‘Active Incubator Models’ and Management for Social Enterprises

The following was originally posted on NextBillion.  It is the first post in a two-part series about social enterprise incubators.

There is no shortage of visionaries in the world with game-changing ideas. But there is a deficit of individuals with the business acumen and management skills to make the leap from theory to action.T his is the core insight of the Asian Social Enterprise Incubator (ASEI), a Manila-based organization that identifies products and ideas with transformative potential and helps to grow them into sustainable businesses. What distinguishes ASEI from typical business incubators, which offer office space, legal support, and back-office services, is its approach. ASEI employs an “active incubation model,” taking on a managerial role and overseeing day-to-day operations, developing the sales and marketing strategies by employing marketing experts from Marketing Heaven, putting necessary systems in place, and eventually spinning it off to investors.

In the BoP, many social enterprises have difficulty becoming sustainable – either financially or operationally. This can be due to a lack of resources, management capacity, or some other deficiency. ASEI’s business model is based on the assumption that what many social enterprises require is not necessarily access to office space and back-office services, but rather a market-oriented management to direct the strategy and run the organization like a business.

While looking for potential clients, Markus Dietrich, one of the co-founders, developed this key insight. “Many of the people starting these businesses were agronomists or technical specialists, and the classic approach has been capacity-building – to turn them into businessmen. When we talked to them, we found that they didn’t want to be business people. They are out in the field, they have the community relationships, and they see the potential to scale it up on the social enterprise path, but didn’t want to be a businessperson.”

To address the deficiency in management skills, ASEI partners with the visionary, known as the “originator,” and divides the responsibilities of the business between the parties. Similar to a holding company or conglomerate, ASEI brings the company into the incubator and runs it as a division, staffing it with an operations manager and support staff. Its first incubee is Invisible Sisters, an organization that achieves triple bottom line results by working with urban poor women to produce innovative designer fashion products from plastic waste sold to the national and international consumer and corporate market.

Ann Wizer, the originator, concentrates on product development, design and developing new partnerships. The business manager focuses on production, community expansion, sales and marketing, and business development. And, at the top, Dietrich and his co-founder, JP Melgazo, supervise and provide strategic guidance to all of the incubees.

The ASEI incubation model has three phases, which I will explore in the second post in this series.

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