Archive for the ‘Social Entrepreneurship’ Category
The University as a Center of Innovation
In this article, Villgro Fellow Jeanne Chen explores the role that universities play in social enterprise and innovation.
Innovators are everywhere – from slum dwellers who find new uses for waste materials to technology developers. However, not all innovations can be commercialized, and at the same time, many great innovations are left uncapitalized. It remains a difficult task for social investors and innovators to find each other.
One innovation ecosystem which has drawn a lot of attention is Silicon Valley’s university-driven model. Academic research centers are the perfect, fertile ground for incubating potential great ideas and turn them into viable innovations. The only question is how do we replicate the Silicon Valley model elsewhere. As the New York Times article “The Idea Incubator Goes to Campus” reports, a number of university campuses are establishing “proof-of-concept” centers to help test and develop great ideas. While certain top research-heavy universities (e.g., Harvard, MIT, Stanford) already have strong technology transfer support systems for their innovators, many other universities around the country are beginning to adopt the model. Most recently, the US government has allocated $12 million to funding this proof-of-concept model.
These proof-of-concept centers are a bottoms-up approach to funding innovations. Directly at the source of where many great ideas are born, the incubator centers in universities help innovators realize ideas that may not have been carried forward otherwise. The NY Times article provides a number of great examples of innovations which have flourished with the help of tech transfer and incubating experts. Lantos Technologies (www.lantostechnologies.com), which makes a 3-D scanner was the brainchild of an MIT professor, who might not have commercialized the idea if not for the support of MIT’s Deshpande Center for Technological Innovation. The Deshpande Center is just one of many across the US, which provides consulting advice for innovators on how to commercialize their idea from providing support for technology transfers to raising capital.
It seems to me that there are few key advantages to this university innovation model:
- Universities are the nature breeding ground for great ideas – the free flow of information between students, faculty, and visiting lecturers is more likely to spawn innovative thinking than anywhere else
- Academic centers offer a ready support network for development – academic centers tend to be a microcosm of expertise that exist in the real world, condensed onto a small parcel of land
- Participants of university life have more time to dedicate to innovations – one of the challenges of following through with an innovative idea is balancing that work with the quotidian job that is your sustainable livelihood
Therefore, the logical thing to do, as the US has begun to do is:
- 1. Establish support centers to help develop and test ideas – employ experts in technology transfer or venture fundraising to guide likely innovators and entrepreneurs
- 2. Create capacity building programs to encourage more innovative thinking – have classes on innovative design, entrepreneurship, and venture creation
- 3. Create an ecosystem of innovation exchange between universities – allow for the collaboration between innovators at multiple universities, who have different realms of technological expertise
While the academic innovation hub concept is starting to grow in the US, this concept is still relatively foreign in India. Although social enterprise has bloomed within the last 5 years on college campuses, with many of the new innovations coming out of IITs and IIMs, there still remains a large gap between the innovators and social investors. Some campuses are luckier than others, like IIT Madras that has the support of Rural Technology & Business Incubator (RTBI), which has incubated a number of successful social enterprises. Yet, the majority of India’s campuses remain an untapped wealth of bright ideas.
Enter Villgro’s My Idea Program and capacity building program. I was immediately reminded of these more under the radar programs that Villgro operates when I read the article. The My Idea Program hosts capacity building workshops at regional technology universities, helping young entrepreneurs understand how to get started on their own ideas. Villgro is also piloting a social entrepreneurship minor with IIT Madras, which allows some of the brightest engineering minds in the country to think about their ideas within the context of social entrepreneurship. While, these initiatives are still nascent, an expansion of such programs across India would certainly help to diminish some of the gap between great ideas and commercially viable innovations.
