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Finding Common Ground Between the Financing Fault Lines

Forging Common Ground – Series of Oxford Student Insights to the Skoll World Forum 2017.

 Skoll Scholar and Oxford MBA Candidate 2016-17, Ashley Thomas, draws on this year’s Skoll World Forum theme in relation to social impact business models.

There is a fault line between models of international development financing. On one side, there is the traditional donor and philanthropic capital that utilises grant money to support projects. On the other side is the social enterprise space that seeks to create sustainable impact through revenue generation.  There has been a lot of excitement in utilising grant funding for social enterprises to build and tweak their business model, but to date there has been little appetite for true hybrid models of ongoing subsidies for social enterprises.

This is a conversation that I had in numerous sessions and coffees throughout Skoll World Forum. It was also one of the key themes from the session hosted by Mercy Corps and USAID on sharing the learnings from their investments in the Innovation Investment Alliance. There is a common ground emerging; these conversations are hinting at the start of innovative new business models that allow for hybrid grant and revenue streams.

The Problem:

Social enterprises are addressing market failures. They bring products or services to underserved markets, often at low margins, and often at high costs. However, market failures exist for a reason; many companies are realising that even at scale, high volume low margin products are not able to generate the revenues that are necessary to be sustainable. However, social enterprises often sell themselves on this vision- that with initial capital to pilot and build systems, they will be financially sustainable at scale.

The Solution:

Philanthropic capital- which does not require financial returns, can help bridge this fault line, and maximise the potential impact of social enterprises. This does not mean we should revert to the large scale unsustainable development models of the 1990’s, but use philanthropic capital as way of targeting the market failure and allowing social enterprises to maintain their focus on their mission and outcomes. This hybrid model is being utilised in the FundiFix hand pump repair service designed by Dr. Rob Hope out of the University of Oxford. The model uses monthly user subscription payments to pool capital to finance prompt hand pump repairs. However, the willingness to pay only accounts for 2/3 of the cost of the service, and the remaining cost is subsidised through grant funding. This is also used in much larger social enterprises.  Ella Gudwin from Vision Spring spoke about how their model has shifted from seeking to maintain cost recovery- and retailing glasses at increasingly higher prices, to minimising the “philanthropy per pair” and serving their target customer.  They were able to do this under a scaling innovation grant from USAID and Mercy Corps, demonstrating that donors are also recognising the need for the pivot into these hybrid models.

It is increasingly clear that there is not one single model for social enterprise, and a single-minded focus on achieving commercial sustainability may limit the impact. Innovative hybrid models that use the social enterprise ethos of cost effectiveness in combination with smart grant funding that can subsidise the product can address the market failures preventing social enterprises achieving impact at scale. There is immense opportunity to achieve scale and impact through creating this common ground.

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Business as a Catalyst for Poverty Alleviation

Forging Common Ground – Series of Oxford Student Insights to the Skoll World Forum 2017.

Allegra Day, Oxford MBA at the Saïd Business School gives her perspective on the  Skoll World Forum session “Business as a Catalyst for Poverty Alleviation”.

In the Opening Plenary of this year’s Forum, Winnie Byanyima of Oxfam International revealed the fault lines in the capitalist model that have enabled 8 men to own as much wealth as half of humanity. Winnie was unequivocal that the system is rigged against the majority and a new economic model is needed that is fairer and more sustainable for all. This echoes a theme that has reverberated across the Forum: business is central to poverty alleviation, but the current legal structure and incentives underpinning big business need to change.

Throughout the week, we have heard from organisations championing this change through investments in staff, suppliers and innovation. Hamdi Ulukaya, CEO of Chobani, spoke of providing a living wage for his employees, one fifth of whom are refugees. During the Business as a Catalyst for Poverty Alleviation Panel, Charlotte Oades of Coca-Cola outlined the company’s aim of supporting 5 million women entrepreneurs to grow their businesses and eventually enter the supply chain of Coca-Cola and other companies through the 5by20 initiative. Fellow Panellist Cherie Blair CBE, QC spoke of her Foundation’s work with financial institutions in markets where women are viewed as “risky” customers training local staff to understand that women are generally good borrowers and should be considered for loans.

But is all this enough? Those spearheading the B Corp movement would probably say no. Panellist and Co-Founder of B Lab Company Bart Houlahan reminded us that in many places, directors are liable under company law for not returning maximum profit. The B Corp model offers a solution: a new legal structure enabling directors to incorporate community engagement, worker involvement and environmental footprint objectives alongside profit maximisation. We now need greater adoption of the B Corp model and adaption of the model to suit multi-national corporations. Alongside this, Ms Blair and Mr Houlahan called for greater education of bankers, investors and lawyers to understand the changing role of business.

