Look at a typical business model. It starts with the Customer Value Proposition. It is all about a product or service which can satisfy a consumer’s needs, real or imagined. It is all about how customer centric the organization can get. Everything else comes afterwards. The other segments of the model – the supply chain, distribution channels and finance structures – are put in place to maximise the Customer Value Proposition. And yes, money is made.
This is how it is for a typical business. The model makes things simple. Everyone’s attention and focus is on the customer and the whole organization is geared to deliver in that one direction – the customer.
Now consider the social entrepreneur. He wants to do business for a social cause. That’s his primary aim. It could be creating an organization for tribals to make and sell handicrafts which will supplement their income. Or it could be setting up an online brand for garments stitched by women from the Mumbai slums so they have that something extra which they can use to send their children to school. The social entrepreneur builds an organization that begins with these people and his focus is on adding value to their lives – the lives of the women who stitch and the tribals who make handicrafts. His business model does not focus on the customer at all
For many social entrepreneurs, this can be a stumbling block.
In their drive to add value to the under-privileged they do not give the consumer the attention that he/she deserves. And the social enterprise falters. They tend to forget that the consumer will not wait, not even for a beautiful piece of tribal handicraft or a reasonably priced garment stitched by the poorest of the poor. There are far too many choices for the consumer of today. There is also the competition – the eco-system that is aggressively marketing products and services similar to the offerings of the social entrepreneur.
Social entrepreneurs need to realise that they operate in the competitive marketplace and customer centricity cannot be underrated. This is in addition to being faithful to their aim of helping the under-privileged. Yes, it’s difficult and twice as complex. But there is no getting around it. The business model must be configured to look in both directions at once – maximizing value for the customer and the under privileged.
The average social entrepreneur tends to view the world through rose tinted glasses, firm in the belief that “good intentions” will see him through. You can’t blame him. He is cast from a different mould than that of the average businessman or start-up entrepreneur. His current language is filled with words like ‘women’s empowerment,’ ‘money for children’s education’ and ‘life skills.’ He asks himself questions like Am I making a social impact? He will work endless hours in a remote village or in the slums so that the deprived can lead a better life.
But he also has as much, if not more, passion and commitment as well as the ability to manage talent as compared to any normal “for profit” businessman. And all this on a frugal budget.
The challenge is to get social entrepreneurs to add to their vocabulary. Get them to understand and talk about words like customer centricity and value propositions. Motivate them to start conversations using these new words so that they blend into their established vocabulary. Creating a whole new conversation with new words and concepts will lead to implementing a more successful business model.
As a leadership coach, working with social entrepreneurs to get them to improve their customer centricity so that it addresses both value propositions – value for the customer and the under privileged – has been truly gratifying.
Anil Kulkarni
Strategy & Leadership Coach
First Published September 2018