Social Enterprise Mistakes: If you build it they will come

| 4 responses | Posted by: David Floyd | Theme: Social Innovation & Investment

As social entrepreneurs, we know that our social venture is exactly what’s needed to change the world (or, at least, a bit of it). We know that, for example, our innovative scheme to tackle youth unemployment through a disruptive combination of skateboarding and environmental action is what unemployed younger people want.

abandoned baseball fieldOn that basis, it naturally follows that all we need to do is buy some skateboards and some lawnmowers, put up some messages on social media (whatever that is) with directions to the field and then loads of enthusiastic clients will turn up to take advantage of the opportunity.

In reality, they might do but they probably won’t. While the specific nature of the research can vary enormously depending on both your available resources and what it is you’re planning to do, in the conventional business world it generally makes sense to do some form of market research before launching a new product or service.

While it’s difficult to open a new café, run it successfully and make a profit , it’s not especially difficult to decide who your café’s potential customers are and why they might choose to buy their dinner from you rather than someone else.

As social entrepreneurs, it’s slightly different because we’re often looking to change markets rather than just enter them. We may even be aiming to create entirely new markets that don’t yet exist.

The fact that our starting position as social entrepreneurs is slightly different to those of conventional business people can sometimes allow us to believe it’s completely different – with the result being that we avoid asking ourselves important questions because we know we’re not going to like the answers.

If I had £100,000 for every social organisation whose market research for their exciting new information website apparently consisted of: ‘our website is full of important information that x group of people really need so they’re bound to come here and look for it and start exciting discussions related to it’, I’d still be nowhere near having anything like the amount of public and charitable money that has been wasted on exciting websites that no one has ever looked at.

The build it and they will come mistake is not just about the situation of setting something up – whether it’s a café or a website – and hoping people will turn up to make use of it. It also applies to attempting to sell a service to a council or NHS agency.

There’s nothing wrong with setting up a service that’s completely unlike anything that your public sector customer buys at the moment but, when doing so, it’s vitally important that you confront the questions of: (a) why that customer doesn’t currently buy that product/service at the moment and, bearing that mind (b) how or why you will be able to persuade them to buy what you’re selling.

While the reason your local council or Work Programme provider is not yet backing a scheme to tackle youth unemployment through a combination of skateboarding and environmental action may simply be down to a lack disruptive innovation incubators in your area, if you want to get funding or contracts for the project you have to be clear about how what you’re offering will enable the people you’re asking to provide the cash to get the results they want.

Having done that, actually getting some younger unemployed people to turn up to engage with the project involves both having clear message about why it’s in their interests to do so and (even more importantly) working out how you’re going to communicate that message to them.

The big danger is that because, as social entrepreneurs, we understand what we’re doing and why it’s useful, we assume that other people will automatically understand that too and rush to engage with what we’re doing without us do the hard work of convincing them that they should. They won’t.

 

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4 Responses

  1. Mike Riddell

    That is an excellent post, for which thanks.
    For me, the bigger issue is that of the business model. How do social enterprises compete for business in this day and age. What way will they be able to generate then sustain recurring revenues?
    I have to confess that I am less than persuaded that not for profits are the answer to our social and economic problems. Typically they are completely under-funded and unable to compete with for profits. This is because their business model simply isn’t robust enough to attract the financial and human resources required to achieve resilience.
    However, this on its own isn’t a reason to quit. On the contrary. I’ve been through a very tough learning curve myself and if i wasn’t passionate about my idea i wouldn’t have been able to sustain it over the past six years. But now that i have, and now that i’m attracting investors, i’m confident that our for profit company with a philanthropic business model will compete in the tough world of business.
    Because business is where it’s at, whether we like it or not. What social entrepreneurs need is more good business training if they are to stand any chance of bringing their ideas to market.

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  2. Charles Rapson

    Well said. I too have seen many worthy ventures fail for exactly that reason. I too have been guilty of spotting a gap in the market but forgetting the vital question, is there a market in the gap? It’s not just social entrepreneurs though. The private sector (and no doubt public sector) is littered with wrecks that sunk through lack of basic market research.

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  3. Lucy Findlay

    I agree – its not just about checking that there is a gap in the market though, its also about effective marketing and sales activity (ie what is it that you are selling and why should I want to buy it?), both of which I find are absent in many social enterprises because we get carried away with the cause and solution.

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  4. David Floyd

    Thanks for comments.

    @Charles – I think the ‘gap in the market’ vs. ‘market in the gap’ issue is a really big one.

    Often part of our role as social entrepreneurs is to try to create markets in gaps – in situations where we’ve identified a clear social need, and a way to meet that need, but there isn’t currently a funding mechanism for what we want to do.

    That’s not an argument against doing the thing you want to do but it does mean that finding a way to create that ‘market in the gap’ (after first understanding why it doesn’t yet exist) has to be a very high priority.

    @Mike I think the question of how they’ll generate ongoing revenue is the big question for most businesses.

    I don’t think its inevitable that ‘not-for-profit’ businesses will have less robust business models than private businesses. Different models work better in different situations (and work better for different people) but glad you’ve found a model that’s working for you.

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