Growing Opportunity
Entrepreneurial Solutions to
Insoluble Problems
Contents                             Acknowledgements                   To the 130 social entrepreneurs
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Growing Opportunity                                                                                               1


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Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
Growing Opportunity                                                                                                       ...
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  1. 1. Growing Opportunity Entrepreneurial Solutions to Insoluble Problems
  2. 2. Contents Acknowledgements To the 130 social entrepreneurs who offered their time and Forewords 1 This project has been a collective perspectives, a heartfelt thank effort — and an opportunity you for your candor, courage Executive Summary 4 to grow in various dimensions. and inspiration. And, our best First and foremost, we are wishes for your success. A list 1 Introduction 5 profoundly grateful to Jeff Skoll, of social entrepreneurs who Sally Osberg and their colleagues participated in our research 2 Survey Findings 11 at The Skoll Foundation, without is provided in Annex 2. We whose financial support and have omitted, however, those 3 The Business Case 23 wider inputs this program of organizations who asked for work would not be possible. confidentiality in their 4 Deeper Dive: Health 30 We also are enormously grateful responses. for the support of our corporate 5 Deeper Dive: Energy 36 In addition, we would like sponsors, Allianz (where we to thank others who made thank Paul Achleitner, Kay 6 Conclusions & Next Steps 44 helpful — in some cases Müller, and Nicolai Tewes) and usefully provocative — inputs: Annexes DuPont (where we thank Linda Gib Bulloch of Accenture; Bill Fisher and Dawn Rittenhouse). Drayton of Ashoka; José Manuel 1 Survey Instrument 48 Entrecanales of Acciona; Tim Our warm thanks go to the Freundlich of the Calvert Social 2 Participants 49 Project Advisory Board, whose Investment Foundation and members were: Jeroo Billimoria Good Capital; Jonathon Hanks of Child Savings International; of University of Cambridge Debra Dunn, Associate Programme for Industry; Gary Consulting Professor, Stanford Hirshberg of Stonyfield Farm, University Institute of Design Inc.; Kurt Hoffman of The Shell and Board member of The Foundation; Jean Horstman Skoll Foundation; Jed Emerson of InnerCity Entrepreneurs; of Generation Investment Oliver Karius of VantagePoint Management; David Grayson Global; Colin Le Duc of of Business in the Community; Generation Investment Pamela Hartigan of The Schwab Management; Martin Newman Growing Opportunity: Foundation; Jane Nelson of the of The Company Agency; Entrepreneurial Solutions to Corporate Social Responsibility Jacqueline Novogratz of Insoluble Problems Initiative, Kennedy School of Acumen; Eric Rassman of UCLA; First Edition 2007 Government, Harvard University; Linda Rottenberg of Endeavor Professor David Wheeler of Global; Samer Salty of zouk ISBN Dalhousie University; and ventures; Björn Stigson, World 1-903168-17-1 Jan-Olaf Willums of InSpire Business Council for Sustainable Invest and TH!NK. Development; Tom Vander Publisher Ark of The X Prize Foundation; SustainAbility Ltd The Project Team from and, from the SustainAbility SustainAbility comprised Faculty, Sir Geoffrey Chandler, Designer Maggie Brenneke, John Francesca van Dijk, Bob Massie Rupert Bassett Elkington and Sophia Tickell, and Andrea Spencer-Cooke. with invaluable help from Printer Meghan Chapple-Brown, Yasmin We hope that those who took Pensord Press Crowther, Kelly Cruickshank, part recognize most of their Jeff Erikson, Sam Lakha, Mark contributions in what follows. Paper Lee, Michael Sadowski, Jodie We gratefully acknowledge the Robert Horne Revive 50:50 silk Thorpe and Peter Zollinger. use of the ’10 Routes to Money’ The survey instrument (see framework, taken from The Copyright 2007 SustainAbility Annex 1) was designed with Power of Unreasonable People: and The Skoll Foundation. the help of John Thomas of How Entrepreneurs Create All Rights Reserved. No part LaunchBox, whose input to Markets to Change the World, of this publication may be every phase of the surveying by John Elkington and Pamela reproduced, stored in a retrieval and analysis was indispensable. Hartigan, to be published by system or transmitted in any Harvard Business School Press form or by any means, in February 2008. Finally, our electronic, electrostatic, gratitude to Rupert Bassett for magnetic tape, photocopying, his design. As ever, all errors recording or otherwise, without of omission or commission are permission in writing from the ours alone. copyright holders.
