developing and organizing a viable business model session 2 of the levitt social entrepreneurship...

Developing and Organizing a Viable Business Model

Session 2 of the Levitt Social Entrepreneurship ProgramFebruary 23, 2013

Flow of This Morning’s Session• Introductory Dialogue and Activity • Business Models and Their Value• Stages of Social Venture Development• What Is Your Venture or Initiative?• The Two Pillars of a Viable Social Venture Business Model

• Program Design and Logic Model• Core Business Model Elements:

• Market• Money• Management

• A Quick Assessment• Next Steps in Our Program and Process

--I Ching

“NO GOOD ENDING CAN BE EXPECTED IN THE ABSENCE OF THE RIGHT BEGINNING.”

Let’s Talk…

• What is a “Business Model?”

• What is a “Viable Business Model?”

Stages of Development

• Opportunity Identification, Clarification, and AssessmentLeads to

• Viability Assessment (or Feasibility Assessment)Leads to

• Business Plan DevelopmentBut not in a single cycle linear process: a strong

venture development process will involve multiple iterations, gaining refinement from each cycle.

Opportunity Identification/ Clarification and AssessmentGrowing Out of Exploration of Session 1•Asset Identification and Evaluation•Asset Valuation•Opportunity Identification and/or Clarification•Opportunity Evaluation•Opportunity Valuation•Risk Assessment

Result: Overall Assessment of Opportunity Worth Further Exploration and Development

Some Risks to Assess(from Dees et al 2001)

• Management Capacity• Workforce Capacity• Organizational Culture• Organizational Infrastructure• Enterprise Concept• Level of Required Capitalization• Prospects for Long-Term Funding• Prospects for Changes in Marketplace• Changes in Knowledge and Technology• Stakeholder Backlash• Competitor Response

A Sound Business Model

Integrates• Viable and Relevant Mission and Vision

(the social purpose)• Real Value Proposition

• Social Value Creation Cycle (in the form of a logic model or theory of change)

• Resources to Finance and Fund It• Capacity to Implement It W

Value Creation Cycle(from The Nonprofit Strategy Revolution. David LaPiana 2008)

Market: -Clients - Donors & Funders

Organization

Capacity

Mission, Vision & Values

Strategic Fit

Strategic FIT

Viability Assessment

Three Basic Elements:•Market Assessment•Money Assessment•Management Assessment

Leads to Overall Assessment of Venture Feasibility and Viability W

Payor Customers: -Donors & Funders

Beneficiary Customers (Clients)

The Market (Customer) Question

Market Viability Assessment

Builds on Assessment of Porter’s Five Forces

Focus on:•Demand•Competitive Advantage•Differentiator(s)•Price and Cost Structure W

This is the ability to produce social value by:•Using a unique asset

and/or•Delivering outstanding execution

•We employ the perspective of Porter’s Five Forces Model to examine and understand where and how we fit

Competitive Advantage (The Nonprofit Version)

Strategy vs. Reality

Let’s Talk…

Share with your colleagues…

In two minutes or less (your elevator speech):•What is your venture or venture concept? What is the social venture or program initiative that you have determined has great potential for creating social value? What is the “social value proposition” and how do you expect to deliver on it? (or your best case scenario)

Key Components of A Well-DevelopedProgram Design

(The Social Value Proposition)

Mission & Vision

• Mission, Vision, Values• The mission:

• Continuing philosophical perspective• Makes explicit reason for the agencies

existence• The Vision:

• Is what can be accomplished by providing mission services

• An end state

Strategy and the 5 “Ps”

• Strategy as a Plan• Strategy as a Ploy• Strategy as a Pattern• Strategy as a Position• Strategy as a Perspective

Program Hypotheses

• A series of “if-then” statements• Cause and effect (factors)• Process• Output

• Means-Ends continuum

Program Hypotheses

• Development Steps• Identify Critical Issue and Factors• Cause and effect of each factor• Identify resources, data and assumptions• Brainstorm solutions• Prioritize solutions

• Provides framework for service

Policy and Budget

• Policy Guidance• Communication Systems• Client Interaction

• Financial Guidance• What will the strategy cost?• How will we fund the strategy?• Is it financially feasible?

• Finances• What will it cost?

• Direct?• Indirect?

• Is there revenue?• Who will pay for the program?• Do we have the capacity to financially manage?

• Implementation• What do we need to do to start the program?• Where will we provide the service?

