Starting a successful social enterprise: lean design thinking in social entrepreneurship

Starting a successful social enterprise: lean design thinking in social entrepreneurship Valeriya Vitvitskaya 22 May 2015

Table of Contents Critical Evaluative Report .........................................................................................3   Introduction ................................................................................................................................. 3   Agenda .................................................................................................................................................................... 3   Context ................................................................................................................................................................... 5   Methodology ........................................................................................................................................................... 7  

Defining a successful social enterprise ....................................................................................... 8   Defining social entrepreneurship ............................................................................................................................ 9   Realising success .................................................................................................................................................. 11  

Starting a successful social enterprise ....................................................................................... 17   Iterative process .................................................................................................................................................... 17   Human-centred approach ...................................................................................................................................... 19   Lean startup .......................................................................................................................................................... 20   Design thinking .................................................................................................................................................... 24   Lean design thinking in social entrepreneurship .................................................................................................. 27  

Recommendations ..................................................................................................................... 34   Erosion factors........................................................................................................................... 35   Conclusion ................................................................................................................................. 36  

Bibliography ............................................................................................................39  

2

Starting a successful social enterprise: lean design thinking in social entrepreneurship Introduction Agenda Reflecting on the original hypothesis, which was: “It is becoming common practice for structures such as incubators and innovation labs to support an emerging sector of social ventures, which may lack knowledge of building sustainable business models. In order to create conditions for social innovation, such intermediaries should establish a common measurement system, which could accelerate social ventures to ‘graft and scale’ and, as a consequence, maximise their impact”, it became clear that the research should start from a definition of social entrepreneurship. In fact, there is no, one, established, or widely accepted definition. Indeed, Roger Martin and Sally Osberg (2007, p.2) argue that ‘the definition of social entrepreneurship today is anything but clear’. However, any definition of the term ‘social entrepreneurship’ should start with the word ‘entrepreneurship’, where ‘social’ is an adjective, modifying entrepreneurship (Martin and Osberg, 2007). Initially, the concept of ‘entrepreneurship’ was studied by Irish-French economist Richard Cantillon (1755), who believed that the entrepreneur is a risk taker, deliberately allocating resources to exploit opportunities in order to maximise the financial return. Similarly, Peter Drucker (2007) emphasises the willingness of the entrepreneur to deal with uncertainty. According to Drucker (2007, p.19), ‘the entrepreneur always searches for change, responds to it, and exploits it as an opportunity’. Thus, entrepreneurship is a process of starting a new business, which can become successful or fail and end in bankruptcy. 3

In addition, the Austrian economist Joseph Schumpeter sees the entrepreneur as an agent of change within the larger economy who has both a disruptive and a generative impact (1994). Successful entrepreneurship, he argues, sets off a chain reaction, encouraging other entrepreneurs to spread the innovation to the point of ‘creative destruction’, a state at which the new venture and all its related ventures effectively ‘render existing products, services, and business models obsolete’ (Schumpeter, 1994, p.85). Hence, the concept of entrepreneurship also has a transformative feature, which results in the reorganisation of the whole system. In summary, building on this theoretical base, entrepreneurship describes the combination of a context in which an opportunity is situated, a set of individual or team characteristics required to identify and pursue this opportunity, and the creation of an innovative outcome. However, what makes social entrepreneurship ‘social’? Firstly, the founder of socially oriented organisation identifies a problem within an environment, which the government may have made insufficient attempts to solve, business may not be interested and see no potential for making a profit, and on which charities, depending on donations, have unsustainable and unpredictable social impact. Thus, social entrepreneurship finds opportunity to satisfy unmet social needs, solving or mitigating social issues. This discussion is taken up later in the ‘Defining social entrepreneurship’ section. Secondly and most importantly, a social entrepreneur considers social values equal to financial values. Martin and Osberg (2007, p.3) believe, that ‘the critical distinction between entrepreneurship and social entrepreneurship lies in the value proposition itself’. Indeed, the social entrepreneur ‘does not create substantial financial profit for his or her investors such as philanthropic, government organisations, or himself or herself” (ibid, 2007, p.4). Thus, social enterprise aims to maximise social impact rather than profit, while being financially sustainable and independent. In summary, social entrepreneurship is a process of starting a new venture, which 4

exploits social challenges as opportunities within an environment where the government may have failed to solve these problems, business, aiming to maximise profit, may have no interest in solving them, and on which charities, heavily depending on donations, have unsustainable or unpredictable social impact. Thus, social entrepreneurship is a financially sustainable business, making sufficient profit, with primarily social or environmental objectives. In order to innovate and transform the whole ecosystem and to deal with uncertainty, the social entrepreneur drawn on creativity, direct action and courage. The critical evaluation report is structured in several parts. The first part looks at the context within social entrepreneurship operates and why starting successful social enterprise is important. It also outlines the strategy and methodologies, used for the investigation of the research question and its sub-questions. The second part sets out a definition of successful social enterprise. The third part examines current discourses of lean start-up methodology along side with design thinking, and analyses the opportunity to implement lean design thinking into social entrepreneurship. The second and the third part of the paper consist of the literature review merged with critical analysis of key texts, outlining the conceptual landscape of social entrepreneurship as well as the discourses of business, design and innovation. The last part evaluates the strategic opportunities and examines the “erosion factors” of the proposal together with recommendations for implementation. Finally, the conclusion will outline and critically reflect upon what is discussed in the critical evaluation report and examine key findings.

Context Successful social enterprises can play an important role in the economy and society as a whole. They aim to tackle a wide range of social and environmental issues. For example, the recent financial crisis in 2008 marked a significant shift in the way people see the world. Funding for health, education, social welfare and more will be ‘bitterly fought over and barely 5

sufficient when won’ argues Ashton (2010, p.2). Less money spent to sustain social welfare means that the state and the private market have found themselves ‘ill-equipped to adequately address’ social challenges (Murray, 2009, p.16). For instance, in the UK, unemployment peaked at almost 2.7 million at the end of 2011. It was at the highest level for 17 years (Office for National Statistics, 2011). The most recent publications suggest that the total number of social enterprises operating in the UK number approximately 70,000, generating sustainable employment for close to 1 million people in the UK, including the most disadvantaged (Cabinet Office, 2013). Thus, social entrepreneurship might help people to find a job or even to become self-employed and start their own enterprise. Moreover, social entrepreneurship could help people to find their purpose and live happier lives by making a contribution to society. Aaron Hurst (2013, p.20) argues that society has stepped into the ‘Purpose Economy’, ‘an economy where value lies in establishing purpose for employees and customers through serving needs greater than their own, enabling personal growth, and building community.’ Moreover, he believes that purpose comes when we know we have done something that we believe matters to others, to society, and to ourselves (Hurst, 2013). The economy serves the critical need for people to develop themselves, to be part of a community, and influence something greater than themselves. According to a survey published by Social Enterprise UK (2009), social enterprises did much better in the financial crisis in 2008 than businesses established purely to make money, because of the business ethics and values of the social enterprises (Ashton, 2010). Hence, social entrepreneurship could help individuals to realise purpose, starting businesses that do more than simply make money but also have a social or environmental mission. To conclude, by using business solutions to achieve public good, social enterprises have a distinct and valuable role to play in helping create a strong, sustainable and socially inclusive economy. Moreover, the UK Government believes that successful social enterprises ‘exemplify

6

enterprise, innovation, competitiveness and social inclusion, which are placed firmly at the heart of Department of Trade and Industry’ (DTI, 2002, p.4). In fact, they can demonstrate innovative new practices, increasing the participation of staff and users in service delivery (DTI, 2002). Hence, the research question: how to start a social enterprise which has the potential to become successful is interesting for Government, individuals who would like to start their own business and investors, who are looking to finance social enterprises that provide public services, expecting to see a commitment to the principles of social value and social impact.

