Marjorie Kelly on the Emergent Ownership Revolution

Do you need something more tangible to use when talking about social business?

Is the 'social purpose' argument a bit thin for you?

According to Marjorie Kelly in Towards Mission-Controlled Corporations: Extractive vs Generative Design there are 5 elements of a generative ownership-driven design framework for social businesses:

1. Membership – How can we have the right people forming part of the business? How can they contribute to the running of the business? What roles and authority can they have?
2. Purpose – What purpose can a business have beyond profit-making for shareholders? What problems might it solve? How is 'wealth', and value spread within the local community?
3. Governance – Who is the board? Who does the board answer to? 
4. Finance – Where does the money come from? Where does it go? How does it circulate through the business? How does it generate wealth and value?
5. Networks – How does the business get access to goods, services, information? How might the exchange be carried out? How might it be non-financial? How might it reach beyond typical boundaries e.g. geography?

Will Starbucks food donations encourage local restaurants and shops to do the same?

Interesting question. Possibly. But as said below by a previous poster the value chain and business processes at large food restaurants look different from those at small restaurants and thus the opportunity for surplus (and thus donations) is different.

Let me add one thought that sprung to mind. In my experience, the other factor that affects the flow of surplus food to the people who need it are the intermediaries in between. For example, small restaurants are not normally able to afford to send/deliver/transport food to charities outside of a couple of miles and small charities are not normally able to absorb this cost either. One idea is that services spring up to help this process/fill a gap. Maybe a group of restaurants band together to hire a van or a group of charities do that ... or even a separate intermediary (maybe... a neighbourhood support scheme paid through by the local authority or even people/citizens/charitable folks who live in the area pay for it). Or possible, someone likes Uber or your local taxi cab company offers this service at a discounted fee.

So, we might see that maybe instead of giving money to charity, people give money in other ways to help restaurants get their food to people who need it.

Originally posted on Quora here

The Iceberg Illusion

What does it mean to do ethical business in apparel?

What value do ethical standards bring to the fashion industry?
What does it mean to be ethical in fashion ?
What is the business case for ethical fashion?

• Product development that sources and uses raw materials according to sustainability regulations/norms/codes/standards/values in the industry 
• Product design that reflects stories from different people and different culture (i.e. non-normative, beyond the Western beauty ideal) and in a way that respects ownership and that protects against cultural appropriation for profit
• Innovation based on participative collaboration that understands power structures and control/equality/equity issues 
• Ensuring that wage payments, work health and safety conditions and regulations are observed, external audits and inspections are supported and violence and illegal practices are addressed through a fair justice system (Guardian)
• Working with producers and suppliers in developing countries: meeting regulations and codes and respecting power imbalances in ethical management styles and monitoring systems
• A systemic approach to certification/regulations/norms/codes/standards to bring about sustainability and scale and builds on the successes of supply chain strengthening (multi-stakeholder governance, transparency, independent verification, and third party chain of custody) (Business Fights Poverty)
• Creating a demand for ethical fashion by using multi-channel retail opportunities including pop-ups to showcase the brand the product and the story
• Ensuring that the pricing model allows producers and suppliers to be paid a living/decent wage even when it means charging the retailer or consumer a few pence more. The recent example of dairy farmers in the UK removing milk from supermarket shelves in an attempt to sell it directly to the consumer to get a better price.
• Understanding that in fashion there is economic value to the 'story' in the same way that any brand builds equity - through rational, emotional and behaviourial consumer analysis
• The impact on retail pricing - what is the market willing to pay?
• Businesses that 'work in Africa' do not automatically mean social enterprise or ethical sourcing
• Making your claims of ethical business practices credible and possible to observe and verify. Consumer driven - Mintel found that half of those surveyed said they would only pay more for ethical products if they understood clearly where the extra money went, and 52 per cent said they found information about which foods are ethical confusing (Supplymanagement.com)
• Working on textile waste to minimise, recycle, reuse, upcycle, upgrade, re-configure, re-integrate, and more (The Ethical Fashion Source)

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http://www.theguardian.com/world/2015/aug/10/lithuanian-migrants-chicken-catchers-trafficked-uk-egg-farms-sue-worst-gangmaster-ever
http://source.ethicalfashionforum.com/article/recycling-on-the-high-street-3-different-approaches

What does a market system specialist like me do?

