Phase II: Designing Operations

Negotiating impact for the resources needed to scale can influence a social enterprise’s supply (how to move inputs from suppliers to the social enterprise to produce products and services), distribution (how the products and services reach the customer/beneficiary), and revenue processes (how the customer/beneficiary pays for them). On one hand, social enterprises link their operations and revenue processes by creating products and services and distributing them to their target customers. On the other hand, they link these processes via revenue systems to current and potential customers who can pay for these services. These were explored in Phase I, by listing actors with whom the social enterprise can negotiate impact for resources. Social entrepreneurs design efficient and effective operations that can help deliver the impacts that are most of interest to both potential customers or beneficiaries and impact investors. The goal is to reduce operating costs in order to design self-sustaining business models. Apart from streamlining operations, social enterprises also design a revenue process. Some choose to provide products or services to customers who can pay at least a minimal price and are positively impacted by the product or service they purchase. Others have traditional (non-impact) customers and, rather, serve beneficiaries by including them as employees or providers in their business’s value chain. In either case, social entrepreneurs must carefully design pricing and payment processes for their target customers. The elements analyzed in this phase are: supply and assets, products and services, and distribution and revenue.