APS 1015: Social Entrepreneurship

Class 1: Definitions and Motivations for Social Entrepreneurship

Thursday, May 10, 2012

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Instructors: Norm Tasevski (norm@socialentrepreneurship.ca)

© Norm Tasevski

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Before we begin…

This course is designed for those that want to start a social venture, and/or work in social enterprise

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Course Director – Norm Tasevski

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What Makes YOU a (Social) Entrepreneur???

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Agenda

•  Class Intros •  Syllabus and Class Structure •  Ground Rules •  Defining Social Entrepreneurship •  What motivates the social entrepreneur? •  What did we learn? •  Next week

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Syllabus

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Class Rules

–  Participation - quality, not quantity!

–  No stupid questions (only stupid answers)

–  Respect your classmates – attend and be punctual!

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Defining Social Entrepreneurship…

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First, we need to understand entrepreneurship...

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Entrepreneurs…

…are motivated

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Entrepreneurs…

…are innovative

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Entrepreneurs…

…are resourceful

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Entrepreneurs…

…take chances

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How is Social Entrepreneurship Different?

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Entrepreneurs…

…are motivated …are resourceful …are risk takers …are innovative

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But, for the social entrepreneur…

…motivations are different

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And…

…innovation is different

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And…

…resourcefulness is different

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And…

…risk taking is different

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An Example – “Civic Engagement, Scaled Up”

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Other Differences

Focus on “systems thinking” and

“systems change”:

“Social entrepreneurs are not content just to give a fish or how to teach fish. They will not rest until they have

revolutionized the fishing industry” Bill Drayton

Seek “profit” in traditionally

unprofitable pursuits:

“(Social entrepreneurs) work in areas where there is partial or total market failure…what distinguishes them is that they are prepared

to strike a very different balance when it comes to creating value for those who would not normally be able

to afford it” John Elkington

Possess a strong “ethical impetus”:

David Bornstein: “Why do you work on the kinds of projects you do? Why don’t you just want to make a lot of money?”

Fabio Rosa: “I am trying to build a little part of the world in which I would like to

live. A project only makes sense to me when it proves useful to make people happier and the environment more respected, and when it

represents a hope for a better future. This is the soul of my projects.” 22

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Some Definitions

•  “Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they are serving”

David Bornstein

•  “A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to make social change”

Wikipedia

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Break

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Defining Social Enterprise…

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What is a Social Enterprise?

•  Organizations (non-profit or for-profit) that imbed both social purpose and business purpose into their organization

•  Returns are both Social (i.e. impact) & Financial (i.e. profit)

•  Key distinguishing factor: How deep social & business purpose is imbedded

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A Question…

What makes a business a business?

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Components of a Business

A transaction

A product/service

A goal A legal form

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How is Social Enterprise Different?

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Social Enterprise has…

Yep �

A transaction

A product/service

A goal A legal form

Yeah, but…�

This one’s complicated�

Absolutely�

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The SE Product/Service

It’s still…

But… •  “Social benefit” is added somewhere on the value

chain

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What is Social Benefit?

•  For our purposes, social benefit may arise when one attempts to overcome an injustice or inequity in society that the market, on its own, cannot respond to –  E.g. creating employment opportunities for individuals that may not otherwise be

employable in the marketplace

•  A similar concept – “environmental benefit”

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Exercise

•  Add social benefit to:

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The SE Transaction

Traditional Business Social Enterprise

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Customers

Customers

“Clients”

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The SE Goal - Social vs. Financial Purpose

Social Purpose –  Creating a “social return” by making positive change

within an inequitable social system •  Examples: Reduced Poverty, Improved Literacy

Financial Purpose –  Creating a “financial return”, usually through the sale of

products/services in the marketplace

Blended Purpose –  Effecting social change by combining social and financial

return –  Also called “Blended Value”

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Viewing SE Through a “business lens”

•  How you think about cost –  Additional costs borne on business that achieves a social

benefit (how do you incorporate? Valuate it?)

•  How you think about investment –  Opportunities to get investment through traditional models,

but because your business is hybrid, the investment needs to be hybrid (i.e. layering of different financing mechanisms)

•  How you think about success –  Part of the social enterprise motivation is social, so you

need to consider success in a dual lens. How do you articulate success in both of these spheres?

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The Legal Form

•  No clearly defined legal form for social enterprise in Canada

•  “Form follows function”

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Emphasis on Social Return Conventional

Nonprofit

Nonprofit with some earned

income

Social Enterprise

Business with social

responsibility

Conventional Business

Emphasis on Financial Return

Nonprofit Structure

For-profit Structure

Philanthropic Capital

Commercial Capital

Source: Stanford Social Innovation Review, Spring 2008; Jed Emerson cited as contributor

Spectrum of Social and Financial Returns

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A test…

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I am: •  A retailer •  Sells goods at rates affordable by low-

income individuals •  Employs individuals with barriers to

employment •  Goals:

–  92% of imported goods from green factories

–  95% of waste redirected from landfill –  Desire to be supplied 100% by

renewable energy by 2015

Social Enterprise or Not?

