A woman living in a rural village in Bangladesh is not feeling well. Getting to the nearest hospital to see a doctor would take two hours and be a considerable expense. Luckily, she lives in the same village as a young man who is a franchisee of Amader Daktar, otherwise known as Doctor in a Tab—an app developed by the Bangladeshi company mPower Social Enterprises. He has been trained in basic health checks, such as measuring blood pressure, and can send the results via his tablet to a hospital-based doctor. He can also help the woman navigate a video consultation with the doctor and, if needed, pass along a prescription she can fill locally.
It might at first seem surprising that this clever combination of technology, training, and public benefit first launched in Bangladesh, because we often expect new technologies to launch in the global North and subsequently move to the rest of the world’s marketplaces. However, some of the most potent and ground-breaking lessons in social enterprise come from the global South.
In many prosperous and developed northern countries, social enterprises do not yet challenge mainstream business, in part because the movement is not yet large enough for the wider economy to notice. But around the world, there are many examples of innovative enterprises in low-income countries that tackle problems at scale, transforming the communities and industries in which they work.
The now-legendary Grameen Bank in Bangladesh, for example, pioneered the microfinance industry, which was entirely new at the time. Today, microlending provides an estimated $102 billion in credit to approximately 132 million individual borrowers, according to the 2017 Microfinance Barometer. Almost all of this funding comes through socially oriented financial institutions.
Northern-based social enterprises could be just as transformational. Our experience has led us to identify how these initiatives can maximize their potential at each stage of development: through innovation, consolidation, scaling, and maturity. Inspiring examples from around the world suggest ways that organizations in the global North might learn from and emulate their Southern peers.
Innovation begins with research
Too many social enterprises are founded on a weak business model. As Glen Mehn, who worked with countless new businesses during his time at the UK social enterprise accelerator Bethnal Green Ventures, describes it, many early-stage start-ups suffer from the same problem: “great team, poor business model.”
A successful social innovation begins with thorough research into the problem it addresses, establishing a clear business case. For example, Frontier Markets, a distributor of solar cooking and lighting products in Rajasthan, conducted extensive field research before it launched. This included interviews and focus groups to understand in depth its intended customers, who were generally women with incomes of less than $2.50 per day. Its research also delved into the reasons why other companies’ efforts to market similar products had failed.
Another instructive lesson comes from M-KOPA, the leading social enterprise working in off-grid energy in Africa. The company brought together an understanding of solar technology, a practical mobile money platform, and knowledge of customer needs around affordable energy. The result was a viable and desirable solution: Customers pay the same amount per day for cutting-edge solar technology as they would for kerosene or firewood.
Successful new businesses clearly articulate how they improve on the competition for their customers—whether nonprofit or commercially motivated. They base their case on empirical evidence from real customers. In developed markets, new social enterprise initiatives often neglect this essential step, assuming they will be able to tap into a latent customer base that will preferentially buy from providers that emphasize public benefits.