In this sub-session we are going to talk about
the business model of the social enterprises
So now you understand what is the business model is
From now on we are going to talk about
very interesting business model of the social entrepreneur company
that differentiated them from the pure businesses
from the pure charities
The first business model would be the low-income client
So the social entrepreneur companies sell the product
or services to the beneficiaries
So the product or services are carefully designed
for the low-cost for the low-income communities
Low-income community
Low-income consumers are typically person
with limited financial resources and limited infrastructures
They don't have any money, they don't have even electricity
So the product that they use must be functional
and at the same time affordable
so in order to meet these types of needs
social entrepreneur company
should design the low-cost version of standard product
This product or service is not just a simple imitation
This could be innovative and cost-effective solutions
tailored to the needs of the low-income communities
The well-known example of this type of product is KickStart Pump
You can see the picture
KickStart Pump is kind of a manual water pump
It's not just expensive electricity water pump
It is a kind of manual water pump
and you can just step on this pedal then you can get the water
This is a manual water pump
The KickStart, which is a social company
carefully designed this type of water pump
and distribute this water pump to the farmers in Africa
Think about in Africa
There is no electricity and no infrastructure
So the pump should be durable and simple to use
and it requires minimal repair
Which is very crucial in the rural area
So when you approach it to the kind of
underdeveloped country, underdeveloped community,
you carefully design your product services
It's pro services tailored to
the real needs of these types of community
Think about low-income client
I want to give you another example
to target the low-income client
This company is the delight hearing aid
Delight hearing aid was founded by this guy
when he was around 25 years old
And he tried to help the disabled people
Then he want to create some affordable hearing aid for them
But hearing aid itself very expensive
But he thought that if he removed the price bubble
by innovation, in terms of innovation
for kind of distribution structure
Then he thought he can provide very cheap
and affordable hearing aid to the people
So instead of relying on multiple kind of middlemen
he streamlined the supply chain
and offer the high quality hearing aid at a much lower prices
So this approach
not only made the hearing aid more accessible for the underserved population
but it also demonstrated the kind of viable business model
So after one year after the founding
delight hearing aid was acquired by
one of the big pharmaceutical company in Korea
for around $4M
When he was 26 years old
he successfully sold his company to the bigger company
Then he cashed out successfully
Anyways this example shows us
how social businesses can be successful
by combining some kind of innovation
and deep understanding about their beneficiaries needs
So please remember
low income the client and there could be opportunities
Look at another example which is a fee-for-service business model
Social companies packages the social service
and sell them directly to its beneficiaries
Look at this picture
The company was Essex Cares
UK based organization that provides some kind of service
to support independent living
especially for the elderly and disabled individuals
They offer a wide range of the services such as
day programs, mobility assistant, and empowerment support
This model work very well
when the beneficiaries are willing to pay for the services
But don't worry about it
The most organizations provide
some kind of support for their service fee
So the disabled person get reimbursed from the government
Anyway by charging for the service
even at a low prices
this organization, Essex care, this organization
can achieve the financial sustainability
While solving the social problem
please remember fee-for-service model
is a well-known business model for the social companies
Let's take another example about the fee-for-service business model for the social enterprises
This is a company in Korea, the name is Cizion
and she established this company
Cizion's main service is LiveRe
What is a LiveRe?
LiveRe is a socialcommenting platform
Social commenting platform what it is
Basically it tried to reduce the kind of toxic behaviors
when people put their comment online
If people read a news article through the online
then they put kind of a comment
Some comments are good some comments are bad
So if other people read a bad comment
and the people feel humiliated
this could be a social problem
So she thought how to reduce this social problem
So she and her partner developed technology and provided
a unique service to the media companies in Korea
So this effort and this service significantly
reduced the toxic behavior online
and also promote the healthier environment
in terms of kind of a conversation online
it could be very valuable
and also this company specialized in processing
big data from the online reactions such as like,
such as comment, such as the reviews and then provide
very unique and insightful the report to the consumers
So the consumers can in this case consumers are media companies
Media companies already subscribe this service for fee
Anyway so the media companies get the benefit from
this specialized report
So the LiveRe which is a social comment platform
that reduce again the toxic behaviors
throughout the social media login
This is their approach
Social media login
If you are logged in the social media
If you write down comment and this bad comment
distributed quickly to your friend
Then you know this fact so you reduce your the toxic behavior
Anyway this company and this service is a great example
to combine technology and the social impact
this company relies on fee for services so this company make a lot of money
Social entrepreneurial company can make money
What other business model can be?
