Is “social entrepreneurship” becoming just a buzzword?

Great post! I agree that we need to focus on scaling great ideas. However, I think you ought to expand your definition of 1) social entrepreneur and 2) innovation.

First of all, a social venture does not pursue “clearly defined social objectives which it pursues regardless of profit.” While many social entrepreneurship is done via state and non-profit organizations, many social entrepreneurs work in the private sector and rely on profitability. This does not make their impact any less profound. In fact, by relying on good economic sense they provide a much more valuable model for society than entrepreneurs who do works through charity alone (all other things being equal). So, if we’re seeking the scalability of great ideas, we shouldn’t leave out profit from social entrepreneurship. Regardless of what self-reinforcing do-gooders may say, most of the world still works toward its immediate self interests. Social entrepreneurship must start from this premise if it cares to go beyond what government social welfare and non-profits have already accomplished.

As for innovation, what you’re proposing that people do is not avoiding innovation in the slightest. Taking existing models and finding new applications for them is highly innovative. Case in point: Yusuf didn’t invent microfinance, but would anyone call his life’s work anything but innovative? His work is one step along the way of a long chain of cumulative innovations, but it’s still innovation. I find it meaningful to make this point because taking something to scale–whether the concept is entirely new or not–is inherently difficult and something we often fail at because we underestimate the novelty and complexity of doing so.

Akhila – great post. But there are a few things I disagree with.

1) Same with Tom, I disagree with your definition of social business about having “certain clearly defined social objectives which it pursues regardless of profit.” Any business, whether regular or social, needs to be profitable – or else it’s a failed business. The difference lies in the goals and objectives. A regular business strive for profit only (ie. single bottom line). A social business strive for both financial return, social return and environmental impact (ie. triple bottom line). This is what sustainability is all about. If a social business is pursuing its social objectives regardless of profit, then how is it going to sustain? and what makes that different from a charity?

2) I disagree with your definition of innovation. We tweeted back and forth before about the need of innovation.You mentioned “innovation is finding a gap in the market and filling it with something new, unheard of.” To me, that sounds more like an invention. Innovation is taking something that already exists and making it better. It doesn’t need to be unheard of. In fact, the most innovative models/technologies are merely improvements of things that have existed before. So I agree with you in the sense that it’s the implementation that matters the most because merely having a good idea is not enough. This is why I think good implementation is part of being innovative, and this is why I think it’s necessary. A lot of people have good ideas – they just have no idea how to implement it RIGHT and that’s why they failed. This brings me to my next point.

3) In your blog you mention “scaling things up” a lot. I just want to share something I have learned recently. From the book Getting to Maybe written by Frances Westley, I’ve learned that problems we face can be put into 3 categories. The 1st category is simple problem, such as baking a cake. A recipe can be followed, and if everything was done right, one can expect a good probability of success since the steps have worked in the past and should continue to work in the future. The 2nd category is complicated problem, such as sending a rocket to the moon. The system design is sophisticated and the degree of certainty has to be perfect such that success in sending one rocket almost guarantees the next will also succeed. The 3rd category is complex problem, such as raising a child. One can read as many parenting books as available but there are no clear rules to guarantee success, even if they have worked on the previous child. That is because every child is unique, is constantly growing, must be understood as an individual, and building relationship is the key. World issues are complex, and require complex solutions. It’s not just about taking something that was successful and roll it out. What worked in India may not work in Ghana. Because we are humans, we have emotions, people resist and all respond differently to changes. This is why changes are complex, takes such a long time, and hard to understand.

It’s frustrating. But thanks for writing about it and sorry for my long comment.

Tom, thanks for the insightful comment! You’re right — perhaps my definition of a social venture is inaccurate. I’d change it and agree with you that social enterprises can be focused on making a profit, but as long as they are doing this with a focus on social objectives. It’s true that Yusuf didn’t actually invent microfinance, but he has innovated much throughout his life and has seen so much success in that through which his various businesses have helped pulled much of Bangladesh out of poverty to some extent. Thanks for pointing out these things!

Ruby, thanks for your long comment! I’m excited to hear your perspective, and everything you say is very valid and true. I understand that a social business does have to make some profit to survive, but I would argue that it’s focus is not on maximizing profit (as a regular business) but on maximizing its social goals and objectives. If profit comes, that is a side thing and will be reinvested in the business. But I don’t think any social businesses would have profit as the main goal as that would defeat the objective. I’ve heard the triple bottom line as well.

And yes, I agree that innovation can be both what I think – as solving a gap in the market – but also what you think about making something better. That’s true, most innovation is making something work better.

The example you gave from the book is fascinating. I totally agree that programs cannot just be copied and replicated in different countries or areas. Of course any program has to be adapted correctly based on local climates and characteristics, and it’s true that social issues are really complex. But this really wasn’t my point regarding scaling up. There are some effective models that I do think would work in different places, but I also think scaling up is just making sure you can reach more people and help more people with a current program that is in place. I see a lot of scope in terms of taking a current program or organization and really improving it, making sure it’s working to the best capability, and yes even scaling it if it’s feasible.

