Social business

Social Entrepreneurship

Why?......bcoz India is already
one of the biggest players….
• http://www.openaction.org/aylluinitiative/#

• Muhammed Yunus - Social Business.mp4

What Is Entrepreneurship?
Process of creating value by bringing
together a unique package of
resources to exploit an opportunity

Defining „social entrepreneur‟
– Development change agent working in the
market as an arena
– Innovative, opportunity-seeking,
resourceful person, group or institution
– Leads creation of enterprises, enterprise
systems or enterprise development
programs demonstrating positive
development impact

The New Buzzword:
Social Entrepreneurship
So, is social entrepreneurship
basically entrepreneurship
regardless of the context?
Or is “social entrepreneurship”
something truly different?

What Is Social
Entrepreneurship?
Nonprofits making money

What Is Social
Entrepreneurship?
For-profits doing things to show they
are not evil

What Is Social
Entrepreneurship?
For-profits doing things to show
they are not evil
Process of creating value by bringing
together a unique package of
resources to exploit an opportunity,
in pursuit of high social returns

The only big difference between
commercial and social entrepreneurship:
Denomination of the returns
Social and commercial
entrepreneurship have most of the same
characteristics

Do Social Entrepreneurs “look”
like Any Other Entrepreneur
Social concern, but also:
Innovativeness
Achievement orientation
Independence
Sense of control over destiny
Low aversion to risk
Tolerance for ambiguity

Traits of a successful social
entrepreneur
• Willingness to self connect
• Willingness to share credit
• Willingness to break free of established
structures
• Willingness to cross disciplinary
boundaries
• Willingness to work quietly
• Strong ethical impetus

The Main Difference: The
Measurement Problem
• What is bottomline? Economic profit?
Or something more?
• How do we count it?
• What is “social return on investment”
for venture philanthropists?
• Can we compare investments?

Focusing on Social Impact
Social entrepreneurs are driven by a social
mission, implying that:
Success is defined by creating the intended
social impact, not simply by
Economic value creation for owners,
managers, and employees, or
Consumption value for customers
Success in achieving this impact is both
Hard to measure in timely, reliable, cost-
effective ways, and
Open to dispute due to value differences

• Social Entrepreneurs_ Pioneering Social
Change.mp4

So why does social
entrepreneurship matter?

What Solutions do we have Today
• Government – alone is not the answer
– Inefficiencies, slow, bureaucratic, prone to corruption….
• Nonprofit Orgs. – inadequate
– dependent on donations (uncertain, demand far exceeds supply)
– “compassion fatigue”
– Raising money takes time and energy, which can be spent
planning growth/expansion
• Multilateral Institutions (World Bank…) - ineffective
– Conservative, slow, under-funded, unreliable
– Success is measured by
a) GDP (might not be helping poor)
b) Volume of loans negotiated (not measuring impact)
– Exclusively work with the government
• Corporate Social Responsibility – still evolving
– “as long as it can be done without sacrificing PROFITS”

New kind of Business
Social Business Enterprise
– Creating business models revolving
around low-cost products and
services to resolve social problems
– Social business is for „more-than-
profit’ as it combine revenue
generating business with a social-
value-generating structure
– Have 2 characteristic
• Unlimited potential for scalability
• Limited capital requirement

How can you do business and serve social goals?
Why is profit-making not conflicting with social objectives?
Profits -
– Promotes R&D, innovation, new technologies
– Increases efficiency
– Enables penetration to new geographical areas and serve
deeper layers of low-income people
– Helps recover costs and pay back investors, thus encourages
investments
PMBs (profit max. businesses) vs. SBs (social businesses)
How they are same yet different
– Employ workers, create goods & services for consumers
– Must recover full costs
– Profits are important
– YET objective is to create social benefit and not limited to
personal gains
Can there be a HYBRID i.e.
60% PMB and 40% SB??

Social Entrepreneurship Is a
National Priority
• Continued prosperity requires private
solutions to social problems and
unmet needs
• Social ventures
• Private support for these venture

Contrast with Business
Businesses also create social impacts, both
positive and negative, typically
– As unintended side-effects that
– Play a relatively minor role in
organizational decision making
Their social benefits result from an “invisible
hand,” not by design
Success is commonly defined in terms of
private value creation (usually profit)
Market discipline helps to reinforce private
value creation

Limits of Market Discipline
Social sector customer and capital markets
are less effective at ensuring intended
social impact as:
 Intended beneficiaries frequently do not
pay full cost
 Payers cannot easily assess the social
impact or the efficiency of operations
 Comparisons across organizations are
inherently problematic
 Rewards to resource providers are not
reliably correlated with performance

Thus, Social Entrepreneurs . . .
Adopt a mission to create sustained positive
social impact
Relentlessly pursue opportunities to serve
this mission
Continuously innovate, adapt, and learn
Act boldly, not constrained by resources
currently in hand, and
Exercise self accountability for cost-
effectively serving the social mission

Growing Need for MBA Skills
Used wisely business skills can:
 Create more sustained impact
 Shift philanthropic resources to more
appropriate uses
 Leverage those resources
 Improve financial strength and
capacity of social sector organizations
 Enhance efficiency and effectiveness

MBAs Can Add Value, but….
It is crucial to
 Respect the work of those in your field
 Be sensitive to the limits of markets and
business methods
 Manage potential risks and challenges
 Prepare for resistance and skepticism
 Learn your chosen field well
 Consider blended /hybrid solutions
 Follow your passion!

• TAPMI Leadership Lecture 2011 - Harish
Hande.mp4

Social business

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