Social entrepreneurship: More complex than 'start a business, save the world'
Gauging the impact of a social entrepreneurship is not a hard science, but there are clear signs of when such an effort is on the right track.
The highest level of impact can be based on whether the entrepreneur changed a system, said Simon Stumpf, regional representative of Ashoka East Africa. A small operation in organic fertilizer or microhydro might not look as efficient as it could be, but an entrepreneur may have worked to get power purchase agreements so others can sell power to grid, for example.
Successful impact, then, is “if you are tackling barriers such that other people can follow behind you,” Stumpf said, pointing to M-PESA of Kenya — a mobile phone-based financial service — as an example of a smart enterprise that has made life easier for an entire country.
There are still more questions than answers surrounding the field — from how to start and how to balance a for-profit business model with social cause to how to measure impact. The very nature of entrepreneurship means seeking to solve a yet unanswered question and navigating uncertainty along the way.
Panelists sought to answer a few of these questions during a breakout session focused on social entrepreneurship sponsored by The Rockefeller Foundation at the Devex Career Fair in Nairobi.
“It sounds great: start a business, save the world,” said C.D. Glin, associate director of the Africa Regional Office for The Rockefeller Foundation. “This is the kind of language we hear, but how about rubber-meeting-the-road reality?”
The reality, according to Nat Robinson, CEO of Juhudi Kilimo, is expensive. It took $5 million in order for the organization, which began by providing loans to farmers to buy cows, to get out of the incubator and become a for-profit business. Robinson was turned down by 160 organizations before; four years later, 10 invested.
The investment was a sign he had created a product or service to meet a real demand, a key aspect of a successful entrepreneur, according to Johnni Kjelsgaard, founder and group chief executive of The GrowthHub, a Nairobi-based organization that supports startups.
“Is it realistic? Does the tech exist to deliver? If not, can you create it?” Kjelsgaard asked, noting these are the questions you have to be able to answer before moving forward.
And how do incubators like The GrowthHub and Ashoka decide which ideas they want to help sprout?
Stumpf likens it to viral videos. You can’t make a viral video, but a video is more likely to go viral thanks to certain qualities: spontaneous dancing and kittens, for example, he said. An entrepreneurial idea is more likely to “go viral” if the person has big, bold ideas, is creative, can tackle challenges and is trustworthy, since entrepreneurs need to build trust around themselves and their ideas.
It’s “the change-maker quality,” Stumpf said.
Once you have a winning idea, you must build a team to take it to market. But entrepreneurs often focus on areas they are good at and lose perspective on the holistic effort, panelists said.
The challenge is that the idea person is often not ready to step into a CEO role, which means empowering others to do everything the business needs, said Annie Roberts, a partner at Open Capital Advisors. Seek out a team that shares your vision and fills in your skill gaps, she said.
The session also focused on the challenges and reality of leveraging hard business concepts to make a difference.
It’s not easy to run both a business and a social nonprofit at the same time, Robinson said, especially if you’re not quite commercial enough to attract commercial investors and too much of a business to attract donors.
“The problems that we face in social enterprise are more challenging than you would find in business or development separately,” Roberts added. “We have to solve both business and development impact problems at the same time.”
Other challenges include balancing interests between shareholder value and societal value, finding the best way to scale the business and making sure you are surrounded by people, including investors, who share your vision.
But those interested in diving into social entrepreneurship should think first about being a job creator versus a job seeker, said John Kieti, manager of m:lab East Africa.
An innovation in mobile technology can mean that “five years from now, we can talk about that local innovation that has turned into an enterprise that employs 10,000 people,” Kieti said.
The world of social entrepreneurship is evolving quickly, but it belongs to ambitious individuals with innovative solutions to societal problems, the panelists agreed.
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