Social Entrepreneurship:The Power of Profit

for Social Goodcharity is dead,

long live the social enterprise

WHO HAS DONE VOLUNTEER WORK?PLEASE, SHARE…

Time for you to start the workshop

About your volunteer work…

• This thing you did as a volunteer, could it had been done by the people you were “helping”.

• After you left, were things different?

IS HELPING ANY HELP?A journey of deceit, discovery and humbling learning

Is Help any Help?• Often, when we help…– We make life decisions for those we are helping.

• If you ask beneficiaries of an agricultural development program what their dream is, they will respond they want to own their own peace of land; ask the question to rural students on a technology institute and they will respond they want to be programmers and network engineers, etc.

• We must make sure stakeholders…– Have access to options and opportunities.– Are enabled and empowered. – Are not mere recipients, but active actors in the

diagnose, planning and implementation parts of it.

Is Help Any Help?• Often, when we help…

– We fail to see the whole picture and feel content to help.– We search the approach most efficient to us…

• What we learned from…– Volunteers flying to build houses in remote places when they can be

built by locals.– Hiring trucks in the Dominican Republic to bring donations into Haiti,

when we could hire the trucks in Haiti and provide additional income for the local economy.

– Foreign doctors and nurses flying to Haiti to do the work local doctors and nurses can do.

– How donated books destroyed a school in Haiti which depended on running a book store for extra revenue to cover its operational expenses.

– The problems of Microfinance: human development or sustainable poverty? how many go from mobile lady to telecenter, from cow owner to dairy factory?

Is Help Any Help?

• Often, when we help… – we destroy the very same environment we are trying

to help.

• What we have learned from…– obliteration of health services in Haiti.– promoting migration away from the villages

connected to the Internet and other modern services without enabling a local market and economic movement to provide professional opportunities for new generations.

Is Help Any Help?

• Often, when we help…– We measure the success of our initiatives through

tautological indicators: delivery, implementation, not actual impact.

• What we learn from…– Telecenters.– Computer Labs at Schools.– International Aid and Donations.

ENGAGE, ENABLE,EMPOWER AND CONNECT

Never Help

NEVER HELP: Engage

• Involve the stakeholders in every step of the processes, from diagnose to planning to decision making.

• Make them an integral part of every aspect.

• You come to serve, not to save.

• First you learn and understand, then you can be of service.

NEVER HELP: Enable• Build capacity:

– train, provide access to knowledge and experience.– methodologies, procedures and processes, logistics.

• Provide support:– guidance, mentoring, advice, feedback.

• Provide resources:– infrastructure, tools, funds, access to...– distribution channels, facilities, venues, etc.

• Provide options:– Make sure the stakeholders have many paths to choose from and are not

limited to the one we choose for them or offer them.

• Enable vision and hope:– Enable stakeholders to dream and envision bigger things.

NEVER HELP: Empower

• Allow the stakeholders to make the decisions or at least be part of the decision making process.

• Allow the stakeholders to decide the direction, extent, reach of the actions and process.

• Allow them to “direct” and be in power positions of the processes.

• Remember, to work for them means to work with them and to put them in the lead as soon as possible.

NEVER HELP: Connect

• Connect them with other potential, partners, parties, resources, competitors, communities.

• Connect their efforts and resources with other resources which can multiply their impact.

• Make sure you are not needed.

• Allow them to have a direct connection to the world, markets, institutions and their future without your mediation.

GIVING THEM A FISH ORTEACHING THEM HOW TO FISH?

ACTUALLY, IT’S NEITHER

It is Not About Teaching to Fish

• it is about enabling the stakeholders to take care of the lake or sea, farm the fish, add value to it – make it a special product -, market it and sell it.

• and if it fails, move on to eco-tourism, whale watching, fish racing, or biomedical research on fish scales...

Occasional vs Process Intervention

• Social Change is the result of…– engaging processes…– not occasional interventions or individual

actions…

A CHANGING WORLD…WHAT CHANGES, WHO CHANGES IT?

Time for you to take control of the workshop again

LIST 10 THINGS THAT HAVE CHANGED THE WORLD IN THE PAST 100 YEARS…

A Changing World…

A Changing World

• What drove those changes?

• Where did they come from?

• Who made it happen?

A Changing World

• Business and profit have been the main drivers of change and innovation in the past few decades…– Or so we have been lead to believe, but I will not

argue the role of war, empires, abusive accumulation of wealth, invasions, occupations, etc. in the History of Humanity and their role in our current global configuration of wealth-poverty.

Markets are More Efficient than Planning in Defining Efficiency

• Creative Destruction (Schumpeter, 1942)

– Progress and wealth are pushed forward by innovation and

entrepreneurs, who destroy old sources of wealth, victim

of their antiguity and their inability to adapt and innovate.

– It is the entrepreneur and the invisible hand of the market

and the economy, generating changes, destroying and

constructing in innovation processes what allows economic

growth.

What’s the problem with change guided by business and profit?

• Is unfair, creates inequality.

• Not a social-oriented solution:– Changes are oriented to serve the markets not the

needs of society.

• Generates gaps in society and bigger divides.– 50 years ago the difference between a poor kid and a

rich kid was clothing, food, probably owning a bicycle.– Today, the difference is a smart phone, computer,

access to the Internet and infinite knowledge at home, a video game console, credit card, etc.

A CHANGING WORLD?WHAT HASN’T CHANGED?

Think again…

Poverty, that’s what

• Those who tried to end poverty without generating wealth are still at it.

