understanding social entrepreneurship

S.Rengasamy - Understanding Social Entrepreneurship

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Social Entrepreneurs

"Social entrepreneurs are not content just to give a fish or teach how to fish. They

will not rest until they have revolutionized the fishing industry."- Bill Drayton, CEO

Founder of Ashoka,

"Nonprofits have to recognize that they're businesses, not just causes. There's a

way to combine the very best of the not-for-profit, philanthropic world with the

very best of the for-profit, enterprising world. This hybrid is the wave of the

future for both profit and nonprofit companies." Bill Strickland, CEO of the Manchester

Craftsmen's Guild

The nonprofit environment has changed.

Community needs are growing in size and diversity.

More nonprofits are competing for government and philanthropic funds.

Traditional forms of funding are becoming smaller and less reliable.

New for-profit businesses are competing with nonprofits to serve community needs.

Funders and donors are demanding more accountability.

"In the face of this new reality, an increasing number of

forward-looking nonprofits are beginning to appreciate the

increased revenue, focus and effectiveness that can come from

adopting "for profit" business approaches. Increasingly, they are reinventing themselves as social


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entrepreneurs, combining "the passion of a social mission with an image of business-like

discipline, innovation, and determination." J. Gregory Dees.

What do the following great people have in common? All are exemplary social entrepreneurs,

leaders who have identified sustainable solutions to social problems that have fundamentally

changed society.

Jane Addams founded Hull-House in 1889, a social settlement to improve conditions in a

poor immigrant neighborhood in Chicago, then expanded her efforts nationally. Addams gained

international recognition as an advocate of women's rights, pacifism and internationalism, and

served as the founding president of the Women's International League for Peace and Freedom.

Her work ultimately resulted in protective legislation for women and children.

Maria Montessori, the first female physician in Italy, began working with children in 1906

and created a revolutionary education method that supports each individual child's unique

development. Montessori schools allow each child to realize his or her full potential by fostering

social skills, emotional growth and physical coordination, in addition to cognitive preparation.

Muhammad Yunus revolutionized economics by founding the Grameen Bank, or "village

bank," in Bangladesh in 1976 to offer "microloans" to help impoverished people attain economic

self-sufficiency through self-employment, a model that has

been replicated in 58 countries around the world.

Vinoba Bhave (India) - Founder and leader of the Land Gift

Movement, he caused the redistribution of more than 7,000,000

acres of land to aid India's untouchables and landless. Mahatma

Gandhi described him as his mentor

Dr.Verghese Kurien (India) - Founder of the AMUL Dairy

Project which has revolutionized the dairy industry through the

production chain of milk, small producers, consumer products

and health benefits

Just as entrepreneurs change the face of business, social


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entrepreneurs act as the change agents for society, seizing opportunities others miss and

improving systems, inventing new approaches and creating sustainable solutions to change

society for the better. However, unlike business entrepreneurs who are motivated by profits,

social entrepreneurs are motivated to improve society. Despite this difference, social

entrepreneurs are just as innovative and change oriented as their business counterparts, searching

for new and better ways to solve the problems that plague society.

Social entrepreneurs are:

Ambitious: Social entrepreneurs tackle major social issues, from increasing the college

enrollment rate of low-income students to fighting poverty in developing countries. These

entrepreneurial leaders operate in all kinds of organizations: innovative nonprofits, social

purpose ventures such as for-profit community development banks, and hybrid organizations that

mix elements of nonprofit and for-profit organizations.

Mission driven: Generating social value-not wealth-is the central criterion of a successful

social entrepreneur. While wealth creation may be part of the process, it is not an end in itself.

Promoting systemic social change is the real objective.

Strategic: Like business entrepreneurs, social entrepreneurs see and act upon what others

miss: opportunities to improve systems, create solutions and invent new approaches that create

social value. And like the best business entrepreneurs, social entrepreneurs are intensely focused

and hard-driving-even relentless-in their pursuit of a social vision.

Resourceful: Because social entrepreneurs operate within a social context rather than the

business world, they have limited access to capital and traditional market support systems. As a

result, social entrepreneurs must be exceptionally skilled at mustering and mobilizing human,

financial and political resources.