Beyond legal reform, the Panellists described two key ways in which businesses can play their role in tackling poverty. The first is more support for women-led businesses in addition to women-owned businesses, given the challenges associated with ownership of assets for many women. Panellist C D Glin of the US African Development Foundation described this as a critical tool for economic growth that dovetails with the safety and security aims of the US Government. The second is support with scaling up enterprises. Ms Oades spoke of the role Coca-Cola can play in scaling enterprises through identifying and sharing learnings across its network that can be adapted to a local context.

During the Forum’s Skoll Awards Night, Bono said that capitalism is “not immoral but amoral: we have to tell it what to do.” Conversations at the Forum have made clear that we as leaders, consumers and human beings must challenge businesses to modernise and innovate in line with moral and ethical standards to create more common ground for us all to share.

Follow Allegra: @legshd

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Building Bridges: Partnerships in Responsible Supply Chains

Forging Common Ground – Series of Oxford Student Insights to the Skoll World Forum 2017.

Macarena Hernandez, Skoll Scholar and Oxford MBA Candidate 2016-17 at the Saïd Business School, gives her perspective on the Skoll World Forum session “Building Bridges: Partnerships in Responsible Supply Chains”.

The task to build bridges to trigger the development of responsible supply chains is not only a task for “bridges builders”, it is a common task. We need to forge common bridges together.

The session kicked off with a “pop-quiz” leading by the session’s moderator, Daniel Viederman, Managing Director at Humanity United. “How many cocoa farmers are around the world?” After guesses and approximations, the right answer was 5 million.

Could you imagine the investment that is needed to audit all of these cocoa farmers have the responsible practices? How many more products a single food industry company have? As Viederman mention, we are not talking about a lineal supply chain, we are talking about a supply web.

The complexity of this supply web has meant that no one takes the responsibility to ensure fair labour conditions within the web. The private sector thought that labour issues needed to be solved by the public sector. Governments have been establishing regulations that encourage big industry players to start solving these issues.

Despite this complexity, companies such as Target and Mars Inc. are taking responsibility and action. In 2015, Target started a partnership with GoodWeave in support of their mission to end child labour in the rug industry. Mars Inc. is partnering with Verité to design simple solution for their suppliers to meet their responsible sourcing standards.

Building Bridges - Partnerships in Responsible Supply Chains panel

Building Bridges – Partnerships in Responsible Supply Chains panel

These leading efforts are transforming the unfair labour practices across industries. However, these partnerships and projects are not easily scalable for the various products across different industries. As Marika McCauley Sine, Mars’ Human Rights Director, said, ‘the situation is complex; we need to make it easy. We need to be specific and clear. Make it as simple as possible.’

For me, this simple and scalable solution is called: trust. If enterprises trust in other stakeholders, especially suppliers and suppliers of suppliers, there would be no need for huge investments to develop detailed audits or localised projects throughout the supply chain.

Although, building trust is not easy. How can we trust in others? Transparency, openness, collaboration, accountability, and information flow is needed. Who is creating trust through stakeholders? Talking and listening during the forum, two potential solutions came into my mind. After the panel, I had the opportunity to talk with Charmian Love, Co-Chair and Co-founder of B Lab UK. I realised that the B-Corporation Certification is identifying responsible players around the world. Listening to the session “Data-Driven Models for Change”, I discovered that Provenance is developing digital tools to trace products’ journeys.

Both trust’s mechanisms, mentioned above, include characteristics such as collaboration, data sharing, and transparency. This openness creates and distributes value along all stakeholders. Which make me reflect: Are the main industry players and competitors ready to collaborate between them? Are the innovators ready to share best practices? Are businesses ready to share value, despite the fact that these actions will reduce barriers to entry, increase the number of competitors, and increase consumer power?

I hope they are! In the long term, collaboration will be the key for value creation. My favourite value at Prospera, the Mexican social enterprise where I was working before coming to Oxford, states: “El que comparte, prospera. Siempre.” Translated to English: “The one who shares, thrives. Always.”

Follow Macarena: @macarenahdeo

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Data Driven Innovation in Impact-driven Markets

Forging Common Ground – Series of Oxford Student Insights to the Skoll World Forum 2017.

MBA Candidate 2016-17, Davidson Edwards, at the Saïd Business School gives his perspective on the  Skoll World Forum session “Data-Driven Models for Change”.