I want to introduce employment
the business model for the social the companies
The social enterprises employees, the beneficiaries
and provide them with the training and support and the others
So the social entrepreneur company not only hire them but also again
to provide the training support and structured working bottom
So the goal is to help them develop their skills and gain confidence
and participate in the economy through the meaningful work
One of the good example is Bear Better in Korea
I prepared for the short video clip
and let's watch it together how they work
What about the video?
Bear Better hires individuals with developmental disabilities
and train them to perform the task like the documentary deliveries
and packaging and snack productions for the corporate clients
This model is very meaningful in two ways
The first one this model created
dignified employment opportunity
for the people who often discriminate in the society
Secondly, this model also produced kind of
marketable goods and services
So throughout this marketable good and services
the social enterprises can make money
And can become self-sufficient
This is a good point for the employment business model
The social enterprises hire their beneficiaries
So throughout this employment opportunity,
this company solve the social problem
which is unemployment problem, which is a disabled problem
which is a discriminant problem
I will show you another example
This company is HomeBoy Industry
I prepared for the short video clip and let's watch it together
Did you finish watching the video?
What about the HomeBoy Industry?
HomeBoy industry is just a bakery shop
But their mission is not to make money from
baking the bread
Their purpose is to hire some kind of the beneficiaries
Hire beneficiaries and provide them with the relevant training
So who are beneficiaries for the HomeBoy Industry?
As you saw in the video they are all kind of
former gang members and they are kind of former prisoners
They were trained to work in the area like the baking or catering and cafeteria
What do you think? It's really really interesting
So anyway, the purpose of this business is
to make them kind of great citizens again
So, it is kind of a transformative intervention
They want to provide
the transformative intervention to the beneficiaries
Throughout this employment model
this company solves the social problems
Remember
Employment model is very useful
and commonly used business model in the social enterprises
This business model is very unique
It is called as market connector
So social enterprises kind of a bridge the gap
The bridge the gap between
the beneficiaries and donors and other stakeholders
Social enterprises try to connect different stakeholders
Instead of directly the producing good or services
or provide some job opportunity of the beneficiaries
these types of social enterprises try to create
some kind of places where different stakeholders meet together
The best example in this area is KaBoom
KaBoom in America
Have we heard about this company?
Let's watch the short video clip that I prepared
What do you think?
Now you understand how KaBoom
connect different the stakeholders
Basically KaBoom partnered with corporate sponsors
to fund the playground creation, playground construction
And at the same time KaBoom attracts the volunteers
and the local resident to help with the actual building process
Through this collaboration
KaBoom is able to provide some high quality playground
at a low cost at very low cost while empowering communities
and building the social capital
This is very innovative
The KaBoom asked corporate to fund this project
and ask the local government to support this project
probably by kind of securing volunteers
And also the KaBoom asked some construction companies
to participate to build up this playground
The KaBoom connect the different stakeholders
to solve the social problems
I want to introduce another very interesting company
that adopted the market connector business model
This company is a big work in Korea
Big work basically mobile application
they developed a mobile application
That tracks your steps
Think about your steps
The big work try to connect the users
and companies and non-profit organization
How it works?
