B Schools and Social Entrepreneurship - Part II

What would it take for social enterprises to become a hot career choice among B school graduates?

Part II

In the first part of the blog, we touched upon what were social enterprises and what social entrepreneurs did. We also explored aspirations of B School students and the gaps present when faced with a career in social enterprises. In this concluding section, we will look at some of the ways in which these gaps can be addressed.

To re-cap, some of the gaps because of which social enterprises are very rarely a career choice for graduating B-School students include:

Expectation of B-School students	Social Enterprise offering	Gap - Issue raised
Attractive compensation	Very limited compensation	Financial insecurity, doubts about sustenance
Work content	Challenging work assignments;adequate opportunity to utilise education;	None. In fact social enteprises offer an enterpreneurial work setting and hence fertile ground for applying business school education
Opportunities for growth	Some but not a fully defined career progression	Professional growth ? Future/forward linkages; recognition in mainstream organisations
Professional work place settings	Unlikely to be a fancy office; but likely provide functional workplace	peer pressure;societal expectations not met

Potential Solutions:

1. The Business Model of the Social Enterprise should be for-profit.

At the outset, the most the important factor is to design the social enterprise as a for-profit enterprise. This has multiple ramifications, namely: increases the chances of commerical funding which in turn sets off a chain; it provides sufficient finances to attract top-talent including B School graduates; necessitates the need for commercial/business metrics; increases the competitive nature of the work environment and provides a stimulating atmosphere.

Understandably this is not possible in all scenarios but where possible, the drive should be towards revenue -generation through independence to profits.

2. Enhanced role of the VC/PE organisations

Given that financial backing is critical to the success of social enterprises and attracting top-talent, there are multiple ways in which VC/PE organisations can provide stimulus and support.

a. VC/PE LP's could stipulate that part of the funds or profits generated from exits be invested in social enterprises. These investments could either look for only return of the capital or modest returns (6-9%).

b. LP's/FII's/HNI's could set-up more funds that are specifically targeted at the social enterprise space. Exisiting organisations such as Bridges could work as role-models.

3. Forward/Industry Links

One of the uncertainities associated with working in a social enterprise is lack of future prospects and the difficulty in making a transition back into mainstream commercial organisations.

Just as in successful private/public partnerships, I believe strong symbiotic relationships can be created between social enterprises and commercial organisations. For commercial organisations, these partnerships can be an integral part of their CSR policy, while for social enterprises the avantage is from access to resources. Additionally, it helps create the links and networks which can help talent movement.

4. Governmental and regulatory support

Governments can play a vital catalytic role and foster the social entrepreneurial space. Governments can do this via policy and through other measures such as:

a. Provide tax exemptions not only for social enterprised who generate profits but also for the investor community to encourage investments

b. Identify unmet social needs which can benefit from a entrepreneurial set-up, step-back and provide support for entrepreneurs who would like to address such issues without bureaucratic hindrance. The government could set-up a national database with a list of such problems and invite suggestions, solutions.

c. Part of the government budget outlay shoud include specific allocations for social enterprises.

5. Social Metrics to be used as performance indicators

A lack of generally accepted metrics in the social dimension makes it difficult to assess the progress or impact of a social enterprise. Additionally, social enterprises do not always use commerical metrics to measure performance in areas such as Operations, Finance, HR etc. Adopting a commercial mind-set adna applying these measures can add further credence to these organisations and also affect individual performances. Each social enterprise can also devise its own set of social metrics and make this publicly available in a easy-to-understand form.

Social Entrepreneurship - Hot Career Choice ?

Social Enterprise -Hot career choice among B school graduates ? Part I

Introduction

Since starting Michael Hay's Social Entrepreneuship elective classes at London Business School, I have been fascinated and intrigued by the nature of social entrepreneurship. I have been inspired by the stories in class about people like Fazle Hasan Abed, Mohammed Yunus and Wendy Kopp as well as meeting and listening to speakers such as Andrea of Riders and Faisel Rahman of Fair Finance.

In this blog entry, I'd like to analyse why there are so few people who take up social entrepreneurship in spite of its inherent feel-good factor. We will start with a very briefly look at a typical social enterpreneur and his scope of work. We will then look at what does a B-School graduate aspire for from his education and then examine the gap.

What is a Social Enterprise? Who is a social entrepreneur and what does he do?

A Social Enterprise is an entity whose primary purpose is to fulfill unmet social needs. in the course of doing so, this enterprise may or may not generate revenues. This definition is being expanded. See here for an interesting article from the Stanford Social Innovation review.

The Ashoka foundation defines Social entrepreneurs as individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.

More definitions and information about Social Enterprises and Social Entrepreneurs can be found on the websites of the Ashoka, the Skoll Foundation, Clinton Foundation, Gates Foundation among others.

What does a social entrepreneur (SE) do?

A social entrepreneur's role includes all that of a commercial entrepreneur but with different challenges. A SE spots an unmet need in the market (major social problems) and creates a solution that can address this. The SE is then likely to create an enterprise for these purposes with the passionate belief that the solution can address the problem in a systemic manner. The SE goes through all the processes of business planning, fund-raising, organisation set-up, obtaining approvals et al. The difference lies in the nature of the challenges which mainly relate to resources - securing financial, quality human and physical resources. To explain and understand this better, I'd like to set context and digress a little bit.

