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23.03.2011
09:23

A For-social-benefit-for-profit Business Model

Do such things exist? Have you ever wondered if the knowledge that we have acquired during our intensive business studies could be used to develop innovative business models to address a social need?

While on my foreign semester I took a few courses in the Social Business area and discovered that there are many entrepreneurial people out there, trying to achieve exactly that. They are trying to develop business models that serve and address a social need, such as unemployment, while being profitable. Such a business approach I learnt is termed a social enterprise. Making a profit in social enterprises is crucial for their survival and achievement of their social mission. In simplistic terms one could see a key difference between social enterprises and corporate enterprises as instead of paying out dividends from the profits, the social enterprise reinvests all profits back into the enterprise to pursue its social mission and address the identified social need. In so doing the social enterprise can grow and serve more people and have a larger beneficial social impact.

WorldStove LLC (http://worldstove.com/about-2/#), is a good example of a social enterprise which I came across. Its mission is to create sustainable and self-perpetuating jobs in the developing world. It is doing this through the establishment of Stove programs, whereby clean cooking carbon negative stoves are initially assembled locally in the respective country and later full production of the stoves is done locally. WorldStove is currently active in 12 countries and continues to grow.

The hybrid business model of this enterprise is particularly interesting; Worldstove finances its social enterprise activities with revenue from its small commercial arm which sell stove products primarily in the US market. The approach to setting up stove programs is one where a pilot program in the respective country is followed by the establishment of the WorldStove Five-step Program, which is adapted slightly for each country. The process is extremely stakeholder driven. Whereby a local country partner needs to show the necessary commitment and initially approach WorldStove to help them to establish a stove program. The social arm mass produces precision pre-cut sheets of stainless steel, which are then shipped as raw materials to the respective country stove program partner for assembly. This approach keeps both costs down and quality high during the initial first phase of establishment of the local stove program, later production is shifted to the local partner. The local country partner owns and runs the stove hubs and program and is a registered business, WorldStove takes on an advisory role. All profits remain those of the Stove Hub owner as well as any Carbon Credits earned through the Measurable Offsets Program (http://measurableoffsets.com/).

These stove programs also have environmental benefits alongside the social benefits of employment, health improvement and provision of clean cooking. To find out more visit the above websites or look WorldStove LCC up on Facebook. I really think that for-social-benefit-for-profit business models are the way forward to solve so many of the world’s problems.

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