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social entrepreneurship

social entrepreneurship

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 SER 204
 
S
ocial
 
E
nterprise
Reporter
Innovative Business Solutions for Nonprofit Entrepreneurs
The
raison d’être
o socialenterprise practitioners isto
create
and
 sustain
social value. Social value creationspeaks directly to accom-plishing a social mission andachieving social program objectives, whilesustainability requires organizational andleadership capacity, business-oriented cul-ture and inancial viability. Thus, a socialenterprise is more likely to achieve
 sus- tained social value
when the enterpriseis integrated within program, operations,culture, and inance.Rick Aubry,
1
Executive Director o Rubicon Programs, says o his organiza-tion’s social enterprises, “we are not in thebusiness o baking cakes; we are in thebusiness o transorming lives. We see busi-ness as the primary vehicle or achievingthis change, but social enterprise is com-prehensive and must be integrated intothe whole [organizational] package.”
2
 Regardless o its degreeo integration, a social enter-prise catalyzes organizationalchange whether invited or not. Examples o organiza-tions whose social enterprises have sur- vived, and gone on to thrive, recognizethis—oten ater substantial trauma—andhave ultimately integrated the enterprisethroughout the organization and workedto manage this change. The hypothesisollows: when integrated within an orga-nization, social enterprise is a
transforma- tion and strengthening strategy
that canincrease mission accomplishment andsocial impact, improve organizational andinancial perormance and health, andengender a more entrepreneurial culture.This “integrated approach” to socialenterprise oers practitioners a new para-digm to create and transorm enterprisesinto High Perormance Organizations, orga-nizations capable o achieving sustainabil-ity, appropriate scale, signiicant impact,and providing blueprints or replication.However, the opportunity to realize socialenterprise’s promise—High PerormanceOrganizations—is being missed.
NewParadigms
SER 204
index
Editor’s LetterBoschee onMarketing: The SingleGreatest ChallengeSocial VentureNetwork Events23
2
)
116
The Integrated Approach toSocial Entrepreneurship:
 
Building High Performance Organizations
by Kim Alter and Vincent Dawans
The opportunity to realizesocial enterprise’s prom-ise—High PerformanceOrganizations—is beingmissed.
1 Rick Aubry received the Klaus Schwab Foundation “Social Entrepreneur o the Year” award in 2001
2
Interview with Rick Aubry, Executive Director, Rubicon Programs, Richmond, California, March 19, 2005.
 
2
 
 SER 204
 
Fntton n myop
There is a lack o wholenessand integration in the social entre-preneurship ield, evidenced by the divergence o players and threeschools o thought—leadership, und-ing, and program.• The “
 leadership approach
supports proessional developmenteorts or individual “social entre-preneurs”. The shortcoming o thisapproach is that individuals are notreplicable and too oten their “socialchange innovations” have not beenused to build the practice or replicatetheir successes.• The “
 funding approach
advocates that nonproits start com-mercial ventures to diversiy their unding. Typically, the venture is struc-tured as an auxiliary project o theorganization. The unding approach to social entrepreneurship hasincreased the number o nonproitsincorporating market discipline andincome-generating activities into their organizations, yet problems ariserom disappointing inancial returns,harder than expected implementa-tion, complex legal and tax issues,organizational discord and missiondissonance.• The “
 program approach
tosocial entrepreneurship is when busi-ness activities and social programsare one and the same, typically incases where business activities arecentral to, or compatible with, theorganization’s mission. The programapproach suers rom the oppositeproblem o the unding approach—relying too heavily on social sector resources and lacking business acu-men. Practitioners o the programapproach are ragmented or “siloed”by sector, geography, and barred by industry vernacular thus, little sharingo knowledge and experience occursbetween silos.
B To Funn
 Among North American orga-nizations there is a bias toward theunding approach. Currently, themajority o the literature and publicorums speak to helping nonproitsstart earned income ventures. Thisis likely more o a PR issue than apractice issue—nonproits needunding, grants or otherwise, andthe promise o earned-income is theallure that leads nonproits down thegarden path. This dangerously narrow  view shits attention away rom theultimate goal o any sel-respectingsocial entrepreneur, namely socialimpact, and ocuses it on one particu-lar method o generating resources.
3
 Though proit is a sexy propositionor practitioners, the reality is thatsocial enterprise as a unding mecha-nism has not paid o or many whohave hungrily ollowed its lure.
muntnn thBnchk
In drawing inspiration rom busi-ness, social enterprise has taken bitsand pieces but has missed the bigpicture, stressing business unctionover social beneit and doing little tointegrate the two. The private sector does not consider any one aspect o business in isolation. A business plan,or example, maps and connects theinternal aspects o a company toeach other as well as to the exter-nal environment. The very idea thatpractitioners use the phrase “mis-sion-driven” is antithetical to businessethos, even i the standard corporatemission is “maximizing proit or shareholders.” In the social enterprisethe mission is complex but, like busi-ness, must be central and anchor alldecisions and activities.
mn n Oppotunty To domo mon
The emphasis on unding meansthat opportunities are being missedto realize other beneits that socialenterprise oers. A recent
 Harvard  Business Review
article instructsnonproits to “put their missions irstrather than starting with a venture’sinancial potential,” citing that “amission-irst assessment o earned-income opportunities returns thenonproit sector to its undamentalprinciples.
4
” Sadly, ew recognizesocial enterprise as a deliberatemethod to accomplish social mission,achieve social impact, create a stron-ger organizations and aect a moreentrepreneurial culture. Financialaspects o resource management are
new paradigms
 
