UNDERSTANDING THE POWER OF SOCIAL ENTREPRENEURS

Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

La Comercial UD – Sustainable development – Bilbao May 2009

Dr. JM Luzarraga –Mondragon [email protected]

[email protected]

GLOBALIZATION & SUSTAINABLE DEVELOPMENT Strategies for Poverty eradication & Wealth creation

The role of multinationals CSR strategy, the fortune at the bottom of the pyramid &

SOCIAL ENTREPRENEURS


Index1. Introduction to “Globalization & Sustainable

development”:- Globalization context - Current Global Challenges in a Knowledge Economy- Impact on economic developed countries- Impact on developing & emerging countries

2. Three Paths to Poverty eradication & Wealth Creation- Corporations’ CSR strategy: employment creation (Karnani)- Fortune at the Bottom of the Pyramid strategy: new customers

(Prahalad)- Social Entrepreneurs: new socio-economic agents (Bornstein-

Yumus & Schwab)


Our goals for todayBased on the book “The power of unreasonable people”(J Elkington & P. Hartigan –Harvard Business Press 2008)

Our objectives are:To introduce a new generation of social & environmental entrepreneursTo understand their Business Models & leadership stylesTo identify their market opportunitiesTo find out their financial resources


3. “THE POWER OF UNREASONABLE PEOPLE How Social Entrepreneurs Create Markets that Change the World”

(Harvard Business Press 2008)

- Understanding what is a Social Entrepreneur - Classifying types of Social Enterprises- Identifying SE market opportunities- Tapping SE financial resources


Understanding what is a Social Entrepreneur

“The reasonable man adapts himself t the world

The unreasonable man persist in trying to adapt the world to himself.

Therefore, all progress depends on the unreasonable man”

(George Bernard Swaw, 1903)


Social entrepreneurs are…Innovative, Resourceful, Practical and Opportunistic,… as any other entrepreneurs

But… What motivates social entrepreneurs is not doing the “DEAL” but achieving the “IDEAL”

So they have a long term commitment with their projects

Most Social entrepreneurs stumble across the opportunity toSERVE OTHERS

Common inspiration is: “You have to be the change you want to see in the world”

(Gandhi)


Why are they unreasonable? Because…

They Want to Change the WorldThey are insanely ambitiousThey are propelled by emotionsThey think they know the futureThey seek profit in unprofitable pursuitsThey ignore the evidenceThey try to Measure the UnmeasurableThey refuse to be made into SuperheroesThey are, well, unreasonable


Characteristics of Successful Social entrepreneursTry to shrug off the constraints of ideology or disciplineIdentify & apply practical solutions to social problems, combining innovation, resourcefulness, and opportunityInnovate by finding a new product, a new service, or a new approach to a social problemFocus-first & foremost-on social value creation and, in that spirit, are willing to share their innovations & insights for other to replicateJump in before ensuring they are fully resourcedHave an unwavering belief in everyone’s innate capacity, often regardless of education, to contribute meaningfully to economic & social developmentShow a dogged determination that pushes them to take risks that others wouldn’t dareBalance their passion for change with a zeal to measure and monitor their impactHave a great deal to teach change makers in other sectorsDisplay a healthy impatience


How they look like…

Dr. Govindappa “Aravind Eye Hospital”“The largest Eye care medicalcentre in the world”VIDEO: http://tinyurl.com/qb37rm

Nicholas Negroponte (MIT-medialab)“Entrepreneur behind the One laptop per child project”VIDEO: http://tinyurl.com/qkavho

Dr. Mohammed Yumus“Grameen Bank – Nobel Price 2006”VIDEO: http://tinyurl.com/dmbz9f


Classifying types of Social Enterprises

Traditional classification:Model 1: Leveraged Nonprofit venturesModel 2: Hybrid Nonprofit venturesModel 3: Social Business Ventures

Social Enterprise from a wider perspective


Traditional classification

Model 1: Leveraged Nonprofit venturesA public good is being delivered to the most economically vulnerable, who do not have access to, or are unable to afford, the service renderedBoth the entrepreneur and the organization are change catalysts, with a central goal of enabling direct beneficiaries to assume ownership of the initiativeMultiple external partners are actively involved in supporting the venture financially, politically, and in kindThe founding entrepreneur morphs into a figurehead, in some cases for the wider movement, as others assume responsibilities and leadership



