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
La Comercial UD – Sustainable development – Bilbao May 2009
Dr. JM Luzarraga –Mondragon University
jmluzarraga@gmail.com
jmluzarraga@eteo.mondragon.edu
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Index
1. 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)
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Our goals for today
Based 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
entrepreneurs
To understand their Business Models & leadership styles
To identify their market opportunities
To find out their financial resources
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

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

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

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 to
SERVE OTHERS
Common inspiration is:
“You have to be the change you want to see in the world”
(Gandhi)
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Why are they unreasonable? Because…
They Want to Change the World
They are insanely ambitious
They are propelled by emotions
They think they know the future
They seek profit in unprofitable pursuits
They ignore the evidence
They try to Measure the Unmeasurable
They refuse to be made into Superheroes
They are, well, unreasonable
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Characteristics of Successful Social entrepreneurs
Try to shrug off the constraints of ideology or discipline
Identify & apply practical solutions to social problems, combining
innovation, resourcefulness, and opportunity
Innovate by finding a new product, a new service, or a new
approach to a social problem
Focus-first & foremost-on social value creation and, in that spirit, are
willing to share their innovations & insights for other to replicate
Jump in before ensuring they are fully resourced
Have an unwavering belief in everyone’s innate capacity, often
regardless of education, to contribute meaningfully to economic &
social development
Show a dogged determination that pushes them to take risks that
others wouldn’t dare
Balance their passion for change with a zeal to measure and
monitor their impact
Have a great deal to teach change makers in other sectors
Display a healthy impatience
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

How they look like…
Nicholas Negroponte (MIT-medialab)
“Entrepreneur behind the One laptop
per child project”
VIDEO: http://tinyurl.com/qkavho
Dr. Govindappa “Aravind Eye Hospital”
“The largest Eye care medical Dr. Mohammed Yumus
centre in the world” “Grameen Bank – Nobel Price 2006”
VIDEO: http://tinyurl.com/qb37rm VIDEO: http://tinyurl.com/dmbz9f
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Classifying types of Social Enterprises
Traditional classification:
Model 1: Leveraged Nonprofit ventures
Model 2: Hybrid Nonprofit ventures
Model 3: Social Business Ventures
Social Enterprise from a wider perspective
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 1: Leveraged Nonprofit ventures
A public good is being delivered to the most economically
vulnerable, who do not have access to, or are unable to
afford, the service rendered
Both the entrepreneur and the organization are change
catalysts, with a central goal of enabling direct beneficiaries to
assume ownership of the initiative
Multiple external partners are actively involved in supporting
the venture financially, politically, and in kind
The founding entrepreneur morphs into a figurehead, in some
cases for the wider movement, as others assume
responsibilities and leadership
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 1: Leveraged Nonprofit ventures
Bunker Roy
“Barefoot College”
http://tinyurl.com/ottmg8
N. Negroponte
OLPC www.laptop.org
http://tinyurl.com/5tfazu
Mother Teresa
“Missionaries of Charity”
VIDEO: http://tinyurl.com/d25chs
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 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 question
Sooner 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 provided
The enterprise is able to recover a portion of its costs through the sale
of goods & services, in the process often identifying new markets
To 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, loans
As mainstream investors & business enter the picture, even when they
are not seeking mainstream financial returns, they push to become
model 3
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 2: Hybrid Nonprofit ventures
Rick Aubry
“Rubicon Programs”
VIDEO: http://tinyurl.com/o4dd82
Martin Fisher
Dr. Govindappa
KickStart: www.kickstart.org
“Aravind Eye Hospital”
http://tinyurl.com/qb37rm VIDEO: http://tinyurl.com/p7mep3
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 3: Social Business ventures
The entrepreneur sets up the venture as a business with the specific
mission to drive transformational social and/or environmental
change
Profits 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 people
The entrepreneur seeks out investors interested in combining
financial and social returns
The enterprise’s financing-and scaling- opportunities can be
significantly greater because social business can more easily take
on debt and equity
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Traditional classification
Model 3: Social Business ventures
F. Arizmendiarrieta
Dr. Mohammed Yumus
MONDRAGON Cooperatives
“Grameen Bank – Nobel Price 2006”
http://tinyurl.com/p75akt
VIDEO: http://tinyurl.com/qt65ux
http://tinyurl.com/otm9ft
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

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

Classifying Social enterprise from a wider perspective
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
1. Demographic opportunities
Facts:
- 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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
2. Financial opportunities
Facts:
- 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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
3. Nutritional opportunities
Facts:
- 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)
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
4. Resource opportunities
Facts:
- 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
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
5. Environmental opportunities
Facts:
- 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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
6. Health opportunities
Facts:
- 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
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
7. Gender opportunities
Facts:
- 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
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
8. Educational opportunities
Facts:
- 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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
9. Digital opportunities
Facts:
- 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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

10 market opportunities for social entrepreneurs
10. Security opportunities
Facts:
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/
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

“YOU HAVE TO BE THE CHANGE YOU
WANT TO SEE IN THE WORLD”
GANDHI
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

Eskerrik asko
Muchas gracias
Thank you
谢谢你
“Our strength does not lead to struggle but co-operation”
P. JM Arizmendiarrieta - 1956
Dr. JM Luzarraga – ETEO-MU – Sustainable Development - April 2009

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