APS1015H Class 1 - Definitions and Motivations for Social Entrepreneurship

APS 1015H: Social Entrepreneurship

Class 1: Definitions and Motivations for
Social Entrepreneurship

Wednesday, September 14, 2011
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
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© Norm Tasevski & Karim Harji

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Before we begin…

This course is designed for those that want to start a
social venture, and/or work in social enterprise

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Course Director – Norm Tasevski

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Course Director – Karim Harji

5


What Makes YOU
a (Social)
Entrepreneur???

6


Agenda

• Class Intros
• Syllabus and Class Structure
• Ground Rules
• Defining Social Entrepreneurship
• What motivates the social entrepreneur?
• What did we learn?
• Next week

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Syllabus

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Class Rules

– Participation - quality, not
quantity!
– No stupid questions (only
stupid answers)
– Respect your classmates –
attend and be punctual!

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Defining Social Entrepreneurship…

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First, we need to understand
entrepreneurship...

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Entrepreneurs…

…are motivated
12


Entrepreneurs…

…are innovative
13


Entrepreneurs…

…are resourceful
14


Entrepreneurs…

…take chances
15

How is Social Entrepreneurship
Different?

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Entrepreneurs…

…are motivated …are innovative …are resourceful …are risk takers

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But, for the social entrepreneur…
…motivations are different

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And…
…innovation is different

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And…
…resourcefulness is different

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And…
…risk taking is different

21


An Example – “Civic Engagement, Scaled
Up”

22


Other Differences
“Social entrepreneurs are not content just to give a fish or
Focus on “systems how to teach fish. They will not rest until they have
thinking” and revolutionized the fishing industry”
“systems change”: Bill Drayton

“(Social entrepreneurs) work in areas where there is partial or
total market failure…what distinguishes them is that they are
Seek “profit” in prepared to strike a very different balance when it comes to
traditionally
unprofitable pursuits:
creating value for those who would not normally
be able to afford it”
John Elkington

David Bornstein: “Why do you work on the kinds of projects you do? Why don’t
you just want to make a lot of money?”
Possess a strong
“ethical impetus”: Fabio Rosa: “I am trying to build a little part of the world in which I would like to
make people
live. A project only makes sense to me when it proves useful to
happier and the environment more respected, and when it
represents a hope for a better future. This is the soul of my
projects.” 23


Some Definitions
• “Social entrepreneurs identify resources where
people only see problems. They view the villagers as
the solution, not the passive beneficiary. They begin
with the assumption of competence and unleash
resources in the communities they are serving”
David Bornstein

• “A social entrepreneur is someone who recognizes
a social problem and uses entrepreneurial
principles to organize, create and manage a
venture to make social change”
Wikipedia

24

Defining Social Enterprise…

26


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What is a Social Enterprise?
• Organizations (non-profit or for-profit) that imbed
both social purpose and business purpose into their
organization

• Returns are both Social (i.e. impact) & Financial (i.e.
profit)

• Key distinguishing factor: How deep social &
business purpose is imbedded

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A Question…

What makes a business a business?

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Components of a Business

A transaction

A product/service

A goal A legal form

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How is Social Enterprise Different?

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Social Enterprise has…

Yep
Absolutely
A transaction

A product/service
This one’s
complicated
Yeah, but
A goal A legal form

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The SE Product/Service

It’s still…

But…
• “Social benefit” is added somewhere on the value
chain

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What is Social Benefit?

• For our purposes, social benefit may arise when one
attempts to overcome an injustice or inequity in
society that the market, on its own, cannot respond
to
– E.g. creating employment opportunities for individuals that may not otherwise be
employable in the marketplace

• A similar concept – “environmental benefit”

34


Exercise
• Add social benefit to:

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The SE Transaction
Traditional Business Social Enterprise

Customers

Customers

“Clients”
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The SE Goal - Social vs. Financial Purpose

Social Purpose
– Creating a “social return” by making positive change
within an inequitable social system
• Examples: Reduced Poverty, Improved Literacy

Financial Purpose
– Creating a “financial return”, usually through the sale of
products/services in the marketplace

Blended Purpose
– Effecting social change by combining social and financial
return
– Also called “Blended Value”

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Viewing SE Through a “business lens”
• How you think about cost
– Additional costs borne on business that achieves a social
benefit (how do you incorporate? Valuate it?)
• How you think about investment
– Opportunities to get investment through traditional models,
but because your business is hybrid, the investment needs
to be hybrid (i.e. layering of different financing
mechanisms)
• How you think about success
– Part of the social enterprise motivation is social, so you
need to consider success in a dual lens. How do you
articulate success in both of these spheres?

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The Legal Form
• No clearly defined legal form for social enterprise in
Canada
• “Form follows function”

Spectrum of Social and Financial Returns
Nonprofit Structure

For-profit Structure
Emphasi Nonprofit Business Emphasi
s on Conventi with Social with Conventi s on
Social onal some Enterpris social onal Financial
Return Nonprofit earned e responsi Business Return
income bility
Philanthropic Capital

Commercial Capital

Source: Stanford Social Innovation Review, Spring 2008; Jed Emerson cited as contributor 39


A test…
I am:
• A retailer Facts:
• Sells goods at rates affordable by low- • $115M raised for charity since 1995
income individuals ($18M in 2009)
• Employs individuals with barriers to
employment • Over 1,000 environmentally-
• Goals: approved products on sale
– 92% of imported goods from green • 1700 new jobs created in Canada in
factories 2009
– 95% of waste redirected from landfill
– Desire to be supplied 100% by
renewable energy by 2015

Social Enterprise or Not?

