Harvard Case - PSI: Social Marketing Clean Water
"PSI: Social Marketing Clean Water" Harvard business case study is written by V. Kasturi Rangan, Nava Ashraf, Marie Bell. It deals with the challenges in the field of Social Enterprise. The case study is 18 page(s) long and it was first published on : Jan 22, 2007
At Fern Fort University, we recommend PSI adopt a hybrid organizational model to effectively scale its clean water social marketing efforts. This model combines the strengths of a nonprofit organization with a social enterprise approach, allowing PSI to leverage both philanthropic funding and market-based revenue streams. This strategy will enable PSI to achieve its mission of providing safe water access to underserved populations while ensuring long-term financial sustainability.
2. Background
The case study focuses on PSI, a global health organization dedicated to improving the health of people in developing countries. PSI is facing the challenge of scaling its social marketing efforts for clean water solutions. The organization has successfully piloted programs in various countries, but it needs to find a sustainable model to reach a larger audience.
The main protagonists in the case are:
- Dr. Michael Kremer: A leading economist and advocate for social marketing, who believes in the power of market-based solutions to address social problems.
- The PSI team: Dedicated to improving global health but facing the challenge of scaling their clean water initiatives.
- Potential investors: Interested in supporting PSI's mission but seeking a clear path to financial return on their investment.
3. Analysis of the Case Study
The case study highlights several key issues:
- The need for a sustainable business model: PSI's current reliance on donor funding makes it vulnerable to funding fluctuations and limits its ability to scale its operations.
- The potential of social marketing: Social marketing offers a promising approach to address the clean water crisis by leveraging consumer behavior and market forces.
- The challenge of balancing mission and profitability: PSI needs to find a model that allows it to achieve its social mission while generating sufficient revenue to sustain its operations.
Framework:
To analyze the case, we can utilize the Triple Bottom Line framework, which considers social, environmental, and financial impacts.
- Social Impact: PSI aims to improve public health by providing access to safe water, reducing waterborne diseases, and promoting hygiene practices.
- Environmental Impact: The organization's efforts contribute to environmental sustainability by promoting water conservation and reducing pollution.
- Financial Impact: PSI needs to develop a financially sustainable model to ensure long-term viability and scalability.
4. Recommendations
To address these challenges, PSI should adopt a hybrid organizational model that combines the strengths of a nonprofit organization with a social enterprise approach. This model would involve:
- Creating a social enterprise subsidiary: PSI could establish a separate subsidiary focused on developing and marketing clean water solutions. This subsidiary would operate as a for-profit entity, generating revenue through product sales, service fees, and partnerships.
- Leveraging existing resources: PSI can leverage its existing expertise in social marketing, program development, and global reach to create a strong foundation for the social enterprise.
- Developing innovative business models: The social enterprise should explore innovative business models that address the specific needs of underserved populations, such as microfinance, pay-as-you-go schemes, and community-based distribution networks.
- Measuring social impact: PSI should develop robust social impact measurement tools to track the impact of its social enterprise initiatives and demonstrate the value proposition to investors.
- Building strategic partnerships: PSI should actively seek partnerships with government agencies, private companies, and other nonprofit organizations to leverage resources, expand reach, and create a more comprehensive impact.
- Adopting a 'B Corporation' structure: This legal structure allows companies to prioritize social and environmental impact alongside financial performance, further aligning PSI's mission with its business operations.
5. Basis of Recommendations
This recommendation aligns with PSI's core competencies and mission by leveraging its expertise in social marketing and public health to create a sustainable solution for clean water access. It addresses the needs of both external customers (underserved populations) and internal clients (PSI staff) by providing a pathway to scale operations and achieve greater impact.
The hybrid model offers a competitive advantage by combining the strengths of both nonprofit and for-profit organizations. It also offers a clear path to financial sustainability, attracting investors who seek both social and financial returns. The recommendation is based on the following assumptions:
- Market demand exists for affordable and sustainable clean water solutions.
- PSI can leverage its existing expertise and network to develop and implement effective social marketing campaigns.
- Investors are willing to support social enterprises that demonstrate a clear path to both social impact and financial return.
6. Conclusion
By adopting a hybrid organizational model, PSI can leverage the power of social entrepreneurship to achieve its mission of providing clean water access to underserved populations while ensuring long-term financial sustainability. This approach will enable PSI to scale its operations, attract new funding sources, and create a lasting impact on the lives of millions of people.
7. Discussion
Alternative Options:
- Focusing solely on donor funding: This option would limit PSI's ability to scale its operations and make it vulnerable to funding fluctuations.
- Adopting a purely for-profit model: This approach could compromise PSI's mission and ethical principles.
Risks and Key Assumptions:
- Market demand: The success of the social enterprise depends on the existence of a viable market for clean water solutions in underserved populations.
- Operational efficiency: PSI needs to ensure that the social enterprise operates efficiently and effectively to generate sufficient revenue.
- Investor interest: Attracting investors requires a clear path to financial return and a compelling social impact narrative.
8. Next Steps
- Conduct a feasibility study: Assess the market demand, potential business models, and financial viability of the social enterprise.
- Develop a detailed business plan: Outline the social enterprise's mission, strategy, operations, and financial projections.
- Secure funding: Seek funding from impact investors, foundations, and other philanthropic organizations.
- Launch the social enterprise: Establish the subsidiary, develop products and services, and launch marketing campaigns.
- Monitor and evaluate performance: Track social impact, financial performance, and operational efficiency to ensure the social enterprise is meeting its goals.
By taking these steps, PSI can effectively implement its hybrid organizational model and create a lasting impact on the global clean water crisis.
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Case Description
Senior management at PSI, arguably the world's largest and most successful social marketer with impressive achievements in the field of family planning, HIV/AIDS, and malaria prevention must determine what to do about their slow-to-take-off clean water initiative. PSI's point-of-use products offered effective protection against water-borne diseases, especially diarrhea, yet the organization found it hard to attract donor funds to sustain the initiative. Its managers must determine how to alter their strategy going forward.
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