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Enterprising Communities Workbook

Enterprising Communities Workbook

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Published by Timothy Curtis
Enterprising Communities workbook
This workbook is primarily designed as additional reading and work outside class. It should be used in addition to the activities and exercises in class. The activities in class complement this workbook, and all of the workbook, and the class activities are relevant for your assignment
Enterprising Communities workbook
This workbook is primarily designed as additional reading and work outside class. It should be used in addition to the activities and exercises in class. The activities in class complement this workbook, and all of the workbook, and the class activities are relevant for your assignment

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University of Northampton

Enterprising Communities
Social Innovation Workbook

Tim Curtis. Alison Bell. Amy Bowkett 11/30/2012

SWK1048 Enterprising Communities – Social Innovation Workbook

UNIT 1 Introduction to Social Enterprise ............................................................................................. 3 What is social enterprise for? .......................................................................................................... 3 Social Entrepreneurship .................................................................................................................. 9 Effectuation .............................................................................................................................. 10 Social Enterprise ....................................................................................................................... 11 Social justice ............................................................................................................................. 13 Unit 2: Understanding me- my personal assets, skills and resources and my innovation orientation .. 15 Introduction ................................................................................................................................. 15 Social capital................................................................................................................................. 15 Developing Social Capital .............................................................................................................. 16 UNIT 3 Creativity and innovation ...................................................................................................... 18 The Rules of Brainstorming ........................................................................................................... 22 Inspiration… ................................................................................................................................. 24 Unit 4 Social Problems and Opportunities ......................................................................................... 25 Problems as opportunities ............................................................................................................ 26 African innovations ....................................................................................................................... 28 Triggers and inspirations that prompt innovation .......................................................................... 29 Thinking differently....................................................................................................................... 30 Selecting problems ....................................................................................................................... 31 Understanding how root causes work ........................................................................................... 31 Analysing complex situations ........................................................................................................ 33 WICKED PROBLEMS................................................................................................................... 34 What is a rich picture? .............................................................................................................. 38 How to create your rich picture ................................................................................................. 39 Unit 5 Venture Organising................................................................................................................. 42 Setting Objectives and outcomes .................................................................................................. 42 Parts of Evaluation ........................................................................................................................ 42 Goals ........................................................................................................................................ 42 Objectives ................................................................................................................................. 42 Outcome Objectives (Final/Intermediate).................................................................................. 43 Process Objectives .................................................................................................................... 43 Logic Models for Objective setting ................................................................................................ 45 The What: How to “Read” a Logic Model ................................................................................... 46 The WHY: Logic Model Purpose and Practical Application .......................................................... 46 If only it was as simple as this…. .................................................................................................... 46 1|P a g e

SWK1048 Enterprising Communities – Social Innovation Workbook

Premortems.............................................................................................................................. 47 Showing progress ......................................................................................................................... 48 Theory of change model ............................................................................................................... 49 Business Model Canvas ................................................................................................................. 51 Fundamental Models of Social Enterprise Strategy ........................................................................ 55 Entrepreneur Support Model .................................................................................................... 55 Market Intermediary Model ...................................................................................................... 55 Employment Model .................................................................................................................. 55 Fee-for-Service Model ............................................................................................................... 55 Low-Income Client as Market Model ......................................................................................... 56 Cooperative Model ................................................................................................................... 56 Market Linkage Model .............................................................................................................. 56 Service Subsidy Model .............................................................................................................. 57 Organizational Support Model................................................................................................... 57 Combining Models .................................................................................................................... 57 Complex Model......................................................................................................................... 58 Mixed Model ............................................................................................................................ 58 Legal Frameworks ......................................................................................................................... 59 Common legal structures .......................................................................................................... 59 Choosing the appropriate legal structure................................................................................... 63

This workbook is primarily designed as additional reading and work outside class. It should be used in addition to the activities and exercises in class. The activities in class complement this workbook, and all of the workbook, and the class activities are relevant for your assignment.

Draft #1

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SWK1048 Enterprising Communities – Social Innovation Workbook

“If I had 60 minutes to solve a problem and my life depended on it, I’d spend 55 minutes determining the right question to ask, and 5 minutes thinking aloud about the solution”. Albert Einstein

UNIT 1 Introduction to Social Enterprise
The starting point for the study of any topic is often to provide a definition, defining the key terms that we are studying. We have a problem with ‘social enterprise’ as a term, however, because there is still a lot of debate about a definition. We will come back to definitions in a while, but first I was to ask a slightly different question.

What is social enterprise for?
This, I think is a better question than ‘what is social enterprise’. I think that the question makes our study of social enterprise purposeful. It seems to me that social enterprise the PURPOSE of social enterprise is ‘making the world a slightly better place’. But there are lots of different ways of making the world a better place and this can just get messy and confusing. We need a way of sorting out what types of social change there are, and which type of social change ‘social enterprise’ fits into. There are a least three types of activity we could use to make the world a better place. We could:    Change the law Create a new product Volunteer.

Think of three changes in the law that have changed the way in which the world worked.

Did you think of:   The emancipation of women or African-Americans to get the vote? The creation of public health and education systems through government finances?

How the world is made better by these actions?

Think of three products that have fundamentally changed the world for better.

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SWK1048 Enterprising Communities – Social Innovation Workbook

Did you think of:    The vacuum cleaner and how it freed women (and servants) from constant house cleaning to be able to work and act as a consumer? The wind up radio and how it made public radio globally available really cheaply and with the need for access to mains electricity or expensive and environmentally damaging batteries? The mobile phone and how it has made communications in Africa very easy, allowing people to check whether a doctor is actually at a surgery before setting off on a long walk, or how Africans can now safely transfer money to each other entirely by mobile phone without the need for bank accounts?

These three different ways of changing the world can be categorised into three circles or domains of activity. Maths experts amongst you will recognise this diagram as a Venn diagram:

How do we make the world a better place?
Change the law Public Sector Private Sector Invent a great product

Civil Society


If we give generic names to our ‘changing the law’, ‘inventing a great product’ or volunteering activities, we can come up with different ‘sectors’ called Public, Private and Civil (or community). Typically, these sectors have been considered to be entirely separate. The government has always done government type things like making laws and providing health and education services (for example) and the private sector always gets on with ‘doing business’. Over the last twenty years or so, this separation seems to have reduced, to the point of overlapping. It is this overlap that seems to be the domain of action for social enterprise. Commentators like Charles Leadbeater, who began writing about this under the guise of the ‘social market’ in the late 1980s and became an advisor to the New Labour government in 1997, also thought that this overlapping model was important when he was trying to describe the social entrepreneur in 1997.

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Source: Leadbeater, C. (1997), The Rise of the Social Entrepreneur, London: Demos, p. 10

This way of thinking about the different types of social change is actually quite widespread. Colleagues in other universities have spend time with people who are called social entrepreneurs asking them to explain what ‘social enterprise is’, and they consistently come up with the same model in their head. Figure 3 shows an example of their research taking from scribbles on bits of paper and tablecloths in cafes as those running social enterprises struggle to explain the idea.

Seanor, P., Bull, M. & Ridley-Duff, R. J. (2007) "Contradictions in Social Enterprise: Do they draw in straight lines or circles?" FIGURE 3 M ENTAL MODELS OF SOCIAL ENTERPRISE Glasgow, 7-9th November, Drawings 8 and 10 paper to 30th ISBE Conference,

If we keep on thinking about this ‘sectors’ approach we can think of types of social change that might happen in the parts of the Venn diagram that overlap with each other. Public/Private overlap Since the 1980’s in the UK, government agencies have been increasingly contracting private companies to provide public services. Most of the time this is a straightforward business activity like supplying photocopies or mobile phones, but it also increasingly involves delivering public services under contract to a government agency. This has involves a debate (a contestation) between a public 5|P a g e

SWK1048 Enterprising Communities – Social Innovation Workbook

service ethos and a business efficiency mentality. Commentators called the influence of business and market dynamics on the public sector New public management1. On the other hand, public service ethos has pushed back into the space with businesses being established that operate with a high ‘service ethic’. Public/Voluntary overlap The voluntary sector provided publicly valuable services long before the growth of the welfare state (which started emerging in Germany in the 1870s and in Britain in the 1930s). Religious groups, communities, families and individuals have provided social care and poverty relief for centuries. By 1939 in the UK, the vast network of friendly societies and industrial and provident societies institutions run by local councils were nationalised into a single and (in theory) nationally consistent system. This didn’t mean the end of the voluntary sector- there is still much that the state cannot do, or cannot afford to do. There are many issues that are just not considered important enough for governments to provide, and these fall to voluntary sector organisations. By the 1980s however, government departments, particularly local authorities were given the opportunity to provide funds to voluntary sector organisations, first through open and flexible ‘service level agreements’ and then through competitive tendering and contracting processes. This has meant that some charities have increased the amount of work that they do under contract to the government. This has increased, overall, from 4% of income to 12% of income in the last 12 years2, whilst donations and other income has stayed more or less the same. Private/voluntary overlap Philanthropy, in its modern usage, is the giving of spare money, time or resources from a business to voluntary good cause. Some very wealthy people give away very large amounts of money- Warren Buffet, an American businessman has committed to give 99% of his personal US$ 46 billion away to charities, mostly to the Bill & Melinda Gates Foundation for healthcare projects around the world. Other companies engage in Corporate Social Responsibility activities. These CSR activities are projects and initiatives that help communities but are not directly related to the core purpose of the company. These activities are concerned with developing good relationships with ‘stakeholders’, people who have a stake in the good behaviour of a company, which is different from ‘shareholders’, who own and receive a portion of the profits of a company. This has shifted as more voluntary organisations have begun trading as part of their charitable objectives. An obvious example is a charity clothes shop. People donate their spare clothes for free, and the charity shop sells them for a modest price to raise money for other activities. This isn’t the same as the government contract, because the person spending the money in the charity shop is a retail customer rather than a commissioner of services. Right in the middle In the centre of the diagram, when the Venn diagram circles get close enough, is a part where the three sectors overlap. This is where most commentators point to when they talk about social


Boston, J., J. Martin, J. Pallot, and P. Walsh. Public Management: The New Zealand Model, Oxford University Press, UK, 1996

UK C i vi l Soc i ety Alma na c 2012

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SWK1048 Enterprising Communities – Social Innovation Workbook enterprise- as an activity that incorporates3 a public service ethos, voluntary sector activism and the marketplace behaviours of a private company. Social enterprises exist across the range of these overlapping areas, but ‘social enterprise’ can be seen more clearly in the very middle of this model. Case-study It is tempting to provide some big and famous social enterprise casestudies to illustrate my points at this point. I could mention Jamie Oliver’s Fifteen Foundation or the mutually owned John Lewis Partnership but they are complicated businesses.

To keep it simple at the moment, watch this film of one of my first year students presenting to class in 2011.


What do you think is the social problem Abi is trying to address?

Abi is responding to an experience she had and which affected her directly. This is often the case with social entrepreneurs. Her younger brother was struggling with his homework and her mum found herself unable to help him understand the skill that lay behind the homework. Abi’s example was ‘annotating’ a film script. Her solution exists right in the middle of the model we have been looking at. The people who benefit from her proposed business are:   Parents and children (voluntary sector) by creating better homework outcomes Schools and government (public sector) by helping teachers overcome barriers to homework setting and completion, and


Note that the term ‘incorporate’ also means to form a Company. Did you spot my pun?! Groan.

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SWK1048 Enterprising Communities – Social Innovation Workbook 

She will be running a (private sector) company earning its own income and therefore no reliant on government grants or philanthropic giving, although she may make use of these sources of funds to start and grow.

Her solution, Abi’s way of making the world a little bit better, is not something schools can achieve, on their own. It’s not something that parents or pupils can solve on their own, and it would not be right to make lots of private profit out of the poorest parents or least able to help themselves. Breaking it down What this case study allows us to do is to break down our understanding of the idea ‘social enterprise’ into three parts. Remember that the PURPOSE of social enterprise is ‘to make the world a better place’, in other words to create social change for the better. • • • Social Innovation o ideas to change the way society works Social Entrepreneurship o the processes of getting the idea into a ‘business’ format Social Enterprise o the venture that emerges from the innovation

Social Innovation If our understanding of the term ‘social’ is ‘to make the world a better place’, then innovation can be understood to be introducing something new into the world to achieve that goal, however we describe ‘better’. Joseph Schumpeter (19344), perhaps the first theorist on entrepreneurship and innovation, describes five features of social innovation 1. 2. 3. 4. 5. The introduction of a new product or an improved version of an existing product The introduction of an improved method of production The development of a new market (or entry into an existing market for a new player) The development of a new source of supply or supply chain The more efficient or effective organization of any industry or sector.

