by Karlo Marcelo
March 16, 2011
Business schools, governments and foundations are investing in trainings and encouraging scaling-up among a new type of innovator. Social entrepreneurship is certainly a buzz word today—a phrase that combines business sense with a do-gooder moral compass. But what does the term mean when put into practice? “Social entrepreneurs are a phenomenal example of how individuals marry their passion with their skills,” said Cheryl Dorsey, President and CEO of Echoing Green at the 2010 National Conference on Citizenship. “It has nothing to do with what they’re doing, but it’s how they’re doing it—how they’re walking through the world with purpose.” In a recent post on the New York Times Small Business section, Jay Goltz tries to untangle what social entrepreneurs do: “I pause because I wonder whether social entrepreneur is really entrepreneurship the way I understand it — where a business owner takes risk in the hope of making money. I guess my question is this: If it’s mostly about the social good, what makes it entrepreneurship? And if it’s mostly about the entrepreneurship, what makes it social? Isn’t the phrase an oxymoron? . . . I’ve been consumed with the other kind of entrepreneurship — the kind where you spend most of your energy trying to solve your own problems, not those of society.” And there Goltz strikes on the first important aspect: the focus on society’s needs and not so much what the market dictates (which is focused on the bottom line only). It’s also entrepreneurship because individuals take huge risks to create innovative models to solve these societal challenges (and perhaps close-up shop if the problem is solved). An article in The Economist tries to untangle the same issue and investigates the role that government, on both sides of the Atlantic Ocean, is playing to encouraging these social entrepreneurs. The struggle with these social enterprises, is that they do not scale quickly, in the way that successful businesses do. A traditional business person would look to gobble up that market space with help from private investment. “But how do you know that an innovation works? Businesses have profit; the social sector lacks a similarly simple yardstick. Often the things that are easiest to measure—say the number of people coming through the door of a community centre—tell you nothing about an activity’s effects.” What makes social entrepreneurship different than traditional business and charity is that its yard-stick is not just dollars and cents, and that the funds it garners to run its operations also include private investments (which mean that there is a chance for a return on those bets for investors). Another hurdle outlined by The Economist article is that the government is slow to distribute money to spur the growth that is normally seen in the private sector. Without access to capital, a social enterprise could be doomed to fail. Instead of the entrepreneur scaling, it becomes an issue of whether investors feel that innovation is happening (for which there isn’t a good metric) and then encourages the model to be replicated. This process is more similar to policy diffusion than it is to hyper-growth in business. The Center for the Advancement of Social Entrepreneurship at Duke University, points out that social entrepreneurship “implies a blurring of sector boundaries.” This is also a view shared by many Millennials—that business, not-for-profits and government can do good in the world, and that one sector will not necessarily make the other sector obsolete. This generational shift is heard among leaders in America’s business schools and is one of the two factors being pointed to for catapulting social entrepreneurship to new heights: “But the current generation of young people also has a strong sense of social responsibility,” said Thomas Moore, dean of the College of Business Administration at Northeastern, which has some 200 students enrolled in social enterprise programs. “There’s a lot of interest in social enterprise at the business school, and I think it’s partly generational,” Moore said. But it might not all be a generational shift; the financial crisis is one factor that has “prompted MBA students to re-examine their lives and careers. Many have opted to use their degrees to better society and the environment by embarking on green careers, non-profit management, and sustainability investing.” In many ways social entrepreneurship overlaps with charity work and business entrepreneurship, and while it is the hot topic/career of today, we should really understand how it is different (if it is) so that the public and private sector better understand their roles when interacting with these enterprises. Discussion questions: 1. What do you think defines a social entrepreneur? 2. Is this a generational shift or a phenomenon that we now have given a label? 3. Are the sectors blurring when it comes to “doing good?” If so, does this create an environment ripe for pro-social collaboration? ______ Piece contributed by NCoC.net commentator Karlo Barrios Marcelo, CEO of Karlo Marcelo Consulting, LLC.