Methodology Throughout the project, in order to answer the main research question, I am going to use different methodologies as part of an abductive strategy. The aim is to describe and understand the notion of ‘social enterprise’ in terms of social actors (the social entrepreneurs themselves) meanings and motives in order to develop a theory and elaborate it (Blaikie, 2009). According to Roger Martin (2005), abductive thinking is an approach by ‘suggesting that something may be and reaching out to explore it’. Therefore, instead of acting on what is certain, I will explore what is probable. In order to implement the strategy, the study is based upon the secondary and primary research. I will undertake a desk research to look at the sector of social entrepreneurship as a whole ecosystem to identify key actors and how they work. Moreover, a research placement at Impact Hub Westminster allows me to gain valuable insights an immersive experience and insider view. In fact, Impact Hub Westminster is a combination of an innovation lab, a business incubator, and a community centre. It provides collaborative spaces, a network, mentoring programs and connections to potential investors and government policymakers (Impact Hub Westminster, 2014). Indeed, my experience of helping the hub’s team with marketing and supporting Impact Investment Readiness Programme enables me to use observation and have 7

informal talks with the members, who are social entrepreneurs. The field research helps me to understand the language of social entrepreneurs through discourse analysis, drawing on social relations, identity, knowledge and power are constructed through written and spoken texts in communities (Van Dijk, 1997). In addition, ‘walking in their shoes’ tactics provides orientations for social entrepreneurs’ actions, their motives and accounts in the context of their everyday activities at the hub. Finally, the diary I kept during the whole journey of investigation into the research question gives me an opportunity to reflect upon my own experiences. This reflective practice is an important tool in practice-based learning (Schön, 1983). This is where individuals learn from their own experiences, rather than from formal teaching or knowledge transfer (Schön, 1983). Despite the fact that much of the activity of social life is routine and is conducted in a taken-forgranted, unreflective attitude, this diary represents a personal management journal, where I can observe my capacities as an innovation manager for future development. Eventually, this will lead to a much greater depth of understanding of the subject and to my becoming a ‘reflective practitioner’ (Schön, 1983).

Defining a successful social enterprise In order to answer the main research question: ‘how to start a successful social enterprise’, I need to answer the following sub-questions: What is social entrepreneurship? How does social entrepreneurship differ from regular entrepreneurship? What makes social enterprise successful? How to measure the success of social enterprise? So, this part consists of consequences of these subquestions.

8

Defining social entrepreneurship There is no one well-established or widely-accepted definition. Indeed, Martin and Osberg (2007, p.2) argue, that the definition of social entrepreneurship today is anything but clear.’ Many in the field believe that one of the main characteristics of social enterprise is that it occupies the ‘space’ between charities at one extreme and commercial business at the other, representing kind of a hybrid of business and charity (UnLtd, 2014). In this regard, Ashton (2010) argues that a business person makes profit at any cost; they spend money for self and may exploit the weak. In contrast, a campaigner or charity makes change at any cost, it spends other’s money for others and champions the weak. Thus, the concept of social entrepreneurship represents a hybrid between business and charity, which is trying to solve social challenge, by applying entrepreneurial skills. Liam Black (2014) argues that the aim of a social entrepreneur is to create an enterprise that is financially viable and profitable in a space where the private and public sectors have failed. Similarly, Leadbeater (1997, p.3) believes that they operate as a ‘kind of research and development wing of the welfare system, innovating new solutions to intractable social problems.’ Leadbeater, (ibid, p.5) further argues that social entrepreneurs are ‘people who deploy entrepreneurial skills for social ends, and are at work in parts of the traditional public sector, some private sector corporations and at the most innovative edge of the voluntary sector’. Hence, social entrepreneurship occupies the space between private and voluntary sectors, filling a gap where the public sector has failed to tackle a social issue. Another important characteristic is that social entrepreneurship considers social value equal to financial. Current debate revolves about balancing financial and social objectives within social entrepreneurship, and strong views have been expressed. Some business people criticise social enterprise for diluting the focus on making positive social impact as well as profit. Charity 9

campaigner criticise social entrepreneurship for dirtying campaigns by adding income generation (Ashton, 2010). However, both might ask how a social entrepreneur can reconcile making money for himself whilst also being committed to helping others, to satisfy unmet social needs. In response, Martin (2007, p.3) believes, that what distinguishes social entrepreneurship is the primacy of social benefit, as the pursuit of ‘mission-related impact’. He argues that the social entrepreneur does not need to create substantial financial profit for his investors such as philanthropic, government organisations or for himself (Martin and Osberg, 2007). Furthermore, Yunus (2007) emphasises that social business is a ‘cause-driven business’. He believes that, in a social business, the investors and owners can gradually recoup the money invested, but should not take any dividend beyond that point. Moreover, Yunus argues that the purpose of this investment is purely to achieve one or more social objectives through the operation of the company and that the investors desire no personal gain (2007). However, in practice, this is not always the case. In fact, it is widely accepted that social enterprises need to be funded by an investor in order to get equity to start or grow their organisations. There are many investment schemes to help social enterprises to get funded, such as grants, loans and equity. Indeed, for some social enterprises, grant funding might be the only realistic source of financing for growth due to the nature of their business and their legal structure (UnLtd Toolkit, 2013). However, one of the characteristics of social enterprise, which differentiates it from the charitable sector, is its access to capital markets, equity and debt investors. Thus, the social investment landscape provides opportunities for social ventures to find investors who are interested in financial returns as well as in social impact. Despite the fact that, typically, they expect a lower financial return than a commercial investor, this does not mean that they are looking for no financial return; most social investors also expect to see some growth in the financial investment they make (UnLtd Toolkit, 2013). Hence, social entrepreneurship often considers social value equal to financial in order to win funding from social investors, who support successful social entrepreneurs, who are financially sustainable and 10

are able to show an evidence of social impact. Thus, in this paper, social entrepreneurship will be understood as a socially oriented organisation, a hybrid of philanthropy and business, which identifies a problem within an environment, which the government may have made insufficient attempts to solve, in which business may not be interested due to perceived lack of potential for making profit, and charities, depending on donations, have unsustainable and unpredictable social impact. Moreover, a social entrepreneur is an individual who comes up with innovative new solutions to difficult social problems. They consider social value equal to financial in order that their enterprise is independent and financial sustainable. So, there are many alternatives to be considered as social entrepreneurship. However, ’a very good fit’ social enterprise should have ‘primarily social/environmental objectives, whose surpluses are principally reinvested for that purpose in the business or community rather than mainly being paid to shareholders and owners’ (The Cabinet Office, 2013).

