THE REAL PROBLEM SOLVERS

Stanford University Press

Contents

Chapter One

The term social entrepreneur and the field of "social entrepreneurship" are not universally agreed-upon constructs. In fact, they are complex, contested, and changing, with definitions, methods, and fields of engagement often as unique and varied as the individuals themselves who are innovating in this field.

My own foray into this work began in 1997, the year of the crash of the bhat in Thailand and the start of the Asian economic crisis. During my doctoral work comparing American and Japanese international development assistance, I had become a believer in the power of business in economic development. I did not go so far as to side with the "trade not aid" mantra, but I do believe that business has to be an integral part of any country's economic development strategy and tool kit. During the Asian economic crisis, Asian companies were facing new challenges that had not heretofore been part of their world. Many Asian companies, weaned within the cozy confines of their home economy, had become regional and begun to face new and important competitive challenges, including the need to compete without the support of their home governments, the realities of differing cultural expectations, and, in 1997, exposure to volatile capital markets and currency fluctuations caused by the crisis. Massive downsizing coupled with the lack of a social safety net in many Asian economies increased the political and social turbulence in the region. It became clear that companies needed to think through not only the specific challenges of responding to the crisis but also the larger question of what the role of the corporation was in society.

In response to this need, I felt it was my role to help them with this conversation and ideally to help provide the tools for them to be engaged corporate citizens. I decided to create the Asia Business Council, a membership organization of primarily Asia-based CEOs, to help them think through what the role of the corporation is in society and what it means to be an Asian firm today. I raised all the start-up capital, built the organization, recruited the members and the staff, put into place programs that had never been part of the Asian landscape, and pioneered a new type of CEO membership organization in the region. It was innovative and bold, and the Council became an important player in the nascent world of business–civil society intermediary organizations of Asia.

In the meantime, the emerging field of social entrepreneurship was continuing to grow and develop. The attributes of a social entrepreneur that I read about, such as the ability to see and seize an opportunity, unwillingness to cede defeat, tenacity, and the ability to reconfigure a strategy when approaching a dead end, were all characteristics that had allowed me to successfully create and build the Council. My family and I moved to Hong Kong in 2003 so I could continue to build up and run the Asia Business Council. When I came back to the United States, it was not immediately clear whether I could become a "serial social entrepreneur" as well as build on my own experiences and skills.

I was thinking about this issue while driving and listening to a program on social entrepreneurs airing on NPR. It featured what seemed to me to be very effective nonprofit founders and managers. What was it that made them "social entrepreneurs"? I decided that if I had these questions, surely others did as well. I conducted a small experiment and randomly asked ten people on University Avenue in Palo Alto what they thought the definition of social entrepreneurship was. Seven of them thought it was some kind of business on Facebook. Surely, there was a need for more information! So I approached my dear friend Gloria Duffy, president of the Commonwealth Club, and asked if I could create a series on social entrepreneurship in America. I proposed that the series include leading lights in the field, social entrepreneurs themselves, as well as funders, investors, and academics who are doing much to shape the field. She was enthusiastic, as were the W. K. Kellogg Foundation, the Skoll Foundation, and the Omidyar Network, who generously agreed to provide funding for the series. Each of the chapters in this book began as a talk presented as part of the series on social entrepreneurship. The goal of the series and of the book is to provide an introductory overview of the field from a range of perspectives within it. Cumulatively, the voices here present important thinking and views on the field of social entrepreneurship, how it is evolving, and the impact it is having on traditional philanthropy and nonprofit management.

This book will allow the reader to answer the following questions:

1. What aspects of social entrepreneurship are particularly compelling and inspirational?

2. How has the field of social entrepreneurship evolved, and what are the implications for traditional philanthropy, nonprofit management, and social change?

3. What barriers are being broken down and through these changes providing social good?

What Is Social Entrepreneurship?

To create the series, I first had to investigate what the evolution of thinking on the field has been and what the key questions are in the current discourse. What makes someone a social entrepreneur? What are some of the basic assumptions and agreed-upon definitions? What are the key components? What are some of the major debates currently framing the field?

