INNOVATIVE BUSINESS

MODEL ADDRESSING

GLOBAL CHALLENGESA COMPARATIVE ANALYSIS OF SOCIAL VENTURING CO-

OPERATIVE ENTREPRENEURSHIP BUSINESS MODEL VS

TRADITIONAL BUSINESS MODELS

BUSINESS MODEL DEFINITION

• A BUSINESS MODEL DESCRIBES THE RATIONALE OF HOW AN ORGANIZATION

CREATES, DELIVERS, AND CAPTURES VALUE, IN ECONOMIC, SOCIAL, CULTURAL

OR OTHER CONTEXTS (ALEXANDER OSTERWALDER, PIGNEUR YVES (2010)

PLOTTING BUSINESS MODELS IN A CONTINUUM

• TYPOLOGY: INVESTOR OWNED FIRM BUSINESS MODEL (IOF-BM), TRADITIONAL CO-OP BUSINESS MODEL (TC-BM),

NEW GENERATION CO-OPERATIVE BUSINESS MODEL (NGC-BM), SOCIAL VENTURING BUSINESS MODEL (SV-BM)

• 100% PROFIT CONTINUUM 0% PROFIT

• IOF-BM TC-BM NOT-FOR- NGC-BM

PROFIT SV-BM

SVCE-BM

GLOBAL CHALLENGES

• CLIMATE CHANGE – FOSSIL FUEL – COAL, OIL, & NATURAL GAS – BURNING OF THESE IS

THE CAUSE OF CLIMATE CHANGE. COAL GENERATES 40% OF ALL GLOBAL ELECTRICITY, WHEN

THE TRUE COST IS TAKEN INTO ACCOUNT, RENEWABLE ENERGY BEGINS TO LOOK BY FAR THE BEST

OPTION FOR HEALTH & SUSTAINABLE FUTURE

• WEANING HUMANITY OFF COAL IS NOT EASY

• UNSUSTAINABLE USE OF RAW MATERIALS – LEADS TO CLIMATE CHANGE

• USE OF INAPPROPRIATE TECHNOLOGY – LEADS TO CLIMATE CHANGE

GLOBAL CHALLENGES CONT’D

• URBANIZATION, LIVELIHOOD & FOOD SECURITY

• THERE IS A DIRECT RELATIONSHIP BETWEEN INDUSTRIAL GROWTH AND URBANIZATION (DANIEL YET FHANG LO (2010), DAVIS & HENDERSON (2003), ELLISON & GLASER (1997)

• URBAN PLACES EXIST LARGELY BECAUSE OF SOME SORT OF AGGLOMERATION ECONOMIES IN PRODUCTION THAT IS NOT PRESENT IN RURAL ENVIRONMENT –

THEREFOR AGGLOMERATION OF ECONOMIES IN RURAL AREAS WOULD SPREAD OUT URBANIZATION

• THE INDUSTRY IMPROVES THE LIVELIHOOD & FOOD SECURITY BY SUPPLYING THE URBAN

DWELLERS WITH SUFFICIENT QUANTITIES AND QUALITY OF BOTH RAW AGRO-FOOD &

AGRO-FOOD PRODUCTS & AT RIGHT TIME, PLACE THROUGH AN EFFICIENT & EFFECTIVE

LOGISTIC SYSTEM

DIFFERENCES BTN BUSINESS MODELS

Variable IOF-bm TC-bm SV-bm SVCE-bm

Theories Classical &neoclassical Institutional & behavioural Institutional & behavioural Institutional & behavioural

Climate change Poor Good Good Very good

Profitability Very good Poor Depends Good

Objectives Profit maximization Profit & social Profit, social or both Profit as a means to achieve social

Weaknesses Negative externalities Poor property rights Dependency syndrome, donor fatigue,

-

Entrepreneurship Make money Make money & serve members

Serve members Calling – solving ill problems

Exit strategies for stakeholder ownership

None other than sale of equity to other investors

none None other than winding the project

Handing over ownership to stakeholders

SVCE-BM SPANNING SPHERE Primary production Secondary level value addition or Tertiary level

Processing

Specified number ofsmallholder

farmersValue addition

enterprise

 

Wholesale co-op or

Retail co-opDelivery rights & equity shares

Holding equity shares & delivery rights in tertiary enterprise

Sale to co-op or open mkt

Open market/commercial or retail for excess commodity/product

 

Distributor/ market agent

Act as

Act as

Offer farm inputs, equipment, training, consultancy, research etc. by host individuals & institutions (philanthropist / social venturing entrepreneur/investor)

SVCE-BM BUILDING BLOCKSInfrastructure

Key partners Class A = Capital , Class B = Debt & risk , Class C = Service provision, D = Product development , Class E = Business partners

Mission

Objectives Key resources • Plant & equipment; • Procurement & distribution network; etc.

Key activitiesProduction & operations management; • Planning & co-ordination; Product & market development; etc

Value preposition

1. Customer value Preposition2. Member value preposition3. Partner value preposition

Guaranteed product nutrition, health & safety; • guaranteed right quantity, time and place deliveryFair commodity prices, skills development, dividends etc.Jobs created; • Contribution to local economy (taxes); • Improved standard of living; Green technology

Customers

Customer segment Niche market

Customer relationships1. Customers

2. Member & partner

Contract management, Quality assurance, Timely response to queries, Product/service availability, Ethical communicationsTimely financial & operational reports, Adherence to common ethics, values & contractual obligations, Efficient communication

Channels 1. Customers2. Member & partner

Own channels or other distributors or both

Revenue

Costs

Revenue streamsCo-operative – farmer owned; • Employee owned company facilitated via employee stock ownership plan; • Divestment to local entrepreneur(s) • Investment fund providing equity like a “Social enterprise Development Fund”; • (see appendix fig. 5.2.3.1f) (Owner-controlled, Manager-controlled, supplier-controlled & community-controlled – a hybrid structure ownership) is anticipated to sustaining the SVE model in practice

Impact • Member retained ownership & control; • Member welfare; • Education & skills training received; • Women participation in economic activities; • Reduction in death or communicable disease; • Access to quality education, water, sanitation etc.• Use of environmentally friendly methods;

Exit strategies Co-operative – farmer owned; • Employee owned company facilitated via employee stock ownership plan; • Divestment to local entrepreneur(s) • Investment fund providing equity like a “Social enterprise Development Fund”, (Owner-controlled, Manager-controlled, supplier-controlled & community-controlled – a hybrid structure ownership) is anticipated to sustaining the SVE model in practice

THANK YOU

• THE END