Archive for August, 2007

The Social Edge is hosting a discussion on the meaning of Social Entrepreneurship. It inspired me to think about my own definition.

Stanford Social Innovation Review had an article attempting to define a Social Entrepreneurship recently. They focused on the technical definition of entrepreneur and my read of their assessment is that it’s someone who creates a change in activity patterns that sticks – people now buy a new product or use a new service in a way that sustains… at least for a while.

Harvard Professor Amar Bhide, in his book The Origin and Evolution of New Business, cites 4 roles played by Entrepreneurs: coordinator, innovator, arbitrageur, and holder of uncertainty.

To me, an entrepreneur is like a firestarter – they bring together various components and help connect them in a way that can keep working together even after the starter steps away. Like a fire, the original starter plays a critical role, but others are needed to sustain it. Unlike a fire, it takes an ability to tolerate ambiguity and uncertianty – you’re bringing together components that aren’t guaranteed to burn together under current conditions, though Bhide’s book suggests that 70% of the time you’ve got the courage to try because you’ve seen something like it before.

Now for the social part. I’ve been researching Fair Trade policies to understand how I might evaluate the social responsibility of a company, and I’ve come to understand that the additional payments are only one aspect of Fair Trade – what’s more important is the financial and technical assistance to help the co-op partners develop their productive capacity. It’s a purchaser-supplier relationship that actually strengthens the supplier, rather than draining them.

In operations class at the Bainbridge Graduate Institute Sustainable MBA program, we studied The Toyota Way, and how it’s about levelized production and efficient but non-draining use of resources. In reducing defects they work to build up their partners rather than secretly compete with partners while partnering. At BGI we also talk a great deal about stakeholders.

So when I pull all that together, I find that social entrepreneurship is about creatively creating self-sustaining enterprises that enrich all their stakeholders as well – investors, suppliers, customers, community and employees come out of their participation in the enterprise as better people and organizations themselves. By that definition, all enterprises will fall a little short – there will always be a difficult balance between the needs of various stakeholders, but the question is, I suppose, how disparately do they benefit? It would be good enough for me if at least some benefit and none suffer. The other trick – how do we measure or know? Given that enterprises do take risks and face unexpected events, what would make it social to me in the long term is that it does regularly measure and rebalance if events drift things out of line.

8/8/2007 – a week later I find an article where the authors seem to be saying a similar thing: that social enterprise is transformative for its stakeholders – though they’re coming from the “social enterprise”=”nonprofit earned income” side, whereas I’m more interested in purely earned income (so usually for-profit) models.

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