I attended the Social Enterprise Dragons event on 28 April this year. Five brave presenters stood in front of a discerning audience at the Vancity Theatre in Vancouver, BC to communicate the vision, performance, and future plans for three social enterprises operating locally. The folks from Street Youth Job Action, JustRenos, and Pedal Energy Development Alternatives did an amazing job and I was very impressed by the high quality and confidence of the presentations.
One of the comments the social entrepreneurs faced was a question around focus. In the scramble to ensure that revenue streams were sufficiently diverse to ensure resiliency of the ventures, they ran the risk of being to unfocused and not paying enough attention to the revenue generating opportunities where they excelled. How confusing this must be for the social enterprises who on the one hand are encouraged to diversify their income sources and on the other hand are told to be more focused. Diversification is important, but it must not happen so soon that it becomes difficult for customers to understand and support the many ideas. Diversification of customer segment must not be confused with diversifying through different value propositions. Give value propositions and revenue models a chance and develop them to their fullest potential before abandoning them in panic to build something else from scratch.
I noticed this theme again when I met with a prospective client the next day in Surrey. The project leader in this case was full of ideas and what she believed to be creative solutions. They most certainly were and one cannot deny that many social enterprises and projects are led by entrepreneurial, ideas-driven people. However ideas are one thing, deliverability and organisation are another. A lot of management time can be eaten up and inefficiently used when there are too many things to juggle to make a project work.
It might take some time for social financiers and impact investors to become more comfortable with the complexity of social enterprise solutions. These days social entrepreneurs are trying to solve big, complex problems with big, complex solutions. However, they still need to get their financiers and investors on-side and that means filling them with confidence that the ideas and plans are focused, organised, and deliverable.
A top tip for avoiding panic diversification is to keep your value proposition straightforward and ensure your customer base is spread out. It is very resource consuming to change your value proposition unnecessarily or too soon and risks losing existing customers. If a change to your value proposition is required in order to reach a new customer segment, make sure you have exhausted the possibilities for the existing value proposition that you know you deliver well.
