Video: Social Business Model Canvas: Value Propositions
The business model canvas is a powerful tool to get a quick sense of how a business works. It can also be used to show how businesses can create social good.
Value propositions form part of the foundation of a business. By clarifying your value proposition, you can focus your business in on the things that amplify that value.
We also go over how to create value using the UN Sustainable Development Goals as a foundation, and use Grameen Bank as a case study in how to model a social business.
You can continue the conversation by joining SocialEconomyConnect.com. Social Economy Connect is a free mutual support platform for practitioners, social entrepreneurs, co-op members and developers and third sector supporters to discuss issues and solutions with a focus on social outcomes in the economy.
Resources:
Business Model Generation: https://www.strategyzer.com/books/bus...
Bain and Co. elements of value: https://media.bain.com/elements-of-value/#
Know Your Customers’ “Jobs to Be Done” by: Clayton Christensen: https://hbr.org/2016/09/know-your-cus...
United Nations Sustainable Development Goals: https://www.un.org/sustainabledevelop...
Grameen Bank: www.grameen.com and founder Muhammad Yunus's book: https://www.goodreads.com/book/show/3...
Get the Strategy Made Simple social business model canvas: https://strategymadesimple.ca/social-business-model-canvas-signup
Contact Matthew:
Twitter: @MatthewRempel
Email: matthew@strategymadesimple.ca
Scripted, recorded and edited by: Matthew Rempel
Music provided by: epidemicsound.com
Do you have questions about Strategy Made Simple or have a coaching request? Please tweet @MatthewRempel or email Matthew@StrategyMadeSimple.ca.
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Transcript:
Do you know why you buy what you do? Why you choose one product or service over another? It's because of the different values that are being presented and provided by different companies. On this episode of strategy Made Simple, we're going to use the Social Business Model Canvas to show you how to create a better value proposition.
My name is Matthew Rempel, and welcome to strategy Made Simple.
What is a value proposition? A value proposition is about the problem that is being solved for the end customer. A value proposition can also be attached to the emotions that the customer feels when purchasing a product or service. When I'm coaching social enterprises through defining what their value proposition is, usually I go through elements of status of connection of saving money, or providing social value Bain and company have a fantastic visual, describing different kinds of value and how they can be applied in various businesses. I've included a link down to it in the description. But in essence, it goes through various kinds of value that can be provided, whether it's functional, emotional, life changing, or through social impact Bain and company in a traditional consulting firm, so that they include social impact in these elements of value is striking. When we're looking at functional values, we're looking at things that save time, but simplify people's work or lives. Some other values include wellness and health, whether it's fun, if it looks good, tastes good, sounds good. We also have elements that are about reducing anxiety or providing access to something whether it's a marketplace or to connection to others. Some of the higher level values include how to achieve a goal or connection into a group For Association, it can be about providing hope, or self actualization. At the very top of the pyramid. You've got self transcendence, to go beyond yourself and help others, which is really the space where social enterprise shines.
Another way of thinking about the value proposition is thinking about what job does the end user need done. Any business, if they're hiring for a position, they are trying to find somebody who can sell themselves to fill that role. Each consumer has a bunch of little jobs that in a similar way, needs some kind of product or service to be fulfilled. Clayton Christensen explains this jobs to be done theory in his Harvard Business Review article. I've included a link to this article in the description where you can read about how he describes how seniors that are downsizing from the family home to a condo have a variety of different issues that they're working through before they are ready to make a purchase. He was working as a consultant to try to help this condo company figure out what the lock was that was preventing seniors from buying into the condo. And they were going through various things like size, shape, number of rooms, left the key part ended up being where is the kitchen table going to go. For lunch, the seniors the kitchen table was the centerpiece, the piece that held the home together, the people within the home together. And so many of these seniors that were moving didn't want to get rid of their kitchen tables. And if they didn't have a family member who was willing to take it, then they were very hesitant to move to a place where they didn't know where it would go through the work with this condo company. Christiansen discovered that either they needed to figure out a place for the kitchen tables to go either a storage unit thrift store somewhere else where it can be given off to somebody Else, or there needed to be a place within the condo for a large kitchen table. The value in having the kitchen table is more than a piece of furniture, especially for seniors who are downsizing. They were leaving their homes, places where lots of memories were made. And a lot of them wanted to keep this centerpiece around which many of those memories were created. The kitchen table was more than just a place to eat. But it was a symbol of the connection that they had to their families. And so the value of providing a space for it was far more than just a space for furniture. Christiansen writes it like this. What was stopping buyers from making the decision to move hypothesized was not a feature that the construction company had failed to offer. But rather the anxiety that came with giving up something that had profound meaning. The decision to buy a six figure condo it