As well as serious implications for people’s health, COVID-19 is significantly impacting businesses and the economy. However, social entrepreneurs are rising to the challenge and working to turn their Covid-19 inspired solutions into viable businesses that will have lasting and positive impacts in the post-pandemic climate.
This pandemic has helped rapidly advance industries across the board and has sped up technological innovation globally. In times of uncertainty, innovation helps us meet the current and future challenges we face – and social entrepreneurs are especially capable of rising to the challenge.
Social Entrepreneurs Can Make a Positive Impact Through Business Viability
From a global effort to a grassroots movement, social entrepreneurs can make a huge impact on progress. Social entrepreneurs want to make a change in cultural, environmental, and societal issues – no matter how small or large the social enterprise. They can make a difference in their communities not just through their actions, but through the modeling of a solution and inspiration of others. And perhaps even spurring the next generation of entrepreneurs to join the cause.
Dirk Schroeder, ScD, MPH is an Associate Professor of Social Entrepreneurship and Global Health at Emory University and an entrepreneur who co-founded, built, and sold a mission-driven company. He published the article: “Turn Your Covid-19 Solution into a Viable Business” in the Harvard Business Review in July 2020. He suggests that today’s Covid-19-inspired innovators follow four key steps if they want to transform their projects into viable businesses for the long term.
1. Determine if your innovation is addressing a long-term problem.
The best innovations are developed in response to specific, pressing, and substantial problems. If nothing else, the Covid-19 crisis has made our most urgent problems and their potential solutions more obvious. For example: healthcare providers needed masks, production facilities were idle; workers were furloughed and needed jobs. A social enterprise could address all three of these urgent problems simultaneously by training workers to make masks in underused production facilities for health care providers.
But will this specific group of problems still need a solution three to five years from now?
Some coronavirus-inspired entrepreneurs are building on existing trends that have been accelerated by the pandemic such as the growth in telehealth, remote patient monitoring, and the growing use of AI in healthcare. For example, an MIT Covid-19 Challenge winner, built a model to track the national distribution of critical medical supplies for hospitals in highest need. The efficient distribution of healthcare supplies is an urgent problem today and will always be of value to healthcare systems trying to reduce waste and lower costs.
Professor Schroeder recommends constructing a market-opportunity analysis using data from 2019 and earlier. The objective is to determine if the problem you are addressing now was a problem previously. And, if so, how big was it? Next, list what specifically changed with the emergence of Covid-19 that created or amplified this problem and the need for your innovation.
For example, telehealth and remote-patient monitoring, clearly existed prior 2020. The Covid-19 change factors were the widespread stay-at-home orders, more widely available video and home-based technologies and, with telehealth, changes in regulations and reimbursement, that led to a tremendous demand for these services.
2. Identify your-long-term market
The next step is guaging if there will be a large market for your product or service in a post-Covid future. Research conducted by CB Insights prior to the pandemic found that a lack of market demand was the most common reason for failed startups, with 42% of companies citing it as a contributing cause.
It’s absolutely critical to be focused on the customer’s problem rather than your technology solution. User-centered design emphasizes that a key to building a lasting business is having a deep understanding of who your customers are and how your product or service fits into their world.
As a Covid-19 inspired entrepreneur, you should ask two questions: Are you delivering an innovation that your customers are passionate about? And will there be a sufficient number of passionate customers to grow a business once coronavirus is under control?
3. Proactively pivot, if you need to.
If you determine that your current target market may not be large enough in a post-Covid future, you may need to pivot as many entrepreneurs do to survive.
If you do have to execute a strategic pivot, do whatever you can to pivot early, proactively, and thoughtfully. There are ample stories in the media these days of startups that are pivoting — but are doing so reactively in a frantic scramble for survival.
4. Map your business model.
Many of today’s Covid-19 inspired innovations are being given away for free, or are supported by donations, as is appropriate during an emergency. Startups should be aware that contributions to non-profit organizations that are not Covid-19 centric are way down. Sustaining a donation-exclusive organization over the long-run in the face of today’s economic circumstances will be difficult.
Covid-19 inspired innovators should consider revenue models native to the field of social entrepreneurship. Social enterprises have a dual mission of social impact and financial growth and have developed an array of business models to achieve these parallel goals.
In 2012 Wolfgang Grassi identified nine types of social business models. He focused on three factors guiding social businesses: the mission, the type of integration, and the target population. He then analyzed how these three factors intersected with the three traditional categories of business (for-profit, not-for-profit, and hybrids) to generate the nine specific types of social business models that any social enterprise can adopt.
There are lessons to be learned from past economic disruptions. For example, during the recession of 2008, Mark Johnson, Clayton Christensen, and Henning Kagermann presented a framework for reinventing your business model that has relevance and utility today.
The framework is centered on the concept of a customer value proposition and asserts that successful companies find ways to create value for customers by helping them get an important job done. By “job” the author’s meant a fundamental problem in a given situation that needs a solution.
Today’s entrepreneurs can use this framework to define their company’s customer value proposition, profit formula, and the key resources and processes needed to deliver an offering in a business environment likely to require novel solutions for the foreseeable future.
Time for Continued Innovation
Clearly the Covid-19 pandemic confirms the maxim that crisis breeds innovation and opportunity. There are tens of thousands of Covid-19 inspired entrepreneurs creating products and services they hope will transcend the pandemic era. Professor Schroeder believes that by following these four steps, more of today’s innovations will be the ones used by people years and decades from now.