Model 1: Leveraged Nonprofit ventures

Mother Teresa“Missionaries of Charity”VIDEO: http://tinyurl.com/d25chs

Bunker Roy“Barefoot College”http://tinyurl.com/ottmg8

N. Negroponte OLPC www.laptop.orghttp://tinyurl.com/5tfazu


Traditional classificationModel 2: Hybrid Nonprofit ventures

Goods or services are delivered to populations that have been excluded or underserved by mainstream markets, but the notion of making a profit is not totally out of the questionSooner or later the founding entrepreneur or his/her team, typically develops a marketing plan to ensure that the poor or otherwise disadvantaged can access the product or service being providedThe enterprise is able to recover a portion of its costs through the sale of goods & services, in the process often identifying new marketsTo sustain activities & address the unmet needs of poor or otherwise marginalized clients, the entrepreneur mobilizes funds from public, private, and/or philanthropic organizations in the form of grants, loansAs mainstream investors & business enter the picture, even when they are not seeking mainstream financial returns, they push to become model 3



Model 2: Hybrid Nonprofit venturesRick Aubry“Rubicon Programs”VIDEO: http://tinyurl.com/o4dd82

Martin FisherKickStart: www.kickstart.orgVIDEO: http://tinyurl.com/p7mep3

Dr. Govindappa“Aravind Eye Hospital”http://tinyurl.com/qb37rm


Traditional classificationModel 3: Social Business ventures

The entrepreneur sets up the venture as a business with the specific mission to drive transformational social and/or environmental changeProfits are generated, but the aim is not maximize financial returns for shareholders but instead to financially benefit low-income groups and to grow the social venture by reinvestment, enabling it to reach and serve more peopleThe entrepreneur seeks out investors interested in combining financial and social returnsThe enterprise’s financing-and scaling- opportunities can be significantly greater because social business can more easily take on debt and equity



Model 3: Social Business ventures

F. ArizmendiarrietaMONDRAGON Cooperativeshttp://tinyurl.com/p75akthttp://tinyurl.com/otm9ft

Dr. Mohammed Yumus“Grameen Bank – Nobel Price 2006”VIDEO: http://tinyurl.com/qt65ux


Team activity

Select one social entrepreneur you might know?Identify which characteristics does he/she have?Identify which type of social enterprise is in used?


Classifying Social enterprise from a wider perspective


10 market opportunities for social entrepreneurs

1. Demographic opportunitiesFacts:- Human population toward 9 billion to10 billion people- Age distribution skewing: old vs. young boom nations- Worldwide migration: from rural to cities- One of the best ways of reining population growth is encouraging

economic development

Examples of successful Social Entrepreneurs- Jeroo Billimoria – Child Helpline International -

http://www.childhelplineinternational.org/- Martin Fisher – Cooperative Home Care Associates (CHCA), the

Paraprofessional Healtcare Institute (PHI) & Independence Care System (ICS) http://www.chcany.org/



2. Financial opportunitiesFacts:- The notion that the haves will find ways to gain more and that the

have-nots will lose more has been acknowledged since biblical times- Extreme financial inequality can sow the seeds of insurrections and

social cataclysm- Tools & frameworks for economic justice are weak or nonexistent

Examples of successful Social Entrepreneurs- Jeroo Billimoria – Aflatoun - http://www.aflatoun.org/- Martin Fisher – Kickstart - http://www.kickstart.org/ (0.6% GDP of

Kenya GDP & 0.25% of Tanzania GDP)- Fazle Abed – Bangladesh Rural Advancement Committee-

http://www.brac.net/



3. Nutritional opportunitiesFacts:- True famine, hunger, and poor nutrition have been constants

through-out human history- 862 million people across the world are hungry, up from 852 million a

year ago- Every day, almost 16,000 children die from hunger-related causes--

ONE CHILD EVERY FIVE SECONDS.

