Thursday, 12 May 2011

Bienestar - Reverse engeneering a Business Plan

What makes a business successful? What is the economic model to follow in order to make a business work? What assumptions should be done? In our final lecture on business planning we tried to figure out all of these questions as well as many others. For this we tried to reverse analyze a business plan.

What is reverse engeneering?

During our Colombia trip we are going to be working on a project that has already started in the region of Caldas: Bienestar. This social business tries to grant access to primary healthcare to the poorest of the poor. It is a type of insurance in which people enroll paying for their membership to the plan, to later receive big discounts when they visit the doctor. One may say it's economy of scale, doctors receive less money for each visit, but in return they get more visits. Thinking on this, everybody wins.

But how do we know if people are willing to pay? How do we know if the doctors are willing to charge less? In that sense, how do we know if the model is going to work? After several conversations with the people putting up the project, we saw that they didn't have a structured idea of how this business would become economically sustainable, so it was hands on!

This is when reverse engineering came into action. For this to happen, we started to do collaborative desktop research, looking for important facts and data (relevant to healthcare and economy) of the region where the business is implemented. This was crucial, since it gave us an overview of the set in which this business is being implemented and it gave us a solid ground in which to base our own assumptions. After having all of the information within our hands, we researched for other business plans and tried to figure out the economic engine of this concrete case.

In this case we analyzed how this membership would benefit the patients (making them save money on healthcare) the doctors (making them make more money) and Bienestar (becoming economically sustainable). After finding some key parameters and making some assumptions based on our findings, we developed the economic engine, and, in fact we discovered this business model was viable. The economy of scale worked both ways (patients & doctors) and if the Bienestar project reaches the goals it has in mind, it would become economically sustainable, making it a successful business.

For us this was an important step, since it gave us a way of dealing with a business plan in which the economic engine is constructed from scratch (even if the business is already running) this can modify the way the business has been operating so far since it gives them key data that helps them to become economically viable. This can modify the strategy, the potential target, and even the organization of the whole business. In other words, the reverse analyzing can put a business back on track.

In that sense, this exercise also gave us the ability to think about the economics within a business in order to make it successful, and this can be applied to any case that we may have in our hands. Our research and knowledge gave us the tools to think about a different approach in the construction of a business model, analyzing it and going to its core.

This is still work in progress and we still need to develop it further and confirm our own assumptions while on site. But at the moment we think we are in the right path.

Thanks Alberto!

Tuesday, 10 May 2011

What is a Holistic Social Business Movement according to the Grameen Creative Lab?

GSBS 2010 Day 2 Governer of Caldas from The Grameen Creative Lab on Vimeo.

Let's step back and breakdown this appealing "Holistic Social Business Movements" (HSBM) title so that we all start from the same page.

Holistic: emphasizing the importance of the whole and the interdependence of its parts.

Social: concerning or belonging to the way of life and welfare of people in a community.

Business: an industrial, commercial, or professional operation; purchase and sale of goods and services.

Movement: a series of actions and events taking place over a period of time and working to foster a principle or policy.

The idea is to focus on a region and create the right environment in which social businesses can thrive while having the unique goal of eradicating poverty in a whole region through different aspects of social business (SB).

After some early experience and valuable knowledge, the Grameen Creative Lab (GCL) has established a logical progression which seems to be based on three steps. First step is the creation of a micro finance network served by the Grameen Bank. Second step is the development of social businesses with special focus on SMEs. Third step is the establishment of the HSBM creating impact on a whole region through social business.

In theory the challenge of creating a self-sustainable ecosystem that supports social development works flawlessly. On the one hand, considering professor Yunus's 7 principals, the capital initially invested for the birth of social businesses is payed back to investors and reinvested for the creation of other social businesses forming an ongoing cycle. On the other hand many ideas need to be generated so pilot testing can be done and social businesses can be reviewed and redesigned. This is precisely what the D4SB team is going to do by collaborating with GCL and going to Caldas (Colombia) from the 16th of May to the 4th of June 2011.

