GCL nbs Social Business Lab Report by GrameenCL

SOCIAL BUSINESS LAB

nbs // RIO DE JANEIRO JUNE 25 // 2012

OVERVIEW

The idea of social business as defined by Nobel Peace Prize Laureate Prof. Muhammad Yunus is a growing movement globally. More and more social businesses are created with the clear focus on solving social problems in a financially self-sustainable way, addressing social problems within healthcare, environment, education, and many other areas. Despite being an emerging economy, Brazil faces several social problems and challenges, which require innovative and creative solutions. Therefore, nbs in collaboration with The Grameen Creative Lab organized a Social Business Lab on June 25th 2012. This unique event brought together practitioners from a variety of backgrounds in order to explore the idea of social business, share perspectives and best practices, and develop concrete social business ideas.

This report will provide a summary of this inspiring event. We will share with you the great social business ideas, which have been developed during the workshops and will give more impressions from the Social Business Lab for all who have not been able to participate this time. We are looking forward to welcoming you to one of the upcoming Social Business Labs, which will take place in many different countries all around the world. Read it with joy! Your GCL Team

// AGENDA //

Monday, June 25th 09.30 am

Introduction to social business and Q&A Session

10.30 am

Socials business best practices I

11.45 am

Brainstorming session on social problems Lunch

02.00 pm

Social business best practices II

02.00 pm

Breakout session social business ideas

05.30 pm

Presentation of results & wrap up

// SOCIAL PROBLEMS // // During this brainstorming session, participants identified and prioritized the most prevalent social problems in Brazil //

SOCIAL PROBLEMS

• Access to education and information

• Corruption & lack of ethics • Injustice & impunity • Waste / waste of resources • Social inequality • Teen pregnancy • Child labour & begging • Violence • Water pollution • Lack of public transportation • Insufficient literacy • Sanitation infrastructure • Dengue fever and other diseases

// BREAKOUT SESSIONS // // During the breakout sessions, participants had time to develop and refine concrete social business ideas //

THE BREAKOUT SESSIONS

1) Access to affordable health services

2) Lack of education

3) Open Topic â&#x20AC;&#x201C; Social business against waste

// 1 // HEALTHCARE //

// 1 // HEALTHCARE

Social Problem Access to affordable health services and information in shanty towns is still limited While there is much variation from favela to favela, the shortage of utilities is constant. Some favelas have better access to different utilities due to their location Lack of waste and water management lead to increased health hazards for the residents of the favelas as waste and sewage are disposed in open ditches, eventually ending up at street level. Especially children are affected, as they are the most vulnerable to diseases that spread in unsanitary conditions. Living conditions in many favelas lead to a high incidence of tuberculosis and maternal and child mortality. While the rate of child mortality has dropped by about 50% over the last twenty years in Brazil, it remains at a high level. A major problem in providing adequate health care in favelas is the lack of well trained staff. Many Brazilian doctors and nurses are lured by higher salaries to the private sector, making it even harder to establish an affordable provision of medical services in shanty towns. The group further discussed these social problems and identified three main categories: • Insufficient Public Healthcare • Lack of healthcare information • Lack of healthy routine …and started to brainstorm many social business ideas within these areas, ranging from micro health insurance, to nurses training, to health online portals and education centers, up to e-health services and school nutrition programs.

// 1 // HEALTHCARE

Social Business Idea Doctors on Wheels While discussing the many social business ideas, the group decided to focus on the idea of a mobile health clinic and to further develop this business model. Doctors on Wheels provides healthcare services to low income communities in little towns or favelas. The services will be provided by doctors and nurses in a mobile health clinic, a truck or van which travels from community to community. In a first step, the mobile health clinic will start to offer basic health services, such as blood pressure, vaccines, temperature, diabetes & blood test and nutritional counseling. In a second and third step, they will offer more sophisticated services, such as dental services, skin & eye exams, x-rays and ultrasounds. The mobile health clinic will charge a one time service fee, but will also offer a membership fee for a specific period. In addition, services will be offered to companies, which will offer free health care services for their employees at selected dates. Another source of income could come from insurance companies, which will pay for the services, as well as through company sponsorships and advertising.