  3. 3. Growing Opportunity 1 Skoll Foundation foreword Social entrepreneurs who are changing the landscapes of these industries, Fast forward: it’s 2020, and the world SustainAbility suggests, have a distinctive has changed. With perfect hindsight we way of ‘reperceiving’ many of the enormous take stock of what we did, or didn’t, to and urgent challenges before us — climate bring about what’s different — good, change, access to and delivery of healthcare bad and negligible. It’s a good bet that for developing world populations, and we will be saying that 2007 marked a overwhelming poverty — as opportunities turning point, and that John Elkington, ‘to leverage the power of markets and SustainAbility, and a relatively new business to have transformative, system- phenomenon called social entrepreneur- wide impacts.’ The report dubs this ship can take the credit for changing emergent, integrated approach ‘Mindset the way we think about business, 3.0,’ differentiating the advance from investment and social progress. predecessor 1.0 compliance-focused and 2.0 ‘cause related’ stakeholder-involved Sally Osberg For two decades, SustainAbility has tuned modes still dominant even at progressive its radar to pick up signals of what the corporations. future might hold, and then used this intelligence to advise mainstream Mindset 3.0, of course, is fundamentally corporations on how to re-tool for long- entrepreneurial; in ‘reperceiving’ well- term competitive advantage — with that entrenched but unsatisfactory systems advantage encompassing what founder as opportunities, Mindset 3.0 cracks the John Elkington has termed the ‘triple code of resistance inherent in any well- bottom line’ of economic, social, and established equilibrium — from fossil fuel environmental performance. So when dependence to health care delivery to over- John began tracking signals from social consumption. That social entrepreneurs entrepreneurs and considering their should excel at 3.0 thinking comes as relevance to corporations doing business no surprise. After all, social entrepreneurs in a globalized world, we at the Skoll are entrepreneurs first and foremost; it’s Foundation took note. just that their value propositions target neglected, disadvantaged or suffering This report is the first product of the Skoll segments of society. Underlying Mindset Foundation-SustainAbility partnership, and 3.0, I’d suggest, is the realization that this we hope our fellow travelers in the worlds segment of society matters, that it is no of business and social entrepreneurship longer possible to ignore two-thirds of the find it informative, useful, and provocative. planet’s population or fail to account for the consequences of industrialization in On one level, the report probes familiar the developing world. Our very survival themes: social entrepreneurs feel as a species and as a planet is at stake. hamstrung by their lack of access to capital, concerned for the visibility and Yes, mainstream business absolutely needs differentiation of their solutions in a what social entrepreneurs know and do. competitive landscape, and worried about And social entrepreneurs need much of their ability to attract the talent and what corporations have and take for commitment needed to expand their granted. Ultimately, this first SustainAbility impact. No surprises here, but humbling, report suggests that a better future — even sobering reminders for those of us for business, society, and the planet — committed to investing in these folks, may very well depend on how well both their models and their ventures. Serious learn and work together. challenges persist, challenges that constrain what social entrepreneurs will be able to Onward! achieve even as their ranks increase and Forewords their champions multiply. Sally Osberg President and CEO The report becomes more intriguing in the soundings it takes of the healthcare and energy sectors. Here the increasingly complex environments — geographic, economic, socio-political — in which business must operate today seem to cry out for what social entrepreneurs have to offer: innovative, highly adaptive models that directly and indirectly serve mainstream business’s larger interests.