Realising success Starting a social enterprise is very demanding due mainly to the complex nature of objectives such as social, environmental and financial outcomes. These are otherwise known as the 3 P’s: people, planet and profit or ‘triple bottom line’. A social entrepreneur is expected to generate profits and proof of creating measurable positive change. In practice, many social ventures use a social model, a single framework for linking business strategy to social impact targets (UnLtd Toolkit, 2013). The social model is the key element that differentiates a social enterprise from a commercial business. Despite the fact that many social entrepreneurs recognise the importance of their social model, some fail to define and articulate its key components and articulate how it works. The social model has three core components. First of all, it sets out the theory of the 11

problem, social or environmental challenge, which a social venture is going to solve. Secondly, it defines the theory of change, representing the solution theory (or strategy) for addressing the problem described above. Thirdly, it incorporates a theory of action that describes the key interventions (actions and operations in detail) enabling the enterprise to deliver the theory of change solution (UnLtd Toolkit, 2013). The first part of the social model embodies the theory of the problem (figure 1). In order to design the solution for the problem, it is important to examine the chosen social or environmental issue in greater detail. However, Horst Rittel and Mel Webber argue in Dilemmas in a General Theory of Planning that social problems are ill defined, they do not have even a solution, and they are never solved (1973, p.160). The authors use the term ‘wicked problems’ in a meaning akin to that of ‘malignant’ in contrast to ‘benign’ or ‘vicious’ like a circle (1973, p.160). In fact, the process of formulating the social problem and of generating a solution (or resolution) is identical, because every specification of the problem is a specification of the direction in which a solution is considered (Rittel and Webber, 1973). Thus, creating the theory of the problem a social enterprise should recognise the inherent wickedness of social problems. Starting with establishing an understanding of the current situation, it is necessary to analyse the context behind the social problem. Then, the target population, their typical experiences and the trends that may change the situation should be identified. Moreover, when starting a social enterprise, investigating the scale of the problem and how big the target population plays a vital role in developing the theory of the problem. And finally, it is necessary to understand why this problem exists, and clarify the goal state that would emerge if the problem were solved (UnLtd Toolkit, 2013). In addition, during the process a social entrepreneur could be caught up in the ambiguity of possible root cases of the social problem. Systems-approach could be necessary to build an argumentative process where the solution emerges gradually as a product of incessant judgment

12

and critical thinking (Rittel and Webber, 1973). Furthermore, the ‘world view’ and system thinking are the strongest determining factors in explaining a discrepancy and, therefore, in resolving a wicked problem (Rittel and Webber, 1973).

Fig. 1 The theory of the problem (UnLtd, 2013) The second component of the social model and the next step is the theory of change (figure 2). Many practitioners in the field believe that the theory of change is a useful tool to understand how to tackle social challenges. The purpose of the theory of change is to develop a solution strategy built around the root causes of the problem that it aims to address. The theory of change includes core elements such as the intermediate outcome and the ultimate goal of the enterprise’s activities. It also includes processes such as linking the stages together and examining assumptions behind and the connections between the interventions and the outcomes (TSIP, 2014). Moreover, a social enterprise should be liable for the consequences of the actions it generates, because the effects can matter a great deal to those people that are touched by those actions. Furthermore, the theory of change helps to improve internal programme design, to provide clear external communication and evaluate planning in order to attain the goal and, therefore, achieve success.

13

Fig. 2 An example of the theory of change (TSIP, 2013) The third component of the social model is the theory of action, which typically contains two types of activities or actions. Core action represents articulating the key interventions outlined in the theory of change and support actions, which are the additional interventions that may be required to enable the organisation to deliver its core actions. However, the theory of actions seems to be very similar to the interventions in the theory of change. Indeed, the theory of action provides the same enterprise activities in greater detail, like outlining tactics, which could be the foundations for operational and organisational planning and marketing strategy (UnLtd Toolkit, 2013). In practice, many social entrepreneurs include core and support actions in 14

their theory of change rather than examining the theory of actions as a separate component of their social model. Thus, the social model is a single framework for linking business strategy to social impact targets (UnLtd, 2014). A social enterprise demonstrates not just commercial success; it also proves the viability of its social model by demonstrating its social impact. Whereas the viability of a business model can be tested and proven by a ‘set of readily quantifiable financial indicators’ (UnLtd Toolkit, 2013), the social model can be validated by demonstrating the social impact generated by the organisation. However, it is vital to establish social impact is to be measured, innovators, commissioners, service users and investors all need evidence to know whether the products or services they develop, buy or invest in make a positive change. There are many methodologies to measure social impact. One of the most common is Social Return On Investment or SROI, a framework for understanding, measuring and managing the outcomes of an organisation’s activities. The framework is a way to monetise the value of the social impact in financial terms (Nef, 2004). Indeed, the SROI ratio is the total monetary value of impact, divided by investment. However, SROI may not be appropriate for all social enterprises. In some cases it may well be impossible or too complex to give a monetary value to an outcome, or to compare that social value to the cost of making that project happen. Although, when suitable, SROI provides a useful tool for assessing and communicating the social impact created by a social enterprise. Another approach, which was recently developed by Nesta called “The Standards of Evidence”, balances the need for evidence with innovation. Indeed, Ruth Puttick explaines: the Standards of Evidence are on a 1 to 5 scale with Level 1 being the minimum requirement, representing a low threshold, appropriate to very early– stage innovations, which may still be at the idea stage, involving little more than a clear articulation of why the intervention is needed, what it will aim to achieve, and why this is better than what currently happens. As the levels are progressed, it will be expected that data is collected to isolate the impact to the intervention, that findings are validated externally, and then at Level 5, demonstrable evidence that the product or the service can be delivered at multiple locations and still deliver a strong, positive impact – in other words, the positive impact is scalable (2013). 15

Thus, successful social enterprise should have a replicable business model in order to scale and maximise its social impact. According to UnLtd Research, success encompasses a range of outcomes, including sustainable social enterprises that generate high turnover, and have high social and economic impact, but including, also, social enterprises that generate high social impact but low turnover (Danton and Sutton, 2010). In fact, turnover, like survivability, is also widely used as a proxy measure to indicate sustainability and does not always equate to high impact. Indeed, UnLtd, The Foundation for Social Entrepreneurs in the UK, supports social entrepreneurs who generate social impact at scale yet at low financial turnover (2014). Thus, high profit is not a necessary ingredient of success, and lack of profit cannot be a generalised indicator of failure. Developing new ways of addressing social problems will not always work, and some enterprises will not succeed in achieving their intended project aims. Social entrepreneurs embrace risk by doing what hasn’t been done before. In this regard, Beck (1999, p.5) argues that ‘through risk, the arrogant assumption of controllability – but perhaps also the wisdom of uncertainty – can increase in influence’. This ‘reflexivity of uncertainty’ allows a social entrepreneur use new knowledge to transform ‘unpredictable risks’ into ‘calculable risks’ (Beck, 1999, p.6). In fact, UnLtd believes that project ‘failure’ nonetheless has the potential to develop into personal ‘success’ albeit through ‘painful personal transition’ (2014). It invests in individuals first and develops their potential to build the skills necessary to set up and run a social venture such as confidence, credibility and enthusiasm (UnLtd, 2014). Hence, failure in a social enterprise is not clear-cut and a great deal of valuable learning and expertise can be gained from this experience. Thus, a social enterprise should be considered as successful if it has a clear goal and creates measurable positive change, meeting unmet needs. Secondly, it should set up a replicable business model in order to scale and maximise social impact. Thirdly, successful social

16

enterprise should be financially sustainable and have high social impact, even if it does not make a high profit. Moreover, any experience gained from running a social enterprise and even failure could be considered for social entrepreneurs as valuable formative learning experience for further attempts to achieve success.

