Giving Social Entrepreneurship a "fair go"	Monday, March 04, 2002

Dr. Pamela Hartigan, Managing Director

Melbourne

Thirty years ago I married an Aussie from Perth. We have continued to come to Australia every year, and many things about the place have changed. But there is one thing that remains true to my first impression of Australians. Firmly rooted in their psyche is the strong belief that everyone has a right to a "fair go". And so it seems appropriate to be in Melbourne… my favorite Australian city… to talk about the work of social entrepreneurs. After all, that is what social entrepreneurs are all about… ensuring that everyone gets a fair go.

Today I'd like to share some thoughts around our experience in working with outstanding social entrepreneurs . What characteristics do they have in common no matter where in the world they are? What are their needs? And how can we work together to ensure that social entrepreneurs get a fair go at changing this lopsided world.

When we started to comb the globe 15 months ago for outstanding social entrepreneurs, we faced one major hurdle: The very definition of social entrepreneurship. We found ourselves in the strange situation of having to define social entrepreneurship by what it is not.

? Social entrepreneurship is not synonymous with corporate responsibility.

? It is not a different form of charity

? Nor are social entrepreneurs simply charities becoming businesses

? That said, social entrepreneurs can be found in the business sector and in the charity sector.

? Social entrepreneurship is a term that captures a unique approach to social problems, an approach that cuts across sectors and disciplines.

? It is an approach that is grounded in certain values and processes that are common to each social entrepreneur, independent of whether his or her area of focus has been education, health, welfare reform, human rights, workers' rights, environment, economic development, agriculture… and so on.

? It is those values and processes that set the social entrepreneur apart from the rest of the crowd of well-meaning people and organizations who dedicate their lives to social improvement.

The best way to describe social entrepreneurship is by example. I will be giving you quite a few examples in this presentation, but for the purpose of clarification, let me start out with two. The first, Muhammad Yunus, is the world’s best-known social entrepreneur. Thirty-some years ago, he was a young professor of economics in his native Bangladesh. He was driven to find a way to convince banks to give loans to the poorest people in his country. He was thought to be mad. The poor have no collateral, he was told. Loaning them money is folly. They will never be able to pay you back. So Yunus decided to start a Bank for the poor. The first loan was for about 30 US dollars. Today millions, women in particular, have been able to pull themselves out of poverty thanks to the Grameen Bank. The Grameen Bank was the first micro-lending institution in the world. Today, microcredit is mainstreamed even into the most conservative institutions. Yunus changed forever the myth that being poor was synonymous with being a high-risk investment. Grameen’s repayment rate over the years has been between 95 and 98%. Other micro-finance institutions across the world that emulated Grameen report the same returns.

The second example comes from India. In 1972, Ela Bhatt was a lawyer with the Textile Labor Union in Ahmedabad. She realized that 89% of the Indian workforce was made up of impoverished women who eked out their existence through cigarette rolling, waste-picking, salt mining, head loaders, street vendors, and the like. Ela did the unthinkable, again, against much opposition. She formed the Self-Employed Women's Association (SEWA), the first union in the world to organize and empower the poor and self-employed, increasing their bargaining power, economic opportunities, health security and legal representation. Today SEWA is the largest labor union in India and has influenced national and international policies in support of informal employment around the world.

When we talk about the underlying core values that drive social entrepreneurs I would cite

? an unwavering belief in the innate capacity of all people to contribute meaningfully to economic and social development,

? a driving passion to make that happen, be it through a new invention, a different approach, a more rigorous application of known technologies or strategies, or a combination of all three.

? a practical but innovative stance to a social problem, coupled with dogged determination, that allows them to break away from constraints imposed by ideology or field of discipline, and pushes them to take risks that others wouldn't dare.

? a healthy impatience. They don’t do well in bureaucracies because they don't wait for things to happen. They are social change agents that make things happen

What have we learned from our immersion with social entrepreneurs, reviewing their personal stories, accomplishments, frustrations and challenges? What have we learned from the reaction of the rest of the world when it realizes the power of social entrepreneurs to ensure that the poor and excluded participate actively in, and benefit from, the global economy?

We have learned that even the most outstanding social entrepreneurs, such as Yunus and Ela Bhatt, have three major interrelated needs: legitimacy/credibility, opportunities for networking among themselves and with others who can mobilize support for their initiatives, and financial and/or in-kind resources.

Credibility comes from sticking to what society has as established as accepted fields of work and practice. But social entrepreneurs tend to defy traditional practice. They don’t fit into the charity mold because they believe hand-outs simply generate more dependency and disempowerment. And they don’t fit the business model because their bottom line is social value creation.

Take Suraiya Haque, founder of Phulki in Bangladesh. She believes that the secret of her success was stubbornness. Suraiya was born and married into comfort. So it was quite against the judgement of her husband and sons that she pursued her dream to open up a day care center for children of poor garment factory workers, first in her garage. Now Phulki is well established in textile factories around the country. What’s more, it is a self-sustaining social enterprise.