Challenges

Enterprises face tremendous hurdles in raising finances - especially so when there isn't any revenue generation. In such cases, these social enterprises are effectively charities - I guess they are referred to as social enterprises since its the more 'in' thing to do so. On the other hand, enterprises which do generate revenue and are able to meet most or all of their costs qualify as social enterprises. The ideal situation is wherein a social enterprise not only addresses a large-scale social problem but also generates economic profit.

With this background, it becomes easier to understand that the nature of the challenges that face a SE are different - raising funds is expecially difficult since there are likely no returns on investment and many a times, even the capital is not returned. Budgets are typically shoe-string and this compounds the organisation set-up problem - attracting and retaining quality resources is difficult and similarly obtaining physical resources is very difficult.

What does a B-School grad look for ?

Some of the key characteristics that a B School graduate would likely look for include

• attractive compensation
• opportunities for growth
• a professional workplace
• challenging work content and opportunity to use business knowledge gained
• ability to contribute

There are many more factors that make a role/job interesting for business school students such as opportunity to travel, brand of the recruiter etc. Having invested a considerable amount of time and money in their education it is but a fair & natural expectation to have such expectations.

In the second part of this blog, we will look at potential ways of bridging this gap and pushing the envelope, what does it take for social entrepreneurship to become a career of choice among B School students.

Academic Earth

Check this new site out created by a guy called Richard Ludlow. Great content. 

Sixth Sense - Fantastic !

Check out this talk at TED. Enjoy !

Another bubble waiting to burst ?

Conversation today morning veered towards various aspects of social networking and started off with my (and a few others’) inability to understand and appreciate Twitter. What is the business model ? What is the practical use ? To those in the know, forgive this ignoramus but I just can’t figure out why do people want to Tweet at all !! Needless to say, I would appreciate a ‘Twitter for Dummies’ post and/or discussion.

So on we went to who funds these etc and the next pit-stop was if what we are seeing in the internet space and the high valuations is another bubble waiting to burst !! Are investors becoming a victim of the bandwagon effect and investing in businesses that have no solid business models ?

This led to a remark that we will inevitably see another shake-out in the dot.com space– few established players with proven revenue models and others fallen by the wayside.  Is this possible ? 

I think this is unlikely and more a wishful thought - largely due to the discomfort with this constant state of flux and the need for stability. We will continue to witness a constant proliferation of new ideas/models, the old being regenerated and the existing revamped. This constantly changing state is the hallmark of the internet and will continue to remain so. 

Local Community/Social Currency

The above currency is legal currency ! Salt Spring, a Canadian Island, is an example of a local community that has its own currency.  Particularly interesting is the Palmas Bank story, a successful Brazilian redevelopment project that also has its own 'local' currency. 

Now, I hadnt't heard of local currency but was intrigued enough to search a couple of more sites. From what I gather, local currency is legal currency that can be used within the boundaries of that locality and is backed by either the national currency or gold/silver or a combination of these.

There are FAQ’slisted on these sites and many Q are answered. But I still wonder, how important or useful this is to a local community’s development. There is more information on the Brazilian Palmas project here and here while a couple of other communities who have their own currency are listed here and here.

Tying in last-week's post on crowd-sourcing with the first link listed above, Changemakers is another example of crowd-sourcing. The difference is that they see themselves as 'Open Sourcing Social Solutions' - a fabulous initiative of the Ashoka foundation that provides solutions and resources to become a Changemaker. Read more here.

A few weekend thoughts

Having attended a few sessions of the recently concluded London Business School Technology Summit, I had a couple of take-aways.

1.

The morning keynote by the Mckinsey speaker had a few interesting points of which I'd like to mention one - 'crowd-sourcing' - this could be a Q in the final quiz :). Crowd-sourcing, as I understood, is the process by which an organisation (Lego, P &G) or movement (Open Source) harness the power of the larger community by inviting them to contribute. The basic idea being that one of the ways to stay ahead of competition is for an organisation to look outside its own boundaries for the next innovation or in current jargon, next 'game-changing deal'. 

P & G has a comprehensive website on this topic here. Similarly, Lego taps into its followers loyalty by allowing/encouraging them to design, share and buy their very own custom Lego model. Pretty cool uh, see here.

A question to others who attended: I remember a social observation the speaker mentioned - Was it that, even in a 'crowd-sourcing' set-up, people prefer a hierarchy in terms of 'org' structure (even though there is no 'org' truly speaking) ? 

2.

In the panel discussion on the mobile topic, I was keen to understand as to how can mobile operators address the disintermediation effect brought about by the success of smart phones and the spike in mobile internet use - the effect being that mobile internet access has eliminated possible revenue stream/s for mobile operators.

One point of view from a panel member was that, as mobile internet access grows, the creation, deployment and management of mobile apps will play an increasing big role (I believe the iPhone currently has more than 20,000 apps !! ). For a wider perspective on the disintermediation effect, read a Deloitte report here.

A quick aside here: there was another point of view from the same panel that people will ncreasingly rely on trusted contacts to provide them with relevant/useful information rather than using a search engine. To illustrate, assume you have an application that shows the people you trust, on your mobile (an 'always-on' version of Facebook). Now, if you are in Drummond Street and want to eat nice spicy Indian food and could access/connect via mobile with these people you trust, you'd rely more on their recommendations rather than what a search engine would suggest. So, Google may not be that ubiquitous after all - possible ? Or, will Android and/or the GPhone become equally popular ?