40


A test…
I am:
• A café
• 84% of all coffee ethically sourced (goal of 100% by
2015)
• Supports farmers by a) selling fair trade coffee, and b)
providing loans to coffee growers
• Purchase carbon credits to offset production
• Goals:
– 100% of cups to be reusable/recyclable
– Use recycled/renewable materials in café
construction
– Organize a “month of service” (employees act as
“change makers” in their communities)

Social Enterprise or Not?
Facts:
• Sells approx. 10% of all Fair Trade coffee globally
• Almost 200,000 volunteer hours made by employees worldwide
• Over 53,000 youth supported and engaged in community events

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What does this mean?

Social CSR
Enterprise

Social Complexity
Enterprise

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What SE is and is Not

Social Enterprise Is Not… Social Enterprise Is…

• A fundraising strategy (i.e. a “give” • A business line (i.e. a “sales” mentality)
mentality)

• Solely focused on either “customers” • Focused on both “customers” and
or “clients” “clients”

• Dependent on restricted funds for • Sustainable (ideally “self-sufficient”)
operations (i.e. not sustainable)

• An event or one-off activity (e.g. • A continuous, market-driven activity
conferences, bake sales)

• Providing value to clients only • Providing value to both “clients” and
“customers” (and distinguishing
between both!)

• Quick • A venture that may take several years
to become profitable/sustainable
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Some Definitions
• “An organization or venture that achieves its primary
social or environmental mission using business methods.”
Social Enterprise Alliance

• “Business ventures operated by non-profits, whether they
are societies, charities, or co-operatives.”
Enterprising Non-Profits (enp)

• “… social mission driven organizations which apply
market-based strategies to achieve a social purpose.
The movement includes both non-profits that use
business models to pursue their mission and for-profits
whose primary purposes are social.”
Wikipedia

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Motivators for Social Entrepreneurs…

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A Question…

What motivates you??

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Some Definitions
• Internal and external factors that stimulate desire and energy in people to be
continually interested in and committed to a job, role or subject, and to exert
persistent effort in attaining a goal. Motivation is the energizer of behaviour
and mother of all action. It results from the interactions among conscious and
unconscious factors such as the (1) intensity of desire or need, (2) incentive or
reward value of the goal, and (3) expectations of the individual and of his or
her significant others.”
BusinessDictionary.com

• “Motivation is the activation or energization of goal-orientated behavior.
Motivation may be rooted in the basic need to minimize physical pain and
maximize pleasure, or it may include specific needs such as eating and
resting, or a desired object, hobby, goal, state of being, ideal, or it may be
attributed to less-apparent reasons such as altruism, selfishness, morality, or
avoiding morality. Conceptually, motivation should not be confused with
either volition or optimism. Motivation is related to, but distinct from, emotion.”
Wikipedia

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In response to
why people are
not giving to
the Pakistani
flood in the
same way as
they did for
Haiti, one
woman said:

“It’s a rogue
state, if they
can afford the
nuclear bomb
they can look
after their own”

48


Costin Militaru, an
outreach
worker has met
addicts as young as
9 years old. "His
family had no money
for food. He was
hungry and kept
crying, so they fed
him heroin," Militaru
says. "If you're high,
you don't need food.”

49


“On March 24, 1989,
the Exxon Valdez ran
aground in northern
Prince William
Sound, spilling 42
million liters of crude
oil and contaminating
1,990 kilometers of
shoreline. Some
2,000 sea otters,
302 harbor
seals and about
250,000
seabirds died in
the days immediately
following the spill.”

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A total of Tasevski & Karim Harji
© Norm
32,700
different people
stayed in Toronto's
emergency shelters
in 2005. 4,600 were
children.

Over half a million
Toronto households
live below the
poverty line

1 in 10 homeless
report attempted
suicide in 2006

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So What Motivates The
Social/Environmental Entrepreneur?
“…it was an epiphanal experience…”
Ray Anderson, Interface Carpets



“I heard the same story again and again. Someone had
experienced an intense kind of pain that branded
There was
them in some way. They said, ‘I had’ to do this.

nothing else I could do.”
Jody Jensen, Ashoka


“…that made a real impression on me…”
Jeff Skoll, eBay, Skoll Foundation, etc.



“I was teaching in one of the universities while the country was

suffering from a severe famine. People were dying of hunger, and I
felt very helpless. As an economist, I had no tool
in my toolbox to fix that kind of situation.”
Mohammed Yunus, Grameen Bank



“…powerful moments of inspiration…”
Jacqueline Novogratz, Acumen Fund


What about…


What did we learn?

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Next Week

• 1st deliverable:
– Pick a social/environmental issue (international or
Canadian), and…
– Pick a group of 4 (we will finalize groups next week based
on final class numbers)

• Readings

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