So, innovation can happen with respect to a product or a service, or the way in which that product or service is manufactured or provided within a company. It can happen in the ‘marketplace’ -that set of relations made between companies selling goods and customers buying them. It can extend to the way in which the materials are supplied to the marketplace, or even the way in which that market is configured- the practices and norms that characterise the marketplace. These changes are dynamically described by Schumpeter as ‘creative destruction’. This term is important because it highlights that the changes that occur in a system like a marketplace is not planned, or always a good thing. In fact, these cycles of change can be very destructive. Schumpeter suggested (19425) that companies, products, market rules and even social relations between people are destroyed and eliminated as capitalism crashes around the world trying to find 6 new places to operate (Harvey, 2010 ), tearing down the old ways (social relations) in which


Schumpeter, J. (1934), The Theory of Economic Development, Cambridge, MA: Harvard University Press. 5 Schumpeter, J. (1942), Capitalism, Socialism and Democracy, Cambridge, MA: Harper and Row: New York. 6 Harvey, David (2010). The Enigma of Capital and the Crises of Capitalism. London: Profile Books. p. 85

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SWK1048 Enterprising Communities – Social Innovation Workbook communities organise themselves (Berman, 19877), even changing the ways in which communities relate to each other across the world in constantly changing flows (Castells 19898). So, the theorists tell us that the capitalist system is constantly changing, and it changes the rules of the game constantly. These changes are not always good, but those who write about social innovation suggest that good things can be created out of the rubble of the last set of social relations. The internet is a good example of this sort of shift in social relations brought about by an innovation. Before the internet, people had to relate to each other with the relatively slow means of letters, faxes, and flying around the world to meet each other in person. Now, with skype, facebook and email we can communicate face-to-face across the globe from our homes. This has created new products, like the mobile phone, and then the smart phone and the tablet computer, all straight out of science fiction movies like Star Trek. It has even created products that even geeks didn’t imagine, like the $4bn a year market in mobile phone ringtone downloads, that wasn’t invented until 1997. It’s not necessary to be the first to create an innovation (Rogers 19629) and there are number of methods that can be used to develop an innovative approach as an individual and as an organisation10. These processes can be called social entrepreneurship.

Social Entrepreneurship
We see a lot of entrepreneurs on television these days and we have a number of expectations of what they are and what they can do.

Think of some famous entrepreneurs that you have heard of and note down a number of characteristics that you think make them entrepreneurs.

If you thought of people like Alan Sugar, Richard Branson, Lakshmi Mittal, Simon Cowell, Anita Roddick, Theo Paphitis, Warren Buffet you are on the right lines. When it comes to characteristics, you probably thought of:    Risk taker Aggressive Passionate

7 8

Berman, Marshall (1987). All That is Solid Melts into Air. p. 99 Castells, Manuel (1996, second edition, 2000). The Rise of the Network Society, The Information Age: Economy, Society and Culture Vol. I. Cambridge, MA; Oxford, UK: Blackwell 9 Rogers, E. (1962), Diffusion of Innovation, New York, NY: Free Press. 10 http://www.nesta.org.uk/publications/assets/features/the_open_book_of_social_innovation

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SWK1048 Enterprising Communities – Social Innovation Workbook  

Calm Interested in money

In fact the list can extend to hundreds of characteristics. A quick check on the internet will show you thousands of websites claiming to have found the magic three, five, seven or ten important characteristics of an entrepreneur. This is because these are based on a psychological understanding 11 of what an entrepreneur is. Of the thousands of academic papers studying this, a few traits are commonly raised: 1. 2. 3. 4. 5. 6. A desire for significant achievements, mastering of skills, control, or high standards, Self-directed competence to complete tasks and reach goals, innovativeness, ability to tolerate high levels of stress, need for to have control over one’s life and work activity, and the ability to anticipate change and adapt with low levels of support or training.

Entrepreneurship isn’t something that only heroic individuals do. These characteristics can be learnt about, and fostered in particular environments. These characteristics may pre-dispose someone to be innovative, but don’t guarantee such behaviour. So, the entrepreneur identifies a problem, identifies a possible solution and then implements the solution. Further to this, an innovative social entrepreneur doesn’t passively spot a social problem, or identify a solution that already exists. Instead, the entrepreneur seems to almost ‘create’ an opportunity through the following activities12:     Questioning Observing Experimenting Networking the results

Importantly, they don’t do this once. They do it lots of times, in very small steps. In reality, entrepreneurs are not hero’s and superhumans; they don’t take risks. Instead, they take small steps and keep checking and modifying their ideas as they go along.

According to entrepreneurship researcher Saras Sarasvathy, entrepreneurs aren’t different from anyone else; they simply adopt a different approach to problem solving.

Watch this film http://bigthink.com/ideas/15302 and make notes in what you think are they key activities that entrepreneurs employ. Make a note of the behaviours that you think you already practice. Make a note of the behaviours that you think you could do with some more experience NOTES


Andreas Rauch, Michael Frese (2007) Let's put the person back into entrepreneurship research: A meta-analysis on the relationship between business owners' personality traits, business creation, and success European Journal of Work and Organizational Psychology Vol. 16, Iss. 4, 12 http://gsbblogs.uct.ac.za/gsbresearchforum/files/2010/03/2008-SEJ-Entrepreneur-Behaviors-Dyer-Hal-Clay.pdf

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Social Enterprise
The venture that arises out of social innovation and processes of social entrepreneurship involves entrepreneurs coming together with ethical consumers in a marketplace to buy and sell in order to solve a social problem. For social entrepreneurship to turn into a social enterprise the following ingredients are needed:  People working together to create a product or service (the company) and sharing risk13 14 and reducing the costs of transacting with each other  Ethical consumers willing to purchase the product or service  A marketplace in which commonly accepted rules of trade allow for a flow of materials and information through buying and selling  Supplies and suppliers of materials and information to allow the product and service. Making the world a better place can involve ethical activity in each and all of these areas. If we take the ‘company’ as the key institution in the centre, we can then map the relationships between the company and all the other human and non-human actors in the network . The following list is not exhaustive but provides an overview of the types of socially entrepreneurial activities that can occur across the marketplace.


One of the most important legal benefits of creating a company is the safeguarding of personal assets from loss in a business transaction 14 Known as the transaction theory of the firm Coase, Ronald H. (1937). "The Nature of the Firm". Economica 4 (16): 386 –405

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External mission of the company  Customer/beneficiary15 oriented o Selling a product to make profit to re-use the profit for a good cause o Providing a product or service for free to poor or socially excluded people o Providing a service or creating a social outcome that the government is not providing Marketplace oriented o Changing the rules of the marketplace- ‘market-making’ Shareholder oriented o Including workers as shareholders who receive profits in dividend o Including customers/beneficiaries as shareholders who receive profits in dividend Stakeholder oriented o Including community groups in decision-making o Protecting or enhancing the environment Internal mission of the company o Employee ownership or decision-making Product/service oriented o Reducing the amount of materials required in a product o Reducing the price of a service Suppliers orientation o Fair trading of materials and information o Including supply chain in decision-making o Investing in supply-chain capacity and equity

     

Some of the changes in the system are not achieved solely by come company or the workers inside that company. Often these changes are achieved by groups of actors working across boundaries, across the system- all collaborating to make systemic16 and large scale change. These collaborations are called social movements. Tilly17 suggests that there are three characteristics of a social movement.


A distinction can be made between a customer who pays for a product or service, and a beneficiary who benefits from the product. Often, the customer is not the same as a beneficiary-like when the government (customer) pays for a disabled person (beneficiary) to receive a service 16 The central concept ‘system’ embodies the idea of a set of elements connected together which form a whole, this showing properties which are properties of the whole, rather than properties of its component parts. Checkland, P. (1981). Systems Thinking, Systems Practice. John Wiley & Sons

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(1) Campaigns: a sustained, organized public effort making collective claims of target authorities; (2) Repertoire (repertoire of contention): employment of combinations from among the following forms of political action: creation of special-purpose associations and coalitions, public meetings, solemn processions, vigils, rallies, demonstrations, petition drives, statements to and in public media, and pamphleteering; and (3) WUNC displays: participants' concerted public representation of worthiness, unity, numbers, and commitments on the part of themselves and/or their constituencies.

Social justice
All of the commentary above is based on three key assumptions: (1) (2) (3) That society should be just, That society is not yet just, and Everyone has the responsibility to make society just.

This idea of social justice is quite important to understand the purpose of social entrepreneurship. Social justice is the idea that all humans should have equal dignity and should work together to achieve that equity. These are the ideas of equality and solidarity. For many centuries, activists and theorists have identified poverty as a major problem for society, yet even when social groups are lifted out of extreme poverty, significant social problems continue to exist, such as poor health, early death, poor education. In recent years, the idea has emerged that the root of many social problems lies in inequality. READ: http://www.scribd.com/doc/25873703/How-unequal-is-Britain People have unequal amounts of      Wealth Access to materials Access to services provided by governments Access to decision-making bodies Power to change their lives

Not matter how rich a country gets, it does not mean that you can expect to live longer or have better health in the country. Watch this film http://www.ted.com/talks/richard_wilkinson.html Whilst the ‘Spirit Level’ theory is subject to much debate, it prompts us to think that if a just society is more equal and more cohesive than now. When we are thinking about social entrepreneurship, we may have a gut feel of what things should be better in the world, but we also need to have a robust theory of social change, otherwise we will end up trying to change the wrong things, or end up changing lots of things that have no impact on the social problem.

A good Theory of Change helps us to handle complexity adequately without falling into over-simplification. Doug Reeler, 2005


Charles Tilly (2004) Social Movements, 1768–2004, Boulder, CO, Paradigm Publishers.

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Developing a theory of social change. Part of the skill of being a social entrepreneur is communicating how the world will change because of the new product or service, or marketplace configuration. The social entrepreneur recognises how complex the social world is, and works with that complexity. This complexity is known as ‘messy issues18’ or ‘wicked problems19’. Wicked problems are the sorts of social problem where we can’t agree on what the question is, let alone what the solution should be. When we are faced with a messy issue, we have to be very careful about how we identify the problem, what the scope of the problem is, and who gets to decide what is important in a particular problem context. In thinking about the problem we need to:      Show the context in which we are facing a social problem (temporal, geographic, social, cultural, economic, political, etc.). Identify the issues that we face. Represent the actors involved (public, private, civil society), their relationships, values, attitudes, abilities and behaviour Incorporate formal and non-formal institutions (public policies, legal framework, standards, customs, cultural patterns, values, beliefs, consensual norms, etc.) that support the desired change. Visualize the present and, after analysing current reality, projecting an image of the future so that the Rich Picture embodies as much a vision of the present as of the future.

Summary This Unit has explored some basic concepts within the field of activity and study called ‘social entrepreneurship’. The learning outcome for this Unit was to “describe social problems and identify possible market-based interventions to solve those problems”. We have established that the purpose of social entrepreneurship is to ‘make the world a slightly better place’ and we have considered different ways of thinking about that social change. We have introduced the concept of the market-place and the different actors within that marketplace. We have split ‘social enterprise’ into three concepts- innovation, the processes of entrepreneurship that implement the innovation and the organisations and institutions that result from the processes of entrepreneurship. We have also begin considering what the social problems are that we are concerned to solve. These are just the starting point. The remainder of this handbook is designed to further deepen your understanding of these challenges and to give you the opportunity to explore the practical application of social entrepreneurship activities.


Ackoff, Russell, (1974) "Systems, Messes, and Interactive Planning" Portions of Chapters I and 2 of Redesigning the Future. New York/London: Wiley,. 19 Conklin, Jeff; Wicked Problems & Social Complexity, Chapter 1 of Dialogue Mapping: Building Shared Understanding of Wicked Problems, Wiley, November 2005.

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Unit 2: Understanding me- my personal assets, skills and resources and my innovation orientation
You are your most valuable asset- your knowledge, skills and experiences are all key resources in developing a venture that can help to change the world. In order to thrive as a social entrepreneur or work in a socially innovative environment it is important to understand yourself, your skills, experiences and attitudes that are tools that you use in creating a new venture. You also will achieve much more if you can work interactively with other people towards your objectives, so team and group working is essential. Knowing people, developing your own networks and getting them people to help you is known as ‘social capital’. Building these skills up systematically is an essential part of what is known as ‘professional development planning’ or PDP. The objective of this unit is to understand personal assets and to develop social capital in social entrepreneurship

EXERCISE 8: Entrepreneurial Orientation
Take the test at http://get2test.net/index.htm Note the results, do you think like an entrepreneur?

Social capital
No matter how entrepreneurial you might be, getting things done requires other people. Before money (financial capital) the most important resource that you can access is that of social capital. It is free and it can be invested in and increased quite readily. For John Field (2003: 1-2) the central thesis of social capital theory is that 'relationships matter'. The central idea is that 'social networks are a valuable asset'. Interaction enables people to build communities, to commit themselves to each other, and to knit the social fabric. A sense of belonging

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and the concrete experience of social networks (and the relationships of trust and tolerance that can be involved) can, it is argued, bring great benefits to people20. Exhibit : Putnam - why social capital is important First, social capital allows citizens to resolve collective problems more easily… People often might be better off if they cooperate, with each doing her share. ... Second, social capital greases the wheels that allow communities to advance smoothly. Where people are trusting and trustworthy, and where they are subject to repeated interactions with fellow citizens, everyday business and social transactions are less costly…. A third way is which social capital improves our lot is by widening our awareness of the many ways in which our fates are linked... When people lack connection to others, they are unable to test the veracity of their own views, whether in the give or take of casual conversation or in more formal deliberation. Without such an opportunity, people are more likely to be swayed by their worse impulses…. The networks that constitute social capital also serve as conduits for the flow of helpful information that facilitates achieving our goals…. Social capital also operates through psychological and biological processes to improve individual’s lives. … Community connectedness is not just about warm fuzzy tales of civic triumph. In measurable and welldocumented ways, social capital makes an enormous difference to our lives. Robert Putnam (2000) Bowling Alone: The collapse and revival of American community, New York: Simon and Schuster: 288-290

Developing Social Capital
17 IDEAS FOR CONSTRUCTING EXPERIENTIAL LEARNING OPPORTUNITIES TO EXPAND YOUR NETWORK INTO YOUR LEARNING PLAN21 1. 2. Attend monthly meetings of a local community or business group of interest to your career with the goal of meeting at least two new people at each meeting. Join a college or university club and attend meetings, participate in functions, and exchange business cards with members and others to whom the club members come into contact with on regular occasions. At each meeting talk with at least two people exchanging business cards and then follow up within 10 to 14 days to develop a working relationship that is mutually beneficial where desirable. Visit with a lecturer and borrow one of several books he/she has in his/her personal library regarding networking best practices, tools and techniques for developing an entry-level preprofessional network system and write a reflective journal. Plan to have lunch or breakfast at least once every two weeks with someone within the college / university or the external business community but outside your discipline.