Economic Development

• Develop retail networks in developing countries to get products and services in the hands of low-income marginalised consumers
• Help aid programmes do more systemic social welfare through systemic safety net programmes
• Improve the enabling environment for MSMEs and the informal sector  

Social Business and CSR

• Look at supply chain interventions that go beyond the value chain approach and take more of a systemic perspective that actually deliver benefits to poor farmers 
• Identify different areas where CSR can be better programmed by way of a market systems approach
• Integrate the private sector into market systems approaches that have historically focused on socialist mechanisms (large State, community associations, NGOs)
• Work with system actors to identify areas where market systems development will make a difference

Behaviour Change

• Train practitioners on behaviour change and behaviour change methodologies to help projects deliver systemic solutions 
• Design behaviour change tools to improve the adoption and commitment of poor people to long terms savings and investments practices

Article - Are we spoiling the private sector?

This blog was originally published here on the SEEP MaFI website.

Are We Spoiling the Private Sector?
by Md. Rubaiyath Sarwar in 2012

"As market facilitators, we strive to make the market inclusive...facilitate some small changes with the hope that the market system will open up to the poor! And we work with our ever so accommodating partners-more often than not lead firms. In the process, we keep on knocking from door to door, asking the private sector if they are willing to partner with us. And then, we negotiate, select the partners and implement our interventions. The interventions fetch excellent results. So much so that we do the same thing with the same partner in a larger scale. We call it replication. And then we involve more partners to do the same thing. We call it scale up. In some cases we say no to our beloved partner as we believe we have solved the market problem. But to our surpise, few months later, we see our partner doing almost the same thing with another project funded by another donor. Do we see another form of distortion taking place? Aren't we making ourselves too dependent on the lead firms? Why are our interventions often skewed towards the lead firms? What about other market system actors which include- civil society, professional associations, the government, the NGOs, cooperatives...? Do we always need to have commercial incentives to have sustainable impacts on scale?"

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Over the last decade we have observed increasing donor investment on market development projects for ‘large scale,’ ‘systemic ‘ and ‘sustainable change’ in agricultural and industrial sectors in Africa, South Asia and South East Asia. The projects proved that the donors can get better value for their investment if the private sector is attracted to invest on the interventions. More importantly, the partnership between the private sector and the project on cost sharing basis evolved as a principle tool to reposition development projects from being providers of critical services to being facilitators of the services.  I have been a direct participant in this paradigm shift and evolved from being a project manager to becoming a technical advisor and evaluator of market development projects in agricultural, industrial and health sectors in several countries that include Bangladesh and Nigeria, the two hotspots for market development projects in the world. 

As my roles shifted and my exposure expanded across different sectors in different countries and contexts, I observed an alarming trend.  It was becoming increasingly evident that (i) market development and support to lead firms was becoming increasingly synonymous (ii) there were projects inThe question attracted wide range of participants contributing to a technically rich discussion. Contributors included Mary Morgan-Inclusive Market Development Expert, Scott Merrill- Independent Consultant, Marcus Jenal, Specialist on Systemic Approaches for Development and James Blewett, Director of Markets, Enterprise and Trade Division at Landell Mills Ltd. All the contributors shared the feeling that indeed there is a risk that market development projects, if not carefully managed, can lead to a new form of market distortion where the private sector become reliant on donor funds.  However, they also reiterated the importance and significance of the collaboration with the lead firms and suggested several approaches that could mitigate the risk of the private sector becoming reliant on donor funds.

Mary suggested that partnerships work when the disparate goals of the private sector (making profits), vulnerable and poor producers (being able to produce and sell their produce at an acceptable price) and the development projects (increasing income and employment for the poor) converge towards the overall goal of inclusive market development (sustainable and systemic change in the market for employment and income generation of the poor).  While acknowledging the potential pitfall of partnerships, Mary pointed out that the risk might be higher in their absence.  She contributed further to the discussion by raising the point that often the support provided by the projects is much too heavy for the private sector to deliver once project support is withdrawn.  As evidence, she cited a case involving Wal-Mart and Mercy Corps in an intervention on developing an inclusive supply chain for Wal-Mart in Guatemala.

The questions raised by Mary were addressed by Scott who argued that the risk of distortion is high when the projects fail to adopt good practices for partnerships. He proposed that instead of pushing the private sector towards the partnership, the development projects should seek to pull the private sector towards the development goal by soliciting proposals from the lead firms. He suggested that we should be careful with how we use the term ‘partnership’ since it could be interpreted as the lead firms being subcontractors or sub-grantees. Scott emphasized on the need to establish objective selection criteria, conduct due diligence and structure relationships with lead firms to ensure sustainability of the interventions. Scott proposed to support the lead firms to develop a business plan so that the commercial benefit from the intervention could be laid out in details prior to the inception of the intervention. This could ensure that the firm owned the development activities and continued to deliver the service after the project support was withdrawn. 