I guess my main point isn’t that innovation – in terms of simply improving things – is unncessary. it’s just that I see so many new businesses, NGOs, social businesses being created EVERY DAY and so many competitions for these sorts of ideas that it left me wondering — instead of creating a completely new business, isn’t it also important to focus on improving the work of existing organizations?

Great point. I see where you’re coming from now and I agree. It does seem at times that people are creating what has already been created, and you’re arguing that those energy and time should really be invested in working together on projects that have already been kick-started & are underway. It is true and thank you for reiterating your point. I think it’ll be more effective when the objective of these competitions are aimed at improving existing solutions, as opposed to just opening the floor up and invite new submissions. Most people don’t do their market research well enough and like to dive right in thinking their ideas are the most original/not thinking thoroughly enough about the implementation part.

With regards to social business, of course you’re right in that the ultimate objective is maximizing social value. You brought up a good point – how profitable can it really be when you’re always re-investing back into the business? There are many definitions out there and people are still trying to come up with models to evaluate “social returns”. This stuff fascinates me.

At the end of the day I think we’re agreeing on the same things: more focus on implementation, maximizing the benefits on models that have proven to work, and…..speeding things up would be preferable too. Thank you SO much for this post. If I read anything insightful about profits in social business, i’ll definitely blog about it. I’d also love to see you blog about current programs that are scalable – it’s important and I feel I don’t know enough of them.

Ruby, thanks! I think you’ve got the point I was trying to make — I really do believe that a handful of these entrepreneurship contests and grants are just causing people to innovate for the sake of innovation, and that people are jumping into these things without necessarily thinking whether their “invention” or innovative project/organization is really needed or necessary.

That’s great – we agree then! Definitely let me know if you think about anything else. I’ll try to blog about current models I like!

Akhila, I think this is a great post on an important topic. I have a few quick ideas to add to the discussion.

1) I think social entrepreneurship is approaching changing the world the same way you might approach starting a company. Yes, it’s a buzzword, and I think that the start-up / business-like oriented approach is its main defining characteristic. However, I agree with you that the glorification of new models seems both excessive and counterproductive. I think that adaptation and implementation are the most crucial pieces.

2) At a social entrepreneurship conference at Stanford, I heard a venture capitalist say that most successful businesses meet social needs. In that sense, any kind of entrepreneurship can be social. This, of course, blurs the definition more, but I think it’s a valid and interesting point.

Leslie, thanks for your insightful comment. You make a great point that adaptation and implementation are often very significant: there are many inventions, organizations, and models that I see out there as doing incredibly effective work. These innovative ideas need to be implemented better. Instead, many of these social enterprise competitions encourage ideas which often seem to replicate pre-existing models and don’t necessarily add significant value. I’d say that some of these budding entrepreneurs really need to spend more time evaluating whether they really need to start a new business or nonprofit, if there are existing organizations doing similar work successfully. The same in global health — a friend of mine told me about how the problem with “global health delivery” is that there are effective drugs out there like ARV drugs as well as very effective programs and ideas – but they really need to be implemented well. I don’t know too much about this personally but it makes sense to me.

As for your second point — interesting point but I don’t know if that is an explicitly social business. If the business meets certain social needs, that’s great — but I wouldn’t call it a social enterprise unless it prioritizes social objectives. Because a primarily for-profit business would prioritize making a profit, even it means cutting back on social objectives. At least, that’s my understanding of it.

The revised point on innovation is well taken. There’s no shame in using what is already known to work. In fact, that’s what the vast majority of innovation is, anyway. We live in such a connected world that any invention or innovation builds upon the work of others. Exceptions to this are quite rare.

Thomas, thanks for your insights. I agree that it’s virtually impossible to really create something totally new and unheard of in this day and age. Almost everything has been done in some way or other, and most innovations are improvements upon past pre-existing programs or inventions.

I’d like to add one more point about social entrepreneurship grant competitions. I once took a grantwriting class and the idea that stuck in my head is that foundations give grants in order to carry out their own missions. If that mission is cultivating innovative models, they create competitions to reward innovative models. If that mission is to use online marketplaces to support social change, they fund organizations that are doing that. I don’t think it’s entirely about which project is better or more effective. Thanks again for the great discussion.

Yes, I agree that a lot of non-profits can be highly inefficient internally, leading to staff and volunteers preferring to work in alternate workplaces. I definitely think that we need to employ better business practices to make non-profits function more efficiently. Non-profits can learn a lot from the way businesses are run.

However, I think the broader question I was trying to get at here was whether social enterprise has just become a “buzzword” and people are innovating for the sake of innovation, rather than in a genuinely meaningful manner.

Thanks for your insights!