Further reading at Smith, M. K. (2000-2009). 'Social capital', the encyclopedia of informal education, www.infed.org/biblio/social_capital.htm . 21 Modified from http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=4&cad=rja&ved=0CFAQFjAD&url=http%3A%2F %2Fjournals.cluteonline.com%2Findex.php%2FJBCS%2Farticle%2Fdownload%2F4886%2F4979&ei=93G3UNu9FaeU0QXD84D4C Q&usg=AFQjCNGctvr8ma6zIvmv2FRx6G-0VT_LAA

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7. 8. 9.

10. 11. 12. 13. 14.

Attend the college or university Career Day and other academic career planning presentations organized by the school for the expressed purpose of meeting practitioners who may have a mutual interest as you. Join a professional organization or a social/community group in the greater community area to develop contacts with their organization. Utilize the class assignments to find a mentor in the greater community area to meet contacts within his/her organization and write a reflective journal. Maintain a file on individuals that you come in contact with at the University with their personal and professional areas of interest – stay in touch each semester with handwritten notes, email correspondence and periodic visits – being alert for articles or information which might be of interest to the person. Invest in business cards to present to others. Send periodic holiday cards to peers, ex-employers, faculty, and staff as a way to keep contact with these people. Develop good relationships with secretaries and other key informants so that they will be more willing to give your messages to their bosses and write a reflective journal. Actively participate in at least three pre-professional organization meetings on community, entrepreneurial, managerial or leadership topics. Volunteer to be a student ambassador or host to guest speakers and at college outreach activities to expand one’s network and contacts and write a reflective journal.

Exercise 9: Building Social Capital
What did you learn from your social capital-building activities?

How might they be useful to your social problem?

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UNIT 3 Creativity and innovation
Social innovation refers to new strategies, concepts, ideas and organizations that meet social needs of all kinds — from working conditions and education to community development and health — and that extend and strengthen civil society. The term has overlapping meanings. It can be used to refer to social processes of innovation, such as open source methods and techniques. Alternatively it refers to innovations which have a social purpose — like microcredit or distance learning. The concept can also be related to social entrepreneurship (entrepreneurship is not necessarily innovative, but it can be a means of innovation) and it also overlaps with innovation in public policy and governance. Social innovation can take place within government, the for-profit sector, the nonprofit sector (also known as the third sector), or in the spaces between them. Research has focused on the types of platforms needed to facilitate such cross-sector collaborative social innovation.

Provocative. Just one word . . . provocative. Until recently, prospective students at All Soul’s College, at Oxford University, took a “on e-word exam.” The Essay, as it was called, was both anticipated and feared by applicants. They each flipped over a piece of paper at the same time to reveal a single word. The word might have been “innocence” or “miracles” or “water” or “provocative.” Their challenge was to craft an essay in three hours inspired by that single word. There were no right answers to this exam. However, each applicant’s response provided insights into the student’s wealth of knowledge and ability to generate creative connections. The New York Times quotes one Oxford professor as saying, “The unveiling of the word was once an event of such excitement that even nonapplicants reportedly gathered outside the college each year, waiting for news to waft out.” This challenge reinforces the fact that everything—every single word—provides an opportunity to leverage what you know to stretch your imagination. For so many of us, this type of creativity hasn’t been fostered. We don’t look at everything in our environment as an opportunity for ingenuity. In fact, creativity should be an imperative. Creativity allows you to thrive in an ever changing world and unlocks a universe of possibilities. With enhanced creativity, instead of problems you see potential, instead of obstacles you see opportunities, and instead of challenges you see a chance to create breakthrough solutions. Look around and it becomes clear that the innovators among us are the ones succeeding in every arena, from science and technology to education and the arts. Nevertheless, creative problem solving is rarely taught in school, or even considered a skill you can learn. Sadly, there is also a common and often-repeated saying, “Ideas are cheap.” This statement discounts the value of creativity and is utterly wrong. Ideas aren’t cheap at all—they’re free. And they’re amazingly valuable. Ideas lead to innovations that fuel the economies of the world, and they prevent our lives from becoming repetitive and stagnant. They are the cranes that pull us out of well-worn ruts and put us on a path toward progress. Without creativity we are not just condemned to a life of repetition, but to a life that slips backward. In fact, the biggest failures of our lives are not those of execution, but failures of imagination. As the renowned American inventor Alan Kay famously said, “The best way to predict the future is to invent it.” We are all inventors of our own future. And creativity is at the heart of invention. As demonstrated so beautifully by the “one-word exam,” every utterance, every object, every decision, and every action is an opportunity for creativity. This challenge, one of many tests given over several days at All Soul’s College, has been called the hardest exam in the world. It required both a breadth of knowledge and a healthy dose of imagination. Matthew Edward Harris, who took the exam in 2007, was assigned the word “harmony.” He wrote in the Daily Telegraph that he felt “like a chef rummaging through the recesses of his refrigerator for unlikely soup ingredients.” This homey simile is a wonderful reminder that these are skills that we have an opportunity to call upon every day as we face challenges as simple as making soup and as monumental as solving the massive problems that face the world. I teach a course on creativity and innovation at the Hasso Plattner Institute of Design, affectionately called the “d.school,” at Stanford University. This complements my full-time job as Executive Director of the Stanford Technology Ventures Program (STVP), in the Stanford School of Engineering. At STVP our

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mission is to provide students in all fields with the knowledge, skills, and attitudes needed to seize opportunities and creatively solve major world problems. On the first day of class, we start with a very simple challenge: redesigning a name tag. I tell the students that I don’t like name tags at all. The text is too small to read. They don’t include the information I want to know. And they’re often hanging around the wearer’s belt buckle, which is really awkward. The students laugh when they realize that they too have been frustrated by the same problems. Within fifteen minutes the class has replaced the name tags hanging around their necks with beautifully decorated pieces of paper with their names in large text. And the new name tags are pinned neatly to their shirts. They’re pleased they have successfully solved the problem and are ready to go on to the next one. But I have something else in mind. . . . I collect all of the new name tags and put them in the shredder. The students look at me as though I’ve gone nuts! I then ask, “Why do we use name tags at all?” At first, the students think that this is a preposterous question. Isn’t the answer obvious? Of course, we use name tags so that others can see our name. They quickly realize, however, that they’ve never thought about this question. After a short discussion, the students acknowledge that name tags serve a sophisticated set of functions, including stimulating conversations between people who don’t know each other, helping to avoid the embarrassment of forgetting someone’s name, and allowing you to quickly learn about the person with whom you are talking. With this expanded appreciation for the role of a name tag, students interview one another to learn how they want to engage with new people and how they want others to engage with them. These interviews provide fresh insights that lead them to create inventive new solutions that push beyond the limitations of a traditional name tag. One team broke free from the size constraints of a tiny name tag and designed custom T-shirts with a mix of information about the wearer in both words and pictures. Featured were the places they had lived, the sports they played, their favorite music, and members of their families. They vastly expanded the concept of a “name tag.” Instead of wearing a tiny tag on their shirts, each shirt literally became a name tag, offering lots of topics to explore. Another team realized that when you meet someone new, it would be helpful to have relevant information about that person fed to you on an as-needed basis to help keep the conversation going and to avoid embarrassing silences. They mocked up an earpiece that whispers information about the person with whom you are talking. It discreetly reveals helpful facts, such as how to pronounce the person’s name, his or her place of employment, and the names of mutual friends. Yet another team realized that in order to facilitate meaningful connections between people, it is often more important to know how the other person is feeling than it is to know a collection of facts about them. They designed a set of colored bracelets, each of which denotes a different mood. For example, a green ribbon means that you feel cheerful, a blue ribbon that you are melancholy, a red ribbon that you’re stressed, and a purple ribbon that you feel fortunate. By combining the different colored ribbons, a wide range of emotions can be quickly communicated to others, facilitating a more meaningful first connection. This assignment is designed to demonstrate an important point: there are opportunities for creative problem solving everywhere. Anything in the world can inspire ingenious ideas—even a simple name tag. Take a look around your office, your classroom, your bedroom, or your backyard. Everything you see is ripe for innovation. Adapted from INGENIUS by Tina Seelig, Ph.D. Copyright © 2012 by Tina L. Seelig.

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What does creativity look like? Draw a picture of creativity

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“Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. It seemed obvious to them after a while. That’s because they were able to connect experiences they’ve had and synthesize new things”. Steve Jobs, Wired magazine, 1996

Watch this film http://www.ted.com/talks/tim_brown_on_creativity_and_play.html

Draw your neighbour really quickly

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The Rules of Brainstorming
We happen to think idea generation is an art form. It's about setting a safe, creative space for people to feel like they can say anything, be wild, not be judged, so that new ideas can be born. Traditionally, the group brainstorm is an activity to generate ideas in-person. With OpenIDEO, the community is turning that model on its head by creating a digital space where ideas spark and fly. We're excited to see the Concepting Phase turning into this new form of digital brainstorming. To help you generate better ideas, here's a set of rules we use in traditional group brainstorming, to set the boundaries of that creative space. The rules for digital brainstorming have yet to be discovered. Based on your experience maybe you can contribute some in the comments!

1. Defer judgment Creative spaces don't judge. They let the ideas flow, so that people can build on eachother and foster great ideas. You never know where a good idea is going to come from, the key is make everyone feel like they can say the idea on their mind and allow others to build on it. On OpenIDEO, we've made this literally into a Build On This button. Click on it to start your own idea, building on someone elses. This still means we pose questions and provocations so that the ideas can get to a better place. Take a look at the comments section under each of the Concepts, where we see lots of builds and questions tackling different dimensions of the idea. 2. Encourage wild ideas Wild ideas can often give rise to creative leaps. In thinking about ideas that are wacky or out there we tend to think about what we really want without the constraints of technology or materials. We can then take those magical possibilities and perhaps invent new technologies to deliver them. We say embrace the most out-of-the-box notions and build build build... 3. Build on the ideas of others Being positive and building on the ideas of others take some skill. In conversation, we try to use and instead of but... On OpenIDEO, you can click the button that says Build on this and then say And... Or leave someone a comment with a new build. 22 | P a g e

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4. Stay focused on the topic We try to keep the discussion on target, otherwise you can diverge beyond the scope of what we're trying to design for. 5. One conversation at a time Of course on OpenIDEO, there's lots of conversations happening at once, which is great! Always think about the challenge topic and how this could apply. 6. Be visual In live brainstorms we use coloured markers to write on Post-its that are put on a wall. Nothing gets an idea across faster than drawing it. Doesn’t matter how terrible of a sketcher you are! It's all about the idea behind your sketch. On OpenIDEO, we love seeing photos, sketches, found images for your ideas. You could also try your hand at sketching it out or mocking it up on the computer. We love visual ideas as the images make them memorable. Does someone else’s idea excite you? Maybe make them an image to go with their idea. 7. Go for quantity Aim for as many new ideas as possible. In a good session, up to 100 ideas are generated in 60 minutes. Crank the ideas out quickly. Our Concepting challenges usually run for 2-4 weeks. How do we keep up the pace and the momentum and get more quantity? It's up to you guys to spark and build!