How Social Ventures can be Learning Laboratories
In a time of economic crisis, it is crucial that business entrepreneurs focus their innovations on the long-term effects. Previously, capital market innovations have focused on short-term profit, resulting in permanent damage to the economy. In their article, “Social Ventures as Learning Labs,” J. Gregory Dees points to how social ventures can be useful “learning laboratories” in which innovative business ideas can be tested without distorting markets. Rachel Padmanabhan, provides an overview of his article.
A decrease in economic opportunities exacerbates other social problems and in turn reverses progress made by impoverished families. This financial stress has proven to result in tension within communities, fewer children attending school, and inadequate health care. In order to make any improvement on these super-sensitive social and environmental problems, the markets must turn to social entrepreneurship.
Innovation by social entrepreneurs can reverse the pattern of destructive markets by focusing on the social impact that innovations can offer. Social entrepreneurship also allows experimentation of innovations that could potentially solve many issues on a small scale, while effectively working to achieve a larger goal. Social entrepreneurs, Dees says, provide what has been called a “learning laboratory” for these innovative business methods to be tested without negatively impacting the market. The resulting successful models can then be replicated and scaled to create a greater social impact.
The primary difference between these social entrepreneurs and others in the business world lies within their motives. While profit-seeking business entrepreneurs and corporations measure financial success quantitatively, social entrepreneurs measure success by the opportunities they create for the future. An example Dees points out to is 2006 Nobel Prize winner Muhammed Yunus and Grameen Bank that focused on micro-credit with the goal to alleviate poverty. While Bangladeshi officials did not see this as a substantial business opportunity, microfinance is now growing in popularity among mainstream business entrepreneurs and financial entities. Decades after the initial idea of microfinance, markets are beginning to acknowledge the viability of this method as an effective business opportunity.
Implementation of creative business models paired with resourcefulness is necessary in order for entrepreneurs to succeed. Recently within social venture business models, there has been a growing trend away from reliance on subsidies towards commercial strategies. Reliance on solely either of these funding methods is hardly optimal for social entrepreneurs to succeed. In order to create sustainable ventures, entrepreneurs must utilize a mixture of both commercial and philanthropic methods. As proven by VisionSpring, a non-profit organization in China, low-cost technologies paired with innovative business models are an effective way to both provide affordable products and create sustainable job opportunities.
The aforementioned application of these “learning laboratory” experimental innovative models to other businesses requires them to be replicated as well as scaled. This means that in order to be considered valuable, it is necessary that they be cost-effective and transferable as well as socially-impacting. However, entrepreneurs can also benefit from recognizing the failures and patterns of these experimental business models and applying new knowledge to future innovations. As financial crisis pushes businesses towards innovation, it can be expected that the growth trend towards social entrepreneurship will continue due to necessity. If this trend persists, many of the social and environmental issues that have been attributed to capitalistic markets in the past can be alleviated over time.
Read the original article here.
Is All Entrepreneurship Social?
In all the talk of social entrepreneurship, we often forget the social value that regular entrepreneurs hold. While their enterprise, or innovative product may not be designed specifically for, or with the explicit need for to solve a social need, the benefits derived can not be ignored.
In an article in Standford Social Innovation Review, Carl Schramm, CEO of the Ewing Marion Kauffman Foundation, walks us through why we shouldn’t ignore the contributions of regular entrepreneurs.
He builds his thoughts around the process of development and entrepreneurship that the United States of America went through. For example, he points to how delivering improvements in health care are always perceived as being social value that the government or non-profits add. However, as in the case of the U.S, private entrepreneurs and businesses have contributed significantly to improvement in health standards as government health programs.
These private sector contributions came in the form of improved quality of services that contributed significantly to overall improvement of living standards. For example, the development of the rail network lead to more movement of goods and services across the country, which in turn enabled cash-strapped Americans to earn a higher wage, and live better lives. Another example he sites is that of the growth of industry that lead to better quality clothing and shelter – two other goods that Americans in the mid-19th century did not have access to. Improvements in these three areas lead to unprecedented rates of change in the 19th century.