James Blewett reflected on his experience in managing a challenge fund project in Afghanistan and argued that challenge funds reduce the risk of distortion in private sector engagement since it seeks to proactively engage the prospective grantees (which include lead firms) in design, co-investment and management of the interventions.  He also suggested the use of financial modeling tools used by investment projects to determine ‘tipping points’ so that the project’s financial contribution to the intervention is just enough to incentivize the private sector to address the investment risk associated with the intervention.

A very important contribution to the discussion came from Marcus who suggested that before deciding on the financial arrangements and technical support, the projects should ask why the private sector is not investing on the intervention on its own if it made commercial sense. He advocated for ‘form follows function’ approach and suggested that the projects should partner with lead firms when it is clear that the vulnerable will benefit from the partnership. Marcus argued that the lead firms often do not invest to reach out to the vulnerable not because they haven’t seen the opportunities, but because of a dysfunctional regulatory system, which according to him is the systemic constraint that needs to be tackled.

From the discussion it was evident that while the need for collaboration with the private sector is real, there needs to be further push from the donors, development projects and practitioners to ensure good practices and reduce risk of distortion in the market systems due to over-engagement with the private sector. The discussion also revealed that there are good practices and models that are being followed and discussion around these models could help market development practitioners to be better able to answer to why they have partnered with the lead firm, what support (financial and technical) they should be providing and why, and finally, how the lead firm is expected to sustain the intervention after the project support is withdrawn.  the same region or country competing for partnership with same lead firms (given that there are not too many in the country that qualifies to become a partner) (iii) the proliferation of market development projects in the same sector led to increasing number of lead firms receiving funds from them that ended up subsidizing their R&D, distribution and marketing costs and (iv) it was becoming difficult to evaluate whether the intervention resulted in systemic change since the lead firms continued to replicate the intervention with funds from other projects once the support from the original project was withdrawn. This prompted me to ask the members of the Market Facilitation Initiative (MaFI) whether they shared the feeling that probably it is time for us market development practitioners to be a little cautious when we approach lead firms.   

Article - Resilience v efficiency: a systems thinking heavyweight bout

(The blog has been reproduced from where it was originally found on the Practical Action website here.)

Resilience v efficiency: a systems thinking heavyweight bout

By Glen Burnett, September 3rd, 2014

Sometimes, Practical Action can really get absorbed in systems thinking. We’ve been working in this space since about 2003, and some of its principles have served as the foundation of some great successes we have had. For an oversimplified approach, think of a terrarium. You have soil, plants water and air all living inside a closed pot (it isn’t considered a true closed system, because sunlight gets in, but you get the idea). If you were to adjust different segments of the system, you might see different developments: more water might mean more growth, or more growth might also mean the system burns out.

So what happens when this system shifts, and you start looking at populations? Plants become people, soil becomes the economy, maybe even water stays the same, and you consider the impacts of clean water in a community. That evaluation is a key part of how Practical Action often engages with communities. Two key features of systems are resilience, which often shows up in our climate adaption work, and efficiency, which is often considered key to creating transformative impact in the lives of the poor—because if something isn’t efficient, it will probably not be as replicable, and you lose that whole transformative impact component.

These two systems characteristics are inversely related: resilience is a trade-off for efficiency.

What does that mean? When we talk about resilience in relation to the extreme poor, we are often talking about those who are able to bounce back when they face a system shock. That could be a drought, a flood, or an economic collapse. If you think about it, resilience gets built up by being able to quickly adapt to a change in a system, and that often means there are multiple support systems created that can create the flexibility needed for that change. In the case of drought, that might mean there are several different kinds of crops that are raised, some that work better in wet seasons and some that work better in dry seasons. This could also mean there exists a knowledge base that allows for more resilience as well—you become a generalist as opposed to a specialist so you can perform multiple tasks.

Then there is efficiency. However you achieve it, be it economies of scale, or through specialization, efficiency is important, because it means you are completing a task more effectively. If you can increase efficiency, you will be able to replicate that task. So when people talk about creating transformative change in a community, efficiency is often necessary for that change to take root. Think of a treadle pump. The first time someone built one, it probably didn’t work very well, but over thousands of years, the design has been improved upon, to the point where many look very similar: they are cheap to build, easy to replicate, and in a word, efficient, given their circumstances.

These days, efficiency is a major focus in many drives to end poverty. You have limited resources, and efficiency allows for expansion that maximizes those resources. But it also means that you are developing systems that require many of your “resources” (READ: people) to specialize in a given approach. As a result, you aren’t as flexible, and your trade-off is resilience. Think of GMO super crops—they are efficient, because they can be made to resist certain pesticides, and can grow bountifully. But they aren’t resilient, because once an infestation comes along that is particularly brutal to that crop, there is no other crop there to create resilience—food prices go up, and people go hungry.