As I pushed open the doors of the well-lit lecture theatre and entered into the business school corridor, my mind ran busily over the last session’s insights. I’d just listened to a panel comprised of Jessi Baker, Ania Calderon, Sarah Jakiel, Oren Yakobovich and Ma Jan; moderated by Jake Porway. Each panelist was a change-maker and innovator, leading an organisation that leverages data-driven models to tackle pressing social problems. Their selected mission ranged from combatting modern-day slavery, as with Polaris, to validating the ethics of supply chains, as with Provenance, to exposing producers’ non-compliance with environmental standards, as with IPE (Institute of Public & Environmental Affairs).

The thesis behind their session was simple: without the necessary data, we cannot even begin to address these massive problems. This fact is well evidenced by Polaris, whose analysis of 33,000 cases of human trafficking in the United States has revealed 25 predominant types, each with their own business model and network of stakeholders. Furthermore, with these insights, partnering law enforcement and non-governmental organisations are now able to execute targeted interventions and more effectively save lives.

As I sat in the lecture hall, I was both excited to hear of the progress and troubled by an unsettling question: “have we only started doing this recently?” You see, an estimated “21 million people worldwide are victims of forced labour” (Unseen, 2017), so given that cluster analysis was discovered in the 1930’s (Driver & Kroeber, 1932), I’d assumed it had long been thrown at the issue. But after listening to Ania talk about Open Data Charter’s challenges getting governments and organisations to share data, or even agree on standards, I began to empathise with the systemic nature of the problem. As emphasised in Atul Gawande’s moving opening plenary speech, the problem was not discovery, but delivery.

To lend jargon from Saïd Business School’s Strategy and Innovation courses, the ‘nascent space’ that is data-driven social impact, has yet to agree on a dominant model. We have yet to figure out how to incentivise governments to share their data with organisations, or what standards social impact organisations should adhere to, or how to provide the mass of human capital necessary to make data-driven impact commonplace. But the power of viewing the problem through this lens is that we already know how to deal with nascent spaces. We prioritize collaboration over competition and share lessons learnt, we set universal standards to allow efficient transactions, we consider the landscape as a network of actors with individual motivations, and we work to build up complementary resources.

Thankfully, the panelist session highlighted efforts in this direction, Open Data Charter has gotten over 70 governments to agree on standards for publishing data (Open Data Charter, 2017), Polaris is partnering with Mexican organisations to curtail sex trafficking across the border, Videre Est Credere sources data from various actors with various motivations and factors this into its data checking process. And efforts such as Skoll’s organisation of this panel, serve to move data-driven models away from the early adopters to the mass of social impact leaders taking on today’s pressing problems. There is much left to do but these valiant efforts show significant promise.

If our ‘impact motive’ can mirror the ‘profit motive’ in capitalist markets, then our collaborative efforts should make well-thought-out, tech-enabled approached to solving social problems the norm, in coming years. I’m eager to see the development of this space and play my part.

Follow Davidson: @davidsonedward8

The next generation of Impact Business Leaders

For the fourth year, check the Skoll Centre will host the IBL@Oxford Programme at the Saïd Business School in the bridging week between two academic years. With scholarships open to graduating Oxford MBA students, the Impact Business Leaders team reflect on the stories of previous fellows and how the programme launched their careers in social enterprise.

How can an MBA help you land a career in social enterprise? At Impact Business Leaders (IBL), we are asked this question a lot. We work with talented professionals who are often either considering an MBA or in an MBA programme. If your professional ambition is to work in a big corporation, it’s easy to see why an MBA makes sense. It’s a clear market signal that you are ready to take on management roles and MBA programmes are often direct talent pipelines to these companies.

But what about if you’re on a different path?

IBL has worked with 189 professionals over the last three years. Many have had MBAs and many have not. While we believe there is no substitute for professional experience in demonstrating your ability to excel in a social enterprise, our work with the Skoll Centre for Social Entrepreneurship to match Oxford Saïd MBAs with social enterprise careers has shown us how an MBA degree can position professionals for success in social enterprise. When combined with IBL’s practical, career focused programming and extensive network of social enterprise hiring managers, we believe that Oxford Saïd MBAs are highly competitive in the social enterprise job market.

On a recent trip to India, we reconnected with several Oxford alumni who we worked with during our annual IBL@Oxford programme. Their stories demonstrate what’s possible when MBA students combine their experience at the Saïd Business School with involvement in the IBL programme.