Starting a successful social enterprise Iterative process Starting any enterprise is comparable to ‘the outset of the voyage, the path is unclear, and the end is not in sight’ (Blank, 2013, p.7). A social entrepreneur challenges the status quo and steps forward, seeing an opportunity to provide a new solution, product, service, or process to tackle social issues that are often shrouded in uncertainty. Uncertainty refers to a future that is not only unknown but also unknowable (Read, 2010). Black believes that ‘mastering the art of living creatively in ambiguity is key to a challenge as a social entrepreneur’ (2013, p.45). Thus, it is essential to consider the process of innovation in social entrepreneurship is as ‘an exercise in the management and reduction of uncertainty’ (Rosenberg and Kline, 1986, p.298). In this paper I identify the appropriate methods or patterns ‘in the midst of the chaos’, which could help social entrepreneurs to eliminate a lot of the ‘early wandering in the dark’ (Blank, 2013, p.9). It is commonly believed that entrepreneurship is enormously risky. However, nothing is as risky as not exploiting opportunities for innovation. Moreover, Drucker argues that entrepreneurship is ‘risky’ mainly because so few so-called entrepreneurs know what they are doing (2007, p.19). Most of them lack knowledge of suitable methodology. Therefore, the innovation process in social entrepreneurship needs to be ‘systematic, it needs to be managed and it needs to be based on purposeful innovation’ in order to tackle a social issue (Drucker, 2007, p.26).

17

According to the established paradigm, people write a plan, raise money and execute the plan; this is a very linear direction (Blank, 2013). Similarly, the waterfall methodology provides an unambiguous structure with clearly defined milestones (Lean Impact, 2013). In a linear model, one does the research, research then leads to development, development to production, and production to marketing (Rosenberg and Kline, 1986). In this model, there are no feedback paths within the on-going work of development process. However, feedback is essential to any evaluation of performance, to formulation of the next steps forward, and to an assessment of the competition (Rosenberg and Kline, 1986, p.286). Therefore, starting a social entrepreneurship requires ‘iterative fitting and trimming’ of the development process against feedback from internal and external stakeholders such as employees and beneficiaries (Rosenberg and Kline, 1986). Nathan Rosenberg and Stephen Kline proposed an alternative model, which they call a ‘chain-linked model’. In this model, change is nurtured by subsequent interactions between research, design, engineering, production, and marketing (Archibugi, 2001). There is a room for the reduction of uncertainty at every step and in every feedback link in the chain-linked model. It’s also possible to shorten the time for the total development process by using parallel paths for some of the steps (Rosenberg and Kline, 1986). Indeed, agile methodology represents a software development process, centred on customer satisfaction and collaboration, quickly responding to change (Lean Impact, 2013). Hence, social entrepreneurs should feel comfortable with uncertainty, ‘testing the waters as they go’ by applying an iterative, non-liner model of innovation (Read, 2010, p.23). This, in turn, allows social enterprise to adapt and learn, continually adding valuable and meaningful features for beneficiaries and, consequently improving social impact.

18

Human-centred approach Traditionally, companies and organisations spent months creating a product or service ‘behind closed doors’ (Ries, 2012, p.6). They did not show it to customers until it was complete. This sometimes resulted in the unfortunate event of customers neither wanting nor needing the product. Thus, the team had wasted significant time and money on a product nobody wanted (Lean Impact, 2013). Similarly, Drucker argues that ‘the new venture needs to remind itself that a ‘product’ is defined by the customer, not by a producer’ (Drucker, 2007). Hence, a social entrepreneur should be focused first of all on beneficiaries’ needs and take into account their opinion. Steve Blank argues in The four steps to the epiphany that the path to disaster is the ‘product development model’ (2013, p.9). In fact, one of the disadvantages of the old paradigm is that a company does not understand its customers (2013, p.7). Blank’s ‘customer discovery model’ focuses on testing the business model, understanding the customers’ needs and problems (2013, p.10). In order to redefine customers’ problems, market insights are needed to discover existing but ‘hidden’ demands or to create totally new demands (Kim, 2004, p.335). Therefore, starting a social enterprise, understanding who its beneficiaries are and what problem they have, plays an important role not, necessarily, to save significant amounts of time and money, but to ensure positive social change. Thus, applying a human-centred approach to a social entrepreneurship means ‘discovering’ a beneficiary (Blank, 2013, p. 6). The starting point for social innovation is an awareness of a need that is not being met by the market or the state. Sometimes, needs appear glaringly obvious – like hunger, homelessness or disease. However, some social problems could be ‘wicked problems’ that are difficult or even ‘impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognise’ (Buchanan, 1992, 19

p.45). Therefore, they need to be broken down into concrete issues with clear causes that can actually be addressed. Moreover, some needs are less obvious, or not recognised – like the need for protection from domestic violence, or from racism (Mulgan, 2006, p.21). Some of the most effective methods for cultivating social innovation start from the presumption that people are competent interpreters of their own lives and competent solvers of their own problems (Mulgan, 2006). However, sometimes peoples’ ability to reflect on their own problems results in difficulties in explaining what they need to solve them. In fact, people might have a hard time assessing their feelings objectively. Hence, social entrepreneurs should be good at talking and listening, digging below the surface to understand peoples’ needs and dislocations, dissatisfactions and ‘blockages’ (Mulgan, 2006, p.22). Indeed, empathy, ‘the ability to know how another feels, reading nonverbal channels such as tone of voice, gesture, facial expression’ (Golman, 1996, p.96) and ethnography could be more relevant formal tools than statistical analysis. Empathy is ‘Genchi gembutsu’ methodology, described in Lean Startup book, means ‘go and see for yourself’ and presumes that business decisions can be based on deep ‘first-hand knowledge’ (Ries, 2011, p.97). The goal of these methods is not to give definitive answers, but to clarify a basic level of deeply understanding potential beneficiaries, problems they have, uncovering their hidden demands.

Lean startup A combination of human-centred approach and iterative pattern of innovation represents a lean start-up methodology for companies that helps to allocate their resources as efficiently as possible, building upon user demand (Roland and Thoring, 2012). The methodology was developed by Eric Ries a Silicon Valley entrepreneur. Originally, the lean startup evolved from the ‘customer development’ model developed by Steve Blank, who states that besides a process for ‘product development’ a start-up also needs a process for ‘customer development’ to find and 20

understand the customers (Blank, 2013). In fact, the lean startup is a continuous loop of processes that include building, measuring and learning. The lean learning cycle is arranged in a circular form and has no clear beginning or ending (figure 3). Furthermore, the lean learning cycle might be applied to different levels of a project allowing a startup to be systematically break down a business plan into its component parts and test each part empirically (Ries, 2011). Indeed, the shorter the cycle, the more quickly the teams learn, the closer to customer needs they are throughout the process, and the less time and resources are wasted (Ries, 2011). Liam Black argues that social entrepreneurs should ‘never underestimate the power of a commitment to relentless, incremental innovation, because sudden radical change is rare’ (2014).

