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:

1. 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
2. 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
3. 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. 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. 2. Create capacity building programs to encourage more innovative thinking – have classes on innovative design, entrepreneurship, and venture creation
3. 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.

This is the focus of a paper by Coady Institute authors Alison Mathie and Gord Cunningham, “Who is Driving Development: Reflections on the Transformative Potential of Asset-Based Community Development.”

The paper takes a look at some aspects of Asset-Based Community Development. Particularly it offers a set of principles and practices to mobilize and keep sustainable community development. It also makes lines of distinction between these principles and practice — such as the concept of social capital, social psychology, enhancement of capacity to engage communities and so on. Finally, the paper offers challenges to implementing asset-based community approaches to sustainablility.

For more on the article, click here.

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.

“Working Wikily” is a phrase that describes the new ways that people are applying network theory and networked technology to do the work they have always done in a more collaborative form.[1] A  Stanford Social Innovation Review Summer 2010’s research paper, “Working Wikily” by Diana Scearce, Gabriel Kasper and Heather McLeod Grant, looks at the way this phenomenon has grown to represent  greater openness, transparency, decentralized decision making, and collective action.[2]

The Benefits of “Working Wikily”

The research paper indicates that online social websites such as Facebook, Twitter and blogs are widely practiced by nonprofit organizations, however, only a very few of these organizations are utilizing these social tools to fundamentally change their operation and enhance their social impact. Kiva and Ocean Conservancy’s International Coastal Cleanup are the rare exceptions. The authors identified five prime reasons why people should use a network to achieve social impacts: weaving community, accessing diverse perspectives, building and sharing knowledge, mobilizing people, and coordinating resources and action.

The Challenges of “Working Wikily”

However, challenges of working wikily exist: In some cases, a more traditional operation of centralized and closed approach works better than the open community platform. For example, a website  that holds restaurant reviews from ordinary patrons  may not serve as well as an authoritative gourmet critiques from New York Times. A dominant opinion channel hold by experts may work much better in the organization that needs to take firm control of a product or process in order to maintain certain quality or when responsibility needs to be clearly assigned. For social change leaders, the challenge is to understand when it is best to maintain tight control and rely on the skills of experts, and when it is best to let go and rely on networks to yield the best result.[3]

The Lessons Learnt from “Working Wikily”

To wrap up the paper, the authors address five suggestions of how to work wikily based on their experiences and lessons learned from the pioneers in the area. 1. Design projects around a problem to solve, not around the tools. 2. Combine top-down and bottom-up approaches. 3. The rules of relationships still apply. 4. Understand your position within networks. 5. Share what you’re doing and learning. In sum, working wikily is not all or nothing. Hold on to control where it is necessary, but also look for small, strategic opportunities to let go.

[2] Diana Scearce, Gabriel Kasper, Heather McLeod Grant, “Working Wikily”, P32, Stanford Social Innovation Review, Summer 2010

[3] Diana Scearce, Gabriel Kasper, Heather McLeod Grant, “Working Wikily”, P35, Stanford Social Innovation Review, Summer 2010

One of the benefits that the model brings with it is the ability to replicate fast, and to scale. This fits perfectly into the challenge several social enterprises face. So can the franchising model be used to replicate and scale social enterprise, and therefore create a greater impact?

This is the topic of a publication by the Association of German Foundations, “Social Franchising: A Way to Systematic Replication to Increase Social Impact.”

At the outset, the report begins by building a clear benefit for social franchising. The opening section talks about the benefits of not reinventing the wheel, and the need for scale. Social enterprises it says, have an “obligation” to scale, seeing that many people are still not reached by existing projects and that social needs remain high. Often non-profits succumb to the idea of developing something new, rather than perfecting and scaling what they know already works. The imperative to scale therefore is high. And this is the case that the report builds.

Further, the report takes a closer look into how replication can be achieved, including franchising. It goes on to define some of the characteristics of commercial franchising, as well as drawing a distinction between the former and social franchising.

The third part of the report enumerates the opportunities and challenges for social franchising. The principal opportunities include: faster and more cost-effective replication of non-profit programs, improvement through systemic transfer of know-how and ongoing learning, financial gains and benefits in network synergies.

Of course, franchising is not without its risks for social enterprises. Some risks documented in the report include: risk of changing initial mission, risk of negative reputation, difficulties of monitoring and evaluation, difficulties in standardization, and competition over fundraising.

Further, the report highlights a framework for implementing social franchising, including suggestions to make models sustainable.

The report draws from several case studies including the work of the Annapurna Conservation Area Project in Nepal, Reach a program of Freedom from Hunger and Aflatoun.  Its depth and detail provide for a good guide to any social venture looking to expand and grow via the franchising model.