  4. 4. Growing Opportunity 2 Forewords SustainAbility foreword New initiatives network them in novel ways, among them xigi 4 and i-genius.5 The entrepreneurs we surveyed are And a growing wave of money chases for- experiencing growing pains, but their profit cleantech investments and markets capacity to see new market opportunities for healthy living, such as organic food. and experiment with novel business models and leadership styles makes Growing numbers of mainstream them an amazing source of insights corporations are switching on to the area — for mainstream business. and trying to work out what the business case might be for investment, partnership, A growing array of apparently insoluble or other forms of engagement. Take socio-economic, environmental, and DHL, with its new initiative, the Young governance challenges presses in on Entrepreneurs for Sustainability (YES) decision-makers — including climate Awards, initially launched in five Asian change, the risk of global pandemics, the countries and designed to support young Maggie Brenneke growing threat to natural resources like entrepreneurs working to help meet the water and fisheries, and the ever-present UN Millennium Development Goals.6 issues of poverty and hunger. Growing Or take the case of Groupe Danone, the Opportunity — the first in an annual series French dairy company, which is leading of surveys conducted by SustainAbility in the new trend with its breakthrough partnership with The Skoll Foundation 1 — partnership with the Grameen Group in explores the potential for more entre- Bangladesh. The aim: to supply fortified preneurial solutions to such challenges. yoghurt products to the nutritionally The key messages: At a time when such deprived. challenges seem to narrow our horizons, they are creating a wealth of new Coincidentally, the launch of Growing opportunities, but to enjoy them longer Opportunity at the Skoll World Forum term we must ensure real opportunity will mark the 20th anniversary of for a very much greater proportion of SustainAbility’s founding. The report is the global population. a companion piece to an ongoing study of the future of globalization, due to This first survey has been financially be published in mid-2007. Through its John Elkington supported by Allianz and DuPont, as noted evolving Skoll Program, SustainAbility in our Acknowledgements. We are proud to plans to develop and communicate a work alongside these partners and, over deeper understanding of the links between time, we believe that a growing number of social entrepreneurship and the six sectors mainstream business and financial on which we now focus: Capital Markets institutions will follow their lead in & Finance, Chemicals; Energy; Food & recognizing the extraordinary potential Beverage; Healthcare; and the Knowledge value of what social and environmental Economy.7 Our overarching aim: to help entrepreneurs are doing. That said, it is build bridges between the mainstream clear that many people in mainstream corporations and financial institutions, business still struggle to understand which make up most of our client and what is going on in this space and its partner base on the one hand, and — relevance for them. on the other — the extraordinary entrepreneurs and enterprises described More positively, a number of recent in the following pages. developments have helped ensure that growing numbers of business people do Maggie Brenneke Sophia Tickell at least invest the effort to learn.2 Indeed, Director and Skoll Fellow these are extraordinary times, with social 1 www.skollfoundation.org and environmental entrepreneurs alike on John Elkington 2 www.sustainability.com/ a roll. Muhammad Yunus — probably the Founder and Chief Entrepreneur downloads_public/skoll_reports/ world’s best-known social entrepreneur — business_primer.pdf won the 2006 Nobel Peace Prize,3 following Sophia Tickell 3 http://nobelprize.org/nobel_prizes/ in the steps of Wangari Maathai in 2004. Chair peace/laureates/2006/ The work of social entrepreneurs is also 4 www.xigi.net increasingly spotlighted at events like the 5 www.i-genius.org/home/ World Economic Forum in Davos, by the 6 www.dhl.com/yesawards Clinton Global Initiative and at summit 7 www.sustainability.com/sa-services/ meetings organized by Acumen, Ashoka, sectors.asp Endeavor Global, the Schwab Foundation, and the Skoll Foundation. The efforts of social entrepreneurs are extensively covered in the media — in the pages of Time, Newsweek, Fast Company, and the Financial Times.
