Let’s consider the question of what is the right or best kind of motivation for the rapidly growing class of social entrepreneurs. It’s a hot area, with a lot of new entrants, and not much in the way of rules and guidelines.
We’ll start with a working definition of social enterprise, the space in which social entrepreneurs operate. A social enterprise, or at least a good one, is a venture that efficiently and sustainably pursues social impact (solving a social problem) as its mission. Profit and income is just fine for social enterprises, so long as profit isn’t chased at the expense of social mission, and that profit as a means to an end doesn’t exploit those who are the intended beneficiaries of the enterprise (in other words and most often, poor people). It is irrelevant whether the enterprise is for profit, not for profit or a combination of each (a so-called hybrid) – what matters is that it’s a sustainable and efficient way to solve real problems in partnership with real people.
Here are some principles that motivate social entrepreneurs with a focus on social entrepreneurs in the market or “vertical” for solutions to poverty alleviation, especially in developing countries and disadvantaged communities.
1. More than good intentions
Good intentions are certainly enough for a philanthropist, when the act of giving is the central act. Good intentions are not enough for a social entrepreneur. To adapt a phrase, the path to a failed charity or social enterprise is paved with good intentions. Oprah Winfrey has an almost limitless supply of genuinely good intentions, and yet her school for young disadvantaged girls in South Africa paid a high price with waste, mismanagement and scandal. On the other hand, the founding team of TSiBA South Africa have developed a little known but high impact free college for very poor blacks and coloreds with great promise using Mandela rather than Oprah as their guide for creating affordable world class education for all.
2. Look outward, not inward, for motivation
Some social entrepreneurs try to solve their own problems, or set their own life on a better course, or fill a hole in their life, by trying to solve the problems of others. If the motivation is to make your life seem better or richer by intervening in the lives of others, it may not be the best for the others. Real solutions require much more than self-centered altruism. Pick a high profile celebrity spending a few days in an African refugee camp, and you’re likely to see this condition. The alternative: Dr. Muhammad Yunus formerly of Grameen Bank, who worked with the poorest of the poor women in rural Bangladesh to build a global banking powerhouse, owned and led by those very same women. His many followers have built thriving microfinance banks around the world that serve the poor first, and other interests like shareholders or governments only with what may be left over.
3. Efficient compassion is the best kind
It’s admirable to care about the suffering of others, but it’s only the first step in building a successful social enterprise. You can’t teach caring, but caring is a given in this market. A commitment to building a sustainable enterprise that efficiently uses limited financial and other resources, including those provided through the generosity of others, is at the core of a real social entrepreneur. There are far too many luxury SUVs filled with well paid consultants and Ivy League interns. Consider John Wood of Room to Read, a former Microsoft executive, for an example of a highly efficient and passionately caring social entrepreneur. The same for the late Dr. Venkataswamy of Aravind Eye Care who built a “pay if you can” surgical hospital for the blind in India that remains a global model for efficient compassion in state-of-the art health care.
4. Listening to voices other than your own
So many self-proclaimed social entrepreneurs start with their own solution to the problem as they see it from their place in the world. The more effective approach is based on listening to those who experience the problem and know more about the solution from living the problem. Blake Mycoskie has done admirable work at TOMS Shoes, but his reformed business practices suggest he’s recognized that the answers came from those who you serve, not from your own image of how they should be served. Warby Parker and its eyeglass business (founded by Wharton MBAs) is a new and improved version of TOMS, empowering micro-entrepreneurs in the developing world while selling affordable glasses here.
5. Beware of branding at someone else’s expense
Within celebrity culture, we often see stars try to build their brand by “doing good.” When it’s more about brand than lasting solutions to real problems, then watch out. Again, consider where the line is between charity and brand building at Oprah’s (Harpo) enterprises, or Bono’s clothing business. On the other hand, we see Matt Damon’s work with developing affordable and accessible clean water resources in the developing world being done in partnership with committed professionals and for the long haul.
6. Bottom-up solutions, not top-down
Solutions are best designed and implemented from the bottom-up not the top-down, meaning from community-based business plans and operations management. No one has done this better than Partners in Health under the early leadership of its inspirational founder, Dr. Paul Farmer. He built capacity in Haiti to treat HIV/AIDS and other diseases of the poor among Haitians, to avoid the “fly in” model used to bring rich world doctors to poor communities.
7. Results matter, not mission or programs
We can only fix the things we measure. Esther Duflo at MIT’s Jameel Poverty Action Lab and Dean Karlan at Yale’s Innovations for Poverty Action have both committed their development economics work to finding ways to actually measure what works and what doesn’t work to reduce poverty. There’s little glamour in measuring and studying programs, such as in developing randomized control trials for poverty work that mimic those for drug testing. But, passion for finding the best ways to really help the poor help themselves represents the next step in the development of social enterprises.
8. There’s plenty of room for genuinely new ideas
We’re finding that there remains lots of room for entirely new ideas in social enterprise, especially in the economic development field. Willie Foote founded Root Capital to fill the “missing middle” of agricultural finance to address rural poverty. Too big for microfinance but too small for commercial banking, Root Capital fills the gap with large loans to cooperatives made up of poor farmers that allow them to achieve the quality necessary to sell into global commodity markets. Similarly, Andrew Youn created The One Acre Fund to help poor rural farmers improve their productivity and access to markets, thus changing the lives of poor farmers forever in East Africa.
9. Drawing the line between good and evil
With the great success of microfinance came a few who would use the model created by Dr. Yunus to exploit rather than empower the poor. The founders of Banco Compartamos of Mexico City and SKS Microfinance of India can defend themselves, but with 100% interest rates charged to the poor just because you can, and collection methods that led some borrowers to commit suicide rather than suffer the shame of default, it’s clear that a line between compassionate capitalism and greed and exploitation can and must be drawn.
10. Giving back is the new new thing
Bill and Melinda Gates of The Gates Foundation have “bet the house” on solving the biggest problems of the world, from education to sustainable farming to affordable medicine. But perhaps even more important, they have led others to do the same, through their “billionaire’s giving pledge” campaign. Some of the wealthiest people in the world like Warren Buffett and Mark Zuckerberg of Facebook have promised to give away at least half of what they have to efforts to solve the big problems. While we all can’t be billionaires, we all can follow their lead and be similarly generous in dollars, time, outlook and spirit.
So, cheers to the new generation of social entrepreneurs and social enterprise leaders who are doing it right. They are role models for young people around the world who are studying hard and hoping to find a clear path to a new more compassionate and inclusive way of doing business.