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We're going to start off with some definitions and some Core Concepts.
So, one of the Core Concepts we're going to be working on is this idea of
a Social Entrepreneur and we need to ask, who are these Social Entrepreneurs?
What makes them different?
Where do they come from?
We're also going to be working with the concept of social innovation.
And the big question there is well what is social innovation?
How will we know it if we see it?
How is it different from other forms of public problem solving?
One definition of social innovation is as follows.
We contend that social innovation is the best construct for
understanding and producing lasting social change.
We redefine social innovation to mean,
a novel solution to a social problem that is more effective, efficient,
sustainable or just than existing solutions and for which the value accrued
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goes primarily to society as a whole rather than to private individuals.
This is from Jim Phills and companies article.
I like this definition, and we need to focus in on a core part of it,
which is social innovation comes down to something that is novel,
it's a solution, it addresses a core problem or pain point.
It's more effective, efficient, and sustainable than existing solutions.
Social innovation at its core has to create value, and
we'll come back to this idea of value creation.
But the core part of it is that value has to accrue to everyone,
to the broader society, not just to one individual.
So if that's what a social innovation might entail, something new,
something creative, something efficient and effective.
Let's ask a question of well what is a social entrepreneur and what is this field
of social entrepreneurship that's chasing after the idea of social innovation.
Social entrepreneurs are a very distinct group of people.
They're people who adopt a mission, a goal to create value.
They wake up in the morning saying, how can I create value,
how can I make social impact?
They have a relentless character to them, social entrepreneurs are constantly
looking for new opportunities to meet their mission, to advance their cost.
They are constantly also looking for a chance to innovate, to adapt and to learn.
They don't take one idea and stick with it for
a long period of time, they will evolve, they'll move.
They'll adjust their ideas, they'll recalibrate, they'll refire.
Social entrepreneurs also are very bold.
Social entrepreneurs act without worrying about resources, they bootstrap.
They do whatever it takes to get an idea off the ground.
They take any resources that are available, they deploy them for
the social purpose.
A final characteristic of a social entrepreneur is someone who is very
accountable.
Someone who realizes that they're working on a problem that affects lots of people,
and that these constituencies have to be addressed and served carefully.
So if you put that together, those are elements from Greg Dees' definition
of social entrepreneurs and what they look like.
If you put that together with the idea of social entrepreneurs pursuing social
innovation, we start to get the idea that this course is going to be about people
who are taking big risks operating with very little resources sometimes,
taking advantage of opportunities that arise and they're trying to come up
with solutions to problems that will meet public problems, pressing problems.
They're going to try to come up with innovative, new solutions.
So that gives us a little starting point of what social innovation might look like
and what a social entrepreneur might be like.
But let's make this more concrete.
Let's just take one example out of the millions of possible ideas.
Think about the problem.
It's a huge problem, of infants dying around the world, due to exposure.
Prematurely born children don't have incubators in a lot
of countries around the world.
They're way too expensive.
Incubators can cost thousands and thousands of dollars.
And as a result, children die of exposure every day.
They can't get the care they need.
They can't get the warmth that they require to survive.
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A group of students in Stanford in a class on engineering for
extreme affordability looked at this problem of premature death of babies, and
said why can't we design an innovative new incubator?
And their idea was what if the incubator were to cost $25, not $2500.
They devised a little tiny sleeping bag.
The sleeping bag keeps the baby at exactly the right temperature because
inside the sleeping bag is a space-aged wax technology
that's inserted into the back pouch of the sleeping bag.
This wax, once it's heated, you heat it over boiling water, you slide it into
the back of the sleeping bag, it keeps the baby at proper temperature for four hours.
Then the wax is removed, re-heated and re-inserted.
For a very low cost, a huge global problem is being addressed.
This product, called the Embrace Incubator has all the aspects of social innovation.
It represents a new lower cost solution.
It represents a solution that's financially sustainable that
can run out of zone.
They sell this incubators and
they're able to sustain the organization without large and charitable inputs.
