Social Entrepreneurship Leadership Myth #1

Social entrepreneurs typically put up with personal economic hardship to launch their dream enterprise. Some work for a while, save money and live off of that or they have small grants, or personal assets, or working spouses or the new trend of limited prize money etc. This breeds a habit of thrift and economy. So far so good. This factor is really important when applying for grants from foundations or public funds. It is a critical personal and organisational leadership skill for running an NGO or other non-profit where one uses limited financial resources - since no new financial resources are being created there is no room for any financial risk-taking. So in my experience social entrepreneurs come to believe in a "how can I save money?" versus "how can I make money?" mindset.

This is where leading a social enterprise is strategically different from leading a non-profit. Corporate or social investors want to know when the organisation will be financially self-sustaining. strategically, a social enterprise looks more like a for-profit venture. Strategic leaders will answer the following questions:
1- how much time to first enterprise revenue dollar
2 - How much time to break even
3 - how much time to first profit dollar (social enterprises typically reinvest revenue)

A business plan that includes a well thought out financial risk (e.g. trying out or investing in a new technology) may be acceptable even if sustainability takes longer. The reason for having the "how can I make money" mindset is that :
1. It makes a more convincing argument that eventually the enterprise will be sustainable. In this mindset, fiscal responsibility is a given as good operations management and positions the entrepreneur as being strategic.
2. Additionally, investors are well versed with for-profit business plan evaluation and thus more likely to commit.

So my recommendation to social entrepreneurs: do put as much energy into your revenue streams as to fiscal operational responsibility when it comes to developing your leadership style.

Social Entrepreneurship Defined

Social entrepreneurship is somewhat new. It is difficult to understand for people new to this area because it is not philanthropy and not quite business though it is known to masquerade as both. Hope the following characterization helps:

1. The motivation is social good and the means is business creation. Typically social good is in the purview of governments, foundations and NGOs. The area lacks financial instruments required by business. Legal structures exist but are not optimal.

2. In a typical social venture, financial return follows social return. Additionally, local social mores play a role in market creation and expansion – making the task operationally more difficult and slower in yielding results.

3. There are successful social entrepreneurs around but none are achieving scale at any significant rate. Possible solution is public-private partnerships but there are few success stories in this area and many failures. Another solution is venture capital but there is low (and slow) financial return to investor. On the plus side I think the risk is lower too.

Example success stories – (mentioned in this blog over time)
Micro finance: SKS, Kiva, Grameen-phone;
Health care – Aravind eye hospitals, Jaipur foot;
Energy – Selco, D.light;
Education- Barefoot College

For organisations interested in participating in this space - Examples of useful services (become a focal “go-to” place for social entrepreneurs and socially motivated investors) are from small to big-

Scholarships to attend conferences/ events
Special track at conference/events
Infrastructure services – create incubator - office space, legal, business plan review
Provide networking opportunities
education opportunities – for investor as well as entrepreneur
sponsored competitions – e.g. best business plan
Mentor services
Technology-social entrepreneur match ups
Social venture fund creation

The Future of Social Enterprise: Harvard Business Review

I had a "duh" moment yesterday. The Kasturi Rangan, Herman Leonard, Susan McDonald HBS working paper has helped me crystallise what my blog is about- yes, I admit it- at least till I change my mind. They examine the "confluence of forces that is shaping the field of social enterprise" and propose three scenarios for how this sector might evolve (full text here):
1. Consolidation: In this scenario, funding will keep growing in a gradual, linear fashion and organizations will compete for resources by demonstrating performance. The sector will consolidate, with some efficient organizations gaining scale, some merging and then growing, and some failing to achieve either scale or efficiency and eventually shutting down.
2. Entrepreneurial: In a more optimistic future, existing and new enterprises will apply strategies to achieve and demonstrate performance, improving efficiency and effectiveness and attracting new funding sources. More organizations will enter a reformed, competitive field of social change with new entrepreneurial models, established traditional organizations, and innovative funding strategies fueling widespread success.
3. Expressive: Rather than focusing exclusively on performance, funders and organizations may view their investment as an expressive civic activity. As much value is placed on participating in a cause as on employing concrete measures of impact or efficiency. In this scenario, funding will flow as social entrepreneurs experiment with new models based on a range of individual priorities and relationships.

I am not satisfied with item 1 - too slow and more of the same. Item 3 is okay but business scales much faster than pure social activity. So here I am: My blog is promoting (creating mind share, providing links and just plain evangelizing) the entrepreneurial scenario (#2) leveraging technical innovation - much like what has fuelled the growth of silicon valley. What would you say?

...And The Winner is .....

Our casestudy competition came to an end Sunday with the winner being SKG - India - Biomass & Biogas -Mothers and daughters making income from selling fertilizer and making electricity.

