Giving social entrepreneurship a fair go

When we started to comb the globe 15 months ago for outstanding social entrepreneurs, we faced one major hurdle: The very definition of social entrepreneurship. We found ourselves in the strange situation of having to define social entrepreneurship by what it is not.

Social entrepreneurship is not synonymous with corporate responsibility.

It is not a different form of charity.

Nor are social entrepreneurs simply charities becoming businesses.

That said, social entrepreneurs can be found in the business sector and in the charity sector.

Social entrepreneurship is a term that captures a unique approach to social problems, an approach that cuts across sectors and disciplines.

It is an approach that is grounded in certain values and processes that are common to each social entrepreneur, independent of whether his or her area of focus has been education, health, welfare reform, human rights, workers' rights, environment, economic development, agriculture … and so on.

It is those values and processes that set the social entrepreneur apart from the rest of the crowd of well-meaning people and organizations who dedicate their lives to social improvement.

The best way to describe social entrepreneurship is by example. Let me start out with two. Muhammad Yunus, is the world’s best-known social entrepreneur. Thirty-some years ago, he was a young professor of economics in his native Bangladesh. He was driven to find a way to convince banks to give loans to the poorest people in his country. He was thought to be mad. The poor have no collateral, he was told. Lending them money is folly. So Yunus decided to start a Bank for the poor. The first loan was for about $US30. Today millions, women in particular, have been able to pull themselves out of poverty thanks to the Grameen Bank. The Grameen Bank was the first micro-lending institution in the world. Today, microcredit is mainstreamed even into the most conservative institutions. Yunus changed forever the myth that being poor was synonymous with being a high-risk investment. Grameen’s repayment rate over the years has been between 95 and 98 per cent. Other micro-finance institutions across the world that emulated Grameen report the same returns.

The second example comes from India. In 1972, Ela Bhatt was a lawyer with the Textile Labor Union in Ahmedabad. She realised that 89 per cent of the Indian workforce was made up of impoverished women who eked out their existence through cigarette rolling, waste-picking, salt mining, head loaders, street vendors, and the like. Ela did the unthinkable, again, against much opposition. She formed the Self-Employed Women's Association (SEWA), the first union in the world to organise and empower the poor and self-employed, increasing their bargaining power, economic opportunities, health security and legal representation. Today SEWA is the largest labor union in India and has influenced national and international policies in support of informal employment around the world.

When we talk about the underlying core values that drive social entrepreneurs I would cite:

• an unwavering belief in the innate capacity of all people to contribute meaningfully to economic and social development;
• a driving passion to make that happen, be it through a new invention, a different approach, a more rigorous application of known technologies or strategies, or a combination of all three;
• a practical but innovative stance to a social problem, coupled with dogged determination, that allows them to break away from constraints imposed by ideology or field of discipline, and pushes them to take risks that others wouldn't dare; and
• a healthy impatience. They don’t do well in bureaucracies because they don't wait for things to happen. They are social change agents that make things happen.

What have we learned from our immersion with social entrepreneurs, reviewing their personal stories, accomplishments, frustrations and challenges?

We have learned that even the most outstanding social entrepreneurs, such as Yunus and Ela Bhatt, have three major interrelated needs: legitimacy-credibility, opportunities for networking among themselves and with others who can mobilise support for their initiatives, and financial and/or in-kind resources.

Credibility comes from sticking to what society has as established as accepted fields of work and practice. But social entrepreneurs tend to defy traditional practice. They don’t fit into the charity mold because they believe hand-outs simply generate more dependency and disempowerment. And they don’t fit the business model because their bottom line is social value creation.

Gisèle Yitamben from Cameroon founded ASAFE based on her belief that African women could develop into successful business entrepreneurs if provided training and development support, alternative financing and access to e-commerce. All we hear about Africa has to do with malaria, HIV-AIDS and corrupt governments. So you can imagine the level of scepticism that Gisèle met as she persisted. ASAFE today supports thousands of women entrepreneurs in Cameroon, Guinea, Benin, Chad and the Democratic Republic of Congo. ASAFE is actively engaged with technology companies and business incubators to help African entrepreneurs overcome the digital divide. With 3,000 paying members, it is connecting successful entrepreneurs to one another and to larger markets.

Takao Furuno is a Japanese farmer with a different problem common to outstanding social entrepreneurs. Furuno, committed to environmental sustainability, came upon an ancient practice in Asian rice farming: releasing ducklings in rice paddies to remove weeds. By perfecting and spreading this technique since 1988, today over 75,000 small rice farmers throughout Asia have taken up his method. Rice yields from farmers using Furuno's method are almost twice that of conventional plots in the same area, and "duck rice" is sold at 20-30 per cent higher than chemically-grown rice. But in the past thirty years, the annual growth of chemical fertilizer use on Asian rice has been from 3-40 times faster than the growth of rice yields. To stem this tide, Furuno does not need money. He needs legitimacy and access to networks that will support his uphill battle against enormous vested interests and power that lie with the agro-industrial complex and governments they support.

