Social Entrepreneurship: Harnessing the market to solve world problems
By Darcy Hitchcock; interview with Tyler Spalding, Ashoka
Copyright 2011 International Society of Sustainability Professionals; Images courtesy of Ashoka
Charity is a good thing, but we are not likely to solve the world's problems with donations. We need to harness the power of the marketplace, to pursue what is called social entrepreneurship. And according to Tyler Spalding of Ashoka, doing this is also key to the long-term survival of traditional corporations because of the rapid pace of change in the world. Social entrepreneurship transcends typical corporate social responsibility (CSR) activities where organizations try to look good. It's becoming central to any serious competitiveness strategy.
We are not likely to solve the world's problems with donations.
What is a social entrepreneur?
A social entrepreneur is an individual who sees a problem and as Tyler Spalding of Ashoka's Global Marketing team puts it, “Bets their life on an innovative and system-changing idea” to solve that problem. Using a market-based approach, the social entrepreneur builds a business model that is not dependent upon outside funding (donations/grants) to continue operation,whittling away at the problem.
It's good to have a great idea; that is an important step in becoming what people at Ashoka calls a 'changemaker.' But what Ashoka looks for is a pattern-changing idea, one that can ripple around the world. Over 90 percent of Ashoka Fellows (social entrepreneurs who received support from Ashoka to launch and scale their ventures) had their programs replicated within 10 years and over half changed national policy.
“To do this,” Spalding explains, “social entrepreneurs must encourage others to be changemakers. It's not until they can inspire and recruit others in hundreds and thousands of communities that will they have the impact they want to have.”
The social entrepreneur model, then, has to be empowering. This is not about the Great White Father or the White Man's Burden, some wise outsider swooping in to solve someone else's problem. It starts from the ground up. “People on the ground know their challenges much more than anyone else. They can identify what solutions will work. They capitalize on the trust they have built by virtue of being a part of the communities in which they are building solutions,” Spalding emphasizes.
Social entrepreneurs are also able to put more of the investment to work. Spalding bemoans many large charities with behemoth overhead budgets. Social entrepreneurs typically have tiny overheads so more of the money can be spent directly addressing the problems they are working to eradicate.
"Certain individuals have the vision and skills that can affect their entire communities."
One person can make a difference
Empowering people on the ground may seem like a naïve notion in this age of multinational corporations. But certain individuals have the vision and skills that can affect their entire communities. Bill Drayton, before founding Ashoka, traveled in India to test this notion. He went door to door in one community and asked each person to write on a card the name of someone who had changed their lives the most. Then he organized the cards to reveal the social network and they all led to one woman, Gloria de Souza, who had spearheaded an experiential learning approach to education. Her education system, based on creativity and problem solving rather than traditional rote skill development,inspired positive changes throughout her entire community. Ashoka was born out of this realization: that there is nothing more powerful than a systems-changing idea in the hands of an entrepreneur. Thirty years later,there are more than 3,000 Fellows who continue to prove this concept to be true.
"There is nothing more powerful than a systems-changing idea in the hands of an entrepreneur."
It's not just for developing nations
Many people think of social entrepreneurship mostly in regards to solving problems in underdeveloped nations, problems like lack of access to food, clean water and medicines. But in developed nations, it's also easy to envision any number of issues that may lend themselves to a social entrepreneur approach:hunger, environmental degradation, wrongful incarceration, and economic inequality, just to name a few. Interestingly, some initiatives, such as microfinance, started in developing nations and then later the insights were imported and applied to the needs in developed nations.
Consider Jill Vialet who started Playworks because students in elementary school were getting less and less time to be creative and build relationships with their fellow students, even during recess. Instead, there had been a shift toward classroom education, teaching to the test. She knew that to be successful today, students needed more than knowledge. They needed to know how to work together. Skills like empathy, teamwork and leadership were going to be even more critical to their success than the ability to remember the capital of each State or know how to solve a quadratic equation. So she started Playworks where she teaches and consults with schools and teachers, showing them how to build structured games and creativity back into recreational time. She started in San Francisco but now works all over the country.