Many who voted cited this case's ability to also address local sustainable agriculture- which given the recent global food shortages is becoming critically important.With our first event over and our group reaching the facebook imposed cut off limit of 1200 members we will be launching some new initiatives from the facebook fan page:http://www.facebook.com/pages/Bordeaux-Energy-Colloquium/8141228466 Two new initiatives we will start:
ANGEL INVESTING: Competition for groups looking for start-up funding for sustainable energy technologies
ACADEMIC GRANTS: Student research grants for projects studying sustainablity.Hope we can continue to build and reinforce this sustainable community we have created.

Three Things I learned From Mohammad Yunus

June is graduation month and I got to double dip -my niece's MIT graduation and commencement speech by Mohammad Yunus, in person - all at once.

For me, it wouldn't have mattered what he said- the symbolism of Yunus, with all that he represents, standing at the podium, was enough. By inviting Yunus, MIT faculty is publicly telling its grads, hey look - we know "Each of you has the power to change the world" and this is the direction - a better world for all. Maybe, I don't give enough credit to MIT but I was surprised when I found out. And maybe Yunus was too - because he started his speech with an ad lib that taught me lesson number one.

Relate first and find common ground: he started by thanking MIT for making him feel right at home by bringing on the rain (yes it was pouring out there), just like the monsoons in his native Bangladesh. I could feel the collective tension of a few thousand people dissipate - hey its only water and we are all in it together!

Individual: The "New" Businessman: "money-making is a means, not an end. But for the businessman in the existing theory money-making is both a means and also an end." Businesses have only one metric of success but humans are multifaceted: as people, he said, we are multidimensional but business has one measure- profit. Don't sell yourself short by identifying too much with the current institution of business - it is not only unidimensional, it is flawed. "Poverty is an artificial imposition of the system." Can you change the system? How about a new kind of business with a new kind of metric? "We can easily reformulate the concept of a businessman to bring him closer to a real human being. In order to take into account the multi-dimensionality of real human being we may assume that there are two distinct sources of happiness in the business world 1) maximizing profit, and 2) achieving some pre-defined social objective. Since there are clear conflicts between the two objectives, the business world will have to be made up of two different kinds of businesses --1) profit-maximizing business, and 2) social business. Specific type of happiness will come from the specific type of business"

Action: Break a big problem into bite sized chunks. "Three basic interventions will make a big difference in the existing system : a) broadening the concept of business by including "social business" into the framework of market place, b) creating inclusive financial and health care services which can reach out to every person on the planet, c) designing appropriate information technology devices, and services for the bottom-most people and making them easily available to them."

Do read the whole speech. His ideas about financial instruments (dow jones for social businesses, partnership with Danone, Intel.. make it all sound not only possible but probable.

Go Grads!

Now We're Talking! Voting ends June 15th

We have had a surge of voting activity - SKG Biomass in India has pulled into the lead with over 300 votes- I will leave the voting open until the end of the weekend. Vote at :
http://www.zoomerang.com/Survey/?p=WEB227QE8J48Y6
For those of you just joining us: The Bordeaux Energy Colloquium is a private group of energy executives and policy makers. We are sponsoring this on-line casestudy competition for outstanding individual efforts in sustainable energy.
There are 10 videos- all available under the video section of the group page
http://www.facebook.com/video/?oid=6763501129
Competition Goals:
1. to educate the members about how very simple and inexpensive solutions can create such large life-changing effects for those involved.
2. to diffuse this information by sharing it with others – forwarding on the videos and asking people to become involved.
3. to humbly reward the casestudy participants by holding a vote and offering a $5000 first prize.

VOTING CLOSES JUNE 15th- What you do MATTERS!
from Kimberly

The Aravind Case: Business at its Best

It is worth studying the Aravind case - a business that does well by doing good. Aravind has overcome barriers of distance, poverty and ignorance to create a self-sustaining system; social entrepreneurship at its best with latest in technology, revenue generation for sustainability and a business model for scaling.

The Bill & Melinda Gates Foundation has selected the Aravind Eye Care System , to receive the 2008 Gates Award for Global Health.

But the contribution made by Aravind is broader than just healthcare - they validate and thrive on the concept of "doing well by doing good".

"Founded in 1976 in a rented house with only eleven beds, Aravind has grown into a thriving network of hospitals and satellite clinics that provide eye exams and surgeries, train healthcare professionals, conduct research, and manufacture eye-care products. In the past year, the Aravind network provided out-patient care to approximately 2.4 million patients and performed more than 280,000 surgeries. Thanks in part to its efforts, the estimated number of blind people in India fell from 8.9 million in 1990 to 6.7 million in 2002 -- a 25 percent decrease according to Philanthropy News."

What I hope this recognition will catalyse is growth in investment in social enterprises, like Aravind, early in their lifecycle so it does not take 30 years to scale.

Microsoft's alliance with OLPC, and the exit of Walter Bender!!

I have several problems with Negroponte's philosophy on the OLPC Project. At the outset, I must confess my admiration for any "disruptive" idea or technology. By that count, the OLPC is a good disruptive technology. However, Negroponte’s business model of initially insisting that poor countries purchase 1 million units at $100 a piece was a real stinker. Imagine, having to shell out $100 million for an unproven concept!! No matter how relevant and exciting the OLPC technology might have been, that is not the way to gouge poorer countries with unproven concepts and products. Poor countries have scarce resources and have the right to prioritize usage in their own unique ways.