What are we as a Foundation doing to respond to the need even the most outstanding social entrepreneurs have for networking opportunities, legitimacy and resources?

First of all, we are trying to clarify what constitutes social entrepreneurship. The problem of definition is a very real one. Most frequently, it is equated with charity. I suspect Australian social entrepreneurs face the social entrepreneur-as-charity misrepresentation continuously. The false dichotomy between those who work in the social arena and those who work in the financial arena will continue as long as the legal structures and mentality exist dividing what is "profitable" and "what is not" … what type of work gets a tax break and what does not. Anyone who has worked in both the financial and social worlds knows that every financial investment has social ramifications, and vice versa.

Interestingly, social entrepreneurs need to be supported as they interface with their counterparts in the business world, particularly in the area of communications. Take for example the specific instance where Fabio Rosa, one of our Schwab entrepreneurs, met at the Forum’s meeting with the CEOs of the seven biggest energy companies in the world. What an opportunity! Rosa has developed a scalable system to provide affordable solar energy to poor people who currently spend $8 to $15 a month on non-renewable fuels for lighting. His model allows investors to recoup their investment in five to ten years. This target market encompasses most of the two billion people in the world who still lack electricity and who, by burning fossil fuels, contribute significantly to global warming. Rosa's challenge was to convey to the energy CEOs that they should work with him.

How? One way could be Rosa asks for help by appealing to fears such as terrorism, environmental degradation, etc., or principles such as - we can't continue to neglect such as the fact that one third of the planet is being left out of development, etc.

Another approach could go like this: Rosa explains to the CEOs something like "This is the largest untapped energy market on the planet. You guys need alternative distribution systems to reach these people. And I can show you how to reach them.!" As business people, the CEOs know that if they want to reach a new market they need new distribution mechanisms. Now the discussion is all about: What is the value proposition? What is the win-win deal? It's a totally different conversation than asking for a hand out, and more hold more promise in initiating a working partnership.

We in the Foundation are strategically placed to assume a brokering role, strengthening the business-social bridge. Our Founder and President is the same man who 30 years ago founded and presides over the World Economic Forum. We want to use our leverage to attract the notice of governments and business people so that the scalable solutions of social entrepreneurs can be replicated, improved and expanded, so that their practical insights can be incorporated into government policy and business initiatives.

I'd like to conclude with a few messages.

First to the business community. For those of you who think running a social enterprise is easy, think again. I think if more business people understood what it is like to manage a social enterprise with a double bottom line they would be more humble.

Turning to those in the management consulting world, there is much talk of unleashing the metrics, methods and talent pool of the private sector as the panacea to end problems of poverty and unemployment. But the private sector has a lot to learn about delivering better outcomes for customers. For example, social entrepreneurs in education are trying to change the performance of their customers – children - in vital skill areas. Finding different ways of helping them be better writers, better critical thinkers, able to attend university. When is the last time anyone asked Nike or Reebok if its shoes actually make anyone run faster or jump higher?

To the charity sector. It is no secret that many of you bristle at the mere term, "social entrepreneurship". Charity is still strongly suspicious of the business community, and has had good reason to be. But something very important is happening around the world, and it will happen in Australia as well. More and more in the business community are serious about addressing social issues. Businesses, large and small, are having to redefine their value proposition to include social and environmental as well as financial bottom lines. But if that does not convince you, then one thing should: poverty elimination will never be achieved if what your bottom line boils down to the number of grants or dollars you give away every year. Feeling good about giving money away is not a product. Welfare is not only disempowering, it is the reason why people remain poor.

To those in who think that using the tag of "social entrepreneur" may access new funds, think again. You can’t wake up one morning and decide you are going to be a social entrepreneur. Sit around with a group of social entrepreneurs and you will quickly realize that they can’t help being the way they are. They are born that way.

Similarly, for business school academics, I don’t believe you can teach someone to be a social entrepreneur. Of course, a social entrepreneur can learn to be better at management, financial accountability, human resource development … and there are courses to help them. But the continuous energy to imagine, innovate, implement, improve on innovation, scale up, diversify, defy the usual, break the patterns, move in a new direction … that exhausting and exhilarating quality of what makes a social entrepreneur … no training course will ever teach that.

Finally, to those of you in government. Don’t be fooled into thinking that a manager of a social enterprise and a social entrepreneur are the same. This will be a great temptation for governments in particularly. They are increasingly unable to deliver public services and the route to privatize those same services has a corrosive effect on equity. So, a confused idea of social entrepreneurs that equates them with people who run social enterprises has emerged. But social entrepreneurs tend to be less managers than they are practical visionaries that innovate because they have a thorough understanding of their field and the context in which they develop their innovation. One does not qualify as a social entrepreneur by getting a degree in the subject.

Social entrepreneurs are the flame that ignites the fire of social transformation. This is not business as usual. That flame must be fanned and nurtured by those who understand what social entrepreneurship is about and delight in its promise to achieve social transformation.