The Untapped Potential of Social Entrepreneurs

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by: Joel Makower

In recent years, we've seen the rise of the "social entrepreneur," a new breed of individuals with innovative solutions to society's most pressing social problems, as Ashoka, the global association of social entrepreneurs, puts it. These individuals are often visionaries, creating innovative enterprises, products and services, and business models, some for-profit, others nonprofit.

Most social entrepreneurs swim upstream in their respective markets, often succeeding with limited financial and human resources, and often with few partners — companies, government agencies, NGOs, and others.

So, what would it take to support not just these individual enterprises, but the entire system in which they operate? That's the topic of Growing Opportunity: Entrepreneurial Solutions to Insoluble Problems, a study just published by the U.K. think tank SustainAbility. It shows how social entrepreneurs are making a difference in the health care and energy fields, and diagnoses some of the challenges and barriers these entrepreneurs encounter.

The bottom line: social entrepreneurs are on a roll and, despite the relative small size of the field, offer considerable potential for breakthrough solutions. But they need money, partners, and the TLC of big business. And it would help if government policies lined up behind them.

Those in the private sector don't often "get" social entrepreneurs, SustainAbility found.

Business people encountering the world of social entrepreneurship for the first time often emerge confused, at least to begin with. The sort of questions they raise include: Why all the excitement? How are these people different from NGOs? Isn't entrepreneurship what business already does? How can you expect the world's poorest to represent any sort of market? And how can ventures operating at this relatively small scale ever hope to change the world, as they proclaim their ambition to be?

These aren't unreasonable questions, to be sure, but they point up the limited mindset through which big companies see solutions to social and environmental challenges. "Many companies still see sustainability challenges as threats and not opportunities," Maggie Brenneke, a Skoll Fellow at SustainAbility, and one of the report's principal authors, told me this week. "Thus, entrepreneurs who are embracing challenges like climate change, while perhaps intriguing, seem foreign and perhaps even threatening to large companies."

Her harsh assessment: "I don't think a lot of companies even know what to do with a good idea or organization that comes their way."

That's a lost opportunity for everyone — social entrepreneurs, big companies, and those who would benefit from the horsepower the latter could bring to the former. It doesn't have to be this way. SustainAbility points to numerous examples of companies — from Nike to Novo Nordisk, Shell to Stonyfield Farm — that have found value from partnering or supporting social entrepreneurs in both developed and developing countries.

Of course, the success of social entrepreneurs shouldn't rest entirely on the involvement of big business. Governments, NGOs, and others need to play strong supporting roles. And the financial community needs to rise to the occasion, eyeing social entrepreneurs as a new investment class, not merely as soft and fuzzy do-gooders. As some of the examples described in the SustainAbility report suggest, there's money to be made, even if it doesn't always measure up to what's known as "venture-grade" investment returns.

But business leaders need to seize the moment, too, and there is sufficient self-interest for them to do so. As business partners, social entrepreneurs can identify new products and services, open up previously inaccessible markets, and engender the kind of systems thinking that's all too frequently lost inside large enterprises. Says SustainAbility:

The first reason that business needs to engage is that the world is changing — and with it markets. Social and environmental entrepreneurs do not have all the answers, but they do see the world and markets differently, and the more innovative are experimenting with new business models that could potentially break out of their niches and help transform key elements of the global economy.

This is a time to put all good ideas on the table, and to let all players participate in bringing them to life. What's the opportunity to engage social entrepreneurs in your company?

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