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Social
Entrepreneurship

                            Raj Melville




      Copyright 2010 by Raj Melville
Key Ingredients of a Social
 Entrepreneur




                  +                                    =



Social Activist         Business                              Social
                         pioneer                           Entrepreneur


                      Copyright 2010 by Raj Melville
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
Social Entrepreneurship


                        Non-Profits


                                     Social
                                 Entrepreneurs



        Governmental
                                         For Profit Businesses
        Organizations




                    Copyright 2010 by Raj Melville
Questions?
 Contact me
  Raj Melville
    Email: rajmelville@gmail.com
    Blog: http://blog.ambientengines.com/




                     Copyright 2010 by Raj Melville
Extra Slides




               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




          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




          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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Social Entrepreneurship

  • 1. Social Entrepreneurship Raj Melville Copyright 2010 by Raj Melville
  • 2. Key Ingredients of a Social Entrepreneur + = Social Activist Business Social pioneer Entrepreneur Copyright 2010 by Raj Melville
  • 3. 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
  • 4. 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
  • 5. 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
  • 6. Social Entrepreneurship Non-Profits Social Entrepreneurs Governmental For Profit Businesses Organizations Copyright 2010 by Raj Melville
  • 7. Questions? Contact me Raj Melville Email: rajmelville@gmail.com Blog: http://blog.ambientengines.com/ Copyright 2010 by Raj Melville
  • 8. Extra Slides Copyright 2010 by Raj Melville
  • 9. 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
  • 10. 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
  • 11. 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
  • 12. 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
  • 13. Grameen Copyright 2010 by Raj Melville
  • 14. 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
  • 15. 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
  • 16. 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
  • 17. 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
  • 18. Agastya Copyright 2010 by Raj Melville
  • 19. 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
  • 20. 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
  • 21. 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