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EXERCISE 12: 30 Circles creativity exercise
In one minute, adapt as many circles as you can into objects, by drawing on them

Balloon Kenya blog Posted on June 8, 2011 Inspiration is an amazingly powerful feeling. It quickly fills you with drive and determination as your mind ventures off on a series of tangents. I experienced such a feeling a couple of months back when I was interning at the Young Foundation. I was sitting in an ideation class with Stu who works there and we were discussing my idea for Kenya when he mentioned gap years and business training. Suddenly I had this feeling of joy and energy as an idea quickly started to formulate in my mind. I left the office soon after too excited to stay and I headed for the underground to journey home. On my commute I got out a notepad and quickly jotted down some more thoughts. And by the time I got off the train to walk the final few steps to my house I was bouncing along with a huge grin on my face. It seemed like in the space of an hour I had gone from being farely clueless on my future to having a very clear idea of what I wanted to do. I was suddenly inspired to found my own social enterprise. I was tired of waiting for opportunities to arise and I was excited that now I was going to make something happen. I returned home and quickly grabbed my mum to explain my idea. After all mums are the crucial litmus test and she would have to like it. Thankfully she uttered the words, ‘it’s brilliant’ and I knew I was on to something. And so a fairly average day had in an instance turned to possibly one of the defining days of my life. Inspiration had hit me and I couldn’t be happier. KenyaWorks was born…

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Unit 4 Social Problems and Opportunities
Anti-social behaviour, homelessness, drugs, mental illness: all problems in today’s society. But what makes a problem social? This unit will help you to discover how these issues are identified, defined, given meaning and acted upon. You will also look at the conflicts within social science in this area 22. Social problems, also called social issues, affect every society, great and small. Even in relatively isolated, sparsely populated areas, a group will encounter social problems. Part of this is due to the fact that any members of a society living close enough together will have conflicts. It’s virtually impossible to avoid them, and even people who live together in the same house don’t always get along seamlessly. On the whole though, when social problems are mentioned they tend to refer to the problems that affect people living together in a society. The list of social problems is huge and not identical from area to area. Some predominant social issues include the growing divide between rich and poor, domestic violence, unemployment, pollution, urban decay, racism and sexism, and many others. Sometimes social issues arise when people hold very different opinions about how to handle certain situations like unplanned pregnancy. While some people might view abortion as the solution to this problem, other members of the society remain strongly opposed to its use. In itself, strong disagreements on how to solve problems create divides in social groups. Other issues that may be considered social problems aren't that common in the US and other industrialized countries, but they are huge problems in developing ones. The issues of massive poverty, food shortages, lack of basic hygiene, spread of incurable diseases, ethnic cleansing, and lack of education inhibits the development of society. Moreover, these problems are related to each other and it can seem hard to address one without addressing all of them. It would be easy to assume that a social problem only affects the people whom it directly touches, but this is not the case. Easy spread of disease for instance may tamper with the society at large, and it’s easy to see how this has operated in certain areas of Africa. The spread of AIDs for instance has created more social problems because it is costly, it is a danger to all members of society, and it leaves many children without parents. HIV/AIDs isn’t a single problem but a complex cause of numerous ones. Similarly, unemployment in America doesn’t just affect those unemployed but affects the whole economy. It’s also important to understand that social problems within a society affect its interaction with other societies, which may lead to global problems or issues. How another nation deals with the problems of a developing nation may affect its relationship with that nation and the rest of the world for years to come. Though the United States was a strong supporter of the need to develop a Jewish State in Israel, its support has come at a cost of its relationship with many Arabic nations. Additionally, countries that allow multiple political parties and free expression of speech have yet another issue when it comes to tackling some of the problems that plague its society. This is diversity of solutions, which may mean that the country cannot commit to a single way to solve an issue, because there are too many ideas operating on how to solve it. Any proposed solution to something that affects society is likely to make some people unhappy, and this discontent can promote discord. On the other hand, in countries where the government operates independently of the people and


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where free speech or exchange of ideas is discouraged, there may not be enough ideas to solve issues, and governments may persist in trying to solve them in wrongheaded or ineffective ways. The very nature of social problems suggests that society itself is a problem. No country has perfected a society where all are happy and where no problems exist. Perhaps the individual nature of humans prevents this, and as many people state, perfection many not be an achievable goal.

Problems as opportunities
“It is easy to assume that Africa is a continent of despair, disaster and disarray. But those who live and work there say that there is another story to be told — one of resilience, entrepreneurialism and resourcefulness. Experience shows that out of difficult circumstances can emerge the best kind of innovation — simple yet life-changing for those who embrace it. One of the most notable recent examples has been Vodafone's launch of the M-Pesa payment system. M-Pesa started out in Kenya, and is a method of transferring cash that bypasses the need for banks and specialist money transfer services. Users register and then receive a Sim card, which features an application that acts as a virtual wallet. They can put money into their M-Pesa account via agents. This can be transferred via mobile phone to another person, who can then withdraw the cash at another agent. None of this might seem innovative to a reader who is used to electronic banking and instant access to their funds, but M-Pesa was initially designed to help Kenyans overcome the problem of the huge distances some people had to travel to money transfer agencies. Initially it was aimed at workers who had moved to city areas wanting to send money back to family and dependants in rural areas. But the scheme has taken off in ways that Vodafone had not anticipated. Customers have been using the service to pay bills, and employers sometimes pay their staff wages via the system.23” One of the most insidious, unproductive ways we use time is complaining about our problems— especially when we should be thinking about them as new opportunities. A problem is just a problem because we think of it that way. Stuff happens. If we don’t like the stuff, we label it a problem and try to jam the world back into the way it was going before. If we do like the stuff, we label it an opportunity and try to take advantage of it. The difference between a problem and an opportunity is what we do with it, not what it is to begin with.


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Have a think about the following ventures and identify the problems that they solve for their customers. Apple ipod

Nike trainers

Amazon books

Dyson vacuum cleaner

What is it about their solutions that make people want to PAY MONEY for them?

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African innovations24
HIPPO WATER ROLLER Idea: The Hippo water roller is a drum that can be rolled on the ground, making it easier for those without access to taps to haul larger amounts of water faster. Problem: Two out of every five people in Africa have no nearby water facilities and are forced to walk long distances to reach water sources. Traditional methods of balancing heavy loads of water on the head limit the amount people can carry, and cause long-term spinal injuries. Women and children usually carry out these time-consuming tasks, missing out on educational and economic opportunities. In extreme cases, they can be at increased risks of assault or rape when travelling long distances.

Method: The Hippo roller can be filled with water which is then pushed or pulled using a handle. The weight of the water is spread evenly so a full drum carries almost five times more than traditional containers, but weighs in at half the usual 20kg, allowing it to be transported faster. A steel handle has been designed to allow two pushers for steeper hills. “Essentially it alleviates the suffering people endure just to collect water and take it home. Boreholes or wells can dry out but people can still use the same roller [in other wells]. One roller will typically serve a household of seven for five to seven years,” said project manager Grant Gibbs. Outcome: Around 42,000 Hippo rollers have been sold in 21 African countries and demand exceeds supply. Costing $125 each, they are distributed through NGOs. A mobile manufacturing unit is set to begin making them in Tanzania. Nelson Mandela has made a “personal appeal” for supporting for the project, saying it “will positively change the lives of millions of our fellow South Africans”. ETHANOL COOKING OIL PLANT Idea: Refining locally sourced cassava into ethanol fuel to provide cleaner cooking fuel. Problem: Forests in Africa are being cut down at a rate of 4m hectares a year, more than twice the worldwide average rate. Some of this is fuelled by demand for wood and charcoal, which the UN estimates is still used in almost 80% of African homes as a cheaper option to gas. The smoke from cooking using these solid fuels also triggers respiratory problems that cause nearly 2 million deaths in the developing world each year. Method: CleanStar Mozambique, a partnership between CleanStar and Danish industrial enzymes producer Novozymes, has opened the world’s first sustainable cooking-fuel plant in Mozambique.


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CleanStar has steered clear of monoculture crops in favour of sustainable farming methods. One-sixth of the final yield comes from locally harvested cassava, which requires farmers to plant in rotation with other edible crops to keep the soil fertile. A Sofala Province-based plant transforms the products into ethanol, which is sold on the local market along with adapted cooking stoves also produced by the company. Outcome: “City women are tired of watching charcoal prices rise, carrying dirty fuel, and waiting for the day that they can afford a safe gas stove and a reliable supply of imported cylinders,” CleanStar marketing director Thelma Venichand said. “They are ready to buy a modern cooking device that uses clean, locally made fuel, performs well and saves them time and money.” The plant aims to produce 2m litres of fuel annually, and reach 120,000 households within three years. THE CARDIOPAD Idea: A computer tablet diagnoses heart disease in rural households with limited access to medical services. Problem: Cardiovascular diseases kill some 17 million worldwide annually. In many African countries, those at risk often have to spend huge amounts of money and travel hundreds of miles to reach heart specialists concentrated in main urban centres. The Cameroon Heart Foundation has noted a "sharp spike" in heart disease among its 20 million-strong population, which is served by fewer than 40 heart specialists. Method: A program on the Cardiopad, designed by 24-year-old Cameroonian engineer Arthur Zang, collects signals generated by the rhythmic contraction and expansion of a patient's heart. Electrodes are fixed near the patient's heart. Africa's first fully touch-screen medical tablet then produces a moving graphical depiction of the cardiac cycle, which is wirelessly transmitted over GSM networks to a cardiologist for interpretation and diagnosis. "I designed the Cardiopad to resolve a pressing problem. If a cardiac exam is prescribed for a patient in Garoua in the north of the country, they are obliged to travel a distance of over 900km to Yaoundé or Douala," Zang says. Outcome: At the Laquintinie, one of the country's biggest hospitals, cardiologist Dr Daniel Lemogoum said that, in a recent survey, three in every five persons who uses the Cardiopad has been diagnosed as hypertensive, or at risk of heart diseases. "These are people who would not necessarily have been aware they are hypertensive. It means sudden deaths might be preventable."

Triggers and inspirations that prompt innovation25
Here we describe some of the triggers and inspirations that prompt innovation, that demand action on an issue, or that mobilise belief that action is possible. 1) Crisis. Necessity is often the mother of invention, but crises can also crush creativity. One of the definitions of leadership is the ability to use the smallest crisis to achieve the greatest positive change. Many nations have used economic and social crises to accelerate reform and innovation and in some cases have used the crisis to deliberately accelerate social innovation. New Orleans after Hurricane Katrina is one example (LousianaRebuilds.info or the New Orleans Institute for Resilience and Innovation); China’s much more effective response to the Szechuan earthquake is another. Both, in very different ways, institutionalised innovation as part of the response.


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2) Efficiency savings. The need to cut public expenditure often requires services to be designed and delivered in new ways. Major cuts can rarely be achieved through traditional efficiency measures. Instead they require systems change – for example, to reduce numbers going into prison, or to reduce unnecessary pressures on hospitals. The right kinds of systems thinking can open up new possibilities. 3) Poor performance highlights the need for change within services. This can act as a spur for finding new ways of designing and delivering public services. The priority will usually be to adopt innovations from elsewhere. 4) New technologies can be adapted to meet social needs better or deliver services more effectively. Examples include computers in classrooms, the use of assistive devices for the elderly, or implants to cut teenage pregnancy. Through experiment it is then discovered how these work best (such as the discovery that giving computers to two children to share is more effective for education than giving them one each). Any new technology becomes a prompt. Artificial intelligence, for example, has been used in family law in Australia and to help with divorce negotiations in the US. 5) New evidence brings to light new needs and new solutions for dealing with these needs, such as lessons from neuroscience being applied to childcare and early years’ interventions or knowledge about the effects of climate change.

Thinking differently
New solutions come from many sources – e.g. adapting an idea from one field to another, or connecting apparently diverse elements in a novel way. It’s very rare for an idea to arrive alone. More often, ideas grow out of other ones, or out of creative reflection on experience. They are often prompted by thinking about things in new or different ways. Here, we outline some of the processes that can help to think and see differently. Starting with the user through user research and participant observation, including ethnographic approaches such as user/citizen diaries, or living with communities and individuals to understand their lived worlds. SILK at Kent County Council, for example, used ethnographic research to review the lifestyles of citizens in their area. ‘Positive deviance’ is an asset-based approach to community development. It involves finding people within a particular community whose uncommon behaviours and strategies enable them to find better solutions to problems than their peers, while having access to the same resources. The Positive Deviance Initiative has already had remarkable results in health and nutrition in Egypt, Argentina, Mali and Vietnam. Reviewing extremes such as health services or energy production in remote communities. Design for extreme conditions can provide insights and ideas for providing services to mainstream users. For example, redesigning buildings and objects to be more easily used by people with disabilities has often generated advances that are useful to everyone. Visiting remains one of the most powerful tools for prompting ideas, as well as giving confidence for action. It is common in the field of agriculture to use model farms and tours to transfer knowledge and ideas. One excellent example is Reggio Emilia, a prosperous town in Northern Italy which, since the Second World War, has developed a creative, holistic and child-centred approach to early years’ education which acts as an inspiration to early years’ educators all over the world. Reggio Children is a mixed private-public company which co-ordinates tours and visits to early years’ centres in the area. 30 | P a g e

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Rethinking space. Many of society’s materials, spaces and buildings are unused, discarded and unwanted. Old buildings and factories remain fallow for years, acting as a drain on local communities both financially and emotionally. The trick is to see these spaces and buildings in a more positive light, as resources, assets and opportunities for social innovation. Assets can be reclaimed and reused and, in the process, environments can be revitalised, social needs can be met, and communities energised. One example is the work of ‘activist architect’, Teddy Cruz. Cruz uses ‘waste’ materials from San Diego to build homes, health clinics and other buildings in Tijuana. He has become well-recognised for his low-income housing designs, and for his ability to turn overlooked and unused spaces within a dense, urban neighbourhood into a liveable, workable environment. Another example is the regeneration of Westergasfabriek by ReUse in Amsterdam, or the transformation of a disused elevated railway in New York into an urban park – the High Line.