It has incredible capacity for scale,
it can grow and it has grown in countries all around the world.
Hundreds of thousands of these units have been sold.
Social entrepreneurs are doing things like this little baby's incubator.
It is a new way of thinking about a problem.
It takes away all the assumptions we have about what an incubator might look like.
It says, what if we reinvent the whole thing
at a radically different cost structure and a totally different technology?
And in this way, the innovation I think is a breakthrough.
And the people behind it, who are driving this product into
countries all around the world where it's desperately needed,
they are fundamentally pure social entrepreneurs.
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So there are many different ways in which social entrepreneurs pursue their goals.
This is just one example and during the course of this term,
we will look at a lot of different examples of social entrepreneurs doing and
all types different things in all parts of the world.
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I want to place this problem or this challenge of meeting public needs,
solving public problems, in a broader sectoral context.
We typically think of three ways in which public problems get solved.
One is the government enters and solves the problem.
The second is that the NGO or non-profit sector comes in and solves the problem.
And the third is that business may step in and offer its own solution.
We often draw a line between these
sectoral solutions thinking that government and
the NGO sector are focused on mission, public value, creation, social impact.
And the business sector is much more focused on the bottom line and on money.
But what's really interesting about the field of social entrepreneurship
is that it's blowing away that line, the dividing point between sectors.
It's saying that problem solving can occur in a lot of different ways
across a lot of different approaches.
And so what I want to do is, to start the sketch for you, something about why social
entrepreneurship has a distinct place in the world of public problem solving.
And the way I want to do it is, think about one problem.
And then we're going to walk through how each of the sectors might approach it.
And then how might social entrepreneurs approach it?
Just to get some difference out in the open about what
makes this feel so special.
So think about the problem of affordable housing.
How do we create housing for people who are on very limited means?
How do each of the sectors, the public sector, the business sector and
the non-profit sector go about providing affordable housing, and
then let's step back and say, how might social entrepreneurs do this work?
So let's start with the government approach to solving
the question of how do we provide affordable housing?
From New York to Chicago to Mumbai to Brazil,
all around the world, big projects have been built for housing the poor.
They share a number of features in common.
They are large scale.
They focus on equity and evenness of delivery of the service.
The apartments are similar.
The distribution of these units, it follows strict rules.
Government moves typically very slowly and cautiously in providing this help.
And because it's accountable to voters, government constantly has to check in and
make sure the solution provides is fair, equitable, and open.
When the business sector tries to solve the problem of public housing,
it goes in a different direction.
It says, how can we create housing that everyone could afford.
So you have module houses, trailers, small units that are very cheaply priced,
that allow people, at a very low entry point, to have housing.
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Now even in Sweden, IKEA has developed a module house that you can snap together,
you assemble yourself.
Now, one might think that they provide a huge allen wrench with this, but no, they
actually provide a set of instructions and tools and you construct your own house.
What do all these approaches share in common?
When the business sector tries to solve a problem like affordable housing,
profit is a key consideration.
How can we construct the business model that will generate product?
Businesses are very market sensitive.
They want to meet demand, they're quick to respond if they see a need,
they will provide a solution.
They are very competitive in terms of looking at what are other people providing
and making sure that their position is strong.
And finally they are responsive to shareholders.
Businesses have to produce value for their shareholders.
So as a consequence,
they tend to produce tangible products quickly in a way that meets market demand.
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Let's think now about how the nonprofit sector
tries to solve the problem of affordable housing.
Their approach is very different.
They'll say, what does the community need?
How can we construct a vision of public and
affordable housing that is appropriate to the local needs?
They'll take existing housing stock, renovate it.
They may build smaller units that are very affordable or mixed units.
They might develop housing for truly the most desperate, the poor and the homeless.
Whatever the approach is, the non-profit sector is almost always mission driven.
It operates under the non-distribution constraint that says money can not be
given away to shareholders and owners.
It must be retained for mission purposes.
It tends to be very creative and locally sensitive to needs, and
it's often shaped by deep convictions of value and faith.