• Those who tried to end poverty by generating wealth are filthy rich now…

THE BEST WAY TO END POVERTY IS TO GENERATE WEALTH

The Fortune at the Bottom of the Pyramid

C. K. Prahalad (1998)

The Bottom of the Pyramid

• 4 billion people in the planet live on less than US$2 a day.

• 1 billion people on less than US$1 a day.

• The lower you go in the pyramid, the more the needs are the same and the differences are less important.

• A trillion dollar global market.

• Extensive geographic coverage.

• Large unattended or not well served needs…– which creates business

opportunity.

The Bottom of the Pyramid

• The lower you go in the pyramid, the more the needs are the same and the differences are less important.

• Remember Maslow.

MYTHS AND MISCONCEPTIONS

Are these True?

• The Failure Myth of Entrepreneurs.

• The Success Myth of Non-Profit.

• The Entrepreneurial Spirit Myth.

SOCIAL ENTREPRENEURSHIPThe Power of Profit

Social Entrepreneurship

• The practice of creating business solutions to address the needs, challenges, inefficiencies and inequalities in society actively engaging stakeholders with a profitable, wealth-generation and sustainable long term approach measured by a double-bottom line of financial return and social impact.

Single Bottom LineConventional Business

• You open a restaurant to make people happy with your food.

• People pay for food.

• You pay your waiters, cooks and employees.

• You pay for ingredients you buy in the markets.

• What is the most important element?

• To make a profit.– If you don’t make money, you can’t buy ingredients, pay

employees, sell your food and make people happy.

• Making a profit is your bottom line.

Double Bottom Line• You open a fair-trade, organic food restaurant to promote awareness and

support environmental, health and social issues.

• People pay for food.

• You pay your waiters, cooks and employees.

• You pay for more expensive ingredients from fair-trade and organic providers.

• What are the important elements here?

• To make a profit.– If you don’t make money, you can’t buy ingredients, pay employees, sell your

food, make people aware of the environmental, social and health issues or support them.

– You are willing to pay a higher price of ingredients and have less profit to support the causes.

• Making a profit and Having Social Impact is your double bottom line.

Double Bottom Line andSocial Return on Investment

• Business performance is measured beyond Financial Return of Investment.

• The value generated by each dollar invested includes…– The value generated for Stakeholders (employment,

access to health insurance, way out of poverty, dignity, access to education, etc.).

– The impact of our operation in the social ecosystem (child mortality, crime rate, domestic violence, etc.).

• This approach allows for…– Scenario comparison (before/after our intervention).– Comparison of return of investment on our business

against donations and funds for charity.

Social Entrepreneurship…

• Is not Charity or Philanthropy

• Social entrepreneurs are not asking for donations to give handouts to those in need.

Social Entrepreneurship…

• Is not about helping others.

• Is about enabling, engaging, empowering and connecting stakeholders.

Social Entrepreneurship…

• Is not Corporate Social Responsibility.

• Social impact is an “a priori” objective, not an “a posteriori” one or afterthought.

Social Entrepreneurship…

• Is not Social Business, which is commonly defined a non-profit business aiming to do good.

• It is about making profit and maximizing efficiency while having a double-bottom line: profit and social impact.

• You can become wealthy by doing good.

Social Entrepreneurshipis not Social Business

• The “conventional” approach of “social business” as “a non-loss, non-dividend company designed to address a social objective” creates serious limitations to accountability, scaling, efficiency, motivation, attracting investors and competing in an aggressive business world.

The Promise ofSocial Entrepreneurship

• As long as we remain true to a double-bottom line vision and committed to enabling and empowering stakeholders, profit generation and dividends can become the most powerful incentive towards efficient use of resources, transparency and realization of a growing social impact.

Some Thoughts on the Challenges of Social Entrepreneurship

• Regulations:– Conventional legislation recognizes and regulates charity and for-

profit business but not social entrepreneurship. It also provides incentives for both, but very little for social enterprises.

• Awareness:– People still ask: “are you a charity or a business?”. People think you

don’t want to make money.

• Unfair competition:– From Corporate Social Responsibility Programs and Non-Profit

organizations with no need to return a profit or efficiency.– From Businesses which don’t have a double bottom line and incurr in

lower costs.

• Is failing fast and forward an option for those who have nothing?

The “Business for Development” Spectrum

SOCIAL ENTREPRENEURSHIP EXAMPLES

how would you do it?

3 Challenges:How would you solve them?

1. Society fails to reincorporate ex-cons and recuperating drug addicts by not offering job opportunities.

2. Limited supply of drinking water in developing regions and disaster areas.

3. Not enough revenue, income and economic activities in rural areas for indigenous communities to send their kids to school.

3 SolutionsHow they are being solved by others

1. Cafeteria that employs ex-cons and drug addicts.– It exists in Singapore.

2. Water filters donated to community to sell water at low prices.– It exists in Haïti.

3. On-line marketplace of products from disaster areas and indigenous communities.– We are making it happen right now with products

from Haïti, Japan and Panamá.

LOCAL INNOVATION ANDGLOBAL ENTREPRENEURSHIP

Your very own competitive advantage

Our Local Competitive Advantage• What makes us different, makes us better.• Instead of competing against others on the same

field or terms…– We can redefine the fields or terms.

• Everyone knows what Silicon Valley is about, but…– Only Singaporeans think like Singaporeans.– Only Indians get Indians.– Only the Chinese see China for what it is and know

the secrets to its potential.

Carlos Miranda LevyGuest Educator @ Peace Boat

www.socinfo.com – www.relief20.com www.entrepreneurs20.com*e-mail: carlos@socinfo.com

Messenger: carlosmirandalevy@hotmail.comSkype: carlosmirandalevy / Twitter: @CarlosMirandaFacebook: www.facebook.com/carlosmirandalevy