During the final stage of the session, the group developed a basic implementation strategy which would enable the launch of this social business within the first half of 2013. Doctors on Wheels would start with a Program Manager, who would start the market research and the technical and legal feasibility study. Subsequently, the Program Manager would need to establish key partnerships with health labs and companies, universities, the local city hall and transportation companies, as well as identifying suitable doctors and nurses. Once staff has been hired, the staff training and the set up of the knowledge management could start in parallel to the marketing and promotion of Doctors on Wheels. Once the van and the other equipment has been bought, the social business could be launched and start as a pilot on a small scale.

// 1 // HEALTHCARE 1

Customer Segments

Value Proposition / Products

Channels

1.Low income customers in small cities or favelas as direct customers 2.Companies offering healthcare programs for employees

1.Basic healthcare services Step 1: Blood pressure, vaccines, temperature, diabetes & blood test and nutritional counseling Step 2: Dental services, skin & eye exams Step 3: x-rays, ultrasounds

1.The truck / van 2.Door-to-door approach 3.Hotline 4.Communication through local radio and local PR channels

Customer Relationships

Revenue Streams

Key Resources

1.Personal relationship 2.Website and social media 3.Media partner 4.Through SMS and Apps

1.One time service fee vs. monthly membership fee 2. Revenues from health insurance companies 3. Revenues from company program 4.Sponsorships and advertising space

1.Doctors 2.Nurses 3.Truck / van 4.Technical equipment

Key Activities

Key Partnerships

Cost Structures

1.Market research 2.Technical feasibility study 3.Design product and services 4.Develop business plan 5.Find sponsors and partner 6.Logistics

1.Health Labs and universities 2.Motorcycle companies, mototaxis 3.City hall 4.Healthcare companies

1.Salaries for doctors & nurses 2.Van and equipment 3.Operating costs (gas, insurance, etc) 4.Maintenance costs 5.Marketing costs

// 2 // EDUCATION //

The social problem Education is one of the social bottlenecks for Rio de Janeiro. Lack of education and its poor quality generate major problems with devastating consequences. There are several reasons for poor enrollment rates â&#x20AC;&#x201C; lack of schools near homes, lack of money, and the need to work. Teacher shortage is also a major problem. There are many public schools without enough teachers. Moreover, many of those who do teach are underpaid and are poorly trained. As schooling is often divided by address of residency faveladors are often not able to attend schools. In numbers, this is reflected by 17% of people over fifteen not being able to read or write and only 40% of children who start school complete their primary education. Because of a low minimum salary, many kids have work to help support their families. It is common in shanty towns to see kids working in stores, not attending school, limiting their options on the job market later on. The International Labour Office (ILO) estimate that 16.1% of children 10 to 14 years old are economically active in Brazil. Attitudes are changing only very slowly with the numbers of kids of age 7 to 14 attending school gradually rising. The group identified the specific problem of high drop-out rates from high schools, with 40% of students leaving or not attending public schools

// 2 // EDUCATION //

Social Business Idea E-Duca – Education Consulting for Transformation Mission: To change the relationship of education with the youth E-Duca has the overall goal to make education a more enjoyable experience for youth, especially for young students entering high school (appr. around the age of 14). The main product and service is a specific learning methodology based on action and dialogue. The students will learn the same content, but through a specific and different delivery methodology based on real projects. Therefore, E-Duca will not focus on creating new content, but rather on the way how to communicate this content. Several methodologies will be applied, based on • Co-Creation: Students will be able to participate in deciding the fields they would study/ focus during a certain period • Group Learning: Students will jointly learn together • Networking: Students will network with the local communities • Mentors from communities: Students will be able to receive mentoring directly from the communities The social business will generate revenues mainly from consulting fees from public and private schools, which will start to implement the learning methodology from E-Duca. Additionally, companies could pay a consulting fee for the implementation of specific content. Finally, revenues could be generated through sales of content, as well as consulting services directly for the communities.

// 3 // WASTE //

Social Problem The group decided to tackle the social issue of waste. It is believed that Brazil is a very wasteful society and we want to change this wasteful culture and put the waste to a social value creating use. The focus of this social business is the waste generated by restaurants that usually are not very good at planning their food supply leading to a situation where up to 30% of the food get thrown away increasing the amount of garbage and wasting valuable resources. Moreover, Brazil produces 195,090 tons of urban solid waste (garbage) a day according to the “Overview of Solid Waste in Brazil in 2010” published by the Brazilian Association of Sanitation and Special Waste Companies (ABRELPE). In Brazil there exists a culture of “Marmiteiros”, people that work in neighborhoods that they are not residents of. They usually bring their food (Marmeitos) in the morning and cook it during the day. Often this food is not very healthy and does not include all the nutritional values that should be in their lunch.