Gisèle Yitamben from Cameroon founded ASAFE based on her belief that African women could develop into successful business entrepreneurs if provided training and development support, alternative financing and access to e-commerce. All we hear about Africa has to do with malaria, HIV/AIDS and corrupt governments. So you can imagine the level of skepticism that Gisèle met as she persisted. ASAFE today supports thousands of women entrepreneurs in Cameroon, Guinea, Benin, Chad and the Democratic Republic of Congo. ASAFE is actively engaged with technology companies and business incubators to help African entrepreneurs overcome the digital divide. With 3,000 paying members, it is connecting successful entrepreneurs to one another and to larger markets.

Takao Furuno is a Japanese farmer with a different problem common to outstanding social entrepreneurs. Furuno, committed to environmental sustainability, came upon an ancient practice in Asian rice farming: releasing ducklings in rice paddies to remove weeds. By perfecting and spreading this technique since 1988, today over 75,000 small rice farmers throughout Asia have taken up his method. Rice yields from farmers using Furuno's method are almost twice that of conventional plots in the same area, and "duck rice" is sold at 20-30% higher than chemically-grown rice. But in the past thirty years, the annual growth of chemical fertilizer use on Asian rice has been from three to forty times faster than the growth of rice yields. To stem this tide, Furuno does not need money. He needs legitimacy and access to networks that will support his uphill battle against enormous vested interests and power that lie with the agro-industrial complex and governments they support.

What are we as a Foundation doing to respond to the need even the most outstanding social entrepreneurs have for networking opportunities, legitimacy and resources?

I like to think we are a socially entrepreneurial organization… pragmatic, seizing opportunities, but with our eye squarely on generating social value. For someone like me who has always thrived in the gray areas of life, I was intrigued at the opportunity to work with Klaus and Hilde Schwab. Professor Schwab founded the World Economic Forum and, thirty years later, the Schwab Foundation for Social Entrepreneurship. For those of you who do not know the Forum, it is the foremost international business membership organization in the world. The Annual Meetings of the Forum are attended by the CEOs of the world’s most powerful corporations, and today, in much greater number, by heads of state, intellectual and other leaders of civil society.

When I first met with Klaus Schwab, he framed what he wanted to achieve with the Foundation in the following way: "It's fine to advocate for social change at the macro level. But I want to find people who have discovered practical solutions to social problems at the local level, solutions that have been shown to work to improve people's lives and that can be adapted to solve similar problems all around the world. I want to create a way to disseminate their accomplishments so others can support them or emulate their approaches."

The original idea of the Foundation was to raise global awareness of the importance of social entrepreneurship by awarding a million dollars to the best example of social entrepreneurship. But it quickly became evident the first time the Schwab entrepreneurs came together last November, that they had found something much more valuable that any award. They wanted access to the upcoming Annual Meeting of the World Economic Forum. It was to take place in eight weeks, in New York City, the first time it had ever been held elsewhere besides Davos. And so the Foundation Board decided to support the participation of the social entrepreneurs to the Annual Meeting. And that was how, in a space of eight weeks between the November gathering and the Forum's annual meeting in late January, we had to prepare for 40 social entrepreneurs to come to the Forum for the first time.

Why am I telling you all of this? Because in preparing for, and attending the participation of social entrepreneurs to the meeting of the World Economic Forum, there are valuable lessons to be learned about the challenges facing the field of social entrepreneurship.

The first major issue again that surfaces is the problem of definition. For example, in New York, George Soros hosted a reception in honor of the Schwab entrepreneurs. It was a wonderful event. The only down side was an article in the New Yorker, one of the leading journals in the US. Reporting on the evening, it equated social entrepreneurship with charity … an ill-conceived comparison that we try continuously and apparently unsuccessfully, to debunk.

I suspect Australian social entrepreneurs face the social entrepreneur-as-charity misrepresentation continuously. The false dichotomy between those who work in the social arena and those who work in the financial arena will continue as long as the legal structures and mentality exist dividing what is "profitable" and "what is not"… what type of work gets a tax break and what does not. Anyone who has worked in both the financial and social worlds knows that every financial investment has social ramifications, and vice versa.

Conversely, social entrepreneurs have had also had the problem of defending themselves against those in the social world that just don’t understand what social entrepreneurship is about. They seem distracted by the word “entrepreneurship”. They panic. Oh my God, this is about turning charities into businesses. Not at all. In fact, while the two worlds of entrepreneurship, business and social, are beginning to meet, there is still a problem of communications between the two. Take for example the specific instance where Fabio Rosa, one of our Schwab entrepreneurs, met at the Forum’s meeting with the CEOs of the seven biggest energy companies in the world. What an opportunity! Rosa has developed a scalable system to provide affordable solar energy to poor people who currently spend $8 to $15 a month on non-renewable fuels for lighting. His model allows investors to recoup their investment in five to ten years. This target market encompasses most of the two billion people in the world who still lack electricity and who, by burning fossil fuels, contribute significantly to global warming. Rosa's challenge was to convey to the energy CEOs that they should work with him.