  5. 5. Growing Opportunity 3 Forewords Allianz foreword DuPont foreword As a leading financial services and The need for truly sustainable options insurance company, Allianz is acutely for 21st century life remains one of the aware of how global trends such as most critical challenges facing the global aging populations, climate change and community. The work of the social and the globalization of supply chains are environmental entrepreneurs profiled in affecting our customers and our Growing Opportunity is truly inspirational. communities. The sorts of questions we address on a daily basis include: As a science company, DuPont has an How can people ensure that their loved interest in being part of the solutions by ones and assets are protected from the putting our science to work in ways that full spectrum of risks, including ever- can design in — at the early stages of increasing manmade and natural disasters? product development — attributes that Do people have access to affordable and help protect or enhance human health, Paul M. Achleitner reliable health care — and, if not, what safety, and the environment. Through can be done to meet their needs? our science, we will design products and And where will the processes of processes that pass rigorous criteria for the globalization take our customers, our use of renewable resources, energy, water, industry and our company? and materials. We believe this is a direct route to a successful, profitable business We see it as our responsibility to empower that adds value to our customers, their our customers to prepare for and respond to customers, consumers, and the planet. these and other challenges. But we cannot do this alone. While we bring significant DuPont has broadened its sustainability experience, knowledge and passion to bear, commitments beyond internal footprint we also seek inspiration from partners who reduction to include market-driven can help us to think outside the box and act targets for both revenue and research as catalysts for innovation. and development investment. The goals are tied directly to business growth, Social entrepreneurs are one potential specifically to the development of safer wellspring of insight and inspiration. and environmentally improved new Linda Fisher Individuals from Bonn to Bangalore are products for key global markets, including seizing the chance to turn challenge into products based on non-depletable 8 Note: unless otherwise stated, opportunity, in the process identifying and resources. all $ references are to US$. pioneering new markets. Microfinance, as an example, is now a $9 billion market And we are investing to ensure that that is increasingly empowering citizens DuPont moves towards sustainable growth. to realize their full potential in society. By 2015, we have committed to: Our hope is that collaborating with creative thinkers will help our people to realize their — Double our research and development full potential — and to better serve the investment in environmentally smart needs of present and future customers. market opportunities; We are delighted to work alongside The — Double revenues to $8 billion 8 from Skoll Foundation and SustainAbility. This non-depletable resources; project has helped us to take a first look at what collaboration between mainstream — Grow annual revenues $2 billion or business and social entrepreneurs might more from products that create energy- look like. While this is new territory for us, efficiency and/or reduce greenhouse it is exactly the sort of opportunity space gas emissions for its customers; and that our business needs to explore. We look forward to ongoing conversation on ways — Introduce at least 1,000 new safety to develop and deploy new generations of products or services. sustainability solutions. Linda Fisher Paul M. Achleitner Chief Sustainability Officer Member of the Board of Management
  6. 6. Growing Opportunity 4 A growing array of socio-economic, 3 The field is growing, but still relatively At a time when such environmental and governance small. To put rough numbers on the challenges seem to narrow challenges presses in on decision-makers three areas of social enterprise, cleantech — including climate change, the risk and philanthropy, we estimate that less our horizons, they are of global pandemics, the growing threat than $200 million is going into social creating a wealth of new to natural resources like water and enterprise worldwide from dedicated fisheries, and the ever-present issues of foundations each year, compared with opportunities, but to enjoy poverty and hunger. Growing Opportunity over $2 billion into cleantech in the USA them longer term we must — the first in an annual series of and EU and well over $200 billion into surveys conducted by SustainAbility philanthropy in the USA alone. ensure real opportunity in partnership with The Skoll Foundation for a very much greater — explores the potential for more 4 Money remains the main headache. entrepreneurial solutions to such Accessing capital is the No.1 challenge proportion of the global challenges. for the entrepreneurs we surveyed, population. with almost three-quarters (72%) The key messages: at a time when such putting this at the top of their priority challenges seem to narrow our horizons, list. Foundations are still the favorite they are creating a wealth of new source of funding for social entre- opportunities, but to enjoy them longer preneurs (mentioned by 74% of term we must ensure real opportunity for a respondents), but there is a wide very much greater proportion of the global recognition of the need to diversify population. The report attempts to assess funding sources. the current state of social entrepreneurship — the possibilities presented by new 5 Financial self-sufficiency is seen as a mindsets, the challenges entrepreneurs face real prospect within five years. 