Fig. 3 Build – Measure – Learn loop (2014) Recently, the lean startup movement created a new framework that meets the unique challenges of good social organisations and called it ‘Lean Impact’ (Lean Impact, 2013). The framework aims to apply lean principles that should work for the social good. However, creating social change is different from running a commercial startup. This part of my research paper examines the lean learning cycle and possibilities of its application in social entrepreneurship. One of the components of the learn cycle is ‘build’ which means that a startup builds a prototype or minimal viable product in order to test it and understand customers’ needs. However, in social entrepreneurship that means a piloting phase. A social venture builds and tests its social model, which includes the theory of the problem in order to understand who the 21

beneficiaries are and what problems they have. For example, Michael Young, who created over 60 organisations including the Open University, Social Research Council, and the School for Social Entrepreneurs, moved very quickly ‘to set up an embryonic organisation rather than waiting for detailed business plans and analyses’ (Mulgan, 2006, p.45). Indeed, setting clear social or environmental impact targets and establishing methods for measuring movement towards these targets, enable a social entrepreneur to critically assess the success of social model (Unltd Toolkit, 2013). Furthermore, this enables the entrepreneur to prove that the social model works and refine the model based on what was learnt from the piloting process (UnLtd). The next step is the ‘measuring’ phase, which, for a social startup, means proving a social model and collecting evidence base. Indeed, a social enterprise must demonstrate more than simply commercial success; it must also prove the viability of its social model by demonstrating its social impact (Unltd Toolkit, 2013). For a social enterprise, that phase includes an attempt to find a repeatable social model, identifying social impact indicators, monitoring and evaluating social impact. In fact, social impact indicators are the specific, measurable things that were planned to be tracked in the theory of change and which allow the effectiveness of interventions to be assessed (UnLtd). However, the indicators defined for a specific organisation could be dependent on the access and ability to collect certain information and on the audience to whom these indicators need to be communicated. Moreover, social impact must be differentiated from outcomes, which are the results of a social enterprise activity such as a new job, increased income, or improved stability in life. Impact is the change resulting from social enterprise activities, taking into account what would have happened anyway without any interventions (SROI). And finally, the ‘learn’ in the cycle represents validated learning from the previous phases. In social entrepreneurship it is likely to be an on-going iterative refinement of the social model (UnLtd). This process should be closely aligned to the business planning and evaluation cycle (UnLtd). Refinement of the social model is typically driven by an increased understanding of the needs and problems of the beneficiaries. According to UnLtd Tooklit, typical refinements 22

usually involve addressing needs and solving problems more effectively, improving the quality of the outcomes. Secondly, delivering products or services more efficiently, which allows the organisation to increase the scale of its impact. And thirdly, prioritising the interventions to focus on more specific, higher ‘quality’ outcomes. A journey of creating Road of Life could illustrate lean startup principles in practice (Cooper and Vlaskovits, 2013). Rob Emrich, the founder of the social startup has overcome his family members’ death from cancer and decided to make a real difference. Initially, he and his team assumed that there are not enough money in cancer research. However, by ‘getting out of the building’ and arranging appointments with professionals from the industry, he and his team found very quickly that was not a real issue. They were told that they donate to the wrong things that really do not have that much promise. In fact, the real big issue was prevention and specifically, prevention for children. So, the team decided to invest their efforts to implement new academic standards for national health education, providing health-education curricula to schools and teachers. Thus, by refining the social model Rob Emrich and his team increased their understanding of problem associated with cancer. Hence, lean start-up methodology, a combination of human-centred approach and iterative pattern of innovation could help starting a successful social enterprise. The learning cycle ‘build’ - ‘measure’ – ‘learn’ could be beneficial for social start-ups not only to allocate their resources as efficiently as possible, but also to foster the understanding of beneficiaries insights and therefore maximise positive change. During the building step or piloting phase, a social enterprise creates and tests its social model with beneficiaries. Testing a social model and collecting evidence helps to measure and demonstrate the social impact of social venture interventions. Finally, the ‘learn’ step represents the on-going iterative refinement of social models, driven by an increased understanding of the needs and problems of beneficiaries.

23

Design thinking Another methodology, which combines a human-centred approach with iterative processes of innovation, is design thinking. This strategy was developed by the design consultancy IDEO in the late 90s based on design methods and principles (Brown, p.2). The methodology uses extensive customer research, feedback loops and iterative cycles. Design thinking approach encourages working in interdisciplinary teams to tackle more complex or ‘wicked’ problems. Brown (2009, p.26) argues that people from different backgrounds ‘within the same team, in the same space, using the same processes, creating increasing overlap in activities and responsibilities’ allows teams to come up with more creative and innovative solutions. However, the idea behind design thinking about collaboration refers not only to collaboration within a team but ideally also with a user, or with a beneficiary in social entrepreneurship. In fact, the objective is to involve beneficiaries, designers, and other stakeholders in an integrative process, which can be applied to product, services, or social enterprise design (Brown, 2009, p.11). Design thinking process consists of the following steps: understanding, observation, ideation, prototyping, testing and implementation (figure 4). Moreover, the process could have iteration loops that result either from the last step 'testing' or after any step, going backwards to the previous step. This process does not start with an idea, but rather with a problem or a question (Mueller and Thoring, 2012).

Fig. 4 Steps in a Design Thinking Process (2009) 24

Thus, for a social enterprise the first step is understanding the problem of the beneficiary. The aim is to identify a design challenge or social issue firstly through secondary research, recognising existing knowledge (HCD Toolkit). Similarly, the theory of the problem, one of the parts of a social model starts with understanding what the current situation of the problem is, the context behind this problem, investigating the scale and why this problem exists (UnLtd Toolkit, 2013). During an ‘observation’ stage, a social enterprise conducts primary research, using qualitative research methods, such as ethnography, individual interviews, group interviews or with experts, in context immersion, self-documentation or community-driven discovery (HCD toolkit). The methods enable a design team to develop deep empathy for the beneficiaries they are designing for, to question assumptions, and to inspire new solutions. Brown states that in order to maximise the impact on corporate outcomes, design should be the path to understand stakeholder priorities (2009). Thus, the first two steps: understanding and observation could represent the theory of the problem in a social model in social entrepreneurship. To move from research to real-world solutions, social enterprise goes through a process of synthesis and interpretation, or 'ideation' (Mueller and Thoring, 2012). A social venture starts with brainstorming sessions, allowing teams and individuals to learn how to ‘turn off their brains’ in order increase the number and fluency of ideas how to solve a social issue. The sessions embody divergent thinking, used to generate creative ideas by exploring many possible solutions (Hestad, 2013). After the process of divergent thinking has been completed, ideas are organised and structured, using convergent thinking (Hestad, 2013). This type of thinking requires a mode of narrowing and clustering information as well as interpretation and synthesis of the beneficiaries’ insights. Hence, the ‘ideation’ could represent the theory of change, a solution strategy on how to tackle a defined social issue. When a few solutions outlining how to tackle a social problem have been synthesised and defined, they are ready for prototyping. Indeed, the step in the design thinking process is concept 25

visualisation and concept enrichment, which may include beneficiaries and other stakeholders. To learn with one’s hands, joining forces with people from other disciplines – ‘are ways of deepening what we know and widening the impact of what we do’ (Brown, 2009, p.227). When a prototype is built it should be tested with potential beneficiaries in order to gather their feedback. Prototyping is a process of making ideas real and tangible, which helps social enterprises to refine and iterate their ideas very quickly. Thus, a social enterprise prototypes the theory of change and tests its solution strategy with the beneficiaries. The last stage of the design thinking process is ‘implementation’, which means the realisation of the tested concepts from a room to a market. Commercial enterprises make prototyped solutions commercially viable. However, in social entrepreneurship implementation means matching social and business models within a whole system that works. Indeed, once the design team has created a social model, it is time to consider how to make it technically or organisationally feasible and financially viable and therefore successful. Implementation is an iterative process that is likely to require many prototypes and pilots to perfect the solution. Hence, a social start-up could use design thinking, another methodology, which combines human-centred approach with iterative processes, which encourages working in interdisciplinary teams to tackle ‘wicked’ problems. Indeed, this process does not start with an idea, but with a problem or a question. The process starts with understanding the beneficiary’s problem conducting secondary research and primary research, using qualitative research methods, also known as the theory of the problem. When observation has been completed, a social venture goes through a process of interpretation of beneficiaries’ insights and proposes a solution, or 'ideation' or the theory of change. Then, the theory of change should be prototyped and tested with beneficiaries. And finally, during implementation stage a social start-up matches social and business models together in a whole system that works, making it feasible and viable.