Schramm moves on to draw a parallel to 21st century development efforts. Case in point: cell phones. While disease still plauges much of the world today, as it did 19th century America, the power of the cell phone to overcome these difficulties has been remarkable. While cell phones themselves can not cure disease, Schramm points out that they have been and can be instrumental in developing new business models, companies and technologies, and as a consequence have a direct bearing on economic growth.
In conclusion Schramm does not belittle the efforts of social entrepreneurs, or even programs targetted at improving development indicators. Rather the point he reiterates that in the years to come larger social change will be had as a result of the work of regular entrepreneurs. And therefore, they must also be lauded in their role in improving society.
Read the complete article here.
Social Entrepreneurship = Social Transformation?
There is no doubt that entrepreneurship in different forms has lead to social transformation. There is invariably a ripple effect on several spheres, including politics and society. Social enterprises are no exception to the power of transformation.
What are the factors that are commonly associated with social enterprises? Do successful enterprises have anything in common at all? Authors Sarah H. Alvord, David Brown and Christine W. Letts of the Kennedy School of Government take a look at seven social enterprises to establish this.
The findings are presented in their paper, “Social Entrepreneurship and Social Transformation: An Exploratory Study.” The study looked at the following enterprises:
- BRAC, Bangladesh
- The Green Belt Movement, Kenya
- The Highlander Research and Education Center, USA
- Plan Puebla, Mexico
- SEWA, India
- Grameen Bank, Bangladesh
- Six-S, Burkina Faso and France
The study identified several forms of core innovation, including building local capacity, innovative ways of disseminating a group of innovations, and building a movement from grassroots alliances to take on the more powerful. These findings form a part of the first hypothesis for successful social entrepreneurship.
The second hypothesis the study makes is that successful social enterprises involve innovations that mobilize existing assets of marginalized groups. An example of this would be the work of Grameen Bank in Bangladesh, which encourages its clients to participate more effectively in local economies.
The third hypothesis for a successful social enterprise is that success is built when there is an emphasis on systematic learning in order to operate at scale.
Read more about the study here.
Balancing Value and Markets in Social Enterprise
Columbia University’s Research Initiative in Social Entrepreneurship (RISE), conducted a study in 2006 that compiled the findings of conversations with more than 200 CEOs of social enterprises based with operations in the US and globally. The study was aimed at understanding the kind of social value that was being created by social enterprises, and the associated challenges that they faced. The report, “RISE For-Profit Social Entrepreneur Report: Balancing Markets and Values” is a follow-up on an earlier reports that looked at the double bottom line capital markets.
Some highlights from the report are:
- CEOs mentioned difficulty in raising money from people who may or may not understand the businesses commitment to a social mission.
- Identifying best definitions and labels for the business venture, and deciding when to use the company’s mission to educate and connect with people and when to avoid doing so.
The report also identifies four types of CEOs of Social Ventures. These were classified based on their prioritizing of social and financial priorities. The four classes of CEOs identified are by the report are: Activits (socially oriented, and explicit about this with their customers), Change Agents (socially oriented, but not explicit about this with their customers), Market Pioneers (financially oriented and explicit to customers), Market Influencers (financially oriented and not explicit about this to their customers).
A majority of the respondents of their survey worked towards creating value in environmental issues, followed by health and community development. The most common vehicle to disseminate this social value created was through a product or service offering. However, this varies by sector. For example, advocacy and philanthropy as vehicles for creation of value is widely used by those in the media.
Read more about the survey and its findings here.
For the Public Good
The indicators of a successful social enterprise often go beyond just making a profit. Social impact is increasingly becoming a key indicator of success as well. An article by Parminder Bahra in UK newspaper The Sunday Times, points to other pointers to setting up a successful social enterprise.
1. Be hard-headed. Social entrepreneurs (SEs)need all the qualities of commercial entrepreneurs. They take risks, grasp opportunities and are proactive rather than reactive. Most social enterprises are viable profit-making entities. If you haven’t got a head for business, then you’ll not cut it as an SE.