DSC_0025Making Connection, Finding Pathways 

Amol Mishra MBA’14 was interested in sustainability but he did not know what to do with it. During his time with the Skoll Centre, he was introduced to Dhruv Lakra, founder of the social enterprise Mirakle Couriers and Skoll Scholar Oxford MBA’08. Lakra described how his MBA experience was the beginning of his journey as a social entrepreneur. With this one conversation, Amol’s interest in sustainability took shape as a viable career opportunity in social enterprise. This led him to enroll in the IBL@Oxford programme at the end of his MBA to pursue a full-time role in social enterprise. Through the IBL programme, Amol landed a job at CottonConnect – a social enterprise developing sustainable supply chain solutions for retail brands – as a Commercial Development Manager.

Inspiration and Incubation

Nidhi Thachankary MBA’15 had always been interested in the education space, but viewed it as an after-work activity. The Skoll Centre changed that by motivating her to develop a start-up social enterprise that would provide workforce training and development for the hospitality industry in India. When Nidhi joined IBL@Oxford, the programme pushed her to develop her model even further and also re-position her experience in a way that would catch the attention of education NGOs like Pratham – the largest education NGO in India. With this angle, Nidhi landed a full-time role at Pratham to lead its first initiative to incubate workforce development ventures within the hospitality industry.

IMG_5597Building Skills, Gaining Experience

Sudhanshu Malani MBA’14 had a formative experience as a Teach for India Fellow, but lacked the hard finance experience he needed to build the career in impact investing he wanted. Through the Skoll Centre, Sudhanshu landed internships with Acumen and ClearlySo, two leading international impact investors. IBL@Oxford helped Sudhanshu communicate his experience to potential employers. With IBL’s support, Sudhanshu landed an investment associate role at Villgro – an early-stage impact investor in India.

These are just three inspiring examples of the dozens of students who combine their Oxford Saïd MBA with the IBL@Oxford programme to build a career in social enterprise. At this year’s IBL@Oxford for Global Social Enterprise programme, IBL will bring Oxford Saïd MBAs and other talented professionals committed to transitioning into social enterprise together for a practitioner-led workshop on social enterprise careers followed by executive mentoring and job matching services. For Oxford Saïd MBAs this practical, career-focused programme is an excellent complement to all that Saïd Business School and the Skoll Centre for Social Entrepreneurship has to offer.

If you are interested, applications for IBL@Oxford are open until the 1st September 2016. Full Scholarships are available for current Oxford Saïd MBA students.

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Just Business

Maria Springer_Head Shot

Skoll Scholar, online Maria Springer, shop reflects on her classes during the Oxford MBA programme.

Economies can, patient and indeed should, work for everyone. While studying the MBA, I realised that all business is social business and that no business is all good or all bad. Every company has a choice. Companies can operate ethically and value social impact and environmental responsibility while maximising bottom-line profits. Of course, this choice is not a one-time decision. Companies must make and reaffirm this choice at the most senior levels of leadership on a continuous basis, not because they should, but rather because it’s good for business. With this understanding of social business, small, medium and large public companies can indeed be a force for good.

In Strategic Human Resources Management, I learned how wages, equity ownership, and benefits can motivate employees to deliver exceptional results. In Leadership, I learned how executives, investors, bankers and shareholders can deliver social impact without jeopardising financial performance. In Private Equity, I learned how companies can form a diverse Board of Directors to increase shareholder value. In Supply Chain Management, I learned how reliable suppliers, ethical manufacturing standards and robust environmental policies can make or break a company’s reputation and viability. And, in Strategic Brand Management, I learned how companies can defy unhealthy marketing standards to create engaged and loyal audiences.

I am walking away from the MBA a pragmatist, but also an optimist. I am clear that no business is all good or all bad; even Patagonia, Tesla, and Whole Foods get it wrong sometimes. I am also hopeful that companies are being forced to correct where they may have been wrong. Acting responsibly is becoming a business norm, required by clients and consumers alike. In response to the market, Wal-Mart, Shell and Monsanto have been forced to transform their operating practices and image in recent years.

Pragmatism and optimism feels more relevant than ever. After the fatal shootings of Alton Sterling and Philando Castile by United States police, the #BlackLivesMatter movement has gained unprecedented momentum as voices of outrage, fear, pain and frustration dominate the media cycle. Yet, I also see hope. Black-owned banks have witnessed an unprecedented number of depositors. Policy and social movements can be powerful solutions to widespread discrimination, but so can businesses that step up to address racism, inequality, and environmental injustice.

Throughout the year, as I walked into formals at colleges hundreds of years older than my country, I felt immense privilege. As a Skoll Scholarship recipient, I have been afforded immense privilege and as a white citizen of the United States, I was born with immense privilege. As I prepare for graduation, conscious of my privilege and the complex world we live in, I am encouraged that my classmates and I have been equipped with the tools required to start, run and grow businesses that will play a role in constructing just, equal and sustainable global systems.