Non-profit leaders do their work because they care deeply,
they want to solve a problem.
And they want to be responsive to the vast range of stakeholders that surround
non-profits including board members, community members, donors and
the general public.
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So if government, business and the non-profit sector all
had their distinctive styles of solving public problems, you might ask well,
what makes social entrepreneurs different?
What makes their approach any different?
I think what makes them different is that they are looking for, as I said before,
something novel, something fresh.
A new approach that says what if we re-conceptualize the problem?
What if we take a different angle at it?
They're trying to drive innovation and they're trying to work above and
beyond the kind on sector limits that I've just described.
So let's take one example.
Let's go to Africa and look at Moladi.
In Africa, there's a question of how can we provide not just affordable housing but
durable housing that can be sustained even amidst storms and violent weather.
A group of social entrepreneurs came up with the idea
of what if we were to construct a house made out of plastic molds?
Small squares that snap together.
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And now they're doing it all across Africa.
They are building houses by taking molds, snapping them together, pouring concrete
into these molds, inserting rebar, steel rebar to make the unit extremely strong.
And they're generating housing at very low cost that
can withstand enormous amounts of environmental stress.
This is an idea that I don't think the business sector,
the non-profit sector, or the government sector would naturally gravitate towards.
It involves a fresh idea about what housing might look like.
It involves the idea of a concrete poured house that can be reassembled, molds for
which can be reassembled all over the place and replicated over and over again.
So what's interesting, I think, about the social entrepreneurship approach to public
problem solving is that it starts from a blank slate.
It says we want to solve a problem, and then it says,
how might we do it most effectively, most efficiently, most creatively.
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Now, social entrepreneurship has gotten a lot of play in recent years.
A number of people have focused on it.
There's a funding community now that's interested in providing
financial support for this field.
But let's take a couple of more definitions
as we get started in this area.
Social entrepreneurs, said Jeff Skoll the founder of eBay,
social entrepreneurs are the practical dreamers who have the talent, and
the skill and the vision to solve problems and to change the world.
Social entrepreneurs have a unique approach that is both evolutionary and
revolutionary, operating in free markets
where success is measured not just in financial profit but
also in the improvement of the quality of the people's lives.
That definition is important because it gets this double bottom line.
That there's both a mission dimension and
a market dimension in many social entrepreneurship initiatives.
Bill Gates has looked at this area and said, as I see it, there are two great
forces in human nature, self-interest and caring for others.
Capitalism harnesses self-interest in helpful sustainable ways but
only on behalf of those who can pay.
Philanthropy and government channel our caring to those who can't pay,
but the resources run out before the needs are met.
To provide for the poor, we need, he says,
a system that draws in innovators and businesses in a far better way.
I like to call it creative capitalism.
That's Bill Gates' term for this domain.
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Finally one more.
One of the leaders in this field is Mohammed Yunus the kind of progenitor of
the whole micro finance movement and of Gramin bank.
Yunus has look at it and
said nonprofits alone have proven to be an inadequate response to social problems.
Charity is a form of trickle down economics.
If the trickle stops, so does the help for the needy.
And in countries where the needs are greatest and the resources for
charity are usually very small.
The need to constantly raise funds from donors uses up the time and
energy of non-profit leaders.
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Yunus says, we need to introduce another kind of business, social business.
So he's struggling with a concept that he wants to introduce
of social business that brings these two sectors together.
Whether you call it creative capitalism, social business, social entrepreneurship,
social innovation, we're talking about the same thing.
Creative public problem-solving that spans boundaries and
that breaks through existing ways of thinking.
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So, let's tighten this up.
I have a way of thinking about social entrepreneurship that I'd like to
share with you.
And I basically put four constraints on this concept.
I say something is social entrepreneurship if it exhibits one,
the characteristic of innovation.
There has to be something new for it to be social entrepreneurship.
Second, it has to have financial sustainability.
The idea cannot be simply to write grants forever and
hope for the largess of others.
