The Importance of Business Models and Value Chains

To deliver on our promise and satisfy the market, we should look at our own value chains and business models. This can be challenging for social enterprises because the paying customer isn't always the social enterprise's primary customer. Gregory Dees defined the primary customer as the one who benefits from the work of the social enterprise. It is therefore important for social entrepreneurs to have a framework for value creation for its multiple stakeholders. 

One framework we've found useful when talking about business models is the business model canvas developed and promoted by the people behind Business Model Generation www.businessmodelgeneration.com. According to the authors of the book, a business model "describes the rationale of how an organization creates, delivers, and captures value."

Below is an illustrated version of the canvas and below it is a blank canvas. By using this tool, social entrepreneurs can think through each of the building blocks of a business model and clearly identify the value proposition for customer segments. Thinking through revenue streams ensures that value is captured for social entrepreneurs to be able to sustainably provide value to its target beneficiaries.

For more information or to purchase the book, please visit the business model generation website.

Once the business model has been thought through, social entrepreneurs must look at their value chains to ensure that the primary activities and the support activities support the value proposition. Value propositions are the unique offering of the social enterprise to its market. Value propositions can include innovative products e.g. appropriate technology for smallholder farmers; speedy and efficient service delivery e.g. treatment at the Aravind Eye Center; or affordably priced products e.g. off-grid lighting solutions. 

The primary activities ensure that there is value-added in the transformation process, that the enterprise finds its market and provides customer service. The support activities on the other hand ensure that operations support the value proposition i.e. does the organization have the correct manpower, is the organization able to leverage IT, does the organization take advantage of the benefits of procuring in bulk.

The Gifts and Graces value chain involves partner identification, capacity building, design, and marketing. Our primary market/beneficiaries are the craftsmen and micro-entrepreneurs we support. Our secondary market that makes our work possible are the corporations and individuals who purchase our fair trade products.

Our business model and value chain has been tweaked over the years. This is expected of social enterprises as well as we have to be flexible so as to provide the most value to our target beneficiaries. 

For more information, please don't hesitate to leave a comment or email us.

G&G Annual Partner's Conference

Creating a Win-win Partnership

Last April 18, 2011 Gifts and Graces held its annual partner's conference at the Philippine Daily Inquirer. The Partner's Conference is a whole day event that is a venue for G&G to dialogue with its partners, give updates, and share new learnings, all towards the objective of creating a win-win partnership. The Partner's Conference is a key component of G&G's capability building program.

Participants enjoy the Airplane game icebreaker

This year, the Partner's Conference was about creating and capturing value along the value chain. To kick off the conference, Executive Director Greg Perez shared G&G's updated mission, vision, strategic direction, and values. Greg announced that G&G would partner with organizations with expertise in capability building, just like its recent partnership with the UP College of Engineering Department of Industrial Engineering; pursue its application for certification with the World Fair Trade Organization, and enter the retail market. 

As part of its commitment to advocate fair trade and fair trade practices, G&G invited Ronald Lagazo, Country Manager of the World Fair Trade Organization (WFTO) Philippines to make a presentation about fair trade in the Philippines. Ronald shared the principles of fair trade and the value of being fair trade certified.

Another guest speaker was Ms. Ma. Rocelyn Bernabe of the Philippine Business for Social Progress (PBSP) who presented PBSP's Business Advisory Program (BAP) that G&G partners can avail of. This is in line with G&G's strategy to link its partners with capability building experts to help them improve their enterprise management skills.

 

On the learning part of the program, Darlyn Ty made a presentation on the value chain based on GTZ's value chain framework. Darlyn is the successful entrepreneur behind the Belle de Jour planners and is a long-time G&G volunteer. We at G&G believe it is important to understand the value chain to better appreciate the cooperation necessary along the chain. 

To supplement and reinforce Darlyn's presentation, AYAD Strategic and Performance Improvement Adviser Michael Golsworthy led the group in a pre-game warm-up, then the group played a value chain game designed by AIM student Anurag Goel. Anurag helped out with the partners conference as part of his walkabout project in AIM. Greg, Mike, Dar, and Anurag facilitated the game. 

The partners present had a lot of fun negotiating along the value chain. At the end of the game the participants said they better understood the concept of the value chain and they appreciated the importance of cooperating along the chain.

After the value chain game, the last part of the conference was a mini case conference where participants were asked to come up with common problems related to different parts of the value chain. Different teams were then assigned to come up with solutions for the identified problems and these were discussed with the group. The solutions the group came up with were creative and innovative and showed that even with limited resources we can find solutions to our pressing problems. 

All in all the partners conference was a success. It created a venue for greater understanding and cooperation between G&G and its partners. 

Thanks to those who attended from Alay Kapwa Tindahan, DAWN, FCED Foundation, Kaakbay, Kaibhan, Kapitbahayan Candles, Pangarap Foundation, Tahanang Walang Hagdanan, The Learning Center. Welcome to new G&G partners Caritas, Heidi's Crafts, I4SEE for Pamana Pag-asa, Nuvali, QC livelihood under the office of Vice Mayor Joy Belmonte, and Virlanie Foundation. Many thanks again to our volunteers Dar, Mike, Anurag, without whom the partner conference would not be the success that it was.

PinoyMe's People - Powered Markets

Last Feburary 22, 2011 PinoyME celebrated it's 5th year anniversary at the NBC Tent at the Fort. On Feburary 22 to 23, PinoyMe also held the People-Powered Markets held at the NBC Tent which featured different social enterprises and companies who have successfully helped small producers integrate into their value chains.

Gifts and Graces was one of four social enterprises invited to showcase its robust value chain in greater detail. Gifts & Graces' exhibit featured how we are able to help our partners through design, capability building, and market access.

Newspaper bag makers and Mang Boy, an artist and painter from Barangay 849 in Pandacan from one of G&G's partners FCED Foundation, were the highlight of the exhibit.

On February 22, President Noynoy Aquino who was guest of honor at PinoyME's anniversary celebration, did a walk through of the different exhibits. While at the Gifts & Graces booth he admired our partners skill and craft and chatted for a while with Minda Rueda, one of our partner producers.

On February 23 Gifts & Graces Executive Director Greg Perez was part of a panel discussion on Social Enterprise: Doing Business with the Poor, joining Bam Aquino, Jim Ayala, Reese Fernandez, with Dan Songco PinoyME Executive Director facilitating. The panelists made brief presentations on their enterprises and answered questions on major challenges, profitability, and the legal structure for social enterprises among many others.

This exhibit was PinoyMe's way of promoting a new kind of people power. Congratulations to Dan Songco and the rest of the PinoyME team for an innovative and ground breaking concept!

Visit the People Powered Markets website and vist our Get Involved page on the G&G website to see how you can be part of this new revolution.

  

Also seen at the People-Powered Markets:

From left to right: Vic Roaring, APFTI Executive Director, Greg Perez Gifts and Graces Executive Director, Lani Concepcion Program Officer of PinoyME Foundation

 

 

Mae Paner, also knows as Juana Change, visits the G&G booth.