Insights on Scaling Corporate Social Enterprise

On November 20 and 21 in Santiago, Chile, leaders and experts from the corporate, government, academic, consulting, civil society, and impact investing worlds came together for an engaging discussion on scaling corporate social enterprise.

The Inter-American Development Bank believes such enterprises offer huge potential as sustainable drivers of development, growth, and job creation. But, like other new and emerging sectors, social enterprises are highly dependent on their environment–on ecosystems which can either support their growth or constrain them. The Multilateral Investment Fund (MIF) is an ecosystem builder. For nearly two decades we have helped others in the region build new markets from commercial microfinance to venture capital. Many, if not most, of our projects combine market and ecosystem building grants with catalytic financial investments. These grants address many of the challenges that were discussed by leading experts on the first day of this conference: information failures, skill deficits, collective action failures, and institutional weaknesses, among others.

MIF General Manager, Nancy Lee, concluded day one by summarizing the rich discussion into the following 25 insights:

On innovation, broadly speaking:

1. We need to think about innovation in democratic terms – empowering people and communities as innovation actors, not just innovation objects.
2. Effective social innovations address the causes of problems, not just the effects.
3. We need to focus on innovation in the business model as much as on technical innovation.
4. Diverse teams come up with better solutions.

On support for social intrapreneurship:

1. Many corporations are not set up to encourage bottom-up ideas for social innovation; internal champions need support and cover, including for failure.
2. External stakeholders can help to validate social intrepreneurs and lower perceived risk.
3. We need to link social innovation ideas to company growth strategies to build the case to company executives.
4. Social intrepreneurs can help attract creative talent and skill sets that are good for the whole company.
5. We need to think about how to incentivize CEOs and others within firms to take risks for long-term gain.
6. There remains a shortage of scalable models and there is a need for more R&D specifically focused on meeting the needs of the base of the pyramid.

On developing social enterprise models:

1. Education on market demand and the value of products can be important – don’t assume demand (e.g. cook stoves).
2. Social entrepreneurs are becoming experts in blended capital, but it is scarce and it is hard to get the right kind of capital (investment versus philanthropic) at the right time.
3. Social entrepreneurs are not messiahs; they do not succeed alone.
4. We need orchestrators of social innovation models as much as incubators or accelerators.

On partnerships:

1. Partnerships are hard; external help is needed, as well internal champions to lead partnerships.
2. Effective solutions really mean partnerships.
3. Building trust among the economic actors of a multistakeholder partnership requires a shared long-term view, regular communication, and a clear purpose.
4. Multistakeholder partnerships need to be risk-sharing partnerships. Philanthropic organizations and development banks have an important role in taking on higher risk activities or stages.

On strengthening the overarching corporate social enterprise ecosystem:

1. The public sector needs to provide the right financial incentives to adjust the cost of capital and tax burdens.
2. The public sector needs to provide support for appropriate workforce development.
3. The public sector needs to provide incentives for other actors, e.g. universities, suppliers, civil society.
4. It is easier to get to scale (move from the blueprint stage) if you build the minimum viable ecosystems, start making money, and then ask others to join.
5. The social enterprise ecosystem itself needs to be more inclusive.
6. Development banks need to be focused on building the ecosystem, including bringing best practice to policy makers, strengthening governance, and fostering a long-term view.
7. The software is at least as important as the hardware in building the social enterprise ecosystem. Not surprisingly, supporting social enterprises involves a lot of social interaction.