Chapter 9: Launch, Growth, and Goal Attainment PDF

CHAPTER 9 Launch, Growth, and Goal attainment Bronx Preparatory Charter School case Bronx Prep had major growth plans These included state certification as well as building its total revenue To achieve its significant growth, it had to significantly increase its funding from cor...

CHAPTER 9 Launch, Growth, and Goal attainment Bronx Preparatory Charter School case Bronx Prep had major growth plans These included state certification as well as building its total revenue To achieve its significant growth, it had to significantly increase its funding from corporate and other sources Bronx Prep was a success – what can social entrepreneurs do to prepare for growth 9- 2 Five competitive forces model Commercial firms are affected by: Substitutes Ease of entry Market power of buyers Market power of sellers Competitive pressure from current rivals 9- 3 What are parallel threats acting on social enterprises? Substitutes ways for clients to meet their needs Competition for donors who support other nonprofits Competition with other groups serving the same clients Socio-economic or demographic changes in client needs or interest Public policy changes in regulation or funding levels Bargaining/market power of paid workers, lenders, land owners, and third-party payers Figure 9.1 illustrates these forces The CBGB case “The high cost of city life” provides additional illustration of the threats that enterprises face 9- 4  Essay Figure 9.1 The threats to social value creation Substitutes for service Socio-economic and demographic changes Ability to create social value Public policy shifts Bargaining power of sellers and buyers 9- 5 Social enterprise growth strategies Product-driven growth Additional activities or programs Market driven growth Finding new consumers for existing services These are not mutually exclusive – social enterprises can combine new or old products with new or old markets Table 9.1 illustrates these combinations 9- 6 Table 9.1 Social enterprise growth strategies Existing markets New markets Existing Market penetration Market products expansion New products Product Product development diversification 9- 7 Growth strategy examples Market penetration VIM providing service to everyone Market expansion VIM took its business model around the world Product development College Summit as a new tool for teens Product diversification College Summit advising colleges on how to reach low- income teens 9- 8 Merging as a growth strategy Largest and 2nd largest national food banks merged successfully Merger proposals should address Is there willingness to partner, as a starting point? Which organization is dominant? Is there much to gain, are the stakes high? Is there a catalyst leader? Are there other supporters? Is there enough (not too much) time to discuss? Do missions align? Can productive personal relationships develop? 9- 9 Myths about social growth A social venture will not grow quickly unless it is in a high- growth sector Figure 9.2 shows that different sectors grow at different rates Growth is more a characteristic of the specific nonprofit than the overall sector Rapid growth requires a venture being the first of its kind First-mover advantage is not as critical when there is unmet need that an enterprise can address 9- 10 Problems to anticipate during growth Being clear about the stimulus for growth Resistance to market-based change Boards are risk-averse Community relationships resist change It is hard to show the results of change There are human resource management as well as cultural challenges 9- 11 Creating an intrepreneurial environment Encourage action Use informal meetings Understand that failure is a part of learning Be persistent in implementing ideas Make innovation a goal Encourage informal communications in the workplace Encourage the development of new ideas Assign people to think about the future Encourage ways to work around bureaucracy\ Reward innovation Source: Kuratko and Hodges 9- 12 The intrapreneurial process Key elements are: Organizational characteristics A trigger event Entrepreneurial personnel Supported by resources and ideas Figure 9.3 shows how these forces interact 9- 13 Figure 9.3 A model of intrapreneurship Organizational characteristics favorable to innovation Idea quality Triggering event Implementation Idea of ideas Personnel with entrepreneurial characteristics Resources 9- 14 The intensity of social entrepreneurship It is characterized by degree and frequency Degree can be revolutionary or incremental Frequency can be continuous or sporadic Figure 9.4 shows these dimensions of intensity Examples of different intensities Rosie’s House grows steadily, in small stages Mexican Institute of Greater Houston has too much demand for its innovative core service Shreveport-Bossier Community Renewal is always adopting new change methods 9- 15 Figure 9.4 A model of entrepreneurial intensity high Continuous but Continuous and incremental revolutionary Frequency of social entrepreneurship Infrequent and Infrequent but incremental revolutionary low low high Degree of social entrepreneurship 9- 16 Growth and risk Stable environments are preferred because they appear to have less risk Stagnation is a concern when nothing changes But radical change can destabilize Dimensions of entrepreneurial intensity include degree and frequency of intrapreneurship Figure 9.5 shows at extreme high or lows of either dimension, risk is highest At middle levels of frequency and degree, risk is lowest 9- 17 Understanding risk factors for social entrepreneurs Leadership risk Staff and volunteer risk Funding risk: Current financial situation Effect on future funding Diversification – one business or more? Enterprise concept risk – is it really a good idea? Marketplace volatility – exposure to broad economic and social factors 9- 18 Managing and reducing risk Get help from experts and network with other social enterprises Gather and use data, look for signs of volatility Plan with realistic models, updated frequently, with contingencies Diversify the support base to spread the risk Grow and make commitments in stages Work on organizational weaknesses Avoid all-or-nothing bets – work steadily towards big goals 9- 19 The end of the social entrepreneurship process Attaining goals is the last stage of entrepreneurship And then what – how to harvest the gains? Nonprofits do not provide the opportunity to divide or distribute wealth The needs for social enterprise is likely to exist even in the face of success 9- 20 Goals worth striving for What goals should social enterprises pursue? Meet the mission by delivering stable and adequate service Integrate into another social venture Win and move on: Redefine to meet a new social mission, like the American Lung Association Shut down, and distribute to other nonprofits 9- 21 Some enterprises end in failure Just as in commercial venture, there are high failure rates among social ventures Figure 9.6 shows the high share of new organizations disappeared within four years in the 1990s Environmental, religious, arts and other types of organizations seem to have been particularly fragile 9- 22 Interpreting failure When social enterprises close, it is the impact of the market mechanism at work One organization’s failure is an opportunity for another one to succeed The failure of a social enterprise is not primarily a moral lesson, but neither do social entrepreneurs have moral immunity against failure 9- 23