In drawing inspirationfrom business, socialenterprise has takenbits and pieces but hasmissed the big picture,stressing business func-tion over social benefitand doing little to inte-grate the two.
3 Dees, Gregory,
Social Entrepreneurship Is About Innovation and Impact, Not Income
, Skoll FoundationSocial Edge, September 2003.4 “Should Nonprofts Seek Profts” (January 2004)
 
 
 SER 204
 
new paradigms
an integral part o the social enter-prise paradigm, hence
the issue isless of perpetuating a money myththan missing a mission opportunity
.
rouc mnnt—Not “Poft”
The perception that social enter-prise is strictly about earned-incomeor proit is misleading. No amounto proit makes up or ailure on thesocial impact side o the equation. Any social entrepreneur who gener-ates proits, but then ails to convertthem into meaningul social impactin a cost eective way has wasted valuable resources.
6
Social enterpriserequires eective resource manage-ment, which must go beyond the nar-row view that inancial resources arethe only resources. Typically, nonpro-its most valuable resources are their people, networks or members, andintangible assets such as methodolo-gies, content, reputation
and 
socialimpact. An integrated approach tosocial enterprise recognizes the inan-cial as well as non-inancial capital(human, social, environmental andphysical) and motivates practitionersto productively employ and managethese assets.
Chlln, rk nLnn
Little research has been con-ducted to ascertain why socialenterprises ail, however, the practicespeaks volumes—cultural tensionand low capacity are the main oend-ers. Change is hard and resistance tochange is human nature, present inboth or-proit and nonproit sectors.Social enterprise challenges the tra-ditional concept o charitable actionand its implications on social struc-tures—do we (western society) really  want the poor no longer poor, or thehomeless no longer homeless?These potential institutionalbeneits o social enterprise, i letunmanaged, are equally a source o institutional risk. Authors and practi-tioners have shared many a caution-ary tale o mission creep, culturalstrie, stakeholder and/or sta ten-sions, lack o vision or capable lead-ership, inancial losses, operationalineiciencies, weak marketing, andthreats to an organization’s reputa-tion.Much o the value o social enter-prise is in the process-or example,the learning gained developing abusiness plan oten exceeds the valueo the plan itsel. Social enterprise isan organizational change and trans-ormation process, thereore thereis a need to deine a ramework or monitoring the impacts that theprocess o developing and managingenterprise activities has on nonproitsthemselves.
Lck of incluon of intntonl Onzton
Microinance institutions (MFI)are quintessential social enterprisesand their leaders are some o the world’s most ormidable social entre-preneurs, yet they have largely absentrom the conversation. From early on microinance practitioners imple-mented MFIs as a vehicle by which to achieve wide-scale sustainablesocial impact. The microinance meth-odology takes a holistic approach,its ethos is that the “social programs”(micro-credit services) must be insti-tutionalized in order to be a goingconcern. Social programs and impactare not disaggregated rom businessactivities and inancial aspects o the organization, rather they are anintegral part o the business model.Capacity building is an enduring pro-cess and central to implementationand development o the MFI. Last year’s Micro Credit Summit celebrat-ed reaching 100 million poor borrow-ers. This is success, yet little has beendone to learn rom their experienceor share their immense intellectualcapital with other practitioners.
a N socl entpP
The reality o the current state o practice is that social enterprises areexecuted in isolation—treated as adistinct project or activity—when in
“Social enterprise as atool for achieving mis-sion has come to thefore. It’s more than arevenue strategy. Peopleare beginning to look atit as a tool of economicempowerment for thecommunities they serve.It’s not just anotherfund-raising tool—it’sa mission fulfillmenttool!”
5
—Yma Gordon,Program Officer, Ms.Foundation for Women
 
5 Interview in July 2005 issue o 
Social Enterprise Reporter.
6 Dees, op.cit

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