9 We adopted the 1.0 – 3.0 terminology in scaling their organizations and the The proportion of respondents expecting during an Australian tour early in 2006. opportunities for greater collaboration with to be funding their own operations, Fast Company also talk of Business 3.0 in corporations and others. with little or no dependence on grants, their 'Fast 50' survey report, Fast Company, jumped from 8% to 28%. March 2007. The terms label different The survey findings are discussed in Chapter aspects of the same phenomenon. 2 (pages 11–22) and the — increasingly 6 There is a real appetite to partner persuasive — business case for mainstream with business. Social and cleantech corporations and financial institutions to entrepreneurs are equally interested get involved is explored in Chapter 3 (pages in developing partnerships with business 23–29). We look at three different mindsets — but with different expectations. that have characterized business thinking Social entrepreneurs, in particular, in relation to the relevant issues. If 1.0 are acutely aware that they often was about compliance and 2.0 about lack the experience and skills needed. citizenship, 3.0 is about creative destruction A constant refrain was the growing need Executive Summary and creative reconstruction.9 Chapters 4 for brokering between the entrepreneurs and 5 then probe a little deeper into two and potential business partners. key sectors, health and energy. 7 Beware blind spots. There is a risk Our main conclusions are that: that we may become overly focused on narrow definitions of social and 1 Social entrepreneurship is on a roll. environmental entrepreneurship. For Social entrepreneurship is emerging as example, it’s easy to get excited about a powerful catalyst of the sort of change small start-ups in the renewable energy that governments and business are field, but we should remember the huge increasingly committed to — but rarely contributions already being made by know how to deliver. much larger companies like Acciona in Spain, Vestas based in Denmark or GE 2 The potential for breakthrough based in the USA. And there is also a solutions is considerable — and need to focus on ways of supporting growing. Among the routes to social intrapreneurs, change agents breakthrough solutions and scaling working inside major corporations and discussed by our respondents, the financial institutions. The potential following surfaced repeatedly: (1) leverage at their disposal is huge. grow individual social enterprises; (2) establish multiple enterprises; 8 For real system change, we must (3) get big organizations — whether focus on government and public policy. companies, public agencies or NGOs — Governments need to do more to shape to adopt the relevant models and public sector targets, tax incentives and approaches; and (4) spur public policy pricing signals to ensure that markets legislation designed to fix market drive change — and that the sort of failures. ventures covered in Growing Opportunity reach their full potential.
  7. 7. Growing Opportunity 5 How do you grow economic, social, Some definitions can be found on page 7, One thing that is likely educational, and political opportunity but as Jed Emerson — one of the field’s to bewilder mainstream to the degree required to ensure that most influential thought-leaders — warned the 21st century is significantly less us, an over-emphasis on definitions can be business brains entering turbulent and violent than the 20th? distracting. ‘We risk wasting the coming the world of social enter- Part of the answer will be to invest in years in endless discussions of how many entrepreneurial solutions to the world’s angels dance on the head of a pin,’ he prise is the near-fetish pressing problems, and to build the argued, ‘as opposed to what wonderful for discussing definitions. system conditions in which solutions garments we might collectively stitch are encouraged to replicate and scale. together.’ Huge effort has been In this sense, the social and environ- invested — and continues mental entrepreneurs discussed in The key point is that a range of social, Growing Opportunity are models of how environmental, and governance challenges to be invested — in defining to push towards a more sustainable increasingly demand something more social and environmental future. than corporate citizenship responses. They require innovative, entrepreneurial, entrepreneurship and in But that’s not always how they are seen.10 and — often — disruptive strategies which identifying and classifying Business people encountering the world of incumbent companies are often ill-prepared social entrepreneurship for the first time to develop or deliver. the relevant entrepreneurs often emerge confused, at least to begin with. The sort of questions they raise This isn’t an either social entrepreneurship include: Why all the excitement? How are or big business agenda, but will involve these people different from NGOs? Isn’t both together. Looking at the worlds of entrepreneurship what business already our three sponsoring organizations, the does? How can you expect the world’s evidence is clear. A company like the US 10 www.sustainability.com/ poorest to represent any sort of market? chemical giant DuPont, with its long- downloads_public/skoll_reports/ And how can ventures operating at this standing ‘sustainable growth’ strategy, business_primer.pdf relatively small scale ever hope to change has the capacity to bring new solutions to the world, as they proclaim their ambition scale. To take just two of DuPont’s 2015 to be. All great questions, but before we goals: it aims to grow annual revenues from start looking for answers, it is worth products that create energy efficiency or remembering the critics at the time could cut greenhouse gas emissions by $2 billion, easily have expressed — indeed often did — and to nearly double revenues from non- the same skepticism about the likes of depletable resources to at least $8 billion. Pasteur, the Wright Brothers or, in more The involvement of German financial recent times, Steve Jobs and Steve Wozniak, services group, Allianz, underscores the who not only founded Apple but also growing role of the financial sector in catalyzed the early growth of the personal supporting entrepreneurial solutions to the computer industry. broad spectrum of sustainability challenges. And Jeff Skoll’s background as a co-founder No doubt a great deal of debate went into of eBay spotlights the emergence of very what a germ was, into what sort of future different thinking on how business models Introduction aircraft might have or whether PCs would can be designed to replicate and scale — ever challenge the computing power of even, if the X Prize Foundation has its way IBM’s ‘Big Iron.’ One thing that is likely (page 29), in such demanding areas as to bewilder mainstream business brains poverty alleviation. entering the world of social enterprise is the near-fetish for discussing definitions. Huge effort has been invested — and continues to be invested — in defining social and environmental entrepreneurship and in identifying and classifying the relevant entrepreneurs. Important work, no question, but you tend to know these people when you meet them. The air crackles with energy. They aim to turn apparently insoluble crises into tomorrow’s political, social, and market opportunities. 1
  8. 8. Growing Opportunity 6 Introduction So why are a growing number of business In preparing this study, we interviewed ‘At its core, the corporate leaders suddenly so interested in the 20 entrepreneurs in depth — and over 100 pursuit of sustainable linked worlds of social and environmental more completed an online survey (page 48). entrepreneurship? And, with intensifying It is clear that they are as determined as development is not just investor interest and lively media ever to drive change, but it is also clear that about “doing good.” coverage, what is the current state of many of their enterprises are experiencing the key sectors now busily developing significant growing pains along the way. It makes companies more entrepreneurial solutions to the world’s entrepreneurial, nimble looming sustainability challenges? These are questions SustainAbility is exploring Key drivers and competitive.’ in its three-year Skoll Program (2006- Björn Stigson, WBCSD 2009).11 Growing Opportunity is the first in Focusing down on today’s world, at least a planned survey of studies into key aspects four factors seem to be central in driving of this increasingly important field. the growing mainstream interest in social and environmental entrepreneurship: Why should business be interested in all of this? We asked Björn Stigson, — First, 20 years after the Brundtland 11 www.sustainability.com/insight/skoll.asp President of the World Business Council Commission first put sustainable 12 John Elkington, The Chrysalis Economy: for Sustainable Development (WBCSD). development onto the political agenda,13 How Citizen CEOs and Corporations He replied: ‘At its core, the corporate a number of major challenges once Can Fuse Vales and Value Creation, pursuit of sustainable development is seen to be (and often dismissed as) Capstone/John Wiley & Sons, 2001. not just about “doing good.” It makes the preserve of activist NGOs and wider 13 Our Common Future, Report of the companies more entrepreneurial, nimble civil society have pushed forcefully into World Commission on Environment and and competitive. One of our largest the political and business mainstream — Development (‘Brundtland Commission’), manufacturing members has taken the a process often reinforced by the Oxford University Press, 1987. concept of eco-efficiency so seriously that withdrawal or weakening of government 14 See Harvard Business Review, it began focusing on selling less material activity. Successive summit meetings of December 2006. product and more knowledge, with great the World Economic Forum, for success. A Latin American member example, have focused on an increasingly understood base-of-the-pyramid business interconnected agenda linking such as a theory, but then found by experience issues as poverty, hunger, pandemic risks, that it makes good bottom-line business terrorism, human rights, energy security, sense. Coping with sustainability challenges and the growing threat of climate builds stronger companies.’ destabilization. In 2001, SustainAbility concluded that the — Second, despite the huge progress early decades of the 21st century would achieved in corporate citizenship and see a series of interlinked economic, tech- corporate social responsibility over the nological, social, political, and managerial past 10–15 years, there is a growing transitions that would transform the global concern that we may be reaching the economy, in very much the same way as the ‘limits of CSR.’ The Harvard Business rapacious caterpillar is transformed inside a Review 14 neatly captured this mood with chrysalis. We are now embarked on a period a twinned pair of articles by Michael of profound economic metamorphosis, of Porter and Mark Kramer (‘Strategy and what the economist Schumpeter dubbed Society: The Link Between Competitive ‘creative destruction.’ Think of the Advantage and Corporate Social entrepreneurs profiled in the following Responsibility’) and Clayton Christensen pages as the global economy’s equivalent (‘Disruptive Innovation for Social of the ‘imaginal buds’ that drive the process Change’). The conclusion: too many that converts a caterpillar into a butterfly companies have seen the new, inside the chrysalis.12 interconnected agenda as remote from their core business interests. The reality is that these complex issues pose increasingly strategic choices that need to be addressed in suitably radical and higher leverage ways — something that most corporate citizenship departments seem ill-equipped to do.