Basic idea behind the big work business model is
the big work create some mobile application again
And then users, get like us, users download the mobile application
then you just take a walk
Then the mobile application calculate your steps
and convert your steps into the donation into the money
This concept is called as walk to donate concept
walk to donate mechanism
But don't worry about it
You don't have to pay the donation
Then who donate the money
The corporate that agree with the big work model
donate the money to the selected non-profit organization
So basically you just open up the mobile application
and you just take a walk
and the mobile application track your steps
Track your steps and and convert your steps into the money
then the corporate donate the money
based on your total amount of the steps
Which is very interesting
Anyway the big work connect
several different types of stakeholders
such as general individual like us consumer
and the corporations corporate who care for
the corporate social responsibility
and the non-profit organization that they need they need donations
So the big work connect these three different stakeholders
Next business model is called cross compensation business model
Basically we have two different types of the consumers
One group of consumers pay
full prices for your product and services
and you can use this product this profit I'm sorry this profit
to provide very similar services
to the people who cannot afford to it
Do you understand the compensation cross compensation model?
So the previously do you remember the Aravind eye hospital
Aravind eye hospital adopted the cross compensation model
So the paying consumers can support
three consumers who cannot afford to it
This is a cross compensation
I want to introduce
another company that adopted cross compensation model
This company, BioLite
BioLite designed and sell
very innovative energy related product such as
smokeless stoves and solar lights and charger
These products are marketed to the outdoor enthusiasts
and campers who are willing to pay full prices
In the meantime, BioLite reinvented this profit to
subsidize the people living in
kind of developing countries
This model is very effective
because it doesn't rely solely on the donation
and also it uses sustainable the business strategy
to serve two distinct consumer segment
This business model is so smart
because it can achieve the both
market success and also kind of make a huge social impact
I prepared for the short video clip
and we can watch it together
This product is just normal product
that be marketized to the outdoor environment
So the campers campers in developed country
are willing to purchase these types of product
Then again, BioLite used the profit and
reinvented this profit to serve underdeveloped country
This is a cross compensation business model
Let's discuss about
the cooperative business model which is one of the oldest
and the most democratic forms of the social businesses
This cooperative business model is typically
fee-based membership of the organization
Fee-based membership organization
owned and operated by its members
These members can be workers and can be consumers
can be producers or even residents
What makes this model unique is that
it is not driven by external shareholders
Instead the members themselves own the businesses
They make a decision together
democratically and share in the profit
One of the most famous and the biggest example
of the cooperative business model is that
is Mondragon Cooperative in Spain
Have you heard about this cooperative?
Mondragon Cooperative in Spain was founded in 1950s
This cooperative operates multiple industries
Such as manufacturing or retailing
or finance and education and etc.
So as I already mentioned that
the employees are all co-owners
Anyway this cooperative business model kind of promote
economic inclusion and stability of the job
and share the responsibility
The workers are also owners
There could be greater loyalty and higher productivity
and more kind of equal chance
Equal opportunity in terms of the income
or in terms of kind of promotional opportunity something like that
Anyway this is a very unique business model for
the social enterprises
cooperative business model
Let's move on another one
This is empowering, marginalized individuals
social enterprises try to help people
throughout the job opportunity and then so that
the beneficiaries can make their own money
by working hard
Then through this process the beneficiaries can gain independence
and can be the self-sufficient and self-reliant
so it is much better than just pure donation
The best example would be big issue I already mentioned
We already talked about big issue before,
so you are pretty familiar with Big issues
Let's move on
In this session this is a last the business model that
social enterprises adopted this is a service subsidization
Basically the social enterprises try to fund the social programs
By selling their own product and services
so they sell their product or service in the real market
then they make money so with that money
they supported to kind of a very relevant to social programs
For example ByMoM
ByMoM is a Korean company
Their main product was indoor tent
In order to make a make a house warm inside
So this company provides some kind of indoor tent
Anyway so this is an indoor tent inside this tent is kind of warm
So you don't have to pay the electricity
to make your room warm
Anyway so this company provide design
and provide these types of tent
and make money and with that money
the company supported some single mom's educational program
or a single mom's kind of training programs
By doing so the company try to make society brighter
Try to solve the social problems
Again, this is a service subsidization business model
that social enterprises adopted
So far we have discussed about several interesting
and very unique business model that social enterprises adopted
Thank you for listening