The way I see it is that SB networks have many players, therefore how will it be possible to evaluate something that is inside a such complex network? How to measure social impact and its evolution? And how to know if the chosen path is the correct one? These are some of the first questions which I'm guessing some might be answered with some practical experience.

So let's start designing and redesigning social business!

Building social business

Read by many, discussed by many more, took in consideration by some, denied by others, the social business concept designed by Muhammad Yunus has in my opinion at least one good starting point: it tried to change for the better the life of many poor people.

The book outlines the important contribution of ‘social businesses’ in solving social issues that couldn’t be overcome via traditional models, giving examples and case studies of big corporations that embraced the concept and tried to give some answers to several social challenges of nowadays. But it reaches also the entrepreneurial spirit of each of us animated with idealistic dreams of changing something within the fixed structure we live in, by initiating small social businesses where there is need and dedicate time and energy to a cause worth fighting for.

The concept of social business got structured in the eyes of prof. Muhammad Yunus by looking at the business world from a different perspective: not only a personal gain but also a help to others, built and developed on the selfless part of human nature. So, the social cause remains the main objective and the business frame gives the opportunity to extend the life of the initial investment, because social business is not a not-for-profit entity, it’s not a normal dividend company nor a simply provider of product and services adapted for poor areas.

It’s a new idea turning into a business that has 7 principles at the core:
  1. A social objective.
  2. Financial and economic sustainability.
  3. Investors get back only their original investment.
  4. Profit stays within the company for expansion.
  5. The company will be environmentally conscious.
  6. The workforce is better paid that standard conditions.
  7. It will always be done with joy.
Looks unreal? For some big names as Veolia Water, Adidas, BASF, Otto Gmbh, Danone, Intel Corporation became a reality, organizing social businesses around most pressing needs of poor people, most of them in Bangladesh.

All 9 chapters deal with how to launch a social business, legal and financial frameworks underpinning a social business, creating the infrastructure for successful growth within a social business, and some of the problems in establishing and scaling a social business.

I am still figuring out what it works and what should be changed in the model, but I think that we should stick to the best part of it: let’s believe and try to build a world we feel happy about!

Sunday, 8 May 2011

Social Business and Human Centric Innovation

An important part of this master is to learn how to apply the Design Thinking approach into the Social Business context.

“Design thinking is a human-centered approach to innovation that draws from the designer's toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” —Tim Brown, president and CEO of IDEO.

With the aim to achieve our goal of creating design solutions for the BOP, we have been working with Marta Lago-Arenas , an engineer and designer from Gravity Spain, a design firm that uses the following Design Thinking process based on Human Centric Innovation:

Understanding à Observe à Synthesis à Ideation à Prototyping à Test (image by Gravity)

For now, we have been working on the first two phases of this scheme and will continue with the rest when we meet Marta again in June.

The preliminary step to a innovation driven project is to adopt some good practices such as team empathy and capacity to develop a shared point of view, a dedicated and organized workspace where visual and analog working methods can take place, the use of storytelling to communicate and an optimized time plan for the project.

We then start debriefing and an initial desktop research is done to gather information on the subject, understand the challenge and prepare for the field research. With this preliminary output in hand, it is key to set a human centered goal that is nor too wide nor too narrow.

Once the project statement is clear, an observation plan must be developed which will include the tools and interview guides that are going to be used on-field and the profiles to be observed. The stakeholder’s map will help identify the profiles to approach (other than the stakeholders is important to also talk to extreme users and experts). A mind map starting from the goal can also be very useful to identify the themes and tools that best suit the needs. The list of tools that can be used is vast:

image by Gravity

Here quality wins over quantity since the goal is to understand and not get statistical approval. During this phase, knowing how to observe people and their surroundings is essential to generate useful insights and to spot opportunities. Be surprised, reconsider you point of view, discover!

With a plan in hands, it is time to go to the field and put into action. In this second phase, it is crucial to have a fresh mind set and to capture your impressions asap, ideally after each session, and to dedicate the same amount of time that you spend during observation in discussing, interpreting, comparing and sharing it with your team.

In the next days, we are going to present how our team is applying this methodology in the Bienestar Healthcare Project in Colombia.