Results oriented: Ultimately, social entrepreneurs are driven to produce measurable returns.

These results transform existing realities, open up new pathways for the marginalized and

disadvantaged, and unlock society’s potential to effect social change.

Today, social entrepreneurs are working in many countries to create avenues for independence

and opportunity for those who otherwise would be locked into lives without hope. They range

from Jim Fruchterman of Benetech, who uses technology to address pressing social problems

such as the reporting of human rights violations, to John Wood of Room to Read, who helps

underprivileged children gain control of their lives through literacy. They include Marie Teresa

Leal, whose sewing cooperative in Brazil respects the environment and fair labor practices, and

Inderjit Khurana, who teaches homeless children in India at the train stations where they beg

from passengers.

Whether they are working on a local or international scale, social entrepreneurs share a

commitment to pioneering innovation that reshape society and benefit humanity. Quite simply,

they are solution-minded pragmatists who are not afraid to tackle some of the world’s biggest

problems.


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Social entrepreneurs are solution-minded pragmatists who are not afraid to tackle some of the world’s biggest problems. They recognize the extraordinary potential in the billions of poor people who inhabit the planet, and they are absolutely committed to helping them use their talents and abilities to achieve their potential. Social entrepreneurs use inspiration, creativity, courage, fortitude and, most importantly, direct action, to create a new reality – a new equilibrium – that results in enduring social benefit and a better future for everyone. Social Entrepreneurs are the equivalent of true business entrepreneurs but they operate in the social, not-for-profit sector building 'something from nothing' and seeking new and innovative solutions to social problems.

Their aim is to build 'social capital' and 'social profit' to improve the quality of life in some of the most 'difficult' and 'excluded' communities.

They identify unmet social need and generate solutions based upon a close reading of the views of those most directly affected.

They normally work in creative partnership with central and local government, business, religious institutions, charities and other local and national institutions and they are skilled at constructing such partnerships.

They are skilled at redirecting, using and regenerating underused, abandoned, redundant or derelict human and physical resources (skills, expertise, contacts, buildings, equipment and open spaces).

Their work reaches the parts of society other policy initiatives do not touch. They recognise, encourage and employ skills from different faiths, cultures, traditions and backgrounds bringing them together in new and creative ways to address practical problems.

Bunker Roy is an example to understand who is a social entrepreneur. He created the Barefoot College in rural communities in India to train illiterate and semiliterate men and women, whose lack of educational qualifications keeps them mired in poverty. Today Barefoot College graduates include teachers, health workers and architects who are improving communities across India, including hundreds of "barefoot" engineers who have installed and maintain solar-electrification systems in over 500 villages, reaching over 100,000 people.

Who is a Social Entrepreneur?

Entrepreneurs are essential drivers of innovation and progress. In the business world, they act as

engines of growth, harnessing opportunity and innovation to fuel economic advancement. Social

entrepreneurs act similarly, tapping inspiration and creativity, courage and fortitude, to seize

opportunities that challenge and forever change established, but fundamentally inequitable

systems.

Distinct from a business entrepreneur who sees value in the creation of new markets, the social

entrepreneur aims for value in the form of transformational change that will benefit

disadvantaged communities and, ultimately, society at large. Social entrepreneurs pioneer

innovative and systemic approaches for meeting the needs of the marginalized, the

disadvantaged and the disenfranchised – populations that lack the financial means or political

clout to achieve lasting benefit on their own.


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Who is a social entrepreneur? The job of a social entrepreneur is to recognize what part of the society is stuck and to provide new

ways to get it un-stock. Finds what is not working and solves the problem by changing the system. Spreading solution and persuading entire societies to take new leaps. Not content just to give a fish or teach how to fish but instead to revolutionize the entire fishing

industry, so to speak. Has the committed vision and inexhaustible determination to persist until they have transformed the

entire system Creative both as goal setting visionaries and in the essential follow-up problem solving An ultimate realist- do not make political statements nor want to be burned at stake Obsessed by an idea to change social norms and patterns but when there is a flaw in the design, he is

most willing to change the design. Not ideological in broader sense: ideology closes the mind to absorbing reality sensitively. Cannot rest until his/her vision has become the new norm society wide. Great visionaries and detailed engineers committed to the persistent pursuit of all practical “how to”

issues that must be resolved for the idea to fly. Possesses an idea that spread with its own merits.