Playworks: Putting creative playback into recess
Jill Vialet is working to ensure that everychild learns from play every day. She is doing this through her organization, Playworks, which is bringing recess back to the schools-as a place of group play. Jill, elected an Ashoka Fellow in 2004, started the organization with the recognition that it is absolutely essential that we make sure every child in America gets to play every day so that they can grasp the concept of empathy, and then practice and deepen it. From its roots in the San Francisco Bay Area, Jill's vision has now spread to 170 schools in 10 cities. Her plan is to serve 650 low income schools in 28 cities by 2012. With these schools providing encouragement as models, more and more communities are taking advantage of Playworks' comprehensive training and technical support programs which will engage a further one million students by 2012. A number of its insights are also now spreading globally through Ashoka's collaborative entrepreneuring for children and young people.
Social entrepreneurship can also be used as a tool to help solve previously intractable social challenges. Dune Lankard, a member of the Eyak Tribe, is working with indigenous populations in Alaska to make conservation pay. Through land trusts and other mechanisms, he's creating an incentive to conserve rather than harvest Alaska's bountiful but fragile ecosystem.
Cultural Conservation Initiative:Conservation as an economic and political tool for native peoples
That was just the beginning of Dune's efforts to convince Native communities and policy makers that reserving renewable sources of food, energy, and water is in their best, long-term economic interest. Under the umbrella of The Cultural Conservation Initiative (CCI), he founded three Native-led organizations: The Eyak Preservation Council achieves landmark conservation victories through advocacy, coalition building, and legal action; the Native Conservancy returns stewardship of lands to Native hands; and the Fund for Indigenous Rights and the Environment provides grants and guidance to grassroots organizations promoting healthy, sustainable communities.Dune Lankard, an Eyak Athabaskan, grew up on the Alaskan coast, where fishing was a livelihood. On March 24, 1989, the Exxon Valdez tanker spilled 30 million gallons of crude oild into Dune's “backyard,” the Prince William Sound. Dune responded by forming a coalition that saved 700,000 acres of wilderness vital to the subsistence lifestyle of Native people, and home to the world-famous Copper River Salmon through a $1 billion restoration settlement from Exxon.
Developing nations can solve their own problems
Social entrepreneurship is thriving in developing countries (Ashoka, afterall, was started in India). Spalding told a story about their first Fellow in Mexico, Antonio Paz Martinez, who started Campamentos Unidos. Martinez was areal estate developer interested in urban planning. His organization provides emergency housing for low-income families so they can purchase quality apartments at about half the cost of units available through the private sector. His vision goes far beyond just construction. He builds thriving communities. And since 1985, he has built 70 buildings, representing over 3000units in Mexico City alone. He has a waiting list of 5000 buyers.
Modern, large scale industry cannot begin to provide jobs for most people in the developing world. As urbanization continues (Brazilians and Mexicans, e.g., are already over 70 percent city-dwellers), more and more people have to create their own jobs. This is especially so for the poor, exactly the people with the least training, the least access to credit or other supports, and the fewest contacts. Through hard work and grit they scavenge, build, cook, sew, and provide a thousand other goods and services, almost always in tiny, weak units.
You don't have to be a do-gooder—Bottom-line focused businesses benefit too
One of the key trends Spalding sees is the increase in the number of large companies partnering with social entrepreneurs to meet shared goals. The company may be hoping to eventually have access to a new market but the twopartners must be committed to the same goal and develop trust from the beginning.
In “Working Together, Corporations and Social Entrepreneurs Can Reshape Industries and Solve the World's Problems” (Harvard Business Review, September 2010) Bill Drayton and Valaria Budinich explain:
“For-profit organizations today have an opportunity to collaborate with citizen-sector organizations (CSOs) on large-scale problems that neither group has been able to solve on its own. The power of such partnerships lies in the complementary strengths of the participants: Businesses offer scale,expertise in manufacturing and operations, and financing. Social entrepreneurs and organizations contribute lower costs, strong social networks, and deep insights into customers and communities.