  9. 9. Growing Opportunity 7 Introduction Panel 1.1 Ashoka16 defines social entrepreneurs as, One key reason why Definitions ‘individuals with innovative solutions to mainstream business needs society’s most pressing social problems. Entrepreneurs are people who, through They are ambitious and persistent, tackling to pay attention is that the practical exploitation of new ideas, major social issues and offering new ideas these people aim to achieve establish new ventures to deliver goods for wide-scale change. Rather than leaving and services currently not supplied by societal needs to the government or higher leverage than existing markets. That said, people like business sectors, social entrepreneurs find conventional philanthropy Greg Dees (Adjunct Professor of Social what is not working and solve the problem Entrepreneurship and Nonprofit Manage- by changing the system, spreading the and NGOs, often aiming ment, Fuqua School of Business, Duke solution, and persuading entire societies to transform the systems University) argue that there is a spectrum to take new leaps.’ of enterprise, from the purely charitable whose dysfunctions help through to the purely commercial.15 Our The Skoll Foundation puts it this way: create or aggravate major version of that spectrum — or landscape — ‘Social entrepreneurs share a commitment can be seen in Figure 1.1. to pioneering innovations that reshape socio-economic, environ- society and benefit humanity. Whether mental, and political On the purely charitable side, ‘customers’ they are working on a local or inter- pay little or nothing, capital comes in national scale, they are solution-minded problems. the form of donations and grants, the pragmatists who are not afraid to tackle workforce is largely made up of volunteers, — and successfully resolve — some of the and suppliers make in-kind donations. world’s biggest problems.’ 17 At the purely commercial end, all these transactions are at market rates. Most Environmental entrepreneurs may be of the really interesting experiments, interested in social objectives, but their however, are now happening in the middle main focus is environmental. Many ground, where hybrid organizations pursue consider environmental entrepreneurship ‘blended value’ and where less-well-off to be a subset of social entrepreneurship, customers are subsidized by better-off but they are distinct. A major rebranding customers. of the sector began in 2002, as the ‘cleantech’ sector. The Cleantech Venture Social entrepreneurs are entrepreneurs Network (CVN) defines cleantech as whose new ventures (social enterprises) embracing ‘a diverse range of products, prioritize social returns on investment, i.e. services, and processes that are inherently 15 J. Gregory Dees and Beth Battle improving quality of life for marginalized designed to provide superior performance Anderson, ‘Framing a Theory of populations by addressing issues such as at lower costs, greatly reduce or eliminate Social Entrepreneurship: Building on health, poverty, and education. One key environmental impacts and, in doing so, Two Schools of Practice and Thought,’ reason why mainstream business needs to improve the quality of life. CVN includes in Rachel Moser-Williams (Editor), pay attention is that these people aim to the following sectors: energy generation; Research on Social Entrepreneurship, achieve higher leverage than conventional energy storage; energy infrastructure; ARNOVA occasional paper series, philanthropy and NGOs, often aiming to energy efficiency; transportation & Vol. 1, No. 3, The Aspen Institute, transform the systems whose dysfunctions logistics; water purification & manage- Washington DC, 2006. help create or aggravate major socio- ment; air quality; materials & nano- 16 www.ashoka.com economic, environmental, and political technology; manufacturing/industrial; 17 www.skollfoundation.org/ problems. agriculture & nutrition; materials recovery aboutsocialentrepreneurship/whatis.asp and recycling; environmental IT and enabling technologies.’
