This document provides an overview of a study on social entrepreneurship conducted by SustainAbility in partnership with The Skoll Foundation. The study found that social entrepreneurs see major challenges like climate change and poverty as opportunities to create innovative business models. However, they face constraints like lack of access to capital and talent. The document contains forewords from representatives of The Skoll Foundation, SustainAbility, Allianz, and DuPont expressing support for social entrepreneurship and its potential to drive sustainable solutions. It also provides an executive summary and outlines the findings of surveys of over 130 social entrepreneurs.

1. Growing Opportunity
Entrepreneurial Solutions to
Insoluble Problems

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. 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. 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. 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. 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. 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. 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. 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. 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. 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