Facts: •  $115M raised for charity since 1995

($18M in 2009) •  Over 1,000 environmentally-

approved products on sale •  1700 new jobs created in Canada in

2009

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A test…

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I am: •  A café •  84% of all coffee ethically sourced (goal of 100% by

2015) •  Supports farmers by a) selling fair trade coffee, and b)

providing loans to coffee growers •  Purchase carbon credits to offset production •  Goals:

–  100% of cups to be reusable/recyclable –  Use recycled/renewable materials in café

construction –  Organize a “month of service” (employees act as

“change makers” in their communities)

Social Enterprise or Not? Facts: •  Sells approx. 10% of all Fair Trade coffee globally •  Almost 200,000 volunteer hours made by employees worldwide •  Over 53,000 youth supported and engaged in community events

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What does this mean?

Social Enterprise

CSR

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Social Enterprise

Complexity

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What SE is and is Not

Social Enterprise Is Not… Social Enterprise Is…

•  A fundraising strategy (i.e. a “give” mentality)

•  A business line (i.e. a “sales” mentality)

•  Solely focused on either “customers” or “clients”

•  Focused on both “customers” and “clients”

•  Dependent on restricted funds for operations (i.e. not sustainable)

•  Sustainable (ideally “self-sufficient”)

•  An event or one-off activity (e.g. conferences, bake sales)

•  A continuous, market-driven activity

•  Providing value to clients only •  Providing value to both “clients” and “customers” (and distinguishing between both!)

•  Quick •  A venture that may take several years to become profitable/sustainable

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Some Definitions

•  “An organization or venture that achieves its primary social or environmental mission using business methods.”

Social Enterprise Alliance

•  “Business ventures operated by non-profits, whether they are societies, charities, or co-operatives.”

Enterprising Non-Profits (enp)

•  “… social mission driven organizations which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social.”

Wikipedia

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Motivators for Social Entrepreneurs…

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A Question…

What motivates you??

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Some Definitions

•  Internal and external factors that stimulate desire and energy in people to be continually interested in and committed to a job, role or subject, and to exert persistent effort in attaining a goal. Motivation is the energizer of behaviour and mother of all action. It results from the interactions among conscious and unconscious factors such as the (1) intensity of desire or need, (2) incentive or reward value of the goal, and (3) expectations of the individual and of his or her significant others.”

BusinessDictionary.com

•  “Motivation is the activation or energization of goal-orientated behavior. Motivation may be rooted in the basic need to minimize physical pain and maximize pleasure, or it may include specific needs such as eating and resting, or a desired object, hobby, goal, state of being, ideal, or it may be attributed to less-apparent reasons such as altruism, selfishness, morality, or avoiding morality. Conceptually, motivation should not be confused with either volition or optimism. Motivation is related to, but distinct from, emotion.”

Wikipedia

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In response to why people are not giving to the Pakistani flood in the same way as they did for Haiti, one woman said:!!“It’s a rogue state, if they can afford the nuclear bomb they can look after their own”!!

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Costin Militaru, an outreach worker…has met addicts as young as 9 years old. "His family had no money for food. He was hungry and kept crying, so they fed him heroin," Militaru says. "If you're high, you don't need food.”!!

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“On March 24, 1989, the Exxon Valdez ran aground in northern Prince William Sound, spilling 42 million liters of crude oil and contaminating 1,990 kilometers of shoreline. Some 2,000 sea otters, 302 harbor seals and about 250,000 seabirds died in the days immediately following the spill.”!

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A total of 32,700 different people stayed in Toronto's emergency shelters in 2005. 4,600 were children. !!Over half a million Toronto households live below the poverty line!!1 in 10 homeless report attempted suicide in 2006!

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So What Motivates The Social/Environmental Entrepreneur?

“…it was an epiphanal experience…” Ray Anderson, Interface Carpets

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So What Motivates The Social/Environmental Entrepreneur?

“I heard the same story again and again. Someone had

experienced an intense kind of pain that branded

them in some way. They said, ‘I had’ to do this. There was nothing else I could do.”

Jody Jensen, Ashoka

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So What Motivates The Social/Environmental Entrepreneur?

“…that made a real impression on me…” Jeff Skoll, eBay, Skoll Foundation, etc.

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So What Motivates The Social/Environmental Entrepreneur?

“I was teaching in one of the universities while the country was

suffering from a severe famine. People were dying of hunger, and I felt very helpless. As an economist, I had no tool

in my toolbox to fix that kind of situation.” Mohammed Yunus, Grameen Bank

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So What Motivates The Social/Environmental Entrepreneur?

“…powerful moments of inspiration…” Jacqueline Novogratz, Acumen Fund

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What about…

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What did we learn?

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Next Week

•  1st deliverable:

–  Pick a social/environmental issue (international or Canadian) from the provided list, and…

–  Pick a group of 4-5 (we will finalize groups next week based on final class numbers)

•  Readings

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