Examples of successful Social Entrepreneurs- Takao Furuno – The power of Duck - http://tinyurl.com/ojdwy7- Hector Gonzalez – Cuadritos - http://www.cuadritos.com.mx/ (the

largest self-sustaining food bank in Mexico, feeding 100.000 people a day)



4. Resource opportunitiesFacts:- A growing world population will not be a problem if the planet’s

resources were limitless, but they are not- Demographic pressures are fistering awareness of the natural

resource limits to economic growth- Example: the UN argues that the conflict in Darfur has been driven by

competition for water as climate change bites

Examples of successful Social Entrepreneurs- Phil LaRocco – E+Co - http://www.eandco.net/- Fabio Rosa – Ideaas - http://www.ideaas.org.br/ & the widely

replicated Palmares project http://www.ashoka.org/node/3291


10 market opportunities for social entrepreneurs5. Environmental opportunitiesFacts:- Environmental issues are universal: there is not South-North differences- Nevertheless, poor populations everywhere in the world re forced to live in

the worst circumstances- The dominant environmental concerns include the immediate of clean water

& sanitation, the risks of local & indoor pollution , & vulnerability to natural hazards.

- Other parts of the world: noise, traffic congestion, air & water pollution, long-term climate change,…

Examples of successful Social Entrepreneurs- Yan Arthus-Bertrand – The Earth from the Air -

http://www.wecommunic8.com/earthfromtheair/- Wangari Maathi – Green Belt Movement -

http://www.greenbeltmovement.org/



6. Health opportunitiesFacts:- From HIV/AIDS, to malaria, to potential pandemics like SARS or Flu-

A, the world problems can seen overwhelming- In 2006,11 million children <5 years died from preventable causes- 4 million babies will not survive their first month of life- > 1/2 million women died in pregnancy, during labor, or after birth

Examples of successful Social Entrepreneurs- Dr. Paul Farmer – “The Man who will cure the world” -

http://tinyurl.com/aovmpq- Dr. Devi Shetty – Narayana Hrudayalaya -

http://www.narayanahospitals.com/- Vera Cordeiro – Resnacer - http://www.ashoka.org/node/3420



7. Gender opportunitiesFacts:- There is always an inescapable gender component- In the 1995 Kobe earthquake, 1,5 times more women than men died- In the Asian tsunami, death rates for women were 3-4 times those for

men- There are several factors: biological, cultural, economic, or access to

health care, education & information technology.

Examples of successful Social Entrepreneurs- Wu Qing – Beijing Cultural Development Center for Rural Women -

http://www.nongjianv.org/english/index.html



8. Educational opportunitiesFacts:- Few factors are as powerful as education in empowering humans- In a knowledge society access to educations becomes eevn more

important

Examples of successful Social Entrepreneurs- Bunker Roy – Barefoot College - http://www.barefootcollege.org/- Kyle Zimmer - Fist book - http://www.firstbook.org- Wendy Kopp – Teach For America - http://www.teachforamerica.org/- Michael Brown & Alan Khazei –City Year - http://www.cityyear.org- Javier Gonzalez – abcdespanol - http://www.abcdespanol.com/es/- Liz Maw – Netimpact - http://www.netimpact.org/



9. Digital opportunitiesFacts:- Enthusiasts may talk of “growing up digital”, but the IT revolution has

created its own divides- 80% of people in the world have never heard a dial tone, let alone

surfed the Web- Kofi Annan: “People lack many things: jobs, shelter, food, health care &

drinkable water. Today, being cut off from basic telecommunications services is hardship almost as acute as these other deprivations, & may indeed reduce the chances of finding remedies to them”

Examples of successful Social Entrepreneurs- Rodrigo Baggio – Committee for Democracy in IT -

http://www.cdi.org.br/



10. Security opportunitiesFacts:- September 11th terrorism attack changed world security, however this

might be an effect of deeper & previous security causes.- Instead of turning to companies like General Dynamics or Halliburton

for security measures, governments should look to social entrepreneurs who recognize address the physical, psychological, social, economic, energy-related, water-related, or environmental security.

- Rich western countries spend up of 25 times as much on defense as they do on overseas aid.

Examples of successful Social Entrepreneurs- Pioneer Human Service - http://www.pioneerhumanservices.org/


“YOU HAVE TO BE THE CHANGE YOU WANT TO SEE IN THE WORLD”

GANDHI


Eskerrik askoMuchas graciasThank you谢谢你

“Our strength does not lead to struggle but co-operation”

P. JM Arizmendiarrieta - 1956

UNDERSTANDING THE POWER OF SOCIAL ENTREPRENEURS

Education

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