II. Hybrid Social Business Model/ Case study Samasource

Question 1

Impact Investing

Answer 1

• Investment into companies/ organizations/ funds
• Intention to generate positive social/environmental impact and financial return
• Investments are often project specific
• Different levels of philanthropy (Wohltätigkeit) since investor retains ownership over asset/ expects positive financial return
• Beneficiaries = Social Enterprises and Social Entrepreneurial Initiatives (Also customers but actors are different)

Question 2

Who invests in B-Corps and Social Enterprises?

Answer 2

• Socially Responsible Investing
• Social Impact Investing
• Venture Philanthropy

Question 3

Socially Responsible Investing

Answer 3

• Social return is expected but social and environmental variables are considered
• Negative screening
• Risk management
• Shareholder activism

Question 4

Social Impact Investing

Answer 4

• Investment into companies/ organizations/ funds

- Intention to generate positive social/environmental impact and financial return

Question 5

Venture Philanthropy

Answer 5

• Grant-making model (Zuschussmodel) with no return expected

- Ventures investing funds and strategic assistance into Start-Ups

Question 6

Types of Investors

Answer 6

• Impact first = Ananda
• Financial first = Khosla Impact (Criteria: 1. Targets crucial issues/ 2. Improve ROI of low-income segments/ 3. Destroy monopoly/ 4. Product or Technology based on ethnographic insights)

Question 7

Mission Statement

Answer 7

• Defines organizational goals
• Sets the boundaries of organizational strategies
• Sets guidelines to measure organizational success
• Defines beneficiaries and customers
• Characterizes the “theory of change” of the organization
• E.g. Nikes Mission = “If you have a body, you are an athlete”

Question 8

Social enterprises vs. traditional enterprises- How they regard value

Answer 8

• TE -> Value capture = Maximizing value captured by organization/ Success measured at organizational level
• SE -> Value creation = Maximizing value created for society/ Value captured just what needed for activities/ Success measured at society level

Question 9

Social enterprises vs. traditional enterprises- Strategic focus:

Answer 9

• TE -> Sustainable Advantage = Become essential in market/ Insulate from competition/ Identifying lack of services and costs opportunities
• SE -> Sustainable Solutions = Become essential to address a social problem/ Correct perceived market and government failure/ Identifying unaddressed social issues

Question 10

Social enterprises vs. traditional enterprises- Managerial Approach

Answer 10

• TE -> Control = Control value chain & critical transactions & resources/ Making stakeholders dependent on company
• SE -> Empowerment = Raise effectiveness of the overall social system/ Release underutilized skills and resources in novel BM/ Empowering stakeholders

Question 11

Social & Commercial Logics

Answer 11

• Goals = Generate economic surplus by selling goods/ services (com) vs. Address local social needs by making products/services available (soc)
• Strategies = Production efficiency/ Customer satisfaction/ Sustainable profitability (com) vs. “Social effectiveness”/ Beneficiaries satisfaction/ Sustainable impact (soc)
• Key stakeholders = Customers/ Suppliers/ Commercial partners (com) vs. Beneficiaries/ NGOs/ Public services (soc)

Question 12

Tensions faced by social entrepreneurial initiatives

Answer 12

• Performing
• Belonging tensions
• Time orientation tensions
• Organizing tensions

Question 13

Performing tensions

Answer 13

• What is success?
• Lack of clarity/ disagreement about the definition of success
• Max 3 KPIs (Not too many)
• Difficulties to support/ create metrics for social and commercial performance at the same time
• Capacity to address needs of target beneficiaries (soc) vs. Capacity to address needs of target customers (com)
• Customers vs. Beneficiaries

Question 14

Belonging tensions

Answer 14

• Who are we?
• Identity change due to sub-groups dominance
• Difficult to communicate identity-changes to external stakeholders
• Different logics of employees imply different identities that might clash
• Important to develop clear common identity/ Formalize goals and objectives/ Trustworthiness of the mission
• Employees identify with social mission (soc) vs. Employees identify with business objectives (com)

Question 15

Time orientation tensions

Answer 15

• Short term or long term?
• Business success comes from short term gains
• Social expansion requires a long-term perspective
• Social impact might constrain (beeinträchtigen) economic growth
• Social impact requires long-term orientation/ Growth can increase but also threaten social impact (soc) vs. Business success come from short-term gain/ Social mission can constrain growth

Question 16

Organizing tensions

Answer 16

• Which kind of skills, processes and structures?
• Should you hire individuals with commercial or with social competencies?
• Should you prioritize activities to create value for beneficiaries or customers?
• How should departments be organized?
• Social impact requires investments/ Deep knowledge of societal issues (soc) vs. Business success requires customer orientation/ Effective cost management (com)

Question 17

How to address tensions?