  10. 10. Growing Opportunity 8 Introduction Figure 1.1 — Zone 1 (The Drain) is where money — Zone 4 (The Pump) is where The opportunity landscape drains from the system, because of predominantly non-profit or hybrid poor management — or because of the non-profit/for-profit ventures leverage It’s remarkable how much of the financial bribery and corruption that blights so resources to create blended value — world’s vocabulary relates to water and to many economies and new ventures. and, through lobbying, promote wider hydraulic imagery. We have liquid assets Enron operated in this space, as do the systemic change. Organizations like and liquidations, we manage cash flows fraudulent ‘briefcase NGOs’ that blight Grameen Bank, OneWorld Health, and solvency, we float companies and countries like India. and PATH create change here. exchange rates, there is sunk capital and there are investments below water, money — Zone 2 (The Well) is where — Zone 5 (The Geyser) is where goes down the drain, we try to deflate communities under stress — or those deep-seated seismic forces (think bubbles, and we — or at least some people that help them — dip into capital demography, economic development, — launder money. reserves and the benevolence of technology trends, and eco-pressures ordinary citizens, although (like wells) like climate change) build a head In this spirit, Figure 1.1 plots five zones public benevolence can be over- of pressure that powerfully, if un- of the opportunity landscape for entre- pumped to the point of exhaustion predictably, erupts in showers of preneurs. On the vertical axis, we plot or ‘donor fatigue.’ Médecins sans new wealth — laying down deposits of ‘Impact’ (think leverage, blended value Frontières and the Red Cross are value and helping irrigate the entire creation,18 and system change), from Low leading players here. catchment area. Powerful players here to High, and on the horizontal axis we include Acciona, GE, Vestas, and much plot the degree to which the ‘Drivers’ — Zone 3 (The Siphon) is the area of of the cleantech sector. of action are ‘purely’ Moral or ‘purely’ corporate philanthropy, where Financial. Clearly, entrepreneurs of businesses create shareholder returns, different types will spot opportunity but channel off a percentage, partly right across this landscape. to ensure their continuing license to operate. Think of the Danone Communities Fund, Shell Foundation, or Google.org. Zone 5 High Zone 4 Geyser Zone 3 Zone 2 Pump Zone 1 Impact Well Siphon Drain Drain Drain Low Conscience Drivers Capitalism
  11. 11. Growing Opportunity 9 Introduction 18 For more on blended value, see — Third, a number of major corporations (2) The ‘cleantech’ sector, in part a www.blendedvalue.org have begun to rebundle existing rebranding of environmental and energy- 19 http://ge.ecomagination.com/ activities, and in some cases launch new related enterprise, has seen rapid growth @v=022120072196@/site/index.html ones, designed to meet sustainability- thanks to growing concerns around 20 One of the most notable actors in this related needs. A case in point has been energy security and climate change — sector is the Cleantech Venture Network. GE, with its ‘ecomagination’ initiative.19 and the recent ‘greening’ of US state and www.cleantech.com To illustrate the scale at which such mayoral politics.20 21 The five-yearly summary of events is companies can drive change, if minded to illustrative only, to give a sense of what do so: when GE released its 2005 else was going on at the time. ecomagination report, it revealed that Closer than you think? revenues from the sale of energy efficient and environmentally advanced At the 2007 World Economic Forum summit products and services had hit $10.1 in Davos a key question asked was: What billion in 2005, up from $6.2 billion in could be done to spur entrepreneurial 2004 — with orders nearly doubling to solutions to global sustainability $17 billion. challenges? The business media picked up on the theme. ‘Imagine a world,’ the front — Fourth, we have seen the emergence cover of BusinessWeek encouraged readers of two separate movements that have in its Davos issue, ‘in which socially helped push entrepreneurial solutions responsible and eco-friendly practices further into the spotlight. (1) The social actually boost a company’s bottom line. It’s enterprise sector has been building for closer than you think.’ This trend aligns decades, but has been given a major closely with the emerging ‘Fourth Wave’ boost by the work of Ashoka and agenda SustainAbility has been tracking. initiatives launched by The Schwab Foundation, The Skoll Foundation, Just as a series of waves run through the Acumen, Endeavor, and Fast Company caterpillar to uncover the chrysalis, so the (particularly its Social Capitalist Awards). global economy has been powerfully shaped by a series of societal pressure waves — at least in the OECD region (Figure 1.2).21 Figure 1.2 Upwaves and downwaves Waves record US Supreme Court opts for Bush / CSR + SD on WEF agenda Nelson Mandela freed / East and West Germany reunite World population Waves (average) projection Saigon falls / Oil begins to flow from North Sea / Angolan civil war Billions Population record Earth Day / US passes Clean Air Act / Tidal wave kills 150,000 Robert Mugabe elected President, Zimbabwe / Solidarity, Poland Population projection Mikhail Gorbachev becomes Soviet leader / LiveAid JFK’s ‘New Frontier’ / Sharpeville massacre, South Africa / U2 crisis Oklahoma City bombing / Netscape goes public 7-7 attacks, UK / Hurricane Katrina, US 10 Total 9 US troops go into battle in Vietnam 8 7 6 Urban 5 4 Rural 3 2 1 0 1960 1965 1975 1980 1985 1990 1995 2000 2005 2030 2035 2040 2045 2050 2020 2025 1970 2015 2010

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