Selecting problems
If I had 60 minutes to solve a problem and my life depended on it, I’d spend 55 minutes determining the right question to ask, and 5 minutes thinking aloud about the solution. Albert Einstein At this stage, selecting an unsuitable problem can really set you back. An unsuitable problem is either too narrow, so that it is already framed as a solution, or too broad, so that it is unrealistic to solve within your means. “There is no internet connection in my flat” TOO NARROW “There are no jobs for youths in Northampton” TOO BROAD If I had asked people what they wanted, they would have said faster horses” Henry Ford, inventor of the first mass produced car. Your job is to keep asking WHY? Why does this person need a faster horse? Get to the root of the problemwhat needs are left unfulfilled.

Understanding how root causes work26
Root causes work like the way sap flows in a tree. Deep down in the roots, water and nutrients are turned into sap. This flows up the roots, up the trunk, along the branches, and to the many leaves on the tree. Each leaf is a symptom.


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Root causes work the same as sap. Causal chains run from the root causes all the way up to symptoms. A causal chain is a flow of influence, also known as cause and effect. All problems stem from their root causes. Difficult problems have many symptoms, just as a tree has many leaves. A difficult problem usually has multiple root causes, just as a tree has many roots. The roots of a problem connect to its symptoms with long chains of causal links. Thus: A problem is a tree of causal links. When a tree is transplanted, enough of its roots must be carefully dug up and moved with the tree, or the tree will wither or die. To solve a difficult problem, enough of its root causes must be carefully found and resolved, or when the solutions are implemented they will be temporary, partial, or fail altogether. Look at tree to see how deep most popular solutions to the sustainability problem go. They attempt to solve intermediate causes. Thus they are superficial solutions and tend to not work nearly as well as they should because intermediate causes cannot be changed without changing their causes, which ultimately are the root causes. But with root cause analysis we can go deep by tracing the causal chain, finding the root causes, and solving them. Looking at the tree again we see how deep analysis must go to solve the problem. The analysis must go all the way down the trunk and below the ground to the normally hidden fundamental layer of the problem, so we can find the root causes and resolve them with fundamental solutions. Visualizing how the tree of causal links works is the key to being able to analyze the sustainability problem and problems like it. Right from the start this ability determines success or failure. So let's take the above tree and rearrange it into a diagram that tells us even more. In the diagram below the the tree is on the right. Click on it to see or hide the causal chain. Think of the leaves as the problem symptoms. The branches and trunk are the long chains of intermediates causes. The roots of the tree are the root causes of the problem.

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The left side of the diagram allows the analytical problem solver to see what matters when doing root cause analysis. The key strategy is to break through the superficial layer (which is easy to see and requires no serious analysis) and penetrate into the fundamental layer of the problem. This is difficult to see, which is what makes a problem difficult. It's the part of the problem that's below ground. The only way to see what's in the fundamental layer of a problem is to dig down deep into the problem with some serious analysis. Once you've penetrated the fundamental layer you can correctly see the root causes and then, with a little more work, their fundamental solutions. These will usually be surprisingly different from the superficial solutions that were being applied, so when you propose your fundamental solutions you may encounter disbelief and resistance. But if you point to the specific root causes the fundamental solutions are resolving, that disbelief and resistance will melt away, and your solutions will be embraced. The best part is fundamental solutions can solve the problem because they resolve its root causes. Superficial solutions cannot solve problems because they are directed at intermediate causes. No matter how clever a superficial solution is, or how long its applied, or how much money is poured into promoting it, a superficial solution can never fully and permanently solve a problem. Only root causes can do that. That's how we can strike at the root.

Analysing complex situations
“Some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them.” This quote from Jeff Conklin describes nicely the challenge of continuing to improve neighbourhood and community-based enterprises. At a time when local authorities, health trusts and development agencies in any given locality, are experiencing severe spending cuts, the complexity of addressing social problems become ever more ‘wicked’.

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Solving social problems is essentially a ‘wicked problem ’, which is one where those involved can’t agree on what the question is, let alone what the solution should be. This is particularly appropriate for areas where social problems have been a challenge for a long period of time. The concept of wicked problems dates back to the 1970s when Rittel and Webber (1973: 155) coined the phrase to describe a class of problem that defy solution in the context of social planning: “The search for scientific bases for confronting problems of social policy is bound to fail, because of the nature of those problems. They are ‘wicked’ problems, whereas science has developed to deal with ‘tame’ problems. Policy problems cannot be definitively described. Moreover, in a pluralistic society there is nothing like the indisputable public good; there is no objective definition of equity; policies that respond to social problems cannot be meaningfully correct or false; and it makes no sense to talk about ‘optimal solutions to social problems’ unless severe qualifications are imposed first. Even worse, there are no ‘solutions’ in the sense of definitive and objective answers.” A wicked problem is a social or cultural problem that is difficult or impossible to solve for as many as four reasons: incomplete or contradictory knowledge, the number of people and opinions involved, the large economic burden, and the interconnected nature of these problems with other problems. Poverty is linked with education, nutrition with poverty, the economy with nutrition, and so on. These problems are typically offloaded to policy makers, or are written off as being too cumbersome to handle en masse. Yet these are the problems—poverty, sustainability, equality, and health and wellness—that plague our cities and our world and that touch each and every one of us. These problems can be mitigated through the process of design, which is an intellectual approach that emphasizes empathy, abductive reasoning, and rapid prototyping. Horst Rittel, one of the first to formalize a theory of wicked problems, cites ten characteristics of these complicated social issues: 1. Wicked problems have no definitive formulation. The problem of poverty in Northampton is grossly similar but discretely different from poverty in Nairobi, so no practical characteristics describe "poverty." It's hard, maybe impossible, to measure or claim success with wicked problems because they bleed into one another, unlike the boundaries of traditional design problems that can be articulated or defined. Solutions to wicked problems can be only good or bad, not true or false. There is no idealized end state to arrive at, and so approaches to wicked problems should be tractable ways to improve a situation rather than solve it. There is no template to follow when tackling a wicked problem, although history may provide a guide. Teams that approach wicked problems must literally make things up as they go along. There is always more than one explanation for a wicked problem, with the appropriateness of the explanation depending greatly on the individual perspective of the designer. Every wicked problem is a symptom of another problem. The interconnected quality of socio-economic political systems illustrates how, for example, a change in education will cause new behaviour in nutrition.








A great resource on the application of wicked issues theory to design and social entrepreneurship can be found at


Ackoff, Russell, (1974) "Systems, Messes, and Interactive Planning" Portions of Chapters I and 2 of Redesigning the Future. N ew York/London:


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No mitigation strategy for a wicked problem has a definitive scientific test because humans invented wicked problems and science exists to understand natural phenomena. 8. Offering a "solution" to a wicked problem frequently is a "one shot" design effort because a significant intervention changes the design space enough to minimize the ability for trial and error. 9. Every wicked problem is unique. 10. Designers attempting to address a wicked problem must be fully responsible for their actions. Based on these characteristics, not all hard-to-solve problems are wicked, only those with an indeterminate scope and scale. So most social problems—such as inequality, political instability, death, disease, or famine—are wicked. They can't be "fixed." But because of the role of design in developing infrastructure, designers can play a central role in mitigating the negative consequences of wicked problems and positioning the broad trajectory of culture in new and more desirable directions. This mitigation is not an easy, quick, or solitary exercise. While traditional circles of entrepreneurship focus on speed and agility, designing for impact is about staying the course through methodical, rigorous iteration. Due to the system qualities of these large problems, knowledge of science, economics, statistics, technology, medicine, politics, and more are necessary for effective change. This demands interdisciplinary collaboration, and most importantly, perseverance

TAMING PROBLEMS The "old design" approach—the creation of artifacts for consumption—has traditionally been managed in the form of individual projects. This is most obvious when a consultant works with a client. The typical engagement works like this: A client—often a large corporation—identifies a problem that requires design skills. The client assigns a budget and a timeline for solving the problem. The consultant then receives the "project," which is a finite engagement with a beginning, middle, and end. The project as a unit of engagement is so ubiquitous as to be nearly unquestioned, and because it is the common container in industry, it has become the common container in education as well. Most schools have integrated the accreditation-driven push towards assessment and learning outcomes, where formal criteria for success are established prior to learning and the student and faculty are judged against these criteria upon learning's completion. The projectising of a problem leads to the ‘taming29’ of the problem- through the selection of a part of the problem, setting clear objectives, assigning limited and time bound resources to a limited number of alternative solutions in order to result in a limited set of outcomes. An alternative approach is to focus on the locality as the unit of problem solving, rather than focussing on the problem. Placing the problem in a wider context, as a small part of a wider (and 30 generally successful) system of interest allows the whole locality (the built environment, the people, their networks and their problem solving capabilities) to be utilised to address the problem.

29 30

Chapman, J. (2004). Systems Failure — Why Governments must learn to think differently, 2nd ed. London: DEMOS The central concept ‘system’ embodies the idea of a set of elements connected together which form a whole, this showing properties which

are properties of the whole, rather than properties of its component parts.

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PERCEPTIONS The usual strategy for identifying that a problem exists is to collate a large amount of existing data, sift it to find patterns and to prioritise those patterns. The problem is that people sifting the data tend 31 to see patterns that they already think exist . In this way, localities are confirmed to suffer from certain types of crimes. The data then tends to confirm that which is already known, operationally and anecdotally. A lot of effort is spent on refining the data in an attempt to understand the problem better. All that actually happens is that we understand the data better, not the problem. Instead, it is possible to look more closely and deliberately at people’s perceptions of the data, rather than the data itself. Being interested in people’s perceptions of data help us to understand what possible solutions that they have in their head when they are sifting the data. This helps us to 32 understand how they are constructing the problem in their heads. ENRICHING THE DATA/ENRICHING THE PROBLEM Instead of creating more data, what is required is a richer understanding of that data, and how it is perceived by different people and interest groups in the given locality. This can be done through a process of ‘rich picturing’
Rich pictures were particularly developed as part of Peter Checkland’s Soft Systems Methodology for gathering information about a complex situation. Rich Pictures provide a mechanism for learning about complex or ill-defined problems by drawing detailed ("rich") representations of them. Typically, rich pictures follow no commonly agreed syntax, usually consist of symbols, sketches or "doodles" and can contain as much (pictorial) information as is deemed necessary. The finished picture may be of value to other stakeholders of the problem being described since it is likely to capture many different facets of the situation, but the real value of this technique is the way it forces the creator to think deeply about the problem and understand it well enough to express it pictorially (a process known as action learning).

Rich picturing captures the ‘perceptions’ we have of data, rather than the data itself. Intelligence staff and community members can come together around a table with different types of data about crime events and insider knowledge and map them as equals. The picturing process needn’t be tidy or elegant, but works to identify differences in understanding about priorities and resources in a locality, and allows partners to have a discussion about those differences in order to solve the problems. VISIONS, PRIORITIES AND PLANS Rich picturing works to analyse the problem, but it is also used to develop a vision and plan for the locality, placing policing priorities into the context of the existing assets and capabilities of the locality and identifying areas where investment will enhance those capabilities, shifting focus away from funding of ongoing remediation projects. The sensitivity of these investment plans can then be tested to understand the factors that contribute most to success or failure.

Checkland, P. (1981). Systems Thinking, Systems Practice. John Wiley & Sons
31 32

Maccoun, Robert J. (1998), "Biases in the interpretation and use of research results", Annual Review of Psychology 49: 259 –87

Berger, P. L. and T. Luckmann (1966), The Social Construction of Reality: A Treatise in the Sociology of Knowledge, Garden City, NY: Anchor Books

Checkland, Peter B. and Scholes, J. Soft Systems Methodology in Action, John Wiley & Sons Ltd. 1990

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GETTING THE MIND-SET RIGHT It’s always tempting to suggest that a problem can be definitively solved, but this process allows the limits of success to be considered. The following principles are guides to understanding the limits to success.
         The way a problem is described in the first place determines the nature of the solution- the right questions need to be asked to get the right answers Every wicked problem, and therefore every community, is essentially unique. Defining wicked problems is itself a wicked problem. Wicked problems do not have a limited number of potential solutions. Wicked problems don’t stop being wicked at the end of a project. There is never a ‘problem-solved’ moment Every solution to a wicked problem is a "one-shot operation"; because there is no opportunity to learn by trial and error, every attempt counts significantly. Every wicked problem can be considered to be a symptom of another problem. You have no right to be wrong (we don’t have permission to get it and try again).

Solutions lie in a combination of small actions, building on assets and capabilities that already exist rather than big high profile ‘projects’ which ultimately finish without addressing the whole issue. When dealing with a complex situation, it is likely that there will be a variety of different ideas and perspectives on the same situation. Therefore a process of gathering this complex information together into data that can be easier to understand is required. For this, a method of using diagrams will be most appropriate. This approach will be most effective as the use of visual aids will help interpret this ‘wicked issue’. Also it will prove helpful when dealing with a multifarious community as pictures are often able to communicate a common language, for example ‘£’ ‘€’ ‘$’ are easily identified as money or ‘’ or ‘’ can communicate their emotion towards a situation. There are however many different types of pictures and diagram methods that can be used and this of course depends on the situation. It is therefore important to clearly understand why you are using a particular type of diagram and what are the benefits and limitations. Diagram types include spray diagrams and mind maps, relationship diagrams and concept maps, system maps, influence diagrams, multiple cause diagrams, sign graph diagrams, conceptual models, causal loop diagrams, activity 37 | P a g e

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sequence diagrams, decision trees and networks, flow block and process diagrams, algorithms or flow charts, input-output diagrams, control model, objective tree, fishbone diagram, cartoon story board, force-field diagrams, cognitive map and rich picture diagrams. It is evident that there are many different types of diagrams that all have a different purpose of sifting out information however the most appropriate diagram for this community profile is a rich picture diagram.