Who is an Entrepreneur? An entrepreneur is person who:

• Creates something new, something different;

• Changes or transmutes values

• Drastically upgrades yield from resources

• Creates new market and new customer by applying

management concepts & techniques

• Is a creator of wealth

• Is innovative; innovation is the specific instrument

of entrepreneurship


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Peter Drucker’s views “Innovation is the specific tool of entrepreneurs, the means by which they exploit changes as an opportunity for a different business or a different service. It is capable of being presented as a discipline, capable of being learned and practised. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.”

Social Entrpreneurship in Teaching & Research Skoll Center for Social Entrepreneurship (Oxford Said Business School) Center for Advancement of Social Entrepreneurship (Faqua Business School, Duke University) Catherine B Reynold Program for Social Entrepreneurship (New York University) Entrepreneurship in Social Sector Program (Harvard Business School) Schwab Foundation for Social Entrepreneurs (University of Geneva) and Social Entrepreneurship Course Series (Stanford University)

Indian Entrepreneurs 1. Dhirubhai Ambani 2. JRD Tata & Ratan Tata 3. Adi Godrej 4. Anil Ambani

5. Dr K Anji Reddy 6. Azim Premji 7. Bhai Mohan Singh 8. B M Munjal

9. Ekta Kapoor 10.Ghanshyam Das Birla 11. Karsan Bhai Patel 12. Kiran Mazumdar Shaw

13. K.P. Singh 14. Kumar Mangalam Birla 15. Lalit Suri 16. M S Oberoi

17. Mukesh Ambani 18. Nandan Nilekani 19. Narayan Murthy 20. Naresh Goyal

21. Rahul Bajaj 22. Dr C Pratap Reddy 23. Shiv Nadar 24. Vijay Mallya

24. Raunaq Singh 25. Subhash Chandra 26. Subrato Roy 27. Verghese Kurien

And innumerable others

Who is an Entrepreneur?

An innovator or developer who recognizes and seizes opportunities; converts these opportunities

into workable / marketable ideas; adds value through time, effort, money, or skills; assumes the

risks of the competitive marketplace to implement these ideas; and realizes the rewards from

these efforts.

According to some reports, globally this is the fastest growing sector and perhaps the only sector

that is creating gainful employment worldwide

Defining Social Entrepreneurship

Social Entrepreneurship is the process of recognizing and resourcefully pursuing opportunities

to create social value and craft innovative approaches to addressing critical social needs.

By “Social Entrepreneurs,” we mean leaders of social-purpose organizations

Two types of entrepreneurs according to motivation Profit-centered entrepreneur: An entrepreneur who creates wealth for himself and his

immediate family, regardless of adverse consequences to society and the environment.

The Socially Responsible Entrepreneur or Social Entrepreneur: An entrepreneur who helps

creates wealth not only for his benefit but also for the benefit of his workers and the community

at large, while protecting the environment for future generation.


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Even then why do people normally equate business and entrepreneurship with the profit motive?

Because of mental models

Mental models are deeply ingrained assumptions, generalizations, or even pictures or images that

influence how we understand the world and how we take action.

Very often, we are not aware of our mental models or the effects they have on our behavior

Most people become imprisoned by mental models? This has to be changed

Paradigm Shift in Mental Models

Old Economy Socially Responsible Economy

profit is supreme ―triple bottom line‖

―invisible hand‖ rules organized stakeholders get a handle of market

free access to information stakeholders‗ participation in market systems design & application

resources are depleted resources can be renewed, recycled

people can adjust to build learning organizations that economic dislocations allow people to acquire new knowledge/skills

Examples of Social Entrepreneurs 1. Amul and Verghese Kurien in Anand 2. Basix and Vijay Mahajan, Hyderabad 3. Bhagavatula Charitable Trust, Vizag,