The right way to proliferate the OLPC in these countries would have been to align with philanthropic foundations that would put up the money to deliver OLPC devices to poorer countries.

Then, this recent OLPC tie-up with M$ has come as an absolute shocker. The initial focus on the "constructionist" learning model will now vanish with M$'s focus on the dollar. Young students starting out with XP will become robotic users of mobile computing devices and applications as defined by M$, rather than develop as creative human beings capable of personalizing open source software to their unique situations through incremental or deeper changes.

I am glad Walter Bender has seen the light and moved on to Sugar Labs where he will continue with the constructionist learning philosophy.

Since Sugar is open-sourced, we would love to put it on our own hardware, the Encore Mobilis which I designed and built with a small dedicated team of engineers at Bangalore, India. We are justifiably proud of our own product but also appreciate the good features, like Sugar, in competing products. I am glad we will now be in a position to offer Sugar on the Mobilis, should we decide to, and provide our users more choice.

Good luck, Walter, and keep the open-source flag flying!! Freedom of choice is important for all of us. Let a thousand flowers bloom.

Shashank

Social and Business networking study- Make your voice count!

This is the first of a kind event- where we are using the 'social web' to spread the word about how everyday people can make an incredible impact on a Sustainable Energy Future for us all. We have selected 10 videos and you need to VOTE HERE:
http://www.zoomerang.com/Survey/?p=WEB227QE8J48Y6.

You can view the videos (they are inspiring!) or vote based on your cause. Winner gets $5000 prize and there is a $500 BEST RECRUITER prize. So if a friend told you about the event- make sure to give their name- $500 buys a lot of pizza and beer that can be shared with many friends!

Videos are as follows:
1. Shelby Tyne- Greenway Farms - S. Africa – Biogas Shelby teaches others how to manage farm waste and generate elec
2. Dan Robichaud - Canada - Solar Heater http://www.youtube.com/watch?v=Lz7k9El_d7A%20
Dan shows that anyone with a bit of initiative can create their own low-cost energy solution.
3. DAXU - China – Biomass
http://www.ashdenawards.org/video.php?action=view&nid=299&fileref=undefined&dims=undefined&title=undefined
Replacing coal with biomass bricks for home cooking.
4. Practical Action - Peru - Micro Hydro http://www.ashdenawards.org/video.php?action=view&nid=306&fileref=undefined&dims=undefined&title=undefined
Local schools keep teachers in villages with electricity.
5. AIDS - Phillipines - Hydro pumps
http://www.ashdenawards.org/video.php?action=view&nid=308&fileref=undefined&dims=undefined&title=undefined
Over 15,000 people now have access to clean and safe water
6. SKG - India - Biomass & Biogas
http://www.ashdenawards.org/video.php?action=view&nid=302&fileref=undefined&dims=undefined&title=undefined
Mothers and daughters making income from selling fertilizer and making electricity
7. BioTech - India – Biomass
http://www.ashdenawards.org/video.php?action=view&nid=301&fileref=undefined&dims=undefined&title=undefined
Keeping the streets clean and reducing the spread of disease.

8. Center for Rural Technology - Nepal - Micro Hydro http://www.ashdenawards.org/video.php?action=view&nid=300&fileref=undefined&dims=undefined&title=undefined
Each improved mill replacing diesel offsets 2.4 tons/yr of CO2
9. Deng Ltd - Ghana - Solar PV Panels
http://www.ashdenawards.org/video.php?action=view&nid=304&fileref=undefined&dims=undefined&title=undefined
Maternity wards now benefit from reliable lighting and refridgeration for vaccines.
10. SEEDS -Sri Lanka - Micro financing for Solar http://www.ashdenawards.org/video.php?action=view&nid=199&fileref=undefined&dims=undefined&title=undefined
Financing of over 52,000 solar home systems in rural areas of Sri Lanka

Social Mission as Strategy

It is becoming quite popular these days for a non-profit to position itself as a business- to show streamlined operations for example. But often a non-profit is missing a strategic view of its social return on investment. It is possible to go one sep further - have the social mission be the strategy for the company. Check my article in WITI magazine for three case studies where social mission has become a differentiating and competitive strategy for the business. They are:
Southwest Creations Collaborative, a 501c3 non-profit enterprise in New Mexico, integrates a successful contract sewing and handwork business with a social mission to enhance dignity in the lives of families. Website : http://www.southwestcreations.com/
Digital Equalizer, a flagship program of the American India Foundation, is charted with bridging the digital divide by taking advantage of computer and internet technology to engage, educate, enrich and empower India’s underserved children. Website: http://www.aifoundation.org/education/de
Vamos Blogar (Let’s Blog!), a Reuters Digital Vision Project at Stanford University, is aimed at improving employability of at-risk youth in Brazil through an innovative literacy curriculum based on multimedia web logs. Website : http://www.vamosblogar.org