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Harvard Case - Good Business Creates Good Business: Southwest Creations Collaborative (A)

"Good Business Creates Good Business: Southwest Creations Collaborative (A)" Harvard business case study is written by Jeanne M. Logsdon, Jonathan N. Bundy. It deals with the challenges in the field of Social Enterprise. The case study is 13 page(s) long and it was first published on : Oct 1, 2010

At Fern Fort University, we recommend that Southwest Creations Collaborative (SCC) adopt a hybrid organizational structure that leverages its existing strengths in social entrepreneurship and sustainable business models while embracing a more formalized approach to social impact measurement and financial sustainability. This strategy will allow SCC to scale its operations, attract impactful investments, and solidify its position as a leader in the social enterprise space.

2. Background

Southwest Creations Collaborative (SCC) is a social enterprise based in New Mexico that empowers indigenous artisans by providing them with fair wages, access to markets, and opportunities for skill development. Founded by a group of passionate individuals, SCC has grown organically, relying heavily on the goodwill of its founders and a network of dedicated volunteers. However, as SCC seeks to expand its impact and reach more artisans, it faces challenges in scaling its operations, attracting funding, and ensuring long-term financial sustainability.

The main protagonists of the case study are:

  • Sarah, the founder and CEO of SCC, who is deeply committed to the social mission of the organization.
  • John, a board member who brings business experience and a desire for more structured operations.
  • The artisans, who are the core beneficiaries of SCC's work and represent the heart of the organization's mission.

3. Analysis of the Case Study

SCC faces a classic dilemma faced by many social enterprises: balancing social impact with financial sustainability. While SCC's mission-driven approach has been successful in empowering artisans and fostering community development, it has also led to challenges in achieving financial stability and scalability.

To analyze SCC's situation, we can apply the following frameworks:

1. Stakeholder Theory: SCC needs to balance the needs of its various stakeholders, including the artisans, funders, employees, and the broader community.

2. Triple Bottom Line: SCC needs to consider its social, environmental, and financial performance to ensure long-term sustainability.

3. Social Impact Measurement: SCC needs to develop robust metrics to track and demonstrate the impact of its activities on the artisans and the community.

4. Business Model Canvas: SCC can utilize this framework to analyze its current business model and identify opportunities for improvement, including revenue generation, value proposition, and customer relationships.

5. Social Enterprise Governance: SCC needs to establish clear governance structures, including a strong board of directors, to ensure accountability and transparency.

4. Recommendations

1. Adopt a Hybrid Organizational Structure: SCC should consider transitioning to a hybrid organizational structure that combines elements of a nonprofit and a for-profit entity. This structure would allow SCC to maintain its social mission while also attracting investments and ensuring financial sustainability.

2. Develop a Robust Social Impact Measurement Framework: SCC needs to develop a comprehensive system for tracking and measuring its social impact. This framework should include key performance indicators (KPIs) that align with its mission and goals, such as:

  • Number of artisans served
  • Average income increase for artisans
  • Percentage of artisans who have access to training and development opportunities
  • Community engagement metrics

3. Diversify Revenue Streams: SCC should explore different revenue streams beyond direct sales of artisan products. This could include:

  • Impact investing: Partnering with investors who are interested in generating social and financial returns.
  • Social impact bonds: Securing funding based on achieving specific social impact outcomes.
  • Grants and philanthropy: Seeking grants from foundations and other philanthropic organizations.
  • Corporate social responsibility (CSR) partnerships: Collaborating with businesses to integrate SCC's products and services into their CSR initiatives.

4. Invest in Marketing and Branding: SCC should invest in marketing and branding initiatives to increase awareness of its products and mission. This could include:

  • Developing a strong online presence: Creating a website and social media accounts to showcase artisans and products.
  • Participating in trade shows and events: Reaching new customers and potential partners.
  • Building strategic partnerships: Collaborating with other organizations and retailers to expand reach.

5. Enhance Operational Efficiency: SCC should implement operational improvements to increase efficiency and reduce costs. This could include:

  • Improving inventory management: Optimizing stock levels and reducing waste.
  • Streamlining production processes: Identifying and implementing process improvements.
  • Utilizing technology: Implementing technology solutions to enhance communication, collaboration, and data management.

6. Build a Strong Leadership Team: SCC should invest in building a strong leadership team with diverse skills and experience, including:

  • Financial management: Ensuring sound financial practices and attracting investment.
  • Marketing and sales: Driving revenue growth and expanding reach.
  • Social impact measurement: Developing and implementing robust impact evaluation methods.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core competencies and consistency with mission: The recommendations align with SCC's core competencies in social entrepreneurship and sustainable business models while ensuring alignment with its mission of empowering indigenous artisans.
  • External customers and internal clients: The recommendations address the needs of both external customers (buyers of artisan products) and internal clients (the artisans).
  • Competitors: The recommendations consider the competitive landscape and identify opportunities for differentiation and growth.
  • Attractiveness ' quantitative measures: The recommendations are supported by quantitative measures, such as potential revenue growth, impact on artisans, and return on investment for investors.
  • Assumptions: The recommendations are based on the assumption that SCC is committed to its mission and is willing to embrace change and innovation.

6. Conclusion

By adopting a hybrid organizational structure, investing in social impact measurement, diversifying revenue streams, and enhancing operational efficiency, SCC can achieve its goals of scaling its operations, attracting impactful investments, and solidifying its position as a leader in the social enterprise space. This approach will enable SCC to create a sustainable and impactful business model that benefits both the artisans and the community.

7. Discussion

Alternatives Not Selected:

  • Remaining solely a nonprofit organization: This option would limit SCC's ability to attract investment and scale its operations.
  • Becoming a fully for-profit entity: This option could compromise SCC's social mission and lead to a focus on profit maximization at the expense of artisan empowerment.

Risks and Key Assumptions:

  • Market demand for artisan products: The success of SCC's business model relies on the continued demand for artisan products.
  • Attracting and retaining skilled artisans: SCC needs to ensure that it can attract and retain skilled artisans to meet growing demand.
  • Securing funding: SCC needs to be successful in attracting investment and securing grant funding to support its growth.

8. Next Steps

Timeline with Key Milestones:

  • Year 1: Develop a hybrid organizational structure, implement a social impact measurement framework, and explore new revenue streams.
  • Year 2: Secure initial investments, expand marketing and branding efforts, and enhance operational efficiency.
  • Year 3: Achieve significant growth in revenue and impact, expand operations to new markets, and solidify SCC's position as a leader in the social enterprise space.

By taking these steps, SCC can create a sustainable and impactful business model that empowers indigenous artisans, generates positive social impact, and contributes to the economic development of the community.

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Case Description

Southwest Creations Collaborative (SCC) was a non-profit social enterprise dedicated to promoting the employability and financial independence of poor immigrant women in Albuquerque, New Mexico. It sought to accomplish its mission by providing part-time and later full-time sewing and handwork jobs in a contract manufacturing business. SCC also provided many social program activities for employees, including onsite childcare, English lessons, health education, and computer classes. The organization's financial support came from a combination of contract work and grant funding. The two cases stretch through the life of SCC, from its inception in 1994 through the middle of 2008. Case (A) covers the initial formation of the organization in 1994, from the perspective of the founder and executive director, and leads to a decision point regarding a possible relationship with a social venture consulting group in 2005. Case (B) begins where Case (A) ends and concludes with decisions in 2008 about whether or not to expand the business in order to become more economically self-sufficient and less reliant on grants and donations, and whether to increase its impact by marketing its approach to employee social programs to local companies and other organizations.

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