26

Lean design thinking in social entrepreneurship Thus, both methodologies: lean startup and design thinking, having similar goals, could help social enterprises foster their innovations. The methodologies have iterative processes and a human-centred approach in common. Both design thinking and lean startup take into account the perspective of the users or beneficiaries and focus on extensive testing in order to improve their solution strategies. Design thinking and lean startup aim to gather feedback from beneficiaries by building a prototype in order to avoid wasting resources and also to increase impact. For both strategies, the solution and the social problem are quite unclear in the beginning, so both teams work with extreme uncertainty. The ‘developed prototypes undergo extensive iteration within the process’ (Mueller and Thoring, 2012, p.6). However, design thinking and lean startup do differ in some respects. Lean startup might be the right choice if a social entrepreneur already has an idea how to solve a social issue. The idea is tested to check its validity, and can, subsequently, be changed extensively during the project. Design thinking, on the other hand, is the better strategy when a beneficiary’s problem is very complicated and it is difficult to find the right idea for founding a social enterprise. Moreover, design thinking suggests only qualitative methods, such as ethnography or observation, whereas lean startup uses quantitative methods such as metric-based analysis, identifying social impact indicators and evaluating social impact in social entrepreneurship. Hence, in order to start a successful social enterprise, there is an opportunity to learn from both design thinking and lean startup and create a “lean design thinking” approach, which combines the strengths of both methods (Mueller and Thoring, 2012). Lean design thinking in social entrepreneurship represents a combination of lean startup, design thinking and social model (figure 5). The methods are complementary, allowing a social venture increases chances of success.

27

Fig. 5 Lean Design Thinking in Social Entrepreneurship (2015)

The process of lean design thinking in social entrepreneurship comprises the following steps (figure 6): 1. understanding a social issue, and creating the theory of the problem; 2. observation, applying an extensive beneficiary’s research, testing the theory of the problem; 3. ideation, constructing the theory of change; 4. prototyping and testing the chosen solutions, applying quantitative methods to measure social impact; 5. implementation: making the solution financially viable and technological feasible. Moreover, the process of lean design thinking could have many iteration loops, which increase learning outcome.

28

Fig. 6 The Process of Lean Design Thinking in Social Entrepreneurship (2015)

Starting with understanding, a social enterprise tries to identify a design challenge or a 29

social issue firstly through a secondary research. Some of the social challenges can be ‘wicked’ problems. They may be difficult or even ‘impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognise’ (Buchanan, 1992, p.33). Therefore, wicked social problems should be broken down into concrete issues with clear causes, which can actually be addressed. Creating the theory of the problem makes it possible to examine the chosen social or environmental issue in more detail (figure 1). Understanding the current situation of the problem is generally accepted as the way to start. Besides this, it is necessary to analyse the context behind this problem. Finally, it is necessary to understand why this problem exists and what goal state would result if the problem were solved (UnLtd Toolkit, 2013). In addition, complex social problems require complex solutions; some social issues are very complicated and require systemic solutions, understanding the root causes. An ability to think with systems could be one of the necessary factors to tackle social problem. System thinking is the process of understanding how things, regarded as systems, influence one another. The process should be based on a model where the solution emerges gradually, as a product of incessant judgment and critical thinking (Rittel and Webber, 1973). A social enterprise should be responsible for the consequences of the actions it generates and effects to those people that are touched by those actions. Hence, in order to solve ‘wicked’ problems, a social venture needs to see the bigger picture and the interconnections and interdependence of the elements within the system. When a social enterprise develops its theory of the problem it is time to observe of the beneficiary and test the proposed theory of the problem with potential beneficiaries and gather their feedback. This helps a social venture learn about a beneficiary’s needs faster and makes subsequent assumptions more accurate. During observation, a venture undertakes primary research, using qualitative research methods (HCD Toolkit). The methods enable a design team

30

to develop deep empathy for the beneficiaries they are designing for revealing hidden demands. To move from research to real-world solutions, a social enterprise goes through a process of synthesis and interpretation, which Brown (2009) calls 'ideation'. A social venture starts with brainstorming sessions, allowing teams and individuals to come up with high number and fluency of ideas on how to solve a social problem. This divergent thinking generates creative ideas by exploring many possible solutions (Hestad, 2013). After the process of divergent thinking has been completed, ideas are organised and structured, using convergent thinking (Hestad, 2013). This requires narrowing and clustering information as well as interpreting and synthesising beneficiaries’ insights. Indeed, the theory of change develops a solution strategy built around the root causes of the problem that it aims to address (figure 2). The theory of change includes core elements such as the intermediate outcome and the ultimate goal of the enterprise’s activities. It also includes processes such as linking the stages and examining the assumptions behind and the connections between the interventions and the outcomes (TSIP, 2014). In addition, in order to make competition irrelevant, a social enterprise could use ‘Blue Ocean Strategy’. In fact, the strategy was developed by Chan Kim and Renée Mauborgne in 2005. The ‘red ocean’ represents an existing market, where companies build advantages over the competition. The ‘blue ocean’, in turn, embodies uncontested market and captures a new demand (Kim and Mauborgne, 2005). The ‘blue ocean’ in social entrepreneurship means a gap (an opportunity) within an environment, where the government have failed to solve a social problem, business does not interested in solving it, and charities have unsustainable or unpredictable social impact. In order to find this gap a social venture could create a ‘strategy canvas’ (figure 7), understanding how a social issue is currently being solved by the government, charities or other social enterprises. By listing attributes or factors of competition and rating each ‘competitor’ against them, a social startup could identify the gap and fill it. In fact, with Blue Ocean strategy, 31

social innovators are able to systematically think through ways to create value for their target beneficiary versus the competition.

Fig. 7 An example of the Blue Ocean Strategy Canvas (2013) When a few solutions how to tackle a social problem have been synthesised and defined, they are ready for prototyping and testing with potential beneficiaries. Making ideas real and tangible allows a social enterprise to gather feedback and refine ideas very quickly. However, it is difficult for a social startup to measure social impact at an early stage. A social venture should identify the social impact indicators that are to be tracked in the theory of change allowing for the effectiveness of interventions to be assessed. Moreover, by monitoring and evaluating social impact, a social venture proves the social model and positive change caused by its interventions. Finally, during the implementation step, a social enterprise ensures that their innovation is successful. Making sure that the solution is desirable for a beneficiary, technologically and organisationally feasible and financial viable (Brown, 2009). Recently, Rowan Yeoman and 32

Dave Moskovitz in conjunction with the Akina Foundation created ‘Social Lean Canvas’ (figure 8) an adaptation of Ash Maurya’s Lean Canvas. The social lean canvas aims to develop coherent social business models in a quick and simple way and then to test them methodically in order to arrive at a thoroughly validated, scalable, repeatable business model (Yeoman and Moskovitz, 2013).

