Socially Innovative Startups : When Doing Good Goes Wrong ?

The three levels that a social innovation startup can focus on

The last couple of years have witnessed a very important development of social entrepreneurship or social innovation projects. The startups focusing on social innovation can do it in three different levels.

• First, they can come up with socially innovative business models. This is

the case of Pixza

• a Mexican pizzeria that sells pizzas made out of 100% local ingredients (notably the blue corn base) and that hires and reintegrates socially, formerly homeless people. The case study, Pixza: Integrative Social Innovation will be published by Fernanda Arreola & Gregory Unruh under the Thunderbird Case Collection, and used in the course

Innovation & Concepts in ISC Paris’ Master of Science (MSc)

• .

• The second type of social innovation is

the governance of the firms

• , which means the regulation and normatity that allow the business to make a decision from within. A startup may for example, decide to operate as a cooperative requesting consensual

decision making

• amongst its members, before committing into any strategic activity.

• The third type of social innovation is the territory. Choosing a territory implies the willingness to either create an

impact locally

with the product or service that is produced, or to encourage the development of a region by means of specializing in a strategic sector or problematic, or by hiring only people within the territory.

Our Dean of the Faculty & Research, Fernanda Arreola, decrypts the challenge it entails

However, willing to do good, may mean the reduction of the chances of survival of a firm. In a recent research paper by Fernanda Arreola & Sébastien Tran, they explain that, an excessive positioning and “locking-in” of social innovation may become an obstacle of a viable business model for startups. This is explained by three different reasons:

The lack of flexibility

• imposed by a pre-determined business model, territory and mode of operation.

The lack the resources

• necessary for the to grow and therefore, aiming at a single territory or area where to create an impact, may withhold these startups from finding valuable resources that enable their development.

The lack of agility

that “alternative or inclusive” governance models may represent to the firm. We can imagine that finding consensus for every choice may take away from one of the key competitive advantages of a startup, this being the pace or speed of reaction.

How to overcome this challenge ?

In order to face this challenge, the authors find some key pieces of advise :

• Startups must always keep clear their

value proposition

• and the

sustainability

• of their economic model, privileging social innovation over survival will ruin the chances of existence, and therefore the possibility of doing good in the long run!

• Startups must make part of accompaniment programs that allow them to observe with

objectivity

• an eventual excessive attachment to an element of social innovation that is

detrimental

to its operation.