Read the entire report here.

Mayank Jaiswal, Villgro Fellow 2010, takes a look the the concept of disruptive innovation through the lens of conventional strategic management theory.

Read Hari Nair’s full article here.

Hari Nair, in his piece, “Shaping For-Profit Enterprises Through Disruptive Innovation,” presents the concept of “disruptive innovation.” In this analysis I have attempted to understand it through the lens of conventional strategic management theory.

In the diagram alongside, the curve ODT represents an efficient Price Quality Frontier (which essentially means that it represents the best quality for a certain price and vice versa available in the market).

Disruptive innovation moves the frontier to point C so assume a curve passing through OCT rather than the solid curve shown passing through ODT. What this means is a business has found a new way of doing something which either provides a better quality at the same price as the efficient frontier or same quality at a lower price than the corresponding efficient frontier.

Let us further assume that A and B were established players who were providing a certain quality for a certain price. For example A is a Ramada Inn, which is a budget hotel with best quality in class similarly B is a Taj Palace, high quality for high price. We also see that both A and B have ‘influence circles’ – it is the area from which A and B derive their consumers. Thus if a company comes along and ‘breaks’ the frontier at D and raises it to C, we can have two types of migration – the ‘quality migrators’ people willing to pay slightly higher prices for a much higher quality or ‘price migrators’ people willing to settle for slightly lower quality with a considerable decrease in price. Thus we see flight of two types of consumers.

Additionally, it might so happen that region D was a consumer ‘wasteland’ say 20 years ago – i.e. no consumers existed in that region. However, with the change in the economic conditions may be region D has now become a ‘hot spot’, the entrenched players A and B usually miss out on these if they are not conducting timely surveys of the consumer landscape, and keeping themselves abreast of the latest changes in consumption patterns.

Razor Rave is a case in point. A can be thought of as the street hair dresser and B as the high end salon. With the entry of Razor Rave kiosks and the fact that there is more disposable income with Indians especially in the middle class, Razor Rave is C. It has come in where no players existed and has created disruptive innovation by serving the consumer professionally (quality axis growth) at not very high price points.

The theory has implications for new social enterprises as well. I If new enterprises can develop innovative approaches which provide better services orquality at similar prices or similar quality at lower prices and can identify “consumer wastelands” which will be no more, there is scope for a successful enterprise to be set up. The need and chances of developing such enterprises in the social space are very high given the current rate of growth in countries like India.

His commentary makes it easy to break down the issues of social enterprise and innovation for social entrepreneurship into three basic aspects:

Firstly, theory and academic research in this sector and the correlations with field practitioners- the chicken and egg story.

Boschee agrees with recent thought leadership on framing theories for social entrepreneurship and abandons the typical academic approach of “building management practice from theory” for this sector. The proposal is to adopt instead the approach of building management theory from practice and to have an academic approach rooted in practical experiences. Boschee also applauds recommendations for further research to be conducted at the interface of innovation and enterprise as this intersection seems to be the only practical solution for viability as gleaned from learnings of on-field practitioners.

Secondly, Boschee looks at the opposing views in traditional definitions of social entrepreneurshi.

The crucial need for defining the domain in a felicitous way is emphasized and Boschee brings to the fore that the best way of framing this new field lies at the intersection of the two dominant schools of practice and thought: the Social Enterprise School and the Social Innovation School.

It is the opposing perspectives of these two dominant schools of thought that have led to the contrary definitions for the sector leading to a sort of status-quo where one mandates social good through innovation and adaptation where entrepreneurs serve as change agents for creating and sustaining social value. While on the other hand, the other side argues that earned revenue is the sine qua non of social entrepreneurship because only earned income will ever allow a non profit to become sustainable and that the entrepreneurial component comes from ensuring financial viability which is essential to effect social good in a self sufficient manner.

Thirdly, Boschee takes a look at the powerful combination of innovation and enterprise as the way forward for achieving social impact in a self sufficient sustainable way.

Boschee believes he has finally found common ground and describes a migration from innovation to entrepreneurship as the way for non profits to move towards sustainability and self- sufficiency which he further describes in his book carrying the same title. He describes how he sees innovation and enterprise to be like siblings or flip sides of the same coin- different yet very deeply interlinked.

Boschee gives insights into the frustrations and operational struggles and inherent uncertainties experienced by innovators and hence requiring the enterprise approach for scaling up and to bring in the viability component to ensure sustenance. This he believes is the true differentiator between initiating new projects (innovation in concept and design) and sustaining the projects for ongoing social impact which is the underlying mandate for the social entrepreneurship sector. He perhaps implies the need for moving away from donor driven projects to self sufficient market driven initiatives as the solution for sustainability for the future.