AP 4. Child Relief (Rights) and You (CRY) 5. Grameen Bank, Bangladesh 6. FINCA – Village Banking 7. Food King – Sarath Babu, Chennai 8. Lizzat Papad (SGMU), Mumbai 9. Polyhydron, Suresh Hundre, Belgaum 10. SEWA, Ahmedabad

Mother Theresa as one of the greatest

entrepreneurs of our time. She started with an angel investment of five rupees in 1948 from the Archbishop of Calcutta. By the turn of the century, her Missionaries of Charity had 602 homes in 125 countries and her band of 4,000 sisters from as many as 40 different national origins marched to the same mission, vision and core values. How did she build that institution? What was the impetus? Disease and death that crawled in the

gutters of Calcutta and nudged her sari each time she walked past? Was it the negative energy of her surroundings? Or was it the possibility of positive outcomes? Or spreading love, joy, seeing a dying destitute as an angel of peace? It wasn’t the former. She was to recall later that she had, in fact, ‘received’ her call….


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Social Entrepreneurship Definition Matrix (Adopted from Change Fusion )

Prepared by S. Dev Appanah & Brooke Estin

Definitions by Organizations/ Individuals Innovation Social

Mission Business model

Impact Organizational structure

J. Gregory Dees, Professor of Social Entrepreneurship at Duke University

Social entrepreneurs are reformers and revolutionaries, as

described by Schumpeter, but with a social mission. They make fundamental changes in the way things are done in the

social sector. Their visions are bold. They attack the underlying causes of problems, rather than simply treating

symptoms. They often reduce needs rather than just meeting them. They seek to create systemic changes and sustainable

improvements. Though they may act locally, their actions

have the potential to stimulate global improvements in their chosen arenas, whether that is education, health care,

economic development, the environment, the arts, or any other social field.

Attack underlying

causes

Education Health-care

Economic

development Environment

Social purpose business

Community

development banks

Hybrid Organizations

Create social/ environmental

value

Local action w/ potential for

global improvement

Not-for-profit Social purpose

business

In addition to innovative not-for-profit ventures, social

entrepreneurship can include social purpose business ventures, such as for-profit community development banks,

and hybrid organizations mixing not-for-profit and for-profit

elements, such as homeless shelters that start businesses to train and employ their residents. The new language helps to

broaden the playing field. Social entrepreneurs look for the most effective methods of serving their social missions.

Arts Shelters

starting businesses

Large scale

Systemic change

Sustainable

improvements

Hybrid

organizations


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Bill Drayton, CEO and Chair of Ashoka

―A leading social entrepreneur sees a new opportunity, figures it out and then starts introducing it at the local

level.‖

Social entrepreneurs are individuals with innovative solutions to society most pressing social problems. They are

ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change. Social

entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution,

and persuading entire societies to take new leaps. Social

entrepreneurs act as the change agents for society, seizing opportunities others miss and

improving systems, inventing new approaches, and creating solutions to change society for the better. While a business

entrepreneur might create entirely new industries, a social

entrepreneur comes up with new solutions to social problems and then implements them on a large scale.

Innovative

solutions Seizing

new

opportunities

Societyʼs most

pressing social

problems

Wide/ large

scale change

Changing

the system Spreading

the solution

Professor Muhammad Yunus, Founder of Grameen Bank

Social entrepreneurship is a very broad idea. As it is

generally defined, any innovative initiative to help people may be describes as social entrepreneurship. The initiative

may be economic or non-economic, for-profit or not-for- profit.

Social business is a subset of social entrepreneurship. All

those who design and run social businesses are social entrepreneurs. But not all social entrepreneurs are engaged

in social businesses. A social business can be defined as a non-loss, non-dividend

business. Rather than being passed on to investors, the surplus generated by the social business is reinvested in the

business in order to support the pursuit of long-term social

goals. The bottom line of a social business is to operate without incurring losses while serving the people and the

planet- and in particular those among us who are most disadvantaged- in the best possible manner.

