Identifying Social Innovation Business Models

A business model describes how an organisation creates, delivers, and captures value. However, there are several reasons why business models of social innovation projects are distinct from those of for-profit enterprises:

• Social innovators pursue different objectives: While commercial entrepreneurs focus primarily on value appropriation, social entrepreneurs focus on value creation from a broader perspective. For social entrepreneurs, profits are a facilitator but not the sole purpose of the organisation.

• Social innovators pursue different entrepreneurial opportunities: Social entrepreneurs often discover and create opportunities related to the social, the so-called ‘third sector’, characterized by the idiosyncratic personal relationships.

• Social innovators take different approaches to enact opportunities: Social entrepreneurs typically spend less time focusing on capturing competitive advantage and increasing market share for their organization, and more time focusing on providing sustainable solutions to the benefit of larger groups of stakeholders. This also means social entrepreneurs worry less about protecting their ideas, as they want their idea to be spread to other geographical regions or target groups.

In this activity, we ask you to evaluate the following case studies, and identify their business models.

Case Studies

The Big Lemon

A bus and coach operator in Brighton, East Sussex. It uses waste cooking oil to fuel local buses.

SMW Wheels

A deferred payment cycle rickshaw social venture company that offers a unique solution to cycle rickshaw drivers to become owners of their own vehicle.