Social Business Idea Marmita Vision:

10 years from now, 80% of wasted food in restaurants in Rio de Janeiro will be recycled as a “second hand” meal (marmita)

Mission: By providing meals (marmita) to low income workers, we want to transform the waste of food in Rio into a self-sustainable meals business. Better nutritional food at a very low cost. Goal:

In 2012 we’ll launch this new business - MARMITA, at the first neighborhood Botafogo in Rio de Janeiro. The social business will expand to a second and third neighborhood in 2013 with the goal of more than 20 neighborhood by 2020

// 3 // WASTE //

Social Business Idea The above mentioned “Marmitereiros” are people that do not have access to a company cafeteria and do not have the money to go to a restaurant. These people come from low income communities and they usually bring their lunch from home, where it is prepared in the morning made from left-overs. There is a significant amount of time spent on the meal preparation and the meal is often not nutritionally balanced. The social business Marmita will collaborate with restaurants to encourage them to produce marmeitos using the left-overs of the high-quality food that they cook and sell in their restaurants. Basically, the social business is consolidating the left-overs from the restaurants and is “re-cooking” the food in order to prepare healthy and affordable meals which will be sold in a “food outlet”. There are two main sales channels, either through the marmeita kitchen that actually produces and sells the food or through street sales women, who collect the marmeitas from the kitchen and sell it at popular eating spots in the city. Other sales channels could include larger companies which are obliged to provide lunch for their employees. This could be used as a source for cross-subsidies with higher margins.

The income is based on a simple revenue stream from the sales of the marmeitas.

// 3 // WASTE // 1

Customer Segments

Value Proposition / Products

Channels

1.Low income workers who bring food from home 2.Companies which want to provide healthy and affordable meals

1.Marmeitos ( healthy food being cooked from leftovers from restaurants)

1.Direct sales through the marmeita kitchen 2.Sales through street sales women 3.Sales though companies

Customer Relationships

Revenue Streams

Key Resources

1.Direct customer relationship through personal relationships

1.Basic revenue stream from marmeita sales (Price could be around 3-4 reais per meal, up to 8 reais for companies)

1.Regulatory compliance 2.Restaurants willing to cooperate 3.Cost-effective collection process 4.Ensure planability of quantities

Key Activities

Key Partnerships

Cost Structures

1.Alliances with restaurants supplying left-overs 2.Logistics to collect and consolidate left-overs 3.Preparation and sales of food 4.Nutritional supervision & quality control

1.Restaurants 2.Supermarkets 3.Media partnerships (e.g. Veja Award â&#x20AC;&#x153;Restaurantes Sustentaveis)

1.Salaries for Program Manager and chef 2.Operating Expenses (rent, insurance, etc.) 3.Marketing Expenses

// IMPRESSIONS //

// QUESTIONS & ANSWERS //

QUESTIONS & ANSWERS

Q: Is it possible to start a social business to solve any social problems? A: Every social business starts with a social problem first. A social business is not limited to solving the problem of poverty. A social business could address many social problems such as malnutrition, lack of education, lack of health services, severe illnesses, etc. Nevertheless, some social problems might be easier to address through a social business than others. Once you have identified a relevant social problem which you would like to address, you then need to develop a good business model in order to make your social business financially self-sustainable. Q: What is the difference between NGO and social business? Is it possible to turn a NGO structure into a social business?

A: A social business is a new type of business. It is a non-loss, non-dividend company with a social goal. It is created because its founders identified a social problem that they wanted to address, and wanted a long-lasting, financially selfsustainable way to do so. Usually, a non-profit organization is not 100% financially sustainable, they do not cover all of their costs by selling products, but they have to rely on other sources of income (e.g. donations). Nevertheless, a non-profit organization could be transformed into a social business, if they become fully financially sustainable. The NGO needs to identify ways to generate revenues for their products and services, which will cover all of their costs. Q: What are the biggest challenges to establish a social business? A: Just like any other business, a social business should be prepared to solve many challenges along the way. The first challenge is of course to find the right and applicable business model which allows you to solve the social problem in a financially self-sustainable way. Receiving funding and the necessary investments is in many cases a challenge as well. During the lifespan of the social business, be prepared for many operative challenges just as in any other business.