2. Everything in triplicate please. Social enterprises have a double or triple bottom line. This doesn’t mean that they are overweight, it means that they combine profits with social and environmental objectives, for example, ensuring that an organization is environmentally neutral.
3. Social entrepreneur or social enterprise? The two are sometimes confused. SEs are interested in outcomes, not processes. Their benchmarks will incorporate any of the three bottom lines, but their organization will be value-led and exist for social benefit. Social enterprises are more fixed in terms of process. They make profits, but then reinvest them into the business or into the community.
4. Know your market. Like commercial entrepreneurs, SEs spot a gap in the market and try to fill it. According to the Social Enterprise Coalition, gaps exist where the private and public sectors fail to provide a service or product.
5. Keep it local. Many social enterprises work at a local level, involving the community in which it provides a service. Nick Temple, the network development manager at the School for Social Entrepreneurs, says that because of the nature of social enterprises, people come from diverse backgrounds and SEs must be able to network with a variety of people and communities.
6. Make a change. SEs are change agents in society, creating and sustaining social value by using all the resources that are available to them. They have to be creative and innovative. SEs should be good at spotting and re-using resources that are underused or abandoned, such as buildings and open spaces. Most importantly, Temple says: “SEs must not be afraid to make mistakes but must be able to learn from them.”
7. Challenge propositions. Temple also says that SEs can be difficult to work with: “They are highly motivated people who can be persistent. They change the status quo. They push the boundaries and against traditional barriers.”
8. Don’t want to start your own organization? There are many ways in which you can get involved without starting your own organization. All social enterprises need trustees to make sure that they are fulfilling their objectives.
9. Use your commercial sector skills. Don’t be put off if you have no sector-specific skills. Social enterprises need people who have the skills gained in commercial organizations, such as marketing, finance and accounting.
10. Other opportunities. According to Temple, commercial organisations are increasingly looking at corporate social responsibility and triple bottom line accounting: “There is a tendency for convergence among all organizations to incorporate these ideas.”
Have you started your own social enterprise? Do you have any other pointers for would-be entrepreneurs? Leave us your comments below.
The original article can be found here.
Business Linkages at the BoP
Business Linkages are often-times the key to reaching out to the BoP. Often companies are unable to act on their own, requiring several layers of linkage in order to acheive their goals.
The IFC, in collaboration with the the International Business Leaders Forum, and the CSR Initiative of the Harvard Kennedy School has been organizing a series of roundtable discussions to understand the several kinds of linkages that exist. Following one such roundtable in Jaipur in 2009, they jointly brought out a report titled “Business Linkages: Enabling Access to Markets at the Base of the Pyramid.*”
The report draws from experiences of participants at the round table. The discussions are based around three areas: Opportunities to enable access to markets at the BoP, Challenges in forming business linkages, and Patterns of Solutions and cross-cutting themes.
The case examples used in the report draw not from “social enterprises” particularly. For example, while discussing the opportunities to enable access to markets at the BoP, the report highlights the work of the Aditya Birla group in selling to the BoP. The group’s cellular network service, Idea Cellular, has been able to penetrate into rural markets by offering a suite of products and services customized to the needs of rural customers.
The report also talks about how enterprises can find opportunity at the BoP by going beyond traditional value chains. These are applicable in areas that improve the quality of life and help strengthen and diversify local economies. For example, education and health. The work of the Syngenta Foundation is cited as an example. The Foundation focuses on raising farmer productivity and access to markets through farmer training, and assistance with commercialization.
However, the report identifies significant challenges to establishing business linkages. These are in the form operational challenges (obtaining reliable information), reputational and relationship management challenges (managing expecations and reducing dependence) and systemic challenges (skill-building, improving access to finance, strengthening regulatory environment).
