When you do the right thing, it’s also good business
While the terminology used around social entrepreneurship in Central America is a relatively new term, we have found hundreds of entrepreneurs who are business-minded, yet impact driven. One of the best examples I can think of in terms of a business-focused enterprise that uses the impact at the core of their business to drive not only their operations but overall scaling strategy is Ecofiltro.
When Philip Wilson became CEO of Ecofiltro, he saw a huge opportunity to shift a passion-driven non-profit that was struggling to scale due to their dependency on donations, to a profit-driven business with impact centered at its core. The transition wasn’t easy, especially for the staff of the foundation that saw the shift to a profit-driven one as taking away the mission of the work they were doing - “we had to bring in a lot of new people from the private sector to be able to make the shift from a foundation to a for-profit model and changing the model of Ecofiltro from selling to NGOs that gave the filter away for free to one where people living in poor, rural areas were seen as potential customers and not objects of pity” (Philip Wilson - paraphrasing of his words done by author).
Philip Wilson saw the importance of shifting this model for Ecofiltro as a direct link to the impact they were trying to create - “Having to fundraise limits the ability for impact organizations to scale. A for-profit model is the only way you can scale and you have to start shifting from a mindset that relies on donations to operate to one that is transactional and that has to have an attractive value proposition that will lead to a sale.
With the foundation we would go on these sites visits to see where the social workers were giving filters away to rural families. You’d see these really humble homes with dirt floors but then you’d see a TV, soda bottles everywhere, etc. For-profit models are inherently more transparent because you get that immediate feedback from your customer who buys your product and their life is then impacted by it.” So Ecofiltro started its for-profit business with an impact-driven mission, or as Philip likes to say, “Ecofiltro has the brain of a business and the heart of a foundation” with two overarching goals that drive both their business operations and plans for scale:
- Profitability for the company - You can’t help anyone if you aren’t profitable
- Reach 1 million families in rural Guatemala by 2020
These two principles help keep them on a straight path in terms of maintaining their social purpose and staying profitable as a business. Sometimes this means learning to say no, even to the most tantalizing offers. Hotel chains, shipping to the US, and selling to big box retailers, have been some of the opportunities that they have had to turn down - but they do it because it doesn’t fit through their lens of helping them get to 1 million families in rural Guatemala. But they can find a balance between large orders and creating high-level impact; one example of this is their current project working with Nestle and getting Ecofiltros to their employees. This project helps both the families of those employees as well as the company itself by lowering sick days and hence increasing the productivity of their employees, who no longer get sick from consuming contaminated water at home.
Ecofiltro also uses a very simple, integrated system for measuring the impact that they create - their number of sales. A lot of times, entrepreneurs believe that measuring impact and measuring the growth and scale of their business are two separate processes, but this doesn’t always have to be the case. At Ecofiltro, they know that if a customer orders a new filter for their Ecofiltro, that means that the product has value to them - the continued use and demand for Ecofiltros shows the company that not only does their marketing and sales strategy work, but the filter does as well. They have seen this in various projects like the Nestle partnership listed above but also in the rural schools that they donate their filters to where missed days of school due to illnesses have also dropped dramatically.
For entrepreneurs that want to integrate impact into the DNA of their business model, Ecofiltro can be a great example for them to start looking at how to do so. While they are always focused on keeping the business profitable and scaling, the driving factor for that scale is always rural families and creating access to clean drinking water.