The term social entrepreneur was originally coined by Bill Drayton of Ashoka in the early 1980s to refer to someone with the passion and focus of an entrepreneur who tackles a social challenge. Drayton recognized that many of the same attributes that drive traditional entrepreneurs to create new ventures also drive social entrepreneurs. Himself a great social entrepreneur, Drayton built Ashoka to find and fund the most extraordinary of these men and women around the world.

All over the world, individuals with and without resources are crafting new opportunities and finding new ways to approach age-old dilemmas. Greg Dees, a Duke University professor who has been one of the most important academic voices in the field, wrote the following definition in 2001:

Social entrepreneurs play the role of change agents in the social sector, by:

• Adopting a mission to create and sustain social value (not just private value),

• Recognizing and relentlessly pursuing new opportunities to serve that mission,

• Engaging in a process of continuous innovation, adaptation, and learning,

• Acting boldly without being limited by resources currently in hand, and

• Exhibiting heightened accountability to their constituencies.

While Dees's definition still holds, there seem to be new characteristics that are coming into play, characteristics that are breaking from traditional philanthropic and charitable organizational behavior. The goal of these new efforts is the same: making the world a better place. The extraordinary passion that these change-makers are bringing to their life's work has also not changed. What have changed are some of the ways in which this work is getting done. Much of the change in the approach has to do with the application of capitalist tools to bring about social change. In many cases, social entrepreneurship has morphed into much more of a market-based discipline.

How does one apply a business model to social change? While few would argue that one cannot take an entirely capitalist model to carry out social good, many in the field look to facets of profit-seeking behavior and traditional business models to explain and develop the field of social entrepreneurship. Jim Fruchterman, CEO of Benetech, put it this way:

Entrepreneurs must understand their market. Just about every social question and issue you may address can be recast into market questions, such as: Who is the customer? What is the value proposition? And who is the competition? Understanding your customers, their environment, and their needs is crucial to any social venture.

Elkington and Hartigan write in their book The Power of Unreasonable People that "the real measure of social entrepreneurship is a direct action that generates a paradigm shift in the way societal need is met." Within a business context, this is the goal of creative destruction, the term rehabilitated by Joseph Schumpeter to mean system change or transformation as a result of an extraordinary innovation. In Schumpeter's theory, new innovations destroy the need for old, as cars replace horses, computers replace typewriters, and so on.

This notion of an innovation changing the status quo has been embraced to a breathtaking degree by those within Silicon Valley. While social entrepreneurship has captured the imagination of people around the world, nowhere is this more true than in Silicon Valley, where many of the most successful men and women devote extraordinary resources to the continued stimulus and support of the field. As we will see throughout the book, there are significant parallels between the goals of a high-tech entrepreneur and those of a social entrepreneur. As Daniel Bornstein wrote in his groundbreaking book on Ashoka and the social entrepreneurial movement, "Everywhere you look, conceptual firewalls that once divided the world into social and economic realms are coming down and people are engaging the world with their whole brains."

Aside from the overarching goal of widespread social change, the transfer of a business mindset to civil society has brought about strategic and behavioral changes in how individuals and organizations conduct their work. These changes have primarily manifested in three ways: (1) a blurring of the demarcation between for profit and nonprofit activities; (2) an increased emphasis on results and measuring impact; and (3) a focus on scale—how to find successful innovations and cause them to proliferate widely to create the greatest societal change. Throughout this book, these three themes will provide important frameworks within which to look at the field as a whole and how it is changing nonprofit management and strategy.

The first theme, the "nonprofit" versus "for profit" question, and an increased blurring between these two, continues to be a hot topic of debate, as you will read in the various chapters of this book. Nonprofit organizations are still alive and well in the United States. We have a long history of robust civil society organizations, and this continues to gain strength: From 1995 to 2005, the number of nonprofit organizations registered with the IRS grew by 53 percent. However, the traditional definitions of the nonprofit are being challenged. The term nonprofit organization implies that the organization, focused on social change and impact, does not make a profit. In the past, this equating of social service work with nonprofit balance sheets was sacrosanct. To do good, common practice and wisdom told us, we could not also do well financially. Now that notion is being turned on its head. Not only do social investors believe that it is possible to do good and do well, but other aspects of an old mind-set are also falling away. Many of these organizations come with skilled and passionate people, innovative funding streams, and new ideas about solutions to our social problems. And many nonprofit organizations are developing profitable income streams to help both their constituencies and the sustainability of their organizations. For example, Juma Ventures, a pioneer in the field of integrating non- and for-profit activities, works holistically with youth at risk by helping them to build job skills, prepare for college, and develop business acumen. Throughout this book, stories of individuals and organizations who blur the distinction between profit and nonprofit will be presented.