Boschee believes social innovators are vital to any hopes we have to address the ills of the world and commends their chutzpah which is inspiring. Nonetheless, he also strongly believes that social enterprise is the tool that can move social innovators towards financial viability.

Summing up, Boschee urges the need for working together to create a harmonious eco system of innovators, entrepreneurs, academics and practitioners. He formulates a three step process for success in the social entrepreneurship sector:

• Start with practitioners
• Build theory from their experiences
• Create a strategic framework of innovation and enterprise for the next generation of practitioners to enable sustained impact.

Read Boschee’s entire article here.

This abstract has been contributed by Yeshesvini Chandar, a Villgro Fellow 2010.

Rural India is teeming with youth who could be made employable. This will bring the youth and their families out of a vicious circle of poverty and deprivation. It not only imparts the youth with the financial stability that comes with a job but also empowers them and develops their self confidence by enhancing their social status in the community.  Companies are increasingly relying on rural India to staff their front and back offices in urban and semi-urban towns.

For long the most coveted jobs in India were with the government. Rapid economic growth, driven by a thriving private sector has changed that, but the government isn’t completely out of the picture as yet. In fact a new initiative in the southern state of Andhra Pradesh, offers models for public-private partnership in providing employment to rural youth. The The Employment Generation & Marketing Mission (EGMM), headquartered in Hyderabad, not only trains young people, but also helps them get employed. The project was started by World Bank and was taken over by the state government of Andhra Pradesh.

The program identifies Grad 10-level students studying in government schools (where education is free)  in rural Andhra Pradesh,  who can be trained, groomed and prepared for an assortment of entry-level jobs in a range of sectors, including telecom, hospitality, manufacturing, retail and outsourcing. EGMM proactively talks to the industry and develops a curriculum, which it makes sure to include essential soft skills . The Mission provides a basic 75-day residential training program, which includes English and computer-skills classes, personal hygiene sessions and counseling. To minimize preconceived notions of what employment might entail, the last 15 days of the program provide on-the-job training at prospective workplaces ranging from security agencies and telecom firms to pharmaceutical companies and retail outlets. This allows trainees to get a feel for the work environment and see what’s expected of them. The familiarization helps youth adapt to their new lives later.

EGMM is a small but important start. If other states are able to replicate the model, there could be enough ammunition to handle India’s rural employment dilemma.

Read more about the EGMM, here.

“Mobile banking may be an industry I would like to start a business in: There are millions of people with phones but not bank accounts – mostly in developing countries”. This quote is from my first blog post of 2008 on www.poorbillionaire.com and marks the day I started taking a big interest in the mobile banking industry.

If you take a lesson from the telecommunications industry you can see that the developing world has “skipped” a step in development: starting with no phones at, skipping land lines, and adopting mobile phones.  If this could influence the banking industry the developing world can go from having no bank accounts at all straight to mobile banking – both a leap in the standard of living for the poor and a leap in the progress of the banking industry.  Think of all the things you can do with your mobile that you can’t do with a landline and you will start to realize the impact this change in the industry will have.

To support the growth of this industry a conference called the Mobile Money Summit was started in 2008.  An example of this conference’s impact is showcased in a paper produced from the 2009 summit titled “Accelerating the Development of Mobile Money Ecosystems ” which talks about how quickly this industry is growing and how the challenges both as a market opportunity and as a poverty alleviation tool are being better understood.

But the paper I really want to talk about is Nexbillion.net Editor Nathan Wyeth’s three part article titled “Report from the Mobile Money Summit”.  His introduction says: “My hope in attending the summit was to share with NextBillion readers the state of the industry and what can be expected in the future outside of places where mobile banking and payment systems have already taken significant hold – namely Kenya and the Philippines (and significant branchless banking in Brazil) – as well as indicate how mobile money systems can be brought into base of the pyramid business models not only for microfinancial services but far outside of the financial services sector – in health, education, agriculture, energy, and more.”

His article brings you up to speed about the potential of this industry and teaches a little about the developing world market.  Part one – “State of the Industry” talks about the industry’s markets structure, business model structure, and the banks’ need/priority of “stability before inclusion”.  The idea that the poor will actually except negative interest on savings accounts if they are able to save their money securely is one of the interesting concepts that he mentions in Part two – “Product Innovations to Reach the Poor” and that credit profiles can be generated based on current mobile banking transactions for future use in microloans.  Part three – “Learning from Agent Networks” discusses the distribution channels involved in making this all happen.

Nathan’s article is a worthwhile read for those interested in Mobile Banking or a glimpse into the world of developing economies and one of the angles that is being used to approach them.

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.