QUESTIONS & ANSWERS

Q: Why is not possible to give back a fixed small percentage of dividend just for increasing investors? A: Social business as defined by Prof. Muhammad Yunus does not offer any dividends on its investments. This protects the social business from never losing sight of its over-arching goal; the service or solution to a social problem that it has been founded to address. A social business is also about a moral commitment to a clear focus on solving social problems. Q: How to build a business plan and make a social business work? A: Once you have defined your business model, you need to develop your business plan and a comprehensive financial plan. Here a seven tips, which we identified to be relevant: • Start small, but think big! • Be innovative and creative • Don’t go it alone • Listen to your customers • Do it with excellence • Measure your results • Do it with joy! Q: If social business investors only get the investment amount back, who are these investors? (“no loss/no dividend”…) A: Investment funds can come from anywhere: companies, institutions, individuals etc. As you know from the examples, many big multinational companies have made investments into social business joint ventures. In addition, first Social Business Funds have been set up, with both institutional and individual money from philanthropists.

QUESTIONS & ANSWERS

Q: If it must be environmentally conscious it must count on the consciousness of the population. Is there an educational role played by the companies? A: A social business has a significant educational role to play. Being environmentally conscious is one of the seven principles as defined by Prof. Yunus, therefore any social business has an obligation to create a maximum positive impact for the environment. In addition, education plays an important role regarding the products and services of the social business. The social business in many cases needs to educate potential customers about the positive effects of the products and services. In the case of Grameen Shakti, the employees needed to educate the customers about the innovative solar energy solutions, not only about the technology aspects, but moreover about the financial benefits customers will have in the long run. Q: What is the major reason for big companies to get involved in social business? A: Prof. Yunus is often asked the question, "Don't you worry that these businesses are just using you?â&#x20AC;&#x153;Prof. Yunus answers, "Well but I thought that I was using them" (to spread the concept of social business). The point might be less what their intention is, but more about the potential effect they could have on fighting poverty and social issues worldwide, and offering solutions previously unavailable to the poor and marginalized. Big multinational companies can bring extensive expertise in a variety of topics for the good of society and social business is the ideal model for this.

// SOCIAL BUSINESS //

SOCIAL BUSINESS

With the idea of social business, Prof. Muhammad Yunus has introduced a new dimension for capitalism: a business model that does not strive to maximize profits but rather to serve humanityâ&#x20AC;&#x2122;s most pressing needs. Thus, the first motive of a social business is not profit, and second, it does not pay its investors dividends. Instead, it aims at solving social problems with products and services at affordable prices, or giving the poor and marginalized people ownership in a business and therefore allows them to share in its profits.

A social business pays back only its original investment and reinvests its profits in innovations or further growth that advance its social goals. Although the social business is pioneering in its aims, it is traditional in its management. Its workforce is professional and paid according to market wages. This type of business may or may not earn profit, but like any other business it must not incur losses in order to be able to sustain itself. In every sense the social business is sustainable: in its direct environmental impact, its impact down the value chain, and critically, in its financial independence. This is a key difference between social business and charity. Once its initial investment is repaid, the social business aims to be financially selfsustaining, giving it the independence and security to focus its efforts on the long-term improvement of the lives of the disadvantaged.

Thus the social business is a new type of company and "social business entrepreneurs" (SBE) are a new type of entrepreneurs who are not interested in profit-maximisation. They are totally committed to making a difference in the world. They want to give a better chance in life to other people and they want to achieve this objective through creating and supporting sustainable business companies. Social business follows 7 principles, which serve as its defining elements. The seven principles of social business: 1. Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access and environment) which threaten people and society; not profit maximization. 2. Financial and economic sustainability. 3. Investors get back their investment amount only. No dividend is given beyond investment money. 4. When investment amount is paid back, company profit stays with the company for expansion and improvement. 5. Environmentally conscious. 6. Workforce gets market wage with better working conditions. 7. â&#x20AC;Śdo it with joy.

SOCIAL BUSINESS

// INTERACT //

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Visit our website http://www.grameencreativelab.com

// CONTACT // The Grameen Creative Lab Leonhard Nima Leonhard.nima @grameencl.com www.grameencreativelab.com