Inside the financial model of the enterprise there has to be the concept of
sustainability.
Revenues have to be generated somehow to make the engine fire and go on its own.
Third, all social entrepreneurs are creating social impact.
If there's not a public benefit that's a accrued from this work,
it's not social entrepreneurship.
There has to be social impact.
There has to be artifacts in the world of change.
Finally, social entrepreneurs are ambitious.
They are interested in scale.
For an idea to be really social entrepreneurship,
I think it has to exhibit the potential for scale and growth.
It can't just be a local, small solution.
Even though those can be very valuable, social entrepreneurs are aiming for
broader and more wide-spread change.
So if you take into consideration those four considerations and
the definitions we worked on just before,
you start to get the idea that social entrepreneurship is a fresh field.
It's cutting across business, non profit and government.
It's trying to find solutions in new ways.
And that people in this field are bold, risk takers and
fundamentally committed to innovation.
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Many times when I talk to people about business models in social enterprise,
one of the critiques that I hear is that, well why does there have to be so
much emphasis on money when what we're really here for is social impact?
Well, I love this quote from John Mackey, where he says,
the purpose of business is not to make money any more than the purpose of
the human body is to make red blood cells.
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What he means by that is
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our bodies have a much higher purpose than making red blood cells.
For red blood cells, they're absolutely critical for
our bodies to even be able to achieve their higher purpose.
And I would argue that it's exactly the same relationship between money and
impact in social enterprise.
The purpose of your social enterprise is not to make money, but
money is what's bringing the sort of oxygen to your organization so
that it can achieve its social impact.
And that's why so
much of this conversation about business models is about money.
Not because that's the goal of what we're doing, but
because it's an absolutely essential element
if we're going to have the kind of scale and impact that we want to have.
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You may wonder what it takes to be a social entrepreneur.
There are many characteristics that are critical to successful social enterprise.
For an entrepreneur, I think the big five that you have to focus on are one,
you have to be persistent.
Social enterprise is full of disappointments, setbacks, and
people saying no.
The successful social entrepreneur is the one who pushes through, hears no, but
keeps going and is unfailingly persistent.
Second, a good social entrepreneur has to be resourceful.
They have to be able to bootstrap and to create, out of nothing, possibility.
They have to be able to find resources, mobilize volunteers, and
find ways to get things done, often with little or no cost.
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Third, I think a social entrepreneur has to be fundamentally collaborative.
Most of the most successful entrepreneurs have teams behind them.
They've built a group of people who believe and
share the same vision as they do.
Building a strong team, working collaboratively is critical to success.
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I also think optimism is a critical trait of a good social entrepreneur.
You cannot do this work without waking up every morning and
feeling like there's a possibility that you could make a big difference.
Successful entrepreneurs are fundamentally positive.
They see the world, and they see possibilities.
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Fourth, I'd say curiosity's really important.
Many times, social entrepreneurs are going to face problems and
have to ask themselves, how could I possibly solve this solution?
It involves an endless questioning of oneself in the world.
So curiosity is a critical characteristic.
And finally empathy is really important.
Social entrepreneurs have to be able to see the world from the perspective
of others.
They have to feel the pain of others, to understand the problems that others
are confronting, in order to come up with innovative powerful solutions.
There are many other possible traits that social entrepreneurs can exhibit, and
we have a list here for your to consider.
But most of all, the five I've identified, those I think are absolutely essential.
Now even if you have all these wonderful characteristics, you still need to find
a moment where your set of skills, your values, intersect with the world's needs.
And this is the moment of power in social enterprise.
Where your personal characteristics, your values, your skill
set intersect powerfully with a critical community problem that you've identified.
When those worlds come together, when those forces overlap,
that's the sweet spot.
That's the moment where value is created in social entreprise.
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In this slide-show I'm going to talk about measuring performance in social sector.
It's a complicated and challenging task, and
there are a lot of ways that you can do it.
I'd like to start up by focusing on three approaches that are out there.
And then we'll drill down into the third in the second lecture.
