Raj Melville Social Entrepreneurship

What Is Social Entrepreneurship ? Business entrepreneurs change the face of business Social entrepreneurs play the role of change agents in the social sector Social entrepreneurs create sustainable solutions that change society for the better "Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry." Bill Drayton, CEO, chair and founder of Ashoka Foundation Copyright 2010 by Raj Melville

Business and Social Entrepreneurs Share Common Traits Strategic thinkers: Like business entrepreneurs, social entrepreneurs act upon what others miss Mission driven: Work hard to generate value Focused: Both entrepreneurs are intensely focused and hard-driving in their pursuit of a social vision Resourceful: They are skilled at mobilizing and motivating resources Results oriented: Driven to produce tangible results Challenge Seekers: Tackle major issues, opportunities or challenges Perseverance: Continue efforts despite obstacles Copyright 2010 by Raj Melville

SEs Bring New Approaches to Social Issues New Design Solutions Process Redesign – Aravind Eye Care (www.aravind.org ) Product Redesign – Jaipur Foot Distribution/Logistics – Saafwater www.saafwater.com Infrastructure/Technology – Grameen Phone New Business Models Micro-Finance Grameen Cooperatives SEWA http://www.sewa.org Muthu Velayutham, Gram Mooligai Co Ltd http://www.new- ventures.org/arquivos/GramMooligai.pdf Triple Bottom Line New Funding Models Venture Philanthropy Socially responsible funds. Calvert Funds Acumen Fund Creative Leverage models Copyright 2010 by Raj Melville

The Non-profit Sector Total US Non Profit Organizations (2006): 1,478,194 904,313 Public Charities Organizations do not pay federal tax Donations are tax deductible 109,852 Private Foundations Created to distribute money to charities or individuals About 29 % of Americans over the age of 16 volunteered in 2005 In 2004, public charities reported nearly $1.1 trillion in total revenues (Source: National Center for Charitable Statistics) Total charitable giving in the U.S (2007): $306.39 billion, consists of 2.2 % of GDP (Source: Giving USA Foundation) Copyright 2010 by Raj Melville

What Challenges do Social Entrepreneurs tackle? Social entrepreneurs typically address areas of unmet social need or social opportunity creation that the public or private sectors have failed to address Health Water/Sanitation Education Sustainable Infrastructure: Housing, Communications Renewable Energy Environmental Sustainability Food and Nutrition Women’s Issues Sustainable Agriculture & Technology Also see the UN Millennium Development Goals http://www.un.org/millenniumgoals/ Copyright 2010 by Raj Melville

Examples of Social Entrepreneurs Grameen Aravind and Aurolab Agastya Additional examples: “How to Change the World” by D. Bornstein “The Fortune at the Bottom of the Pyramid” by C. K. Prahalad www.Ashoka.org Copyright 2010 by Raj Melville

Grameen Grameen Bank was started by Prof. Muhammad Yunus in Bangladesh in 1976 (http://www.grameen-info.org/ ) Social goal was to Extend banking facilities to poor men and women who otherwise would not get bank loans Eliminate the exploitation of the poor by money lenders Create opportunities for self-employment for the large number of unemployed people in rural Bangladesh Currently Grameen has 7.61 million borrowers, 97 per cent of whom are women 2,535 branches in 83,343 villages Loan recovery rate is 98.24 per cent. 2008 Projected loan disbursement of US $ 874 million For profit concern generating dividends to borrowers who are shareholders Copyright 2010 by Raj Melville

Grameen What did they do differently? Went after untapped sector Were willing to take a risk with uncollateralized loans to poor Focused on women entrepreneurs Introduced new business processes No legal paperwork for loans Created self help groups to ensure repayment thru social pressure Simplified loan repayments with weekly meetings for incremental loan payments Created competitive product Set market rates of interest versus usurious money lender rates Websites like www.kiva.org and www.microplace.org now allow individuals to help entrepreneurs by Raj developing countries Copyright 2010 in Melville

Aravind Eye Hospital Founded in 1976 by Dr. G. Venkataswamy, in Madurai, India (http://www.aravind.org/ ) A social organization committed to the goal of elimination of needless blindness through comprehensive eye care services. Every year the Aravind Eye Care System Sees over 2.4 million patients Does over 200,000 cataract operations, nearly half of them free Average cost at one hundredth of that in the US. Doctors conduct over 2000 operations a year, over 6 times the national average Aurolab, a manufacturing spinoff, makes interocular lenses to world class standards at tenth of international cost ($4-5 versus $100 -$150) Copyright 2010 by Raj Melville

Aravind Eye Hospital What did they do differently? Focused on the social objective "But Aurolab sells the lenses for less, not only because their costs are lower but because they chose to price them lower – because our goal is maximizing service rather than maximizing profit." Streamlined the entire operation process Setup as a production line Increased the utilization of doctors and equipment Built new multi-tiered pricing models Cross subsidized free patients with higher charges for those who could pay Copyright 2010 by Raj Melville

Agastya Founded in 1999 by Ramji Raghavan in Bangalore, India (http://www.agastya.org/ ) Non-profit focused on transforming education in India through a scalable and interactive education model India, one of the most populous countries, has over 35% illiteracy rate Rural schools are poorly staffed with teachers with inadequate training Created a science training center with distributed centers in each rural district Developed a new style of interactive teaching Agastya Mobile Labs take science education out remote schools Mobile Labs reach over 800 rural teachers and 40,000 students a year Over 30 Agastya Mobile Labs make it largest science outreach program in the world Results show passing rates at Agastya schools up from 40% to 96%. Having touched over 80,000 teachers and 2.5 million children, Prime Minister’s National Knowledge Commission has recommended the ‘Agastya model’ for nationwide dissemination Copyright 2010 by Raj Melville

Agastya What did they do differently? Disruptive business model Developed a unique teaching model Break the typical mold of teacher/student interaction Redesigned the supply chain Took classes out to the student Matched resources to talent available High school students as capable instructors Scales reasonably well Engage the ‘customer’ i.e. student Created a product that satisfied both student and teacher’s needs Copyright 2010 by Raj Melville

Getting Started Social entrepreneurs play the role of change agents in the social sector, 1. Define a clear vision around a by: social issue or challenge Adopting a mission to create and sustain social value (not just private 2. Identify market opportunity and value) define innovative or disruptive Recognizing and relentlessly solutions pursuing new opportunities to serve that mission 3. Build a sustainable business Engaging in a process of continuous innovation, adaptation, model and learning Acting boldly without being limited 4. Clearly define social impact by resources currently in hand metrics Exhibiting heightened accountability to the constituencies served and for 5. Recruit and attract resources the outcomes created and volunteers (Source: The Meaning of Social Entrepreneurship, J. Gregory Dees) Copyright 2010 by Raj Melville

The Funding Gap Concept Implement Growth Sustain Stage Stage Stage Stage Developing Implement Scale Long Term Concept and Build Concept Sustainability Concept Venture Philanthropists The GAP Family Foundations Corporate Foundations Government Echoing Green Draper New Profit Richards Skoll ($60K) Schwab ($1 Mill) ($100K) Foundation Social Inno Ashoka Forum (Stipend) Copyright 2010 by Raj Melville Confidential

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Raj Melville Social Entrepreneurship

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