“But to work together effectively, they must focus on creating real economic as well as social value. We believe they can do so by forming what we call hybrid value chains (HVCs), which capitalize on those complementary strengths to increase benefits and lower costs.”
With so many of the world's population being excluded from the existing markets, there is a huge opportunity.
“Consider the housing industry. Currently, one-sixth of the world's population lives in slums and squatter cities. That's a billion people who are shut out of the formal housing market. If you're a cement company, a tile maker, a brick manufacturer, a banker, a developer, or a utility, just think: What would it mean for your business if you could unlock the potentialof a trillion-dollar housing market?”
But you can't open the market if you can't help people afford the products you can offer. That's where a hybrid value chain, a collaboration between business and local NGOs, comes in.
Danone (which US consumers may recognize as the manufacturer of Dannon yogurt) approached Mexican social entrepreneur Carlos Cruz about repurposing his job training to teach low-income women how to sell yogurt on the street. It took them six months to hash out how to adapt the job-skills program. But three years later, more than 200 women have sold 50,000 kilograms of their yogurt and75,000 liters of water, tripling sales from 2009 levels. (Source:http://www.Ashoka.org/story/Ashoka-plays-matchmaker-businesses-and-social-entrepreneurs)
These 'bottom of the pyramid' initiatives must be handled carefully. It can't appear to be a shameless way to sell more product with a CSR veneer. At least yogurt is a healthy food; the image would be quite different if they were selling Fritos, and in the figures above, many sustainability experts might wince at the sales of bottled water. This is a fine line to walk. Be careful to design your effort such that you make all three legs of the triple bottle line better; don't trade one problem for another. But creating what Ashoka calls a'hybrid value chain' is one way that business can make a bigger difference while still pursuing their for-profit mission.
Advice for would-be social entrepreneurs
If you want to become a social entrepreneur, Spalding has this advice:
- Do your research and identify what you can add to the party. "The solution may not be to create your own organization but instead to join another and push on their thinking, make them more successful,” Spalding says.
- Assess yourself and then bring on high-caliber people to fulfill functions that aren't your strengths.
Advice for partnering with social entrepreneurs
If you want to have your company partner with a social entrepreneur, keep these tips in mind.
- Respect the value your partner brings. Spalding shared a story where the social entrepreneur told their corporate partner that they would have to change their packaging to be successful in this marketplace. Rather than complaining about the costs associated with making that change, the company trusted the insights of their partner and the new product was a success.
- Build trust, from the very beginning. Make sure you both are committed to the same outcomes.
Burlingham, Bo (2005) Small Giants: Companies that Choose to be Great instead of Big. New York, NY: Penguin.
Prahalad, CK (2005) The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. Wharton School Publishing.
Social Venture Network, http://www.svn.org/
Founded in 1980, Ashoka is the world's working community of more than 2,500leading social entrepreneurs. It champions the most important new social change ideas and supports the entrepreneurs behind them by helping them get started,grow, succeed, and collaborate. As the rate of change in the world continues to escalate exponentially, social entrepreneurs and Ashoka must play a special role in helping the world evolve new systems designed to serve the good of all. Central to that change is the necessity for everyone to be able to contribute to change. Ashoka, its inner circle of leading social entrepreneurs across the globe, and its other partners ranging from highly successful business entrepreneurs to 12- to 20-year-old Youth Venturers are all contributors - individually and collectively - to the work of helping the world make the transition to its “everyone a changemaker™” future. For more information, visit www.ashoka.org.
About the interviewee
Tyler Spalding, Global Marketing, Ashoka
Tyler Spalding graduated from the School of Foreign Service at Georgetown University where he compared the shift from Communism to Globalization in China and Russia. He has traveled extensively throughout China and is a proficient speaker of Mandarin Chinese. While at Georgetown, Tyler was dedicated to improving campus safety and created and managed a coordinated set of safety/awareness initiatives. He also worked to expand free tax preparation for low-income residents of DC and piloted a free credit counseling program. Tyler currently sits on the national Board of Directors for Saving Promise, a citizen sector organization focused on eradicating domestic violence, and is also very active in the DC performing arts scene.