model to achieve a social purpose. A commercial business can be financially feasible but deliver very little social impact. A social program can deliver a lot of social impact but be financially infeasible. When a social enterprise business model is designed and implemented so that it delivers social impact, we call it ‘social enterprise feasibility’ – it’s then that the social enterprise magic happens!

But, sometimes there is a disconnect. Not one that cannot be overcome, but one that hinders social enterprises from delivering on their social purpose in a sustainable way.

The THRIVE enterprises are learning, for example, that a social enterprise with a social purpose to deliver training outcomes for marginalized youth is not always feasible with a business model that is set up to target corporate clients who expect the highest quality product and quick turnaround times. Targeting clients with deep pockets and high expectations may not be the best business model in which to maximize on the job training outcomes for inexperienced people with complex needs.

Through THRIVE, we are encouraging enterprises to consider the feasibility of their existing business model to deliver on their social purpose and the social impact that combination is having.

The better matched the social purpose is with the business model, the higher the feasibility and the higher the sustainability of their social impact. In the example of our enterprise aiming to deliver training outcomes for marginalized youth, a more feasible social enterprise business model might be one that profitably serves corporate clients using professional staff, offers some on the job training with lower-cost clients on a cost-recovery basis and funds additional training with the profit from the corporate jobs. Equally feasible, may be a model that offers lower cost, lower margin jobs that include on the job training, to clients with more time and lower exceptions, who understand and are supportive of the social purpose of the enterprise. Key to both these examples is trying to maximize social impact by finding the most feasible business model to deliver social impact.

Stay tuned to see how the THRIVE enterprises go in finding the most feasible business model to support their social purpose and maximize impact. But in the meantime, be sure to follow THRIVE on twitter: #THRIVEst.

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