Objectives

• Provide short-term and long-term outlook• Intermediate results: Immediate impact or change• Final results: The long-term impact or ultimate change

• Should be stated in measurable terms• Time frame• Target of change• Results

Outcome Objectives

• Service Result• Flow from the problem analysis• Establish criteria for numbers served• Multiple outcomes for a strategy or

program

Process Objectives

• Target program actions• Establish milestones necessary to meet

intermediate outcomes• Focus on internal activities

Group Work

Program Design

• Inputs• Client• Staff• Material resources• Facilities• Equipment

Program Design

• Throughput• Service Definition• Service Task• Method of Intervention

• Outputs• Unit of service• Service completion• Quality

Outcomes

• Numeric Counts• Standardized Measures• Level of functioning scales• Client satisfaction

These Add Up to Becomea “Logic Model”

A very useful device to plan and explain:•Your assumptions and expectations for how you expect to link:•Inputs, which will support•Activities, which will lead to •Outputs, which will add up to •Outcomes, which will result in•Long-term Outcomes

and Community Impact

Take A Few Minutes…

Please take about ten minutes to sketch out the basic logic model that explains the process by which your social venture or initiative will accomplish the outcomes that will result in social value and community impact.

Return to Viability AssessmentThree Basic Elements:•Market Assessment•Money Assessment•Management Assessment

Leads to Overall Assessment of Venture Feasibility and Viability W

Money Viability Assessment

Initial Consideration of•Revenue Potential•Investor Potential•Available Capital

To Integrate These: CompassPoint’s “Dual Bottom Line Matrix”

Management Viability Assessment

• Mission Compatibility• Core Competencies• Venture Capacity (including complexity)• Core Constituents or Stakeholders

Social Venture Planning

In other words, social venture planning is the process by which we plan and articulate how we will integrate

• Money• Market• ManagementTo successfully deliver social value. W

The Summary: Key Elements of Feasibility or Viability Assessment

1. Explain the Venture2. Market research on potential customers3. Desire and Need for Product or Service4. Assets and Capacity (including management, personnel, facilities, & competence)5. General Business/Revenue Model and Pricing Strategy6. Preliminary Financial Information:

a) Start-Up Costs and Time needed to begin to generate revenueb) Start-up capital needs and availabilityc) Pro Forma/ Financial Projections (including estimates of revenues

needed to break- even and timing to break even)7. Discussion of feasibility:

a. Mission relevanceb. Risk acceptabilityc. Competitive capacityd. Quality & quality assurancee. Feasible for your organization now?

Let’s Do A Quick Assessment

• Take about ten minutes to work alone or with your work group, if you have one, to take a look at the “Quick Market Test” and then complete the “Quick Market Test Scorecard.”

• After you have completed this, we will invite observations about the topics where you know the most and the topics where you will want to engage in further research and analysis.

Move to a Business Plan?

If the venture is deemed feasible…• Build on all of the information of the

feasibility assessment. • Add depth to each of the elements of

the feasibility assessment to create a business plan.

Wrap-Up: For the March Workshop

• Meet and Begin to Work With Your Coach• Develop and Clarify Your Logic Model (complete the form)• Use the Worksheet Sets 4 and 5 (from the book, Venture

Forth) to gather and organize your data to begin to assess the feasibility or viability of your venture.

• Read the materials on financial viability assessment in preparation for next workshop, which will focus on “Funding and Financing Your Social Venture”

• Contact your Levitt Program facilitators and advisors (Laufer, Helm, Andersson, and Renz) as needed to help you and your coaches to progress in the development of your social venture.

• Questions?

• Comments?

• Clarifications?

developing and organizing a viable business model session 2 of the levitt social entrepreneurship...

quick assessment

assessment of porters

development workshop

viability workshop

process workshop

feasibility assessment

viable business model

sound business model

Documents

helen levitt

levitt letter, november 2021

jep revision levitt & list

justin levitt erika wood

is social media a viable business tool?

gwsteven levitt

miopia de marketing levitt

levitt - marketing myopia

cascade by jessica levitt

steve levitt in his seminal study ... - university of...

levitt february 2021

levitt hawthorne

levitt - freakonomics

theodore levitt

levitt letter, february 2017

levitt jmb85 normal modes

levitt deposition

levitt (2009) vernacularization.pdf

freakonomics levitt steven levitt e stephen dubner

levitt-safetypresentation nov 09