What is a rich picture?
A rich picture is part of a soft systems methodology (SSM) developed by Peter Checkland in the 1960’ and 70’s. A SSM is a way of thinking of the ‘real world’ by ‘constraining your thinking in order for you to expand your thinking’. It allows you to structure your thinking about the real world. This means that it allows you to expand your way of thinking so that you can better understand the world (or in this case the research required for the community profile) giving ideas for improvements (this relates to the actions that you will take when you have identified the issues). A rich picture is used when the situation is not yet clear or a ‘system of interest’ has not yet been identified therefore it is used in the beginning process of your community profile. It is a way of gathering information about a complex situation (or wicked issue) by influencing our thoughts before we are clear on the situation or outcome. We use rich pictures to summarise information that can be studied to see what emerging patterns you can find. Furthermore it is a way of communicating different perspectives in the same space by collecting different viewpoints on the same situation, encouraging us to think about a complex problem to approach in a different way. When we are looking at ‘wicked issues’ it can be difficult to assess the situation accurately however this creative method allows you to paint a picture. When situations are so complex we find it easier to communicate our ideas through the use of pictures and diagrams to explain and evaluate it, in comparison to words. A rich picture is thus a way of recording these wicked issues down. Visual aids are used as a method to summarise relationships, community assets, causes and effects, characteristics and viewpoints just as a few examples. This may include cartoon sketches, symbols, pictorial symbols, diagrams and keywords. Through this process of drawing the ‘problem’ it allows you to develop these thoughts and demonstrate how one aspect affects another. The finished result allows you to see holistically the importance of individual components as a whole.

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How to create your rich picture
STEP 1: A rich picture can be created individually or as a group. The starting point of your rich picture is to think about the situation. Step-by-step, look at the situation and break it up so that you can begin to identify the ‘problems’ or separate ‘issues’ that contribute to it. Similar to a brainstorm it may help to put the ‘situation’ into the centre of the page. This way it can be easily seen what the rich picture is concerned with.

STEP 2: It is important to think about the way that you see or interpret the situation. When you have done this you can start to draw the first piece of the puzzle. By thinking of the issue first you can begin to think of the way in which you interpret this into a picture, diagram, symbol etc. This may help by using symbols such as ‘!’ or ‘?’ or perhaps colours can represent your situations, or even buzz words such as ‘angry’ or ‘isolation’. However you choose to represent your issue, it is important that this relates to the way that you see the situation as this will begin to develop your understanding of it and this is important when you need to go back and assess your holistic viewpoint.

STEP 3: When these ideas develop further it is also important to show the way in which these interrelate, or if one issue causes another to happen or if one situation changes something else. Either way, if something is affected by another, this can easily be shown by arrows. During this process when you think of a contributing factor ask yourself ‘how does this contribute to the issue I am looking at?’ ‘who does this effect?’ ‘why is this important?’ By doing this it will develop your thinking and understanding of the whole situation by encouraging you to think harder about that single situation in the way in which it contributes or overlaps on others.

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STEP 4: Remember to include everything that you believe to contribute to the whole situation. Although buzz words can be used, try to show your situation through pictures and diagrams and only use words when your pictures are not quite enough to explain the real problem. Whilst it is important to include every detail that you deem necessary it is equally important to ‘let yourself go’ by allowing your thoughts to flow freely. This is a crucial aspect of a rich picture, as the whole point of this exercise allows you to see a problem that is so complex and difficult to comprehend, in a way that step-by-step you can begin see how constituent parts contribute to the whole situation. Avoid using a ‘system’ or an organised approach, as by doing this, you may be assuming what the problem is, which will defeat the point of the whole exercise. Also you may be channelling your thoughts down a particular route; by doing this you may only be making stereotypical assumptions or only seeing patterns that you already think exist. However, your rich picture will include factual information and some subjective information. It may be helpful to look at the social relationships within the community which may relate to the issue we are concerned with and the kind of behaviour expected from these roles. For example this may be the lack of communication between different cultural groups or how one problem may make someone feel such as angry, isolated or scared. It may also be important to include your role within the rich picture to show the way in which you contribute to the whole situation.

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During your own rich picture process you will be able to start to identify what you believe are the issues or problems within the community and think about how each aspect interrelates. As you do this it will increase your understanding of holistic and problem-solving thinking so that you can see the situation in the community as a whole. Your rich picture shows the way that you interpret the situation, your perceptions, ideas and beliefs and this develops the way that you understand and see the situation.

Draw some rich pictures to illustrate your social problem and to provide ideas for your social enterprise ‘solutions’. You will need more than this page to do the task thoroughly, but you can start with this question mark:


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Unit 5 Venture Organising
By this point, you may be thinking of starting a social enterprise (or working in one), or you may be designing a new product, creating an event, performance or media campaigning to achieve mainstreaming of your idea. Whatever you decide to do, we have called this your ‘venture’- it doesn’t have to be a business. Getting this right is essential as a part of career planning as well as getting the venture off the ground. Writing a plan is the starting point, but getting resources together to make it happen is also important. In this unit you will be doing some simple business planning, but also working in groups to get the other essential parts of your venture together. The objective of this unit is to plan the launch of a new venture and provide evidence of identifying and securing resources to deliver the plan. There are lots of books and guidance manuals on planning businesses, but planning a social venture is quite different from planning a standard business. Developing a social venture has to be a social activity- in other words it has to involve other people (not least the people you are trying to help), so planning in a closed room on your own is not a good way of planning a venture. In fact, planning is not a good word, so we have chosen to focus on ‘venture organising’, to pick up on the principles of community organising and community development that we have worked on so far.

Setting Objectives and outcomes
Up until this point all the exercises have been directed towards understanding social problems and creating innovative and creative solutions, leading towards a detailed understanding of what the OBJECTIVES of the venture should be, and making sure that your solutions actually do meet those objectives. So, from this point we start working back from the objectives towards our community, and towards our social venture. Setting the objectives at this stage also make sure that when we conclude our venture actually have the effect in the real world that we planned.

Parts of Evaluation
A goal is a general statement about what you would like to achieve through your event, programme, organization, or activity. Goals are typically described through a brief statement like “To make our alleys clean places to drive, walk, and enjoy.” The intention of a goal is to provide direction for action, as well as direction for the objectives that you will measure for your evaluation. A goal statement can be general and should capture the spirit of your efforts that will be evaluated (Kettner, Moroney, & Martin, 1999). It is not necessary to measure your goal directly. As you will learn below, the goal will be broken down into different objectives. Those objectives will be broken down into measurable parts which, in sum, will provide the results of your evaluation.

Explain your goal in one sentence, based on your ‘problem statement’ in the last Unit

Objectives are the stepping stones that lead to the goals that you are pursuing through your event, program, organization, or activity. These are the measurable activities that you have deemed necessary to complete in order to achieve the goals you have set. Take for instance the goal stated 42 | P a g e

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above relating to clean alleys. One possible objective would be “to recruit 15 neighbours to volunteer for a morning of alley clean-up.” Another possible objective could be “to collect at least 100 kilos of rubbish during the alley clean-up.” In general, objectives should either describe the results you are attempting to achieve, or describe the way in which you seek to achieve your results. So, there are two broad types of objectives: Outcome Objectives and Process Objectives (Kettner, Moroney, & Martin, 1999). Both of these types of objectives form the building blocks that lead to the goals of your event, program, organization, or activity.

Outcome Objectives (Final/Intermediate)
Outcome Objectives are those objectives that deal with the results of your work. They are the measurable end products that need to be achieved in order to meet your goals. There are two types of Outcome Objectives: Intermediate Outcome Objectives and Final Outcome Objectives (Kettner, Moroney, & Martin, 199934). These two types of Outcome Objectives are both measurable results, but they occur at different times during the event, program, or activity. Intermediate Outcome Objectives describe the results you hope for before the end of the event, program, or activity. Again, pulling from the two examples of outcomes for the alley clean-up, the objective “to recruit 15 neighbours to volunteer for a morning of alley clean-up”, is an Intermediate Outcome Objective. This is an Intermediate Outcome Objective because it is a result or end (i.e. having 15 volunteers), and it is necessary to meet this objective before the ally clean up begins. Final Outcome Objectives describe the results you hope for near the end of the event, program, or activity. The example detailed above, “to collect at least 100 kilos of rubbish during the alley clean up”, is an example of an Outcome Objectives. This is a Final Outcome Objective because it is a result that will occur at the end of the alley clean up.

Process Objectives
While Intermediate and Final Outcome Objectives deal with measuring the ends or results of an action, the Process Objectives deal with measuring the way in which you try to achieve the Outcome Objectives (Kettner, Moroney, & Martin, 1999). These objectives answer the question, “How will we do this?”. Consider the example of the Intermediate Outcome Objective “to recruit 15 neighbors to volunteer for a morning of alley clean-up.” In order to achieve this objective, you will need to do at least a couple of things; you will need a process. You might need a list of neighbours’ email addresses. Also, you might need to call those neighbors that you have phone numbers for, but no email address. Lastly, you might need to go door-to-door to some new neighbors you have not met. All three of these things will be separate Process Objectives for that Intermediate Outcome Objective of recruiting 15 neighborhood volunteers. Those Process Objectives would be as follows: (1) To e-mail all 24 neighbors with an e-mail address and ask if they will volunteer for the alley clean-up. (2) To call all 10 neighbors with a telephone number, but no e-mail address, and ask if they will volunteer for the alley clean-up. (3) To go visit the 10 new neighbors whom I’ve never met and ask if they will volunteer for the alley clean-up. As you can see, these Process Objectives pertain to steps that lead to the Outcome Objective of recruiting 15 volunteers. It is important to identify process objectives. As you begin to complete the


Kettner, P.M., Moroney, R.M., & Martin, L.L. (1999). Designing and managing programs: An effectiveness-based approach (2nd Ed.). Thousand Oaks, CA: Sage.

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evaluation process, measurement of process objectives can help one understand the reasons why a particular Outcome Objective succeeded, or where there is opportunity to improve. Once you have identified all objectives for your goals, it is important to strengthen those objectives by adding three additional elements to the outcome statement. Those three elements are timeframes, measurement tools, and responsibility assignments. The timeframe is the date or range of time for which you will complete each objective. The measurement tool is the way in which you will measure the objective. The responsibility assignment is simply stating the person or group of people who are responsible for completing the measurement of the objective. Take for instance the process objective “To e-mail all 24 neighbors with an e-mail address and ask if they will volunteer for the alley cleanup.” To fully complete that Process Objective, it is important to add the timeframe, measurement tools, and responsibility assignment. For example, “To e-mail all 24 neighbors with an e-mail address and ask if they will volunteer for the alley clean-up by June 10, 2008 as measured by the Alley CleanUp Check list and to be completed by John Doe.” It is understandable that, at first glance, this work of identifying goals and objectives is quite confusing. Remember that they each build from one another in support of the goals pursued by your group or organization.

Fill in the chart below with details of your chosen venture

The above activity, taken from the Community Organisers workbook is a basic form of a logic model. Below is the same model as we have just covered, but using a slightly different terminology. It is important to get used to the different terminology, but the principles are the same.

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Logic Models for Objective setting
The Basic Logic Model components shown in Figure 6 are defined below. These components illustrate the connection between your planned work and your intended results. They are depicted numerically by steps 1 through 5. YOUR PLANNED WORK describes what resources you think you need to implement your program and what you intend to do. 1. Resources include the human, financial, organizational, and community resources a program has available to direct toward doing the work. Sometimes this component is referred to as Inputs. Program Activities are what the program does with the resources. Activities are the processes, tools, events, technology, and actions that are an intentional part of the program implementation. These interventions are used to bring about the intended program changes or results.


YOUR INTENDED RESULTS include all of the program’s desired results (outputs, outcomes, and impact). 3. 4. Outputs are the direct products of program activities and may include types, levels and targets of services to be delivered by the program. Outcomes are the specific changes in program participants’ behaviour, knowledge, skills, status and level of functioning. Short-term outcomes should be attainable within 1 to 3 years, while longer-term outcomes should be achievable within a 4 to 6 year timeframe. The logical progression from short-term to long-term outcomes should be reflected in impact occurring within about 7 to 10 years. Impact is the fundamental intended or unintended change occurring in organizations, communities or systems as a result of program activities within 7 to 10 years. In some models impact often occurs after the conclusion of project funding.


The term logic model is frequently used interchangeably with the term program theory in the evaluation field. Logic models can alternatively be referred to as theory because they describe how a program works and to what end.




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The What: How to “Read” a Logic Model
When “read” from left to right, logic models describe program basics over time from planning through results. Reading a logic model means following the chain of reasoning or “If...then...” statements which connect the program’s parts. The figure shows how the basic logic model is read.