Any innovative

initiative

Serving people,

planet;

disadvantaged groups

Social business;

non-loss, non-

dividend business

Surplus reinvested for

long-term

social goals

Long-term social goals

For-profit Not-for-profit


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Social Enterprise Alliance USA

A social enterprise is an organization or venture that advances its social mission through entrepreneurial, earned

income strategies.

Social enterprise describes any non-profit, for-profit or hybrid corporate form that utilizes market-based strategies

to advance a social mission

Social

mission

Earned

income strategies

Market-based

strategies to advance social

mission

Non-profit

For-profit Hybrid

corporate

form Earned income

strategies

Social Enterprise Coalition UK

Social enterprises are businesses set up to tackle a social or

environmental need. Many commercial businesses would consider themselves to

have social objectives, but social enterprises are distinctive because their social or environmental purpose is central to

what they do. Rather than maximizing shareholder value their

main aim is to generate profit to further their social and environmental goals. Social enterprise is a business model

which offers the prospect of a greater equity of economic power and a more sustainable society - by combining market

efficiency with social and environmental justice.

Social and

environment

al need

Social or environment

al

objectives are

central to the organisation

Business to

tackle social/

environmental need

Generate profit

to further

social/ environmental

goals

Greater

equity of

economic power and a

more sustainable

society

Not-for-profit

Social purpose

business Hybrid

organisations

Jed Emerson, Stanford Graduate School of Business By ―social enterprise‖ we mean the application of business

models and acumen to address social issues, whether through non-profit or for-profit corporate structures.

Social issues Business models and

acumen to address social

issues

Non-profit For-profit

corporate

New Profit Inc Social entrepreneurs are visionaries who generate

innovations with the potential to transform a problem or field; possess exceptional abilities to rally the human and

financial resources to transform their vision into a reality;

and deliver high-quality social impact. Social entrepreneurs have powerfully demonstrated their

models, and with an infusion of financial and strategic resources can take their social innovations to scale.

Transformational

innovation Social

innovations

Infusion of financial and

strategic resources to

scale social

innovations

High-quality social impact

Not-for-profit Social purpose

business Hybrid

organizations


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Schwab Foundation for Social Entrepreneurs

A social enterprise is an organization that achieves large scale, systemic and sustainable social change through a new

invention, a different approach, a more rigorous application

of known technologies or strategies, or a combination of these.

Social entrepreneurs are leaders, change driven, passionate, innovative, risk-takers, believers in people, high standards.

A social entrepreneur combines the characteristics represented by Richard Branson and Mother Teresa

New

invention Different

Approach

Rigorous application

of known technologies

/ strategies

Large scale,

systemic and sustainable

social

change

Skoll Foundation

The social entrepreneur aims for value in the form of transformational change that will benefit disadvantaged

communities and ultimately society at large.

Just as entrepreneurs change the face of business, social entrepreneurs act asthe change agents for society, seizing

opportunities others miss by improving systems, inventing new approaches and creating sustainable solutions to

change society for the better.

Inventing new approaches

Disadvantaged communities and society at large

Sustainable solutions

Transformational change

Not-for-profit Social purpose for profit business Hybrid organizations

The Small Enterprise Education and Promotion (SEEP) Network

A social enterprise is a nonprofit organization or socially oriented venture that advances its social mission through

entrepreneurial market-based approaches to increase its

effectiveness and financial sustainability with the ultimate goal of creating social impact or change.

Social enterprise is about linking financial and moral incentives in business and the marketplace. Social enterprise

has synergies with existing poverty alleviation approaches—

value chain development, market development, and microfinance—and can augment and add value to current

initiatives as well as provide new tools.

New invention

Different Approach

Socially oriented

Poverty alleviation

Value chain

development Market

development Microfinance

Market-based approaches

Financial sustainability

Linking

financial and moral

incentives in business and

the

marketplace

improvement Economic

Improvement Quantitative

and

Qualitative measure

Policy Change

Non-profit Socially oriented

The Roberts Foundation Homeless Economic

Development Fund

A revenue generating venture founded to create economic opportunities for very low income individuals, while

simultaneously operating with reference to the financial bottom-line.