Answer 17

• Performing -> Clear Value propositions for Customers & Beneficiaries/ Clear KPIs
• Belonging -> Common and overarching (übergreifende) Identity/ Trustworthiness to mission/ Formalization and Collaboration
• Time orientation -> Dialogue with stakeholders to understand short- and long-term expectations and priorities

Question 18

Managerial challenges

Answer 18

• Strategic challenges
• Managing trade-offs
• Social innovation in the technology sector

Question 19

Business Process Outsourcing

Answer 19

• Subset of outsourcing
• Contracting operations and responsibilities of a specific business process to a third-party service provider
• Most common areas Customer care (52%)/ Finance & Accounting (23%)/ HR (16%(

Question 20

Reasons for outsourcing

Answer 20

• Economic = Cost reduction/ Transforming fixed costs into variable costs
• Strategic = Flexible service/ Better focus on core competencies
• Technological = Access to new technology

Question 21

From Business Process Outsourcing to Impact Sourcing

Answer 21

• Impact Sourcing = Employing people at the base of the pyramid with limited opportunity for sustainable employment (Annual income <3000$)
• Implement them as principal workers in business process outsourcing centers to provide information-based services to domestic and international clients

Question 22

Samasources’s Mission and Approach

Answer 22

• Vision = Address poverty
• Mission = Access to work and train employees through digital work -> Empowerment
• Target group of workers in the middle of pyramid instead of bottom (cheaper because of training efforts)
• Process Innovation = Performing something efficient and effective
• In between people who need work and customers who require low-cost labor

Question 23

Samasource’s stakeholders and expectations

Answer 23

• Customers = quality of service, cost savings, flexibility, reliability, social impact
• Beneficiaries = training, wage, career development, better life conditions, emp.
• Employees = meaningful work, financial income
• Donors = maximizing social impact (job creation, living wages, training workers, impact on poverty, transparency, consistency with mission)
• For-profit investor = ROI
• Delivery Centres (Local Entrepreneurs) = Know-how, Stable revenues, Stable work, Financial resources (support to grow)
• Community
• Media = raises awareness about what Samasource is trying to address
• Competitors

Question 24

Samasources’s Tensions

Answer 24

• Performance tension = Customers (Low-price/Flexibility) vs. Beneficiaries (Training))/ Investors (Economic benefit) vs. Donors (Social impact)
• Time-orientation tension = Delivery Centers & Beneficiaries benefit (Long-term) vs. Customers & Investors profitability (Short-term)
• Organizing tension = Customers (Economic employees) vs. Beneficiaries (Social employees)/ Social impact (Training) vs. Quality of outcome (Customers)/ Donors (scale up impact) vs. Delivery centers (Scale deep)

Question 25

Samasources strategy to manage tensions – People

Answer 25

• CEO = cares about the social mission of Samasource;
• Marketing manager = customer orientation -> closing contracts with them
• Pluralist Manager = Specialized engineer (managing delivery centers)
• Project manager = Quality control
• Trainers and recruiters = Mainly interact with beneficiaries

Question 26

Samasources strategy to manage tensions- Structure

Answer 26

• Sama-Hub = Technology they are using to combine the needs of customers (flexibility, efficiency and quality) and of beneficiaries
• Sama-Lab = Standardize processes
• Sales department = Specifically focused on customers
• Delivery Centre = Works with trainers and recruiters

Question 27

Samasources strategy to manage tensions- Processes

Answer 27

• Quality assurance
• Screening of partners
• Long-term contracts with customers
• Start every job with a trial
• Highly standardized processes
• Tracking performance (very rigorous)
• Pull model -> entrepreneurs go to them

Question 28

Samasource Scaling Strategy

Answer 28

• Samahope -> provides financial resources to access medical treatments in underdeveloped countries
• Samaschool -> digital skills training in developed countries)
• Both founded to leverage technology to scale social impact

Question 29

Does it make sense for Samasource to differentiate their businesses?

Answer 29

• Yes = 1. Different Targets/ 2. Support all chain/ 3. Efficiency/ 4. Sope Economies
• No = 1. Needs to be established firstly (No trust in efficiency)/ 2. Confusing for donors (Complex, No clear social orientation)/ 3. Too much differentiation could lead to value loss for customers/ 4. Goals coordination difficult across organizations
• Answer = No -> Really struggled to keep it sustainable due to missing synergies between companies