Fig. 8 Social Lean Canvas (2013) This step involves establishing key social indicators, cost structure and financial sustainability in social lean canvas. The cost structure is how much it will cost to deliver a solution to the beneficiaries at scale. Financial sustainability might follow a traditional revenue model (on-going income or on-going donations and etc.) and funding model (individuals or

33

organisations contributing initial capital and ownership structure). Implementation is an iterative process that is likely to require many prototypes and pilots to perfect the solution.

Recommendations Thus, by adopting an abductive strategy in this research paper, I explore probable options for starting a successful social enterprise. I examine lean startup and design thinking and their application to social entrepreneurship. Both methodologies in combination with social model complement each other and represent lean design thinking in social entrepreneurship. This new method could be of interest for social startups, established social enterprises, social intermediaries (incubators, accelerators, hubs), social investors and the government. Since, the approach is new in social entrepreneurship, its implementation should involve continuous monitoring of the results for on-going improvement. However, a number of recommendations can be made with regards to the implementation of the outcome of the research. 1.

First of all, an individual or a team should have a shared mission and vision that keep people inspired and motivated;

2.

in order to avoid the ambiguity of possible root cases of the social problem during the process, systems-approach could be necessary. The solution should emerge gradually as a product of incessant judgment and critical thinking (Rittel and Webber, 1973). The ‘world view’ and system thinking are the strongest determining factors in explaining a discrepancy and, therefore, in resolving a wicked problem (Rittel and Webber, 1973). Moreover, a social enterprise should be responsible for the consequences of the actions it generates and effects to beneficiaries. Hence, in order to solve ‘wicked’ social problems, a social venture needs to see the bigger picture and the interconnections and 34

interdependence of the elements within the system; 3.

the beneficiaries are not always the people who pay for a product or service. Therefore, during the understanding phase of the process, a social enterprise should also take into account the needs and demands of all the stakeholders such as beneficiaries, customers, partners, shareholders.

Erosion factors However, the lean design thinking in social entrepreneurship could have limitations and ‘erosion factors’ (Chesbrough, 2003) of its implementation, such as: 1.

the approach has not been tested yet in social entrepreneurship. Hence, I’m going to apply the method in practice, and use the findings to refine and optimise the method;

2.

the application of lean design thinking in social entrepreneurship depends on the industry. It is argued that in heavily regulated industries, the lean startup method would not work because of the lengthy time it takes to get a product such as pharmaceuticals or biotechnology to market (Parrisius, 2013). Thus, some social ventures could pick and choose the aspects of the lean approach that work for their particular industry;

3.

dealing with wicked social problems, it could be difficult to do an ultimate test of a solution. In fact, any solution, after being implemented, will generate waves of consequences over an unbounded period of time (Rittel and Webber, 1973). Every solution and every attempt counts significantly, irreversibly influencing beneficiaries’ lives. Hence, a social enterprise should be aware of affect and effect of its interventions realising interdependence of elements within social system.

35

Conclusion Research has shown that social entrepreneurship has a distinct and valuable role to play in the economy. It contributes to socially inclusive wealth creation, showing new ways to deliver and reform public services and helping to develop active citizenship (DTI, 2002). Hence, I decided to examine the question of how to start a successful social enterprise. In order to answer the main research question, I structured the research paper in the following parts. Firstly, I undertook secondary research in order to understand the concept of social entrepreneurship through the literature review critically analysing the key discourses of business, design and innovation. I found that social entrepreneurship is the process of starting a new venture that exploits social challenges as opportunities within an environment where the government may have failed to solve these problems, business, aiming to maximise profit, may have no interest in solving them, and upon which charities, heavily depending on donations, have unsustainable or unpredictable social impact. Thus, social entrepreneurship is a financially sustainable business, making sufficient profit, with primarily social or environmental objectives. Secondly, I examined what makes a social enterprise successful. A social entrepreneur is expected to generate profits as well as offer proof of the creation of measurable positive change. A social model, a single framework for linking business strategy to social impact targets, is the key element that differentiates a social enterprise from a commercial business and that makes it successful. A social model consists of the theory of the problem, the theory of change and the theory of action. The effective social model allows a social venture to identify a real social problem, the goal state of the problem and a strategy for solving it. Moreover, any experience gained from running a social enterprise and even failure could be considered for social entrepreneurs as valuable formative learning experience for further attempts to achieve success. 36

As Stuart Read (2011, p.70) believes, ‘think of yourself as an emerging chess master, learning new moves with each game and using them in the next’. Thirdly, I explored ways of starting a successful social enterprise. I found that an important and useful way to consider the process of innovation in social entrepreneurship is as ‘an exercise in the management and reduction of uncertainty’ (Rosenberg and Kline, 1986, p.298). Indeed, a social venture should adopt an iterative, non-liner model of innovation, that allows for adapting and learning, continually adding valuable and meaningful features for the beneficiaries and, consequently, improve social impact (Read, 2010, p.23). In addition, a humancentred approach help social enterprises to build a social model, understanding who its beneficiaries are and what problem they have. By digging below the surface to understand peoples’ needs and ‘blockages’ a social startup puts people at the centre of the development process. Fourthly, I examined the lean startup methodology and design thinking that represents both a combination of human-centred approach and an iterative pattern of innovation. I argue that the learning cycle ‘build - measure – learn’ could be beneficial for social startups not only in allocating their resources as efficiently as possible, but also in fostering their understanding of the beneficiaries insights and therefore maximising positive change. Design thinking, which encourages working in interdisciplinary teams to tackle ‘wicked’ problems, might be useful for starting a social enterprise. Indeed, this process does not start with an idea, but with a problem or a question. Hence, in order to start a successful social enterprise, there is an opportunity to learn from design thinking and lean startup and create a “lean design thinking” approach, which combines the strengths of both methods (Mueller and Thoring, 2012). Lean design thinking in social entrepreneurship represents a combination of lean startup, design thinking and social models (figure 5). The methods are complementary, allowing a social venture to increase its 37

chances of success. The process of lean design thinking in social entrepreneurship comprises the following steps (figure 6). Firstly, a social enterprise understands a social issue, creating the theory of the problem. Secondly, a venture observes potential beneficiaries, applying an extensive beneficiary’s research, and testing the theory of the problem. Thirdly, a social startup goes through ideation, constructing the theory of change. Then, a social venture prototypes and tests the chosen solutions, applying quantitative methods to measure social impact. Finally, a social enterprise makes the solution financially viable and technological feasible. Moreover, the process of lean design thinking could have many iteration loops, which increase learning outcome. Taking into account erosion factors and limitation of the research there are a few future steps that I would like to undertake. Firstly, the lean design thinking in social entrepreneurship needs further theoretical exploration and analysis. Secondly, I would like to test the new method in reality, founding a social enterprise. Implementation of the method should involve continuous monitoring of the results for on-going improvement.