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But first let's start with a basic question, why measure performance?
Why try to assess impact?
I think there are three good reasons.
One is, if you measure impact well,
it can make your organization function more effectively.
How could you possibly improve performance if you didn't know
how well you were doing?
You need to know if the organization's going up, down or sideways
to make the adjustments necessary to make the organization perform more effectively.
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Secondly, you measure performance because the people outside the organization
want to know, are you getting results?
Are you effective?
So there are demand externally to your
project that are going to drive you towards performance measurement.
Third and
I think the best of the best reason is that performance measurement is a moment
where you can get much clear about what it is you're trying to accomplish.
When you ask the question, what should we measure?
You're really ask any question, what matters, what are we all about?
What are we trying to accomplish?
So for all three reasons there's a movement in the social sector towards
greater performance measurement.
Let's look at three different ways people started thinking about measuring and
tracking performance.
The first is what I would describe as an approach that
says let's measure in very quantitative terms social return on Investment.
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This is an approach that says, we can quantify impact and
we can render it into a simple formula.
Second approach says, no, why don't we try a rating systems as a way of ranking and
assessing organizations that gives people inside and outside the organization's
sense of how these organizations stack up comparatively.
And the third approach is what I call scorecards and dashboards.
These are multi-dimensional performance measurement tools
that I think have the most promise.
So let's look at these three and then we'll drill down into the third area.
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Social return of investment is simply a moment when an organization says
can we account for the net benefit of the work we do?
Can we monetize and be clear to the external world about the costs and
benefits of what we're undertaking?
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But at its core there is this deep question,
can all social value really be monetized?
Can you really turn everything, from educational achievement,
to cultural enrichment, to environmental safety.
Can you turn all that into a dollar number and compute a net
benefit as a result of the work that's undertaken by social enterprise?
I have my doubts about how it can be used across a lot of different areas.
There's not doubt that it has some application in some areas, but
it ultimately is a rather narrow tool.
Let's look at one way in which people have tried to do this.
Here's a formula used by one of the biggest funders, the Hula Foundation.
And this is in your readings.
It's Paul Brest's article on calculated impact.
And what you'll see is the social return of investment model says that we can use
an equation with expected return,
outcome probability, the philanthropic contribution and the total cost.
And we can compute a number a returned number that give us a sense of, for
ever dollar we put in, how much social value do we get out?
Now there are some cases like the one in the article that Paul Brest uses,
of job training, where the number is monetized.
Earnings are achieved by people going through the program, and
that can be projected that over time and the costs of achieving those increase in
earnings can be calculated and a number can generated.
But there are many areas in the social sector where the ultimate benefit,
the ultimate end result doesn't lend itself so easily to monetization.
How would you translate the value of a child going to a museum?
How would you understand the value of religious revelation?
How would you understand the benefit of clean air in monetary terms?
So, this sort of approach, which is a narrow approach and
it has some applications but I have my doubts about it's capacity to be extended
across the broad range of purposes that we see in the social sector.
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The second approach is a ratings approach.
It says, across organizations, can't we come up with ways that track
accountability, that count in terms of how open an organization is?
Can we track how well an organization treats its employees?
How open it is to listening to its consumers.
How engaged it is with the community, and how solid is its environmental record.
And there are tools out there that say across different categories, we're going
to give grades to organizations and then we'll sum up and we'll get a sense of how
these organization within different sub-domains match up against one another.
And B-Corporations are at the front edge of this movement.
These are benefit corporations, and as part of this movement to create this new
class of organizations, they undergo a screening which asks these very
basic questions about accountability, employee treatment,
consumer relations, community engagement and environmental record.
And across each of those areas,
after asking a whole series of questions doing field work,
they develop a scorecard or a simple statement about how the organization
sums up in terms of its measurement of its record across these different domains.
Nothing wrong with these rating systems but they tend to be rather rigid,
because they have to be applied each time the same way to different organizations.
And they have one limitation, which is there constantly trying to pose a grade or
a number on their organization.
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