The third part of the report draws from previous roundtables in Washington, Johannesburg and Rio de Janeiro, to establish a clear pattern of challenges and a scheme of solutions to meet those challenges. Beyond particular solutions, two broad solutions are offered. The first is to develop a “systems thinking” mentality. This is recommened to enable those engaging with BoP markets to counter inefficiencies that might arise due to the unpredictable nature of BoP suppliers, distributors and customers. To combat a system full of holes that can not be taken for granted, the report suggest that companies think proactively about the sytems, and often take action to make sure they work better.
A second solution on offer is that of “collaboration.” Collaboration becomes necessary when it is not economically feasible for a company to plug all the systemic loopholes on its own. In such cases companies may look for partners — either government agencies, civil society organizations, international development agencies — that are themselves in complementary lines of businesses. For example, GlaxoSmithKline is able to organize a milk value chain from end-to-end for its Horlicks brand, but ICICI Lombard partners with microfinance service providers such as BASIX.
The report emphasises the need for building these linkages at a time when truly risk-free opportunities are rare. The plethora of solutions on offer a valuable set of solutions to organizations looking to reach out to the BoP.
Read the entire report here.
* Jenkins, Beth and Eriko Ishikawa. 2009. “Business Linkages: Enabling Access to Markets at the Base of the Pyramid.” Report of a Roundtable Dialogue, March 3-5, 2009, Jaipur, India. Washington, D.C: International Finance Corporation, International Business Leaders Forum, and the CSR Initiative at the Harvard Kennedy School.
Important Distinctions in the Social Enterprise Field
When talking about social enterprise, how do we distinguish between the several kinds of organizations that exist? Kim Alter in her paper on Social Enterprise Typology plotted enterprises along a hybrid spectrum, classifying practitioners into four types: non-profit with income generating activities, social enterprise, socially responsible business and corporation practicing social responsibility.
However, within the realm of the social enterprise itself there is much misunderstanding about what the term means. Organizations are quick to label themselves as a social enterprise without fully understanding the distinctions that need to be drawn.
In an article published on Social Enterprise Alliance, authors Jerr Boschee and Jim McClurg run us through some important distinctions to be made. The paper is geared towards helping non-profits identify the lines of distinction between themselves and traditional for-profit enterprises. Both the authors have considerable experience in the social enterprise world, and draw on this in their paper.
They point to four crucial distinctions.
1. The differences between “entrepreneurship” and “social entrepreneurship.”
A traditional entrepreneur, they point out have “the ability to take a business to the point at which it can sustain itself on internally generated cash flow.” A traditional entrepreneur may engage in activities that are socially relevant, but not core to the businesses operations. For example, donating to charity.
A social entrepreneur on the other hand, is anyone who “uses earned income strategies to pursue a social objective.” As opposed to traditional entrepreneurs who use profit as an indicator of success or failure, a social entrepreneur is driven by a double — sometimes triple — bottom line. His or her success is defined by a blend of financial and social returns.
2. The differences between “sustainability” and “self-sufficiency.”
While traditional non-profits have used philanthropy, subsidies and earned revenue to achieve sustainability, a social enterprise, while it may welcome philanthropy and subsidies, relies wholly on earned income.
3. The differences between “earned income strategies” and “social purpose business ventures”
Typically non-profits enter carry out strategies to cover program costs, and increase revenue. These are referred to “earned income strategies.” Example of these may be in membership fees, or program registrations. A “social purpose business venture” is sometimes the next step that non-profits take. This often means starting a whole new business, which is legal and operationally separate from the parent organization.
Of course for many the “social purpose business venture” route is the first option. But for those who wish to create impact without engaging in the rigor of a business venture, “earned income strategies” offer a sustainable option.
4. The differences between “innovators,” “entrepreneurs” and “professional managers”
The last point of differentiation is made to enable non-profits to correctly identify the kind of people it needs at different stages at growth. Drawing from their experience, the authors point out that often non-profits realize that their efforts are doomed because they are being lead by the wrong kinds of people.