How? One way could be the following: Rosa asks for help by appealing to fears such as terrorism, environmental degradation, etc., or principles such as - we can't continue to neglect such as the fact that one third of the planet is being left out of development, etc.

Another approach could go like this: Rosa explains to the CEOs something like "This is the largest untapped energy market on the planet. You guys need alternative distribution systems to reach these people. And I can show you how to reach them.!" As business people, the CEOs know that if they want to reach a new market they need new distribution mechanisms. Now the discussion is all about: What is the value proposition? What is the win-win deal? It's a totally different conversation than asking for a hand out, and more hold more promise in initiating a working partnership.

We in the Foundation see ourselves in that brokering role, strengthening the business-social bridge. We want to use our leverage to attract the notice of governments and business people so that the scalable solutions of social entrepreneurs can be replicated, improved and expanded, so that their practical insights can be incorporated into government policy and business initiatives.

I'd like to conclude with a few messages… first to the business community in the audience. For those of you who think running a social enterprise is easy, think again. I think if more business people understood what it is like to manage a social enterprise with a double bottom line they would be more humble. After all, if you're only concerned with a single measure of success, your financial return, you can do whatever it takes to achieve it, cut personnel, move your factory. But if you are a community-based venture, you can't move out of town and you have to assume that the problems in the community are your problems. Creating and running such ventures is what social entrepreneurs do best.

Turning to those in the academic and the management consulting worlds, there is much talk of unleashing the metrics, methods and talent pool of the private sector as the panacea to end problems of poverty and unemployment. But the private sector has a lot to learn about delivering better outcomes for customers. Think about it. To take an example, social entrepreneurs in education are trying to change the performance of their customers – children - in vital skill areas. Finding different ways of helping them be better writers, better critical thinkers, able to attend university. When is the last time anyone asked Nike or Reebok if its shoes actually make anyone run faster or jump higher?

Now a message to the charity sector. It is no secret that many of you bristle at the mere term, “social entrepreneurship”. Charity is still strongly suspicious of the business community, and has had good reason to be. But something very important is happening around the world, and it will happen in Australia as well. More and more in the business community are serious about addressing social issues.

Businesses, large and small, are having to redefine their value proposition to include social and environmental as well as financial bottom lines. But if that does not convince you, then one thing should: poverty elimination will never be achieved if what your bottom line boils down to the number of grants or dollars you give away every year. Feeling good about giving money away is not a product. Welfare is not only disempowering, it is the reason why people remain poor.

On the other hand, if there are some here think that using the tag of "social entrepreneur" may access new funds, think again. We at the Foundation are barraged with self-nominated social entrepreneurs. It doesn’t work that way. For one, you can’t wake up one morning and decide you are going to be a social entrepreneur. Sit around with a group of social entrepreneurs and you will quickly realize that they can’t help being the way they are. They are born that way. Similarly, I don’t believe you can teach someone to be a social entrepreneur. Of course, a social entrepreneur can learn to be better at management, financial accountability, human resource development… and there are courses to help them. But the continuous energy to imagine, innovate, implement, improve on innovation, scale up, diversify, defy the usual, break the patterns, move in a new direction… that exhausting and exhilarating quality of what makes a social entrepreneur… no training course will ever teach that. So we are lucky. It is not difficult to identify a social entrepreneur from the rest of the pack. To paraphrase a famous U.S. Supreme Court Justice, “I can’t define social entrepreneurship, but I know it when I see it.”

Finally, to those of you in government. Don’t be fooled into thinking that a manager of a social enterprise and a social entrepreneur are the same. This will be a great temptation because governments are increasingly unable to deliver public services, and the route to privatize those same services has a corrosive effect on equity. So, a confused idea of social entrepreneurs that equate them with people who run social enterprises has emerged. In the UK, for example, I have found a recent phenomena that goes something like the following: identify needs in specific low-income, under-served communities, needs such as health services, primary and secondary education, care for the elderly and for children, training and employing unemployed people, housing and so forth. Then the government or the private sector, or both, establish a social enterprise at the community level to respond to those needs. The next step is to advertise for a “social entrepreneur” to run it and presto… problem solved. Well… in my humble opinion, what you are looking for is a good manager. In our network of accomplished social entrepreneurs, most admit to having to rely on others to run their organizations.

Social entrepreneurs tend to be less managers than they are practical visionaries that innovate because they have a thorough understanding of their field and the context in which they develop their innovation. You can't innovate if you don't know the field. You can't feel the drive and the passion if you don't know the context. I can't wake up one day and say "I am going to find a better way to organically farm rice in Asia", if I have never been an Asian farmer. Or, "I am going to improve aborginal health services", if I have not lived and experienced what it is like to be on the giving or receiving end of those services. Again, one does not qualify as a social entrepreneur by getting a degree in the subject.

Social entrepreneurs are the flame that ignites the fire of social transformation. This is not business as usual. That flame must be fanned and nurtured by those who understand what social entrepreneurship is about and delight in its promise to achieve social transformation.

That is the work of SEN in Australia and New Zealand, and that is the work of the Schwab Foundation globally. We need to work together to make that happen.