The second important theme is an increased focus on and attention to results. Again, this impulse stems from the business world, where measuring results is fairly straightforward. Are we making money? In the world of social change, other measurements need to be put in place. What is success in the nonprofit world? What is the difference between a dreamer and an effective do-gooder? Social entrepreneurs are keenly interested in understanding impact. There is great effort to measure efficacy and to seek means of improvement. The Acumen Fund has created a management system called Pulse that establishes metrics to determine these very things in delivering social good. Room to Read measures every dollar against the number of schools, libraries, books published and distributed, and the time it takes to accomplish each task.

The third spirited discussion taking place within the field of social entrepreneurship is about scale. While there are numerous examples of extraordinary people overcoming obstacles to create and put in place innovative programs, many of these are rather small and confined in scale. How does one take an individual intervention and scale it up to have an impact on larger sets of communities, nations, and even the world? Social equity investors believe that private enterprise must play a role in such a pursuit. Others believe that, within the nonprofit paradigm, scale is achievable.

Who Are the Players?

There are many who are contributing to the shaping of the field and, by doing so, are breaking new ground in the way philanthropy and social change are taking place in the United States and globally. The term social entrepreneur can refer to the person who is working directly with the issue or group he or she is seeking to change. It can also be justifiably used to describe the funders who are providing financial support to those on the "front lines." Funders, such as those at Acumen, Skoll, and Omidyar Foundations, are themselves creating new and innovative means by which to find, finance, and support social entrepreneurship. Historically, it was relatively easy to separate out those creating and running nonprofit organizations from those providing the philanthropic resources they needed. Now, the lines are much blurred with individuals and organizations in several roles. Bill Drayton, for example, was the social entrepreneur who first helped to define and identify the field; he became a funder through Ashoka and is a major thinker on the evolution and future of the field. Still, to the extent possible and with the purpose of coherent organization, this book is divided into separate roles and functions with the understanding that it is the community at large that is creating the social entrepreneurship phenomenon.

This book brings together a number of the leading thinkers and doers in the field. Representing different perspectives and roles within the field, their combination of views and experience will offer a wide-ranging picture of the field as it is today and the collective vision of those driving it forward.

At the conclusion of each section, we have included a round robin among those whose talks are part of that section. The round robin format allows the reader to hear, in the speakers' voices, their answers to a number of the most compelling questions and issues in the field.

ENTREPRENEURS

The first group we are going to highlight within the field of social entrepreneurship is those working on the front lines of social change. These are the most important players in this field. Others can analyze them, fund them, advise them, but without the entrepreneurs, there would be no movement.

As Greg Dees has pointed out, "Social entrepreneurs are reformers and revolutionaries ... but with a social mission ... Where others see problems, social entrepreneurs see opportunity." Social entrepreneurs are "can-do" people who are not stymied but are, in fact, invigorated by the knowledge that no one has confronted a particular challenge in exactly the same way that they plan to confront it. For this group, the idea of "starting something" can be exhilarating and motivational.

Social entrepreneurs believe that they have a new idea, product, or process that can benefit a community or a segment of a community in important ways. Social entrepreneurs are often using market tools to make the world a better place. Like for-profit entrepreneurs, they must find a market for their product, new capital to get it going, and ongoing funding or a revenue stream to ensure sustainability.

It was important to identify representative as well as inspirational social entrepreneurs so as to showcase the abundance of issues that are being addressed in innovative ways. The good news is that there are numerous extraordinary people in the United States and around the world doing innovative work. The challenge is that there are so many people to choose from. In the following descriptions, I explain why each of these social entrepreneurs was asked to be part of this effort.

(Continues...)

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