ENTR4800 Class 1 - Introduction to Social Entrepreneurship and Social Enterprise


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This introductory class provides an overview of social enterprise and social entrepreneurship, and some of the key tensions that social entrepreneurs encounter.

Theory: What is social entrepreneurship? What distinguishes social entrepreneurship from traditional entrepreneurship?

Practice: What is social enterprise? How is it different from social entrepreneurship? How does it differ from traditional business?

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ENTR4800 Class 1 - Introduction to Social Entrepreneurship and Social Enterprise

  1. 1. ENTR 4800: Social Entrepreneurship Class 1: Introduction to Social Entrepreneurship and Social Enterprise Monday, September 10, 2012Instructors:Elisha Muskat (elisha@socialentrepreneurship.ca)Norm Tasevski (norm@socialentrepreneurship.ca) 1
  2. 2. © Elisha Muskat & Norm Tasevski 2
  3. 3. © Elisha Muskat & Norm TasevskiBefore we begin… This course is designed for those that want to start a social venture, and/or work in social enterprise 3
  4. 4. © Elisha Muskat & Norm TasevskiCourse Director – Elisha Muskat 4
  5. 5. © Elisha Muskat & Norm TasevskiCourse Director – Norm Tasevski 5
  6. 6. © Elisha Muskat & Norm TasevskiWhat Makes YOUa (Social)Entrepreneur??? 6
  7. 7. © Elisha Muskat & Norm TasevskiAgenda•  Class Intros•  Syllabus and Class Structure•  Ground Rules•  Defining Social Entrepreneurship•  Defining Social Enterprise•  What did we learn?•  Next week 7
  8. 8. © Elisha Muskat & Norm TasevskiSyllabus 8
  9. 9. © Elisha Muskat & Norm TasevskiClass Rules –  Participation - quality, not quantity! –  No stupid questions (only stupid answers) –  Respect your classmates – attend and be punctual! 9
  10. 10. Defining Social Entrepreneurship… 10
  11. 11. © Elisha Muskat & Norm TasevskiFirst, we need to understandentrepreneurship... 11
  12. 12. © Elisha Muskat & Norm TasevskiEntrepreneurs… …are motivated 12
  13. 13. © Elisha Muskat & Norm TasevskiEntrepreneurs… …are innovative 13
  14. 14. © Elisha Muskat & Norm TasevskiEntrepreneurs… …are resourceful 14
  15. 15. © Elisha Muskat & Norm TasevskiEntrepreneurs… …take chances 15
  16. 16. How is Social EntrepreneurshipDifferent? 16
  17. 17. © Elisha Muskat & Norm TasevskiHow is Social Entrepreneurship Different? Motivation Innovation Resourcefulness Risk Taking 17
  18. 18. © Elisha Muskat & Norm TasevskiBut……motivations are different 18
  19. 19. © Elisha Muskat & Norm TasevskiBarefoot College 19
  20. 20. © Elisha Muskat & Norm TasevskiBut……innovation is different 20
  21. 21. © Elisha Muskat & Norm TasevskiRegistered Disability Savings Program 21
  22. 22. © Elisha Muskat & Norm TasevskiBut……resourcefulness is different 22
  23. 23. © Elisha Muskat & Norm Tasevski“Civic Engagement, Scaled Up” 23
  24. 24. © Elisha Muskat & Norm TasevskiBut……risk taking is different 24
  25. 25. © Elisha Muskat & Norm Tasevski“Banking for the Poor” 25
  26. 26. © Elisha Muskat & Norm Tasevski Other Differences “Social entrepreneurs are not content just to give a fish or Focus on “systems how to teach fish. They will not rest until they have thinking” and revolutionized the fishing industry” “systems change”: Bill Drayton “(Social entrepreneurs) work in areas where there is partial or total market failure…what distinguishes them is that they are prepared Seek “profit” in traditionally to strike a very different balance when it comes to creatingunprofitable pursuits: value for those who would not normally be able to afford it” John Elkington David Bornstein: “Why do you work on the kinds of projects you do? Why don’t you just want to make a lot of money?” Possess a strong “ethical impetus”: Fabio Rosa: “I am trying to build a little part of the world in which I would like to live. A project only makes sense to me when it proves useful to make people happier and the environment more respected, and when it represents a hope for a better future. This is the soul of my projects.” 26
  27. 27. © Elisha Muskat & Norm TasevskiSome Definitions•  “Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they are serving” David Bornstein•  “A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to make social change” Wikipedia 27
  28. 28. Break 28
  29. 29. Defining Social Enterprise… 29
  30. 30. © Elisha Muskat & Norm Tasevski 30
  31. 31. © Elisha Muskat & Norm TasevskiWhat is a Social Enterprise?•  Organizations (non-profit or for-profit) that imbed both social purpose and business purpose into their organization•  Returns are both Social (i.e. impact) & Financial (i.e. profit)•  Key distinguishing factor: How deep social & business purpose is imbedded 31
  32. 32. © Elisha Muskat & Norm TasevskiA Question… What makes a business a business? 32
  33. 33. © Elisha Muskat & Norm TasevskiComponents of a Business A transaction A product/service A goal A legal form 33
  34. 34. How is Social Enterprise Different? 34
  35. 35. © Elisha Muskat & Norm TasevskiSocial Enterprise has… Yep Absolutely A transaction A product/service This one’s complicated Yeah, but… A goal A legal form 35
  36. 36. © Elisha Muskat & Norm TasevskiThe SE Product/Service It’s still…But…•  “Social benefit” is added somewhere on the value chain 36
