I recently came back from running a ‘Where to Play’ workshop for double-bottom-line startups at EPFL’s Tech4Impact program. The interesting aspect of this workshop was the need to estimate the social or environmental impact of different market opportunities, and add this key dimension to the set of considerations when choosing where to play. We therefore called it ‘Where to Impact’.
I am happy to share with you this brand-new addition to the Market Opportunity Navigator and how it fits the overall process.
Defining a market opportunity
In conventional businesses, market opportunities are defined as a specific offering for a specific set of customers. In social ventures however, it is important to add the beneficiaries into this definition.
Beneficiaries could be your paying customers (i.e. affordable products for the poor), the end users of your innovation (i.e. a medical device for handicapped people), other members internal or external to your value creation model (such as suppliers/employees) or even the planet (i.e. clean energy system). In all cases, you must specify the beneficiaries of your market opportunities so you can estimate your overall impact on that group.
Estimating the overall social/environmental impact
Worksheet 2 of the Market Opportunity Navigator guides you how to systematically assess the overall economic potential and the overall challenge of each market opportunity. A new worksheet (Worksheet 2B) can now help you to estimate the overall social/environmental impact of your opportunities, to make sure you can gain sustainability along with financial returns.
The worksheet includes 3 key factors:
1.Problem Severity: are you trying to address an important and painful problem for these beneficiaries? To estimate this factor, you will need to understand if this is really an unresolved social/environmental concern, does it bear significant detrimental consequences, and how big is this problem (in terms of affected people/ areas). You can look at resources such as the UN’s Sustainable Development Goals or the Global Risks Report by the World Economic Forum to help you in this assessment.
2.Pertinent solution: Is your solution well suited to address the social/environmental challenge and to be adopted by your beneficiaries? To estimate this factor, you will need to understand how effective and efficient is your solution, is it clearly better than existing alternatives, and does it avoid secondary harm or negative effects. Frameworks like Theory of Change and Life Cycle Analysis can help you in this estimation.
3.Impact reach: Can you achieve a broad & long-lasting impact? To estimate this factor, you will need to understand how easy it will be to measure and report impact, how enduring and how scalable is your solution. Resources like Theory of Change and Scaling Social Impact can actually help you to design your solution so that it is measurable and scalable from the outset.
Once you consider these 3 factors, you can estimate the overall social/environmental impact of any market opportunity, with a scale ranging from low to super high.
Worksheet 2B. Download worksheet here.
Adding impact to the overall attractiveness
The Attractiveness Map (step 2 of the Market Opportunity Navigator) helps you to summarize your learning and visually compare your market opportunities. You locate opportunities on this map based on their economic potential and on their level of challenge. Now, you can add their impact level by drawing small hearts on each sticky note. Draw one heart for low impact, all the way to four hearts for super high impact. Finally- all the key considerations are summarized in one image, so you can compare, prioritize, and choose ‘where to impact’.
Putting it all together
As a short example, lets look at Insolight. This Swiss based startup developed a radically new design of translucent solar panels with record breaking efficiency. Their solution lowers the cost of renewable energy and thus contributes to one of the major problems of this planet: Co2 emission.
As a venture striving to maximize both financial returns and sustainable impact, Insolight needs to choose their initial target market, and build their roadmap to success. They examined 3 possible directions: applying their translucent solar panels in greenhouses- to combine electricity and agricultural production, integrating it in newly designed architectures- to enable zero-energy buildings, or replacing the standard commercial rooftop panels- to increase efficiency and enable higher returns on investment.
Applying Worksheet 2 and 2B of the Market Opportunity Navigator helped them to systematically evaluate the economic potential, the challenge and the environmental impact of each option. Summarizing the results on the Attractiveness Map, allowed them to take all three dimensions into consideration when choosing their path.
Confronting the financial-social tradeoff
Going through this process with multiple startups revealed an intriguing insight: in double-bottom-line ventures, choosing where to play often means choosing what comes first: financial gains or social gains. Understanding your priorities and discussing this with your team is sometimes critical, as different market opportunities might vary on both aspects and create a real dilemma.
For example, Swoxid is developing a water purifying system operating on sunlight. Their mission is to provide safe drinking water in developing countries. This opportunity combines limited economic potential with extremely high social impact. On the other hand, they could apply this simple system to purify water in swimming pools and lower the usage of Chlorine. While this market bears high economic potential, its social impact is limited.
While the Market Opportunity Navigator doesn’t tell you which option is superior, it does help you to realize the tradeoff and confront it. Choosing which option is more attractive depends eventually on your own goals and motivations.
Overall, more and more ventures strive to ‘do good’ and make the world a better place with their business. We are happy to join this wonderful movement and offer this framework to help managers figure out where to impact. Good luck 😊