The WHY: Logic Model Purpose and Practical Application
The purpose of a logic model is to provide stakeholders with a road map describing the sequence of related events connecting the need for the planned program with the program’s desired results. Mapping a proposed program helps you visualize and understand how human and financial investments can contribute to achieving your intended program goals and can lead to program improvements. A logic model brings program concepts and dreams to life. It lets stakeholders try an idea on for size and apply theories to a model or picture of how the program would function.

If only it was as simple as this….
Don’t get me wrong. I love a good logframe36. I love the conceptual thinking (culturally-specific as it is) that goes into them. I love the concise representation of the key elements of a project. I love the articulation of what is supposed to happen, the results we’re after, and the assumptions we’re making, all providing a basis for monitoring and evaluation activities (though often not for organizational learning). The predictable, linear, rational progression of activities is what can make a sound logframe clear and elegant. But this predictable, linear, rational progression of activities is also what can render a logframe useless in the context of providing relief and fighting poverty and injustice. In spite of any amount of bellyaching on my or anyone’s part, the logical framework and the logical framework approach is not going away any time soon. Thus I think it’s important for you to be aware of its purpose and its limitations. First, let’s understand where logframes came from: “Its origins lie in a planning approach for the US military, which was then adapted for the US space agency NASA before being adopted by USAID for development projects over thirty years ago. It was picked up by European development organisations in the 1980s and by the end of the 1990s the LFA (or an adapted form of it) had become the standard approach required by many donors for grant applications (Hailey & Sorgenfrei 2004: 7).” In “The use and abuse of the logical framework approach” by Oliver Bakewell and Anne Garbutt for SIDA, 2005. If we’re honest, for most people planning a venture, completing a logframe is rarely an exercise that is completed in a participatory or even a consultative manner with the people we aim to serve. Logframes’ origin demonstrates why they are not tools that lend themselves easily to ongoing, participatory decision-making. Decisions are made by the generals. Logframes tell the soldiers what to do. One of the most common criticisms of logframes is that they assume a constant environment and they do not (or cannot by their very nature) represent local realities. Rigid? Over-simplified? Yes. But remember logframes were originally used to move and deliver resources, to achieve an end, to carry out orders to defeat “the enemy.”


Modified from http://www.how-matters.org/2012/02/26/logframes-errrgh/

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But what about the means to that end? There is certainly no place for descriptions of step-by-step processes in a logframe. No place to help us understand the relevance of the activities being carried out to those benefitting. No place to understand the relationship between vulnerability, assets, policies and politics. But if your army is trained coherently and responses to changing circumstances are entrusted to the chain of command, understanding how something happens must not be important for the implementers. This is not true however for development programs. We know that logframes are not sufficient in and of themselves for project planning and management. A data collection plan and ways to track and compare indicator measurements over time are necessary if there’s any chance of reporting results down the road. Only looking at a logframe when the proposal goes in and then again when the first report is due ends up in lots of “estimated” reporting of project results. Obviously these are not new or revelatory insights. Ultimately, learning activities, including the results frameworks within logframes, have to be feasible and realistic given programmatic and onthe-ground realities. Luckily there are efforts underway by agencies to modify logframes to be more flexible and adaptive, as well as to quantify qualitative stories of change at the community level. When these efforts will influence donors and trickle down to alter people’s day-to-day work is yet to be seen. The question is—how do we get beyond logframes’ use within the industry as merely a bureaucratic requirement? The challenge for aid workers, grant makers, and grant seekers (and social entrepreneurs and students!) is to ensure we are not just going through the motions with logframes, using them as a claim that we care about results rather than a tool to help achieve them.

Projects fail at a spectacular rate. One reason is that too many people are reluctant to speak up about their reservations during the all-important planning phase. By making it safe for dissenters who are knowledgeable about the undertaking and worried about its weaknesses to speak up, you can improve a project’s chances of success. Research conducted in 1989 by Deborah J. Mitchell, of the Wharton School; Jay Russo, of Cornell; and Nancy Pennington, of the University of Colorado, found that prospective hindsight—imagining that an event has already occurred—increases the ability to correctly identify reasons for future outcomes by 30%. We have used prospective hindsight to devise a method called a premortem, which helps project teams identify risks at the outset. A premortem is the hypothetical opposite of a postmortem. A postmortem in a medical setting allows health professionals and the family to learn what caused a patient’s death. Everyone benefits except, of course, the patient. A premortem in a business setting comes at the beginning of a project rather than the end, so that the project can be improved rather than autopsied. Unlike a typical critiquing session, in which project team members are asked what might go wrong, the premortem operates on the assumption that the “patient” has died, and so asks what did go wrong. The team members’ task is to generate plausible reasons for the project’s failure37.


Further reading at http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1218&context=intl

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Exercise 16
Discuss and note down 10 reasons why your venture will fail to meet its objectives 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. . . . . . . . . . .

What strategies can you adopt to prevent these failures?

Showing progress
Conducting an activity is not the same as achieving results from the accomplishment of that activity. For example, being seen by a doctor is different from reducing the number of uninsured emergency room visits. Tracking data like meetings held or patients enrolled does monitor your program’s implementation and performance, but those data are outputs (activity data), not outcomes (which refer to the results you expect to achieve in future years). “Do the outcomes first” is sage advice. Most logic models lack specific short- and longterm outcomes that predict what will be achieved several years down the road. Specifying program milestones as you design the program builds in ways to gather the data required and allows you to periodically assess the program’s progress toward the goals you identify. For that reason, Exercise 1 isn’t filled out from left to right. This exercise asks you to “do the outcomes first.” We will focus our attention first on what we have called “your intended results.” Outcomes and Impacts should be SMART: • Specific • Measurable • Action-oriented • Realistic • Time bound i.e. have a deadline

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Exercise 17
Complete the basic logic model, starting with your proposed impact.

Theory of change model
Now that you have worked out the links between the impact you want to achieve and the resources you need to make that change, you need to express the dynamics of the change process- how are the different elements going to work together. This shifts you basic linear planning model forwards to a dynamic model. What problems are you attempting to solve or what issues are you striving to address? A wellconstructed program theory points toward your venture’s eventual effectiveness. Begin your problem statement explaining concisely the issue you will address, stating the issue either as a community problem or asset. Your theory-of-change logic model will be built upon this statement, which illustrates how the program will function and what it expects to achieve in your community. It is smart to refer to research about your program’s problem or issue in your statement; Internet searches can provide other successful program or “best practice” information.

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Exercise 18

1. 2. 3.

4. 5. 6.

Problem or Issue Statement-Describe the problem(s) your venture is attempting to solve or the issue(s) your program will address. Community Needs/Assets- Specify the needs and/or assets of your community that led your program to address the problem(s) or issue(s). Desired Results (Outputs, Outcomes, and Impacts) Identify your desired results, or vision of the future, by describing what you expect to achieve, near- or longterm, if your venture is funded. Influential Factors- List the factors (e.g., protective or risk factors, existing policy environment, or other factors) you believe will influence change in your community. Strategies-List general, successful strategies or “best practices” your research identified that have helped communities like yours achieve the kinds of results your venture promises. Assumptions- State the assumptions behind how and why the identified change strategies will work in your community

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Business Model Canvas
The Business Model Canvas is an analytical tool outlined in the book Business Model Generation38 developed from Osterwalder’s PhD. It is a visual template preformatted with the nine blocks of a business model, which allows you to develop and sketch out new or existing business models. Osterwalder notes two key features of the business environment that we consider to be especially important in developing social ventures- complexity and uncertainty. Your work so far on wicked issues will stand you in good stead to work with this model. Complexity39 According to Hodgson (2003) capitalism naturally leads to more complexity driven by powerful economic forces. Under this he understands a growing diversity of interactions between human beings and between people and their technology (Hodgson 2003). He also mentions "new and varied organizational forms devised to increase productivity and to manage an exponentially expanding number of products and processes" as drivers of complexity (Hodgson 2003, p.471). Indeed, the decomposition of the integrated company and the formation of business networks as described above has contributed to complexity because it is a mechanism that generates diversity (Andriani 2001). The business model concept may be one of the tools that helps tackling at least some aspects of complexity by highlighting important issues and pointing out the relationships between them). Like every conceptualization and model the business model concept aims at representing reality in a structured, simplified and understandable way. Uncertainty It is widely accepted that one of the effects of the communication technology revolution of the 1990s, coupled with the forces of globalisation and liberalisation, has been the increase in environmental risk and uncertainty that organisations have to face (Andriani 2001). As Wytenburg states "the greater the degree of complexity in an environment, the more various, dynamic, and unpredictable are those situations" (2001, p.118). The problem with uncertainty is that it increases the environmental risk that a company faces because the future becomes unpredictable. Referring to this Courtney, Kirkland et al. (1997) speak of four levels of uncertainty that managers face (see Theory Box 1). At the first level there is a single view of the future, at the second level one of several futures will occur, at the third level there is a range of possible futures and at the fourth level true ambiguity rules in regard to future. Managing uncertainty is probably one of the most important challenges that managers face today. Providing a specification of the conceptualization of business models could eventually improve scenario approaches and one day lead to simulation. This would help managers to be better prepared for the future.


Business Model Generation, A. Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self published, 2010 39 Modified from http://www.hec.unil.ch/aosterwa/PhD/Osterwalder_PhD_BM_Ontology.pdf

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In a nutshell Osterwalder describes a business model...:   as an abstract conceptual model that represents the business and money earning logic of a venture. as a business layer (acting as a sort of glue) between business strategy and processes.

But, the business model...:   is not a guarantee for success as it has to be implemented and managed. is something other than the company's business process model – i.e not a description of how the venture goes about its activities

Influenced by the Balanced Scorecard approach (Kaplan and Norton 1992) and more generally business management literature (Markides 1999) Osterwalder suggests adopting a framework which emphasizes on the following four areas that a business model has to address:         PRODUCT: What business the company is in, the products and the value propositions offered to the market. CUSTOMER INTERFACE: Who the company's target customers are, how it delivers them products and services, and how it builds a strong relationships with them. INFRASTRUCTURE MANAGEMENT: How the company efficiently performs infrastructural or logistical issues, with whom, and as what kind of network enterprise. FINANCIAL ASPECTS: What is the revenue model, the cost structure and the business model’s sustainability.

These four areas can be compared to the four perspectives of Norton and Kaplan's Balanced Scorecard approach (Kaplan and Norton 1992). The Balanced Scorecard is a management concept developed in the early 90s that helps managers measure and monitor indicators other than purely financial ones. The authors compare their now quite well known tool to an airplane cockpit where the pilot flies the plane by reacting to the information they get from their board tools. Evidently this information has to cover all relevant aspects of flying a plane. The same applies to companies where managers have to monitor the essential areas of a business in order to lead it. Norton and Kaplan identify four perspectives of the firm on which executives must keep an eye to conduct successful business. In the customer perspective the company asks itself how it is seen by its customers. In the Internal perspective the company reflects on what it must excel at. In the innovation and learning perspective the company analyzes how it can continue to improve and create value. Finally, in the financial perspective a company asks itself how it looks to shareholders. Osterwalder then splits the four pillars of the business model ontology into nine interrelated business model building blocks, or simply business model elements.

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Exercise 19
Complete the Business Model Canvas with your venture plan

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Here’s an example for a social enterprise

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Fundamental Models of Social Enterprise Strategy
Entrepreneur Support Model

The entrepreneur support model of social enterprise sells business support and financial services to its target population or "clients," selfemployed individuals or firms. Social enterprise clients then sell their products and services in the open market. Continue reading Entrepreneur Support Model

Market Intermediary Model

The market intermediary model of social enterprise provides services to its target population or "clients," small producers (individuals, firm or cooperatives), to help them access markets. Social enterprise services add value to client-made products, typically these services include: product development; production and marketing assistance; and credit. The market intermediary either purchases the client-made products outright or takes them on consignment, and then sells the products in high margin markets at a mark-up. Continue reading Market Intermediary Model

Employment Model

The employment model of social enterprise provides employment opportunities and job training to its target populations or "clients," people with high barriers to employment such as disabled, homeless, at-risk youth, and ex-offenders. The organization operates an enterprise employing its clients, and sells its products or services in the open market. The type of business is predicated on the appropriateness of jobs it creates for its clients, regarding skills development, and consistency with clients' capabilities and limitations, as well as its commercial viability. Continue reading Employment Model

Fee-for-Service Model

The fee-for-service model of social enterprise commercializes its social services, and then sells them directly to the target populations or "clients," individuals, firms, communities, or to a third party payer. Continue reading Fee-for-Service Model 55 | P a g e

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Low-Income Client as Market Model
The Low Income Client as Market model of social enterprise is a variation on the Fee-for-Service model, which recognizes the target population or "clients" a market to sell goods or services. The emphasis of this model is providing poor and low-income clients access to products and services whereby price, distribution, product features, etc. bar access for this market. Examples of products and services may include: healthcare (vaccinations, prescription drugs, eye surgery) and health and hygiene products (iodize salt, soap, eyeglasses, earring aids, sanitary napkins), utility services, (electricity, biomass, and water), etc. for which they pay. Continue reading Low-Income Client as Market Model

Cooperative Model

The cooperative model of social enterprise provides direct benefit to its target population or "clients," cooperative members, through member services: market information, technical assistance/extension services, collective bargaining power, economies of bulk purchase, access to products and services, access to external markets for memberproduced products and services, etc. The cooperative membership is often comprised of small-scale producers in the same product group or a community with common needs--i.e. access to capital or healthcare. Cooperative members are the primary stakeholders in the cooperative, reaping benefits of income, employment, or services, as well as investing in the cooperative with their own resources of time, money, products, labor, etc. Continue reading Cooperative Model

Market Linkage Model

The market linkage model of social enterprise facilitates trade relationships between the target population or “clients,” small producers, local firms and cooperatives, and the external market. The social enterprise functions as a broker connecting buyers to producers and vice versa, and charging fees for this service. Selling market information and research services is a second type of business common in the market linkage model. Unlike the market intermediary model, this type of social enterprise does not sell or market clients' products; rather it connects clients to markets. Continue reading Market Linkage Model

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Service Subsidy Model

The service subsidization model of social enterprise sells products or services to an external market and uses the income it generates to fund its social programs. Continue reading Service Subsidization Model

Organizational Support Model

The organizational support model of social enterprise sells products and services to an external market, businesses or general public. In some cases the target population or "client" is the customer. Continue reading Organizational Support Model

Combining Models
Social enterprises combine operational models to capture opportunities in both commercial markets and social sectors. Combining is a strategy to maximize social impact as well as diversify income by reaching new markets or creating new enterprises. In practice, most experienced social enterprises combine models--few social enterprise operational models exist in their pure form. Operational models are like building blocks that can be arranged to best achieve an organization’s financial and social objectives. Model combinations occur within a social enterprise (Complex Model) or at the level of the parent organization (Mixed Model). Social enterprise models are combined to:    facilitate enterprise or social program growth; increase revenues by entering new markets or businesses; augment breath or depth of social impact by reaching more people in need or new target populations.