Create

economic

opportunities

Revenue

generating

venture Financial

bottom-line


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Nonprofit Enterprise and Self-sustainability Team

(NESsT) The term social enterprise to refers to "the myriad of

entrepreneurial or 'self-financing' methods used by nonprofit

organizations to generate some of their own income in support of their social mission.

The term social entrepreneur is currently used to mean very different, albeit interesting things. Some use the term social

entrepreneur to refer to ―social innovator‖ (i.e. an individual that is addressing a critical social problem in a particularly

effective or innovative way). Others, including NESsT, use

the term social entrepreneur (or social enterprise) to refer to a CSO (civil society organization) that uses entrepreneurial,

business activities as a means to generate income and/or otherwise further its mission impact (e.g., to create

employment opportunities for underserved constitutes). A

social enterprise is also referred to as a ―nonprofit enterprise,‖ ―social-purpose business,‖ or ―revenue

generating venture‖ that operates with a ―double bottom line‖ of generating financial return while simultaneously

advancing a social mission.

Entreprene

ur ial

Social

innovator

Critical social

problem

Self-financing

methods Generate own

income to

support social mission

Non-profit enterprise

Social purpose business

Revenue

generating venture

Double Bottom

Line

Financial return

w/ social mission

Non-profit

Virtue Ventures A social enterprise is any business venture created for a

social purpose--mitigating/reducing a social problem or a market failure--and to generate social value while operating

with the financial discipline, innovation and determination of

a private sector business.

Mitigating/ reducing a

social problem

or market

failure

Business venture

Financial discipline

Social value Not-for-profit Social purpose

for profit business

Hybrid

organisations

Third Sector Enterprises

Social enterprise is not defined by its legal status but by its nature: its social aims and outcomes, the basis on which its

social mission is embedded in it's structure and governance,

and the way it uses the profits it generates through its trading activities.

Social aims Profits

through trading

activities

Social

outcomes


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Social Enterprise Ambassadors

Social enterprises are profit-making businesses set up to tackle a social or environmental need. Many commercial

businesses would consider themselves to have social

objectives, but social enterprises are distinctive because their social or environmental purpose is central to what they do.

Rather than maximizing shareholder value, their main aim is to generate profit to

further their social and environmental goals. By combining a public service ethos with a commercial focus

on efficiency and good business practice, social enterprises

are able to deliver on the things that really matter, whilst remaining both independent and sustainable.

Social or

environmental

need

Social or environment

al purpose is

central to activities

Public service

ethos

Profit-making

businesses Generate

profit

to further social

and environmental

goals Commercial

focus

Independent and

sustainable

Social Ventures Australia At SVA, we define a social enterprise as a non-profit business

whose purpose is to create employment for marginalized people. Marginalized people include people with disability,

people with mental illness, refugees, indigenous Australians and other long-term unemployed people.

Employment for marginalized people

Non-profit business

Non-profit business

The Non-profit Good Practice Guide

A non-profit venture that combines the passion of a social mission with the discipline, innovation and determination

commonly associated with for-profit businesses.

Non-profit

University of Wisconsin- Madison

Social Entrepreneurship is the application of innovative ideas to solve social problems. A social entrepreneur is

someone who recognizes a social problem and uses

entrepreneurial principles to organize, create, and manage a venture to create change.

Innovative

ideas

Solve social

problem

Create

change

Enterprising Non-Profits Social enterprises are businesses operated by non-profits, with the dual purpose of generating income by selling a product or service in the marketplace andcreating a social, environmental or cultural value. The term "social enterprise" to refer to business ventures operated by non-profits,whether they are societies, charities, or co-operatives.

Selling product or service

Create social/ environment al value

Non-profit Societies Charities Co-operatives


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The following is the number of times each element is highlighted in each definition:

• Innovation – 11 times • Social Mission – 17 times • Business model – 15 times • Impact – 12 times

In summary, the central elements of social entrepreneurship/ enterprises include:

• Advancing a social mission • Applying innovative processes/ technologies • Having measurable and scalable impact

Integrating financial sustainability


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understanding social entrepreneurship

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