turned out off hinged on a family member's willingness to take custody of a clunky piece of furniture. That realization helped modesta and the condo team begin to grasp the struggle potential homebuyers faced. I went in thinking we were in the business of new home construction, he recalls, but I realized we were in the business of moving lives. I use these examples to show how the value you're providing is far more than just the product or service that you're selling. It's also the emotions for the customer that are attached to buying that product or service. It goes beyond just the functional value. And now even beyond the value for the customer. We're going to talk about social value. How does your product or service also create social value beyond what the customer sees for some social enterprise known as workplace integration Social Enterprise. This is about bringing people into the workforce who have otherwise been left out, forced out of their social enterprise, like to go about reducing poverty or reducing hunger, trying to end homelessness, the things that you typically associate with nonprofits, if you're just starting out on this journey towards creating social value, the United Nations Sustainable Development Goals are a fantastic place to start. They go over 17 goals that are working towards bettering our planet across national borders, the Sustainable Development Goals or SDGs. Address everything from poverty, to education, to gender equality, all the way to environmental issues. And if you're trying to find a social goal that fits within your business, to help create social enterprise, the Sustainable Development Goals are a great place to start each of the UN SDGs also Come with a variety of indicators, specific measurements that are being used to figure out if we're making positive progress towards these goals. I'm certain that there would be more episodes on how to create social value as we go along. But for the purposes of creating a social business model canvas,
you'll be creating value for your customers. And you will also be creating social value for society for the poor for the world. And these two forms of value become even stronger when they're aligned. If the value you're providing by selling your product or service is at the same time providing the social value, it is a much more resilient business model. The case study I'm using for this episode for value is the Grameen Bank. The Grameen Bank is a financial institution based out of Bangladesh, the primary value that Green Bank provides to their customers is access to credit, like any other bank, the differences they're doing it for the poor people who don't typically have access to these kinds of institutions or these kinds of resources. Well, they are providing access to credit as their primary value. their social value is access to credit to help people get themselves out of poverty. Because of this, they have a very clearly defined customer base, the poor of Bangladesh. As we fill out the Social Business Model Canvas, based on those two sections, the value being provided and the customer is being provided to the rest of the canvas must be oriented to facilitate those transactions, that transfer of value. So the channel they use local branches, and village intermediaries, specific agents who go into the villages to find groups of people who need credit, who can't afford credit, otherwise, the relationships that they have with these lenders is a long term pod based relationship where groups of five to eight lenders pooled together and once One lender has paid back the loan, then another lender within the pod may take a loan, this long term relationship and the groups that are providing accountability have paved the way for Grameen Bank to happen over 97% repayment rate. Most of the revenue for Grameen Bank comes from the interest from these loans. And their costs are reduced because they don't have to have lots of the physical infrastructure that typical big institutions would have. The activities that Grameen Bank is primarily in administering and providing micro loans and the resources that they have to do that involve startup capital and the networks between the villages and the locals who live there. The key partners that they required to enable this were local community representatives, individuals of high standing from each village to basically champion this idea of the micro loan to start businesses. Grameen Bank is a fantastic example of how social value can be created through the operations of a social enterprise. And I have one caveat around the kinds of value that should be provided in a social enterprise. there is value in treatments of social problems and cures of social problems. They are both beneficial. Don't make the mistake of ignoring treatments, just because it's not a permanent fix. But there is the potential for negative patterns. pharmaceutical companies have figured this out thoroughly. Treatments allow for recurring customers, people who come back time and time again and that ends up being very financially viable. cures are much more difficult because if they work, they work and problem is solved. Which means you need to find a new value proposition each time. There are some benefits when it comes to treatment. Usually, treatment is cheaper for the customers. Then a cure. But we have to be careful when we're dealing with social problems, that we don't trap people in a cycle of pain for the next treatment, instead of being able to pay for a cure.
Thank you for joining me on this episode of strategy Made Simple about the value propositions that you create in a social business public canvas. If you have any questions or comments about this episode, please tweet at me at Matthew Rempel. Or email me Matthew at strategy made simple.ca strategy Made Simple is available as a video on YouTube podcasts through your whatever podcast app you prefer. Or in a blog transcript format on strategy Made Simple website. There are links to all of those down in the description. The strategy Made Simple Social Business Model Canvas is available for free. There's a link down in the description if you'd like to print your own. And as you go to define what value you're going to create. Keep it simple