They draw the following lines of distinction:
Innovators, who are dreamers. They “create prototypes, work out the kinks” often with little emphasis on the financial viability of what they do.
Entrepreneurs who are builders. They turn the prototypes into businesses. Financial viability is key to what they do.
Professional managers are akin to trustees. They “secure the future by installing and overseeing systems and infrastructure” needed to keep things going.
This distinction could perhaps be useful in helping non-profits identify the right resources for their projects.
Overall the paper serves as a good guide for those thinking of starting an enterprise, and for those non-profits considering a for-profit model. It helps clear the lines of confusion that might exist.
Enabling Access to Energy at the BoP
The focus on renewable sources of energy has been reinforced in recent weeks by the BP oil spill off the Gulf Coast in the U.S. While one part of the globe voraciously consumes energy, 1.6 billion people globally have no access to electricity. A further 3 million still use traditional biomass for cooking, the health hazards of which have been substantially documented.
However, there are several – mainly local entrepreneurs – that are offering valuable energy solutions to this very segment of people. Most of these enterprises are removed from the traditional energy enterprises, and offer solutions based on local needs, and local possibilities. The Ashoka Network, in collaboration with Hystra, a hybrid organization that works with business and social sector entrepreneurs to design and implement strategies for the BoP, conducted a study on the work of these enterprises.
The study, “Access to Energy for the Base of the Pyramid,” is an in-depth look at several market-based approaches to BoP energy requirements. It looks at the different kind of technology available such as:
- Grid connections: which turns the BoP into legal, paying consumers
- Devices: such as solar lanterns and biomass cook stoves
- Solar home systems: Which deliver electricity to households
It also looks at systemic support to deliver these solutions. These include the roles of co-operatives which take on that challenge of providing sustainable power supply and create income generating opportunities, and the role of finance and various financing intermediaries. It also makes recommendations for action, outlined for various system enablers – aid agencies, governments, social investors and so on.
The study puts out two interesting observations – that it is not only important to focus on providing solutions that are cost and need-efficient, but also to optimize “human capital.” And secondly, that the most successful social entrepreneurs are also the ones who have tried harder to get the users who were implied in the value-addition process involved.
Download the entire report via the Hystra website.
Stakeholder Engagement in Social Enterprise
The enablers of the social enterprise system are varied. There are government actors who promote the space through policy, there are private investors, who seek to create value through their investments, there are donor-agencies who work towards meeting certain important goals through their donoations.
Each body of stakeholders interacts with the sector in a certain way, and follow explicit or implied rules of engagement. Governments want enterprises to implement policy decisions, investors look for a whole slew of indicatiors – mainly financial, and donors look for documented evidence of outreach, of impact.
Of these various roles, the role of a grant maker is often crucial to building a fledgling enterprise, or program. However, sometimes the good intentions behind grants fail when grantmakers do not engage more closely with the communities that they serve. The lack of engagement sometimes leads to weaker programs, poor understanding of the issues and less-effective organizations.
This is the issue that authors Kathleen P. Enright and Courtney Bourns tackle in a recent issue of Stanford Social Innovation Review. The paper goes into several examples of where grant making has not acheived its results, and some of the reluctance shown in engaging with stakeholders.
But importantly, it highlights a method to further engagement. To start with, Enright and Bourns suggest three questions grantmakers need to ask to establish the need for further engagement:
1. Are your strategies for change inclusive of the grantees and community members?
2. Is your staff, including board memebers, competent enough to understand what is happening in the community?
3. What can you do to build stronger relationships with grantees and other stakeholders?
The article also points to the benefits of engaging with stakeholders. Some of the benefits it discusses are: develop a deeper understanding of problems, creating new and better solutions, building more effective organizations.
Finally, the article also points to several tools to engage with stakeholders at different levels, including surveys, focus groups, listening sessions, inclusion on internal panels and staff.
For the complete article, visit the Stanford Social Innovation Review website.