Social Enterprises can use activities for an effective impact value chain. Activities in the value chain can be ranked by their importance in affecting positive change in the target population. This article cites five primary activities of an impact value chain (provisioning, creating impact investments, driving demand, linking with other systems, and promoting leadership).
The provisioning activity is where social enterprises actually produce goods or services to make a difference in the community. A social enterprise may purchase goods or manufacture them itself as part of this activity. Purchased goods could be raw materials that are used to create something new, such as textile scraps that turn into clothing; they can also be finished products that are sold directly to consumers. On the other hand, produced goods can be the actual product social enterprises set out to create.
Creating impact investments is how social enterprises keep their operations running and maintain a level of financial sustainability. Impact investments come in different forms and may include loans or revenue from other activities such as consulting or fundraising.
Driving demand for products is one of the most important functions in an effective value chain since it will help ensure that the impact made by provisioning is felt. This may involve using marketing strategies, partnering with larger companies, or implementing innovative distribution strategies. In order to achieve an impact on a larger scale, social enterprises must find ways to make their products accessible to consumers at a low cost or even free of charge (though the latter may be difficult).
Linking with other systems, such as governments and businesses, can help create partnerships that share resources and expand an enterprise's reach. This is necessary in order to establish a more effective value chain and improve impact on a larger scale. Social enterprises benefit from these relationships by receiving additional funding or supplies that may not otherwise be available and having access to new markets for their goods or services. By working with other systems, social enterprises become stakeholders of broader change initiatives rather than being responsible for creating all the positive change themselves. In this way, social enterprises enter into a partnership model.
Promoting leadership among consumers is another important function of an impact value chain because it inspires others to get involved in the change they wish to see in their communities. In essence, social enterprises carry out this function by becoming leaders of movements. A movement may be a cause that is supported by a large number of people, such as an animal rights campaign or the fight for racial equality.
By understanding the different activities in an impact value chain and their importance for positive change, social enterprises can more effectively drive impact and create lasting change in their target populations. The five primary activities we’ve outlined provide a good starting point for social enterprises looking to increase their impact. Have you tried any of these methods to improve your impact value chain? If so, tell us about it in the comments below and contact us for help creating activities that maximize your social impact.