So does this mean that the world should be extremely resilient? Or should we focus our efforts wholeheartedly on efficiency, hoping to create economies of scale that are extremely good at overcoming system shocks? Ultimately, this conversation starts sounding more like one with a personal finance advisor. If you are preparing for the future, you need a diversified portfolio. Like in that terrarium, finding the appropriate balance is key, and it will rarely be wholly efficient or wholly resilient.

http://practicalaction.org/blog/programmes/climate_change/resilience-v-efficiency-a-systems-thinking-heavyweight-bout/

Article - Diffusion of innovations theory

Diffusion of innovations

Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures. Everett Rogers, a professor of communication studies, popularized the theory in his book Diffusion of Innovations; the book was first published in 1962, and is now in its fifth edition (2003).^[1] Rogers argues that diffusion is the process by which an innovation is communicated through certain channels over time among the participants in a social system. The origins of the diffusion of innovations theory are varied and span multiple disciplines. Rogers proposes that four main elements influence the spread of a new idea: the innovation itself, communication channels, time, and a social system. This process relies heavily on human capital. The innovation must be widely adopted in order to self-sustain. Within the rate of adoption, there is a point at which an innovation reaches critical mass. The categories of adopters are: innovators, early adopters, early majority, late majority, and laggards.^[2] Diffusion manifests itself in different ways in various cultures and fields and is highly subject to the type of adopters and innovation-decision process.

The key elements in diffusion research are:

Element	Definition
Innovation	Innovations are a broad category, relative to the current knowledge of the analyzed unit. Any idea, practice, or object that is perceived as new by an individual or other unit of adoption could be considered an innovation available for study.[14]
Adopters	Adopters are the minimal unit of analysis. In most studies, adopters are individuals, but can also be organizations (businesses, schools, hospitals, etc.), clusters within social networks, or countries.[15]
Communication channels	Diffusion, by definition, takes place among people or organizations. Communication channels allow the transfer of information from one unit to the other.[16]Communication patterns or capabilities must be established between parties as a minimum for diffusion to occur.[17]
Time	The passage of time is necessary for innovations to be adopted; they are rarely adopted instantaneously. In fact, in the Ryan and Gross (1943) study on hybrid corn adoption, adoption occurred over more than ten years, and most farmers only dedicated a fraction on their fields to the new corn in the first years after adoption.[6][18]
Social system	The social system is the combination of external influences (mass media, organizational or governmental mandates) and internal influences (strong and weak social relationships, distance from opinion leaders).[19] There are many roles in a social system, and their combination represents the total influences on a potential adopter.[20]

Five stages of the adoption process

Stage	Definition
Knowledge	The individual is first exposed to an innovation, but lacks information about the innovation. During this stage the individual has not yet been inspired to find out more information about the innovation.
Persuasion	The individual is interested in the innovation and actively seeks related information/details.
Decision	The individual takes the concept of the change and weighs the advantages/disadvantages of using the innovation and decides whether to adopt or reject the innovation. Due to the individualistic nature of this stage, Rogers notes that it is the most difficult stage on which to acquire empirical evidence.[11]
Implementation	The individual employs the innovation to a varying degree depending on the situation. During this stage the individual also determines the usefulness of the innovation and may search for further information about it.
Confirmation	The individual finalizes his/her decision to continue using the innovation. This stage is both intrapersonal (may cause cognitive dissonance) and interpersonal, confirmation the group has made the right decision.

Change agents bring innovations to new communities– first through the gatekeepers, then through the opinion leaders, and so on through the community.

Adopter category	Definition
Innovators	Innovators are willing to take risks, have the highest social status, have financial liquidity, are social and have closest contact to scientific sources and interaction with other innovators. Their risk tolerance allows them to adopt technologies that may ultimately fail. Financial resources help absorb these failures. [40]
Early adopters	These individuals have the highest degree of opinion leadership among the adopter categories. Early adopters have a higher social status, financial liquidity, advanced education and are more socially forward than late adopters. They are more discreet in adoption choices than innovators. They use judicious choice of adoption to help them maintain a central communication position.[41]
Early Majority	They adopt an innovation after a varying degree of time that is significantly longer than the innovators and early adopters. Early Majority have above average social status, contact with early adopters and seldom hold positions of opinion leadership in a system (Rogers 1962, p. 283)
Late Majority	They adopt an innovation after the average participant. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are typically skeptical about an innovation, have below average social status, little financial liquidity, in contact with others in late majority and early majority and little opinion leadership.
Laggards	They are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. These individuals typically have an aversion to change-agents. Laggards typically tend to be focused on "traditions", lowest social status, lowest financial liquidity, oldest among adopters, and in contact with only family and close friends.
Leapfroggers	When resistors upgrade they often skip several generations in order to reach the most recent technologies.

Source: Wikipedia