38

Bibliography

Archibugi, D. (2001) Technology, economics in Reader's guide to the social sciences. London: Routledge. Ashoka (2015) Home. [Internet]. Available from: [Accessed: 17 June 2014]. Ashton, R. (2010) How to Be a Social Entrepreneur: Make Money and Change the World. United Kingdom: Capstone. Beck, U. (1999) World Risk Society, London: Polity Press. Black, L. (2014) The Social Entrepreneur’s A-Z. London: Fields Publishing Ltd. Blaikie, N. W. (2009) Designing social research: The logic of anticipation, Cambridge, UK: Polity Press. Blank, S. (2013) The Four Steps to the Epiphany: Successful Strategies for Products That Win. United States: K & S Ranch. Breen, B. (2005) The Business of Design: In an economy where style is king, we all need to start thinking and acting more like design. [Internet]. Available from: [Accessed: 12 December 2014]. Brown, T. (2009) Change by Design. New York: Collins Business. Buchanan, R. (1992) Wicked Problems in Design Thinking. [Internet]. Available from: [Accessed: 17 June 2014]. Chesbrough, H. W. and Brown, J. S. (2003) Open Innovation: The New Imperative for Creating and Profiting from Technology. 1st edn. United States: Harvard Business School Press. Cooper, B., Vlaskovits, P. and Ries, E. (2013) The lean entrepreneur: how visionaries create products, innovate with new ventures, and disrupt markets. United States: Wiley, John & Sons, Incorporated. Dana,

H., Taplin, H. (2012) Theory of change: Basics. [Internet]. Available from: [Accessed: 17 June 2014].

Danton, K., Sutton, A. (2010) Social entrepreneurs: realising success. [Internet]. Available from: [Accessed: 17 June 2014]. 39

Department of Trade and Industry (2002) Social Enterprise: a strategy for success. [Internet]. Available from:< http://www.uk.coop/sites/storage/public/downloads/se_strategy_2002.pdf> [Accessed: 17 June 2014]. Dijk,

V. (1997) Critical Discourse Analysis. [Internet]. Available from: http://www.discourses.org/OldArticles/Critical%20discourse%20analysis.pdf.> [Accessed 27 February].

<

Drucker, P. (2007) Innovation and Entrepreneurship. Oxford: Routledge. Fast

Company (2012) The Business of Design. [Internet]. Available from: [Accessed: 12 December 2014].

Goleman, G. (1996) Emotional intelligence. London: Bloomsbury Publishing Pls. Hestad, M., Rigoni, S. (2013) The Little Booklet on Design Thinking: An introductory workshop. London: Brand Valley Publications. Hurst, A. (2013) The Purpose Economy: How Your Desire for Impact, Personal Growth and Community Is Changing the World. United States: Elevated Press. Ideo, Bill & Melinda Gates Foundation The and The Bill & Melinda Gates Foundation (2011) Human-Centered Design Toolkit: An Open-Source Toolkit to Inspire New Solutions in the Developing World. United States: Authorhouse. Impact

Hub Westminster (no date) Home. [Internet]. from: [Accessed: 12 December 2014].

Available

Impact Hub. (2005) About Impact Hub. [Internet]. Available from: [Accessed: 18 June 2014]. Kilkku, V. (2014) Build – Measure – Learn loop. [Online image]. Available from: [Accessed 27 February]. Kim, C. W. and Mauborgne, R. (2006) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. United States: Giland Media Corp. by arrangement with Harvard Business School Press. Kline S., Rosenberg, N. (1986) An Overview of Innovation. Washington: National Academy Press. Leadbeater, C. (1997) The Rise of the Social Entrepreneur. United Kingdom: Demos. Lockwood, T. (2009) Design thinking: Integrating innovation, customer experience and brand value. New York: Allworth Press. Luke, A. (2009) Introduction: Theory and Practice in Critical Discourse Analysis. [Internet]. Available from: [Accessed: 16 February 2015]. Martin, R. (2007) Social Entrepreneurship: The Case for Definition. [Internet]. Available from: 40

[Accessed: 17 June 2014]. Maurya, A. (2012) Why Lean Canvas vs Business Model Canvas? [Internet]. Available from: [Accessed: 12 December 2014]. Mueller, Roland & Thoring, Katja (2012) Design Thinking vs. Lean Startup: A comparison of two user-driven innovation strategies. [Internet]. Available from: http://www.researchgate.net/publication/234066097_DESIGN_THINKING_VS._LEAN _STARTUP_A_COMPARISON_OF_TWO_USERDRIVEN_INNOVATION_STRATEGIES> [Accessed: 12 December 2014]. Mulgan, G. (2006) Social innovation: what it is, why it matters and how it can be accelerated. Skoll Centre for Social Entrepreneurship Saïd Business School University of Oxford Murray, R. (2009) Danger and Opportunity. Crisis and the new social economy. [Internet]. Available from: [Accessed: 18 June 2014]. Neadertha, L., Pittsford L. (2014) The Ultimate Dictionary of Lean-for-Social-Good-LeanImpact. [Internet]. Available from:< http://www.leanimpact.org/resources/ultimatedictionary-lean-social-good/>[Accessed: 12 December 2014]. Neilson, J. (2013) Blue Ocean Strategy Canvas. [Online image]. Available from:< http://www.theinnovativemanager.com/blue-ocean-strategy/> [Accessed 27 February]. Nesta (no date) Home. [Internet]. Available from:< http://www.nesta.org.uk/> [Accessed: 17 June 2014]. Nesta. (2008) Social Innovation: New approaches to transforming public services. [Internet]. Available from: [Accessed: 17 June 2014]. Osterwalder, A., Pigneur, Y. (2010) Business model generation: a handbook for visionaries, game changers, and challengers. 1st edn. United Kingdom: Wiley, John & Sons, Incorporated. Ratcliffe, J. (2009) Steps in a Design Thinking Process. [Online image]. Available from: [Accessed 27 February]. Read, S., Sarasvathy, S. and Wiltbank, R. (2010) Effectual entrepreneurship. United Kingdom: Routledge. Ries, E. (2011) The Lean Startup. United States: Crown Publishing Group, Division of Random House Inc. Schön, D. A. (1983) The reflective practitioner: How professionals think in action. New York: Basic Books. Schumpeter, J. (1994) Capitalism, Socialism, and Democracy. Routledge; New Ed edition. 41

Shanmugalingam, C. (2011) Groving social ventures. [Internet]. Available from: [Accessed: 16 June 2014]. Skoll Centre for Social Entrepreneurship. (2014) [Internet]. Available from: [Accessed: 15 June 2014]. Social

Entrprise UK (2014) Home. [Internet]. Available http://www.socialenterprise.org.uk/> [Accessed: 12 December 2014].

from:<

Social Innovation Camp. (2014) Social Innovation Camp. [Internet]. Available from: [Accessed: 18 June 2014]. Social Innovation Fund. (2014) Social Innovation Fund. [Internet]. Available from: [Accessed: 16 June 2014]. The Cabinet Office (2013) Social Enterprise: market trends. [Internet]. Available from: [Accessed: 12 December 2014]. The

Young Foundation (no date) Home. [Internet]. [Accessed: 16 June 2014].

Available

from:

Tushman, M. L. (2004) Managing strategic innovation and change. Oxford: Oxford University press. UK

Parliament (2014) The ageing population. [Internet]. Available from: [Accessed: 23 May 2014].

UnLtd

(no date) Home. [Internet]. December 2014].

UnLtd

(2013) Social entrepreneurship awards toolkit. [Internet]. December 2014].

Available from: [Accessed: 12 Available from: [Accessed: 12

Yeoman, R., Moskovitz, D. (2014) Social lean canvas. [Online image]. Available from: [Accessed 27 February]. Yunus,

M. (2007) Social business. [Internet]. Available from:< http://www.muhammadyunus.org/index.php/social-business/social-business> [Accessed: 12 December 2014].

42