  37. 37. © Elisha Muskat & Norm TasevskiWhat is Social Benefit?•  For our purposes, social benefit may arise when one attempts to overcome an injustice or inequity in society that the market, on its own, cannot respond to –  E.g. creating employment opportunities for individuals that may not otherwise be employable in the marketplace•  A similar concept – “environmental benefit” 37
  38. 38. © Elisha Muskat & Norm TasevskiExercise•  Add social benefit to: 38
  39. 39. © Elisha Muskat & Norm TasevskiThe SE TransactionTraditional Business Social Enterprise Customers Customers “Clients” 39
  40. 40. © Elisha Muskat & Norm TasevskiGood Foot Delivery | Specialisterne 40
  41. 41. © Elisha Muskat & Norm TasevskiThe SE Goal - Social vs. Financial PurposeSocial Purpose –  Creating a “social return” by making positive change within an inequitable social system •  Examples: Reduced Poverty, Improved LiteracyFinancial Purpose –  Creating a “financial return”, usually through the sale of products/services in the marketplaceBlended Purpose –  Effecting social change by combining social and financial return –  Also called “Blended Value” 41
  42. 42. © Elisha Muskat & Norm TasevskiA Common Dilemma •  Usual: Social enterprises feel they need to sacrifice social purpose for financial gain, or vice versa •  Ideal: Financial returns depend on social mission (and vice versa) 42
  43. 43. © Elisha Muskat & Norm TasevskiViewing SE Through a “business lens”•  How you think about cost –  Additional costs borne on business that achieves a social benefit (how do you incorporate? Valuate it?)•  How you think about investment –  Opportunities to get investment through traditional models, but because your business is hybrid, the investment needs to be hybrid (i.e. layering of different financing mechanisms)•  How you think about success –  Part of the social enterprise motivation is social, so you need to consider success in a dual lens. How do you articulate success in both of these spheres? 43
  44. 44. © Elisha Muskat & Norm Tasevski The Legal Form •  No clearly defined legal form for social enterprise in Canada •  “Form follows function” Spectrum of Social and Financial Returns Nonprofit Structure For-profit Structure Emphasis on Emphasis on Nonprofit with Business with Conventional Social Conventional Financial Social Return some earned social Nonprofit Enterprise Business Return income responsibility Philanthropic Capital Commercial CapitalSource: Stanford Social Innovation Review, Spring 2008; Jed Emerson cited as contributor 44
  45. 45. © Elisha Muskat & Norm TasevskiA test…I am:•  A retailer Facts:•  Sells goods at rates affordable by low- •  $115M raised for charity since 1995 income individuals ($18M in 2009)•  Employs individuals with barriers to employment •  Over 1,000 environmentally-•  Goals: approved products on sale –  92% of imported goods from green •  1700 new jobs created in Canada in factories 2009 –  95% of waste redirected from landfill –  Desire to be supplied 100% by renewable energy by 2015 Social Enterprise or Not? 45
  46. 46. © Elisha Muskat & Norm TasevskiA test…I am:•  A café•  84% of all coffee ethically sourced (goal of 100% by 2015)•  Supports farmers by a) selling fair trade coffee, and b) providing loans to coffee growers•  Purchase carbon credits to offset production•  Goals: –  100% of cups to be reusable/recyclable –  Use recycled/renewable materials in café construction –  Organize a “month of service” (employees act as “change makers” in their communities) Social Enterprise or Not?Facts:•  Sells approx. 10% of all Fair Trade coffee globally•  Almost 200,000 volunteer hours made by employees worldwide•  Over 53,000 youth supported and engaged in community events 46
  47. 47. © Elisha Muskat & Norm TasevskiWhat does this mean? Social CSR Enterprise Social Complexity Enterprise 47
  48. 48. © Elisha Muskat & Norm TasevskiWhat SE is and is NotSocial Enterprise Is Not… Social Enterprise Is…•  A fundraising strategy (i.e. a “give” •  A business line (i.e. a “sales” mentality)mentality)•  Solely focused on either “customers” •  Focused on both “customers” andor “clients” “clients”•  Dependent on restricted funds for •  Sustainable (ideally “self-sufficient”)operations (i.e. not sustainable)•  An event or one-off activity (e.g. •  A continuous, market-driven activityconferences, bake sales)•  Providing value to clients only •  Providing value to both “clients” and “customers” (and distinguishing between both!)•  Quick •  A venture that may take several years to become profitable/sustainable 48
  49. 49. © Elisha Muskat & Norm TasevskiSome Definitions•  “An organization or venture that achieves its primary social or environmental mission using business methods.” Social Enterprise Alliance•  “Business ventures operated by non-profits, whether they are societies, charities, or co-operatives.” Enterprising Non-Profits (enp)•  “… social mission driven organizations which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social.” Wikipedia 49
  50. 50. © Elisha Muskat & Norm TasevskiWhat did we learn? 50
  51. 51. © Elisha Muskat & Norm TasevskiNext Week•  1st deliverable: –  Pick a social/environmental issue (international or Canadian), and… –  Pick a group of 4 (we will finalize groups next week based on final class numbers)•  Readings 51