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Complex Model

A complex model of social enterprise combines two or more operational models. Complex models are flexible; virtually any number or type of operational models can be combined into one social enterprise. Models are combined to achieve desired impact and revenue objectives. For example, operational models that fall into integrated or external social enterprise categories may yield greater financial benefit, whereas embedded social enterprises offer higher social return, thus models are combined to achieve the dual objectives of the social enterprise. If appropriate for an organization's target population, the employment model is often combined with one of the other models to add social value--i.e. employment and organizational support model (as illustrated). Operational models are often combined as part of a natural diversification and growth strategy as the social enterprise matures. Continue reading Complex Model

Mixed Model

Many nonprofit organizations run multi-unit (mixed) operations, each with different social programs, financial objectives, market opportunities and funding structures. Each unit within the mixed model may be related vis-à-vis target population, social sector, mission, markets, or core competencies. A museum for example, in addition to educational art exhibits, might have both a for-profit catalogue business and highly subsidized research and acquisition operation. Nonprofits employing a mixed model combine social and business entities; subsidiaries owned by the parent organization or departments (cost or profit centers) within it to diversify their social services and capitalize on new business and social market opportunities. Like all social enterprises, mixed models come in a variety of forms depending on the organization's age, sector, social and financial objectives and opportunities. The diagram is representative of complexity, not conformity of organizational form. Mixed models are often a product of an organization’s maturity and social enterprise experience. This model is common among large multi-sector organizations that establish separate departments or subsidiaries for each technical area--i.e. education, health, economic development, etc. and new 58 | P a g e

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business ventures. In nonprofits with mature social enterprises, mixed models are the convention, not the exception, a result of expansion and diversification.

Legal Frameworks
As there is no legal definition for what constitutes a social enterprise, there is considerable scope for choosing from a variety of different legal forms (although there are numerous viewpoints of what constitutes the ‘best’ social enterprise legal structure, often driven by vested interests). Before getting into the detail, it’s worth bearing in mind two fundamental principles:   It is not the legal structure that makes an organisation a social enterprise - it is its activities. Your immediate and future funding and income generating opportunities will have a major impact on the structure you choose.

An individual operating a social enterprise without a legal structure is usually regarded as a sole trader or self employed. Organisations that are operating as a membership body without a legal structure are typically regarded as an unincorporated association (also known as voluntary association and community groups). There are a number of reasons why you might consider adopting a legal structure for you organisation:     A requirement by stakeholders that you are planning to engage with A requirement based on the type of activities you plan to undertake To enhance your credibility with customers, funders, suppliers and employees To protect individuals involved from personal liability.

As a sole trader, self employed individual or unincorporated association (i.e. not recognised as a separate legal entity), the individual or management committee of the association is directly liable for any debts or legal actions affecting your organisation- a risky position. For example, if the organisation generates a financial deficit, it will be the responsibility of the individuals involved to find the money to pay any creditors. Adopting a formal legal structure can protect individuals (e.g. members/ trustees/ directors) from personal liability, therefore limiting this type of risk. The variety and diversity of the possible legal structures for social enterprise complicates matters. However, there are a number of over-riding principles that should be considered; thinking through these should help you decide the best legal form to adopt for your project. After looking at the different possible legal structures, we’ll address some of these considerations.

Common legal structures 40
The most common legal structures used in the Social Enterprises sector are:          Model 1: Unincorporated Association Model 2: Registered Charity Model 3: Company Limited by Guarantee Model 4: Charitable Company Model 5: Charitable Incorporated Organisation (coming on stream in 2013) Model 6: Registered Charity with a trading arm Model 7: Industrial & Provident Society Model 8: Community Interest Company Model 9: Share Capital Company


information source: UnLtd ‘Built to Last’ Toolkit

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The following tables examine these legal structures in more detail, along with a summary of the key advantages and disadvantages associated with the respective structures: Model 1: Unincorporated Association Most voluntary and community organisations are unincorporated associations – whether they know it or not. The governing method for unincorporated associations is usually the constitution or association rules. The term ‘unincorporated’ means that, in law, the association has no existence apart from its members as individuals. Members, usually the elected committee, are responsible for any debts the association incurs. Members can be sued personally for damages following any accident occurring during activities or events organised by the association. The association cannot own property, although many unincorporated associations set up trusts to hold property on their behalf. The association cannot enter into legal action, borrow money or enter into contracts. When unincorporated associations think they are doing such things, it is actually the individuals who sign the documents who are entering into a legal agreement, and it is they as individuals who are liable if anything goes wrong. Model 2: Registered Charity To become a charity, an organisation needs to register with the Charity Commission. The activities of a registered charity must fall into one or more of the following: Relief of poverty Advancement of religion Advancement of education Other purposes beneficial to the community

A central feature of a registered charity is a board of trustees, ie a group of people who volunteer to run the charity. Key advantages of being a registered charity include:    Exemption from certain forms of taxation, eg capital gains tax and corporation tax 80% (and in some areas more) reduction in the non-domestic rates on property Greater ability to raise funds from trust funds and companies (some trusts and companies will only support registered charities)

One of the main disadvantages is the restriction within charity law on carrying out certain activities, such as political campaigning. Also, substantial trading activity by registered charities is restricted, which is why they often set up trading arms (see Model 5).

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Model 3: Company Limited by Guarantee Incorporation41 is especially relevant for voluntary organisations that employ staff, own assets and have sizeable contractual commitments. Company Limited by Guarantee is the most popular form of incorporation for organisations in the social sector. The governing body in this model is called a ‘Board of Directors’. ‘Limited by guarantee’ means that each member’s liability for the company’s debts is limited to an amount written into the governing instrument: usually not more than £5 each. This minimises the risks for the directors (see footnote). In return for limited liability, certain information has to be lodged with Companies House: • • • • Annual accounts Annual return Notice of change of directors or secretaries and their particulars Notice of change of registered office

Model 4: Charitable Company This is a model that combines being a Company Limited by Guarantee with registered charitable status, in other words models 2 and 3. By the same token it combines the advantage of limited liability with the benefits associated with charitable status. The primary disadvantages associated with this model are having to account to both Companies House and the Charity Commission, and having to manage the potential conflict that can arise between 2 different regulatory systems. Model 5: Charitable Incorporated Organisation (coming on stream in 2013) The rationale behind this new structure is that the Company Limited by Guarantee model, although the most popular form of incorporation for larger voluntary organisations, was never actually designed with charities in mind and is primarily aimed at the “for profit” sector where the members have a common financial interest. Furthermore, sometimes there is conflict between company law and charity law and this can lead to confusion for the Directors/Trustees of a Charitable Company. The Charitable Incorporated Organisation (CIO) model will only be available to charities and will require registration with the Charity Commission (rather than with Companies House as is currently the case with Companies Limited by Guarantee), thus avoiding the dual responsibilities of a Company Limited by Guarantee with registered charitable status (see model 4) and its directors having to comply with both charity law and the Companies Acts. Existing charitable corporations will not have to convert to the new form, but if conversion is desired this will be possible by a simple conversion procedure.


Incorporation does not give complete protection from personal liability to the directors, as they can in some circumstances be liable, for example, under company law for breach of fiduciary and statutory duties; under the Insolvency Act 1986 for wrongful trading, and under charity law (if the limited company is also a registered charity) for breach of trust.

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Model 6: Registered Charity with a trading arm Charities can set up trading arms so that they can separate income-generating trading activity from their core charitable activities. A trading arm is a self-sufficient limited company operating as wholly owned subsidiary of the charity, but being run and financed independently. A trading arm can pledge or gift aid its profits back to the charity, avoiding having to pay corporation tax, but the charity should not use any of its money or resources to support or manage the company. Other forms of legal structures can also operate with trading subsidiaries. An example would be a community centre run by a community association constituted as an unincorporated association and democratically accountable to it members, with a separate trading company running the bar as a financial concern. Model 7: Industrial & Provident Society (IPS) Essentially these are co-operatives, run and owned by their members, but which may operate for the benefit of the community in addition to benefiting the members. An IPS can own property, enter into contracts, issues shares and take out loans. It has to be registered with and regulated by the Registrar of Friendly Societies. Model 8: Community Interest Company The Community Interest Company (CIC) is a new type of company created for those wishing to establish a business with a social purpose (a social enterprise) in a legal form. CICs can be private companies limited by guarantee or by shares, or a public limited company. They can adopt the cooperative, not for profit or general commercial company model. There are number of obligations (see model 3 above) that a CIC has to meet and continue to meet in addition to those imposed on an ordinary company: • • • To satisfy a community interest test To adopt certain statutory clauses in its constitution. To deliver an annual community interest company report with its accounts.

The community interest test looks at the underlying motivation of the company in terms of what it will do, who it will help and how. If it makes a profit, or surplus, what the company will do with it. This information is made available on the public record after incorporation. The statutory clauses have the following effect: • • To lock in the assets to benefiting the community it was set up to serve. This is referred to as the ‘asset lock’. To prevent the CIC falling under the control of individuals, or organisations, who are not members.

The annual CIC report is made available on the public record and provides transparency of operation by describing: • • • • • • How the company’s activities have benefited the community What steps were taken to consult stakeholders and the outcome What payments were made to directors What assets were transferred other than for full consideration What dividends were paid What performance-related interest was paid on loans or debentures 62 | P a g e

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The ‘asset lock’ prevents the CIC giving away communities assets for less than the true market value unless the distribution is to another asset locked body, such as, a CIC or charity or to benefit the community it was set up to serve. A CIC limited by shares may pay a dividend, if agreed by a resolution of its members. Dividends payable to private shareholders (non-asset locked bodies) will be subject to a dividend cap. The cap is at present a maximum dividend per share of 5% above the Bank of England base rate and a maximum aggregated dividend of 35% of the distributable profits. Unused dividend capacity can be carried forward for 5 years. There is also a cap on performance-related interest of 4 % above the Bank of England base rate. The ‘asset lock’ does not affect the ability of the CIC to use its assets in the normal course of business. For instance, they will be able to use their assets as collateral for finance, and if they do so, the assets will be available to creditors in the event of default. Model 9: Share Capital Company Instead of a CIC a social enterprise can be set up as a Share Capital Company (Company Limited by Shares). This is basically a “for-profit” model that is now being tailored to meet the needs of the social enterprise sector. The model brings together a private individual, who acts as the social entrepreneur driving the company forward, with financial investors in the form of existing social enterprises. The entrepreneur at the heart of the Share Capital Company has a minority shareholding in the company and the board structure reflects this ownership model. It is similar to the CIC limited by share model. The primary difference is that a straightforward Share Capital Company is not legally protected by the statutory asset lock of the CIC. Also, dividends on shares are not capped. Instead, the model seeks to preserve the social enterprise brand by the guarantee of non profit making agencies in the independent sector benefiting from share dividends. In other words, the majority (at least 51%) of profits or surpluses do not go into the pockets of private individuals, but are re-invested into enterprises that trade for a social purpose. Share capital companies can be wholly or mostly owned by employees, producers, beneficiaries or consumers and therefore are known as co-operatives or mutuals.

Choosing the appropriate legal structure
This guide gives you a general overview of some of the major considerations when choosing the legal structure for your social enterprise. It is not intended as any form of legal advice – this can only be given with reference to the facts relevant to you and your project. You should always seek professional advice, including legal advice, if you are not certain as to what legal structure is appropriate for you; this is important to get right from the beginning, since it can be both complex and expensive to change from some legal forms to another later on down the road. The issues to consider when deciding on a legal structure for your social enterprise include: • • • • • Personal liability Ownership Funding, both short and long term Governance Profit distribution

These can be explored in more detail here http://setoolbelt.org/resources/1782

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