Social entrepreneurship is a broad area since many disparate groups are using entrepreneurial strategies to solve social problems. It seeks to solve a social need while earning a reasonable financial return. In general, social-entrepreneurship organizations seem to be somewhere between a foundation focused on social issues based on charitable contributions, and a pure business corporation that is focused on financial profits. Social entrepreneurship has taken on many forms, including the following:
- Creating jobs in under-served or low-income areas:
- Helping low-income entrepreneurs:
- Helping entrepreneurs from poorly served segments:
- Micro-lending
My experience is that many of the people migrating to social entrepreneurship move there from the social angle rather than from the entrepreneurship side. They want to serve society’s needs, and either hope that someone will keep giving them money, or think that they can raise some money and earn a “reasonable” return. The latter group often thinks that getting a financial return is easy and that it can calibrate the returns in new-business development.
I spent more than two decades in “social” entrepreneurship. Social entrepreneurship is not about singing kumbaya around a campfire, as many who venture into this arena think. It’s not about walking with a halo around your head since you want to do “good” and will show the world how to succeed without the “crass” attitude of successful entrepreneurs and companies. In fact, social entrepreneurship is more difficult than any other form of entrepreneurship.
Resources are scarce. Since financial returns are low and often much lower than that of the regular entrepreneurial world, only a few brave governments and foundations offer funds in this area. So there is plenty of competition for the scarce resources.
Academic experts can create more problems if not grounded in reality. Often the social entrepreneurs have a connection with academia for credibility, and the academics think they can do good and do well. Academics need to realize that social entrepreneurship can be more difficult than the real kind since the entrepreneurs are often not experienced, or believe that the theory works. So everybody needs to tread carefully since the well-being of many lives may be at stake.
Success takes time. Most of the do-gooders fade into the sunset when the seeds don’t sprout immediately, and only the dedicated stay on. This is because do-gooders with credentials can make more money in corporate careers, Wall Street, or Silicon Valley. After doing their small bit for humanity, even the most noble-minded person can get jaded.
There is a fine line between condescension and successful social entrepreneurship. Many who enter this field seem to do so with an unwritten assumption that all it takes are high ideals to fix the problem. The reality is that practical entrepreneurship at the social level requires even more street smarts than Silicon Valley’s cut-throat environment (but without the upside).
Each area has different needs. The key is to have a top-notch set of tools in your arsenal, and apply them with flexibility. You cannot apply the same tools everywhere and expect success everywhere.
Here are a few suggestions for social entrepreneurship:
- Keep your ideals at the front door: Social entrepreneurs need to be as practical as “non-social” entrepreneurs. I have seen more problems in social ventures than in pure profit-making ones. A small amount of money seems to bring more larceny to the surface.
- Train entrepreneurs to be better: At the end of the day, good entrepreneurs can build businesses in any conditions. I have seen some fantastic entrepreneurs build great businesses in the poorest parts of Haiti – without any education. You just admire in awe.
- Not everyone will succeed. But the few superstars make up for the rest. The odds are the same as in other forms of venture development. Not everyone who wants to do good actually does well.
- Trainers have to be better: They need to be practical. And they need to know their stuff. And they need to know how to apply, not just talk about theory. And they need to be able to do this even if it does not make them rich. That is a tall order.
MY TAKE: My experience is that there is nothing social about social entrepreneurship. None of the returns are easy, and to think that they can be calibrated is fantasy. You have to be practical and hard-nosed to build successful social ventures since social entrepreneurs need extra skills to grow without capital – as most in this world do not have access to capital. They need to know how to grow with smarts than with money.
