The opening keynote to the 10th annual HBS Social Enterprise Conference was a truly inspirational presentation by Linda Rottenberg from Endeavor, Inc. Endeavor helps mentor and grow entrepreneurs in developing countries. It has screened over 18000 candidates and selected 400 entrepreneurs, who have generated over 86,000 jobs and $2.5 billion in revenue.
Linda traced the arc of social entrepreneurship as it accelerated over the past decade from an idea to formally becoming a key movement. Here are some of my notes from the session.
She pointed out that the long path was facilitated with three key developments.
- When Bono became the symbol for AIDS in Africa with his RED Campaign, he made social activism cool
- When Prof Muhammad Yunus won the Nobel Peace prize, he instantly became the visible leader from within the field.
- When Bill Gates went beyond establishing his foundation and stepped down from Microsoft to focus exclusively on his philanthropic work and presented his vision of Creative Capitalism, he made social entrepreneurship mainstream.
It is clear that government cannot solve all social problems. Businesses on the other hand are not always there to fill in the gaps. This is where social entrepreneurs come in.
She said that there was a lot of excitement with the new government and its support of social activism. The risk is that government might wind up playing a larger role than existing social entrepreneurs.
For social entrepreneurs to scale venture philanthropists need to get away from the fixation with overhead and attract the best. When a VC invests in a technology startup, they insist on an A Team to go with the A+ ideas. Linda said her response to investors is “We don’t have overhead, we have people.”
When social entrepreneurs partner with corporations, they risk having their brand subsumed by the sponsor or partner. Linda gave an example of a company executive who told her, “I am not in the business of promoting Endeavor but of promoting my brand.”
She pointed out that the recent shakeup at Google.org where Larry Brilliant was pushed aside and the operations handed over to a mainstream Googler. Google said that they felt their technologists could better provide scalable solutions and this was another example where the corporate goals have overtaken the original social objectives.
Social entrepreneurs have a lot of lessons that they can share with for profit companies especially in these times of fiscal restraint. For example:
- How to motivate employees without large monetary bonuses or rewards
- How to look beyond a quarterly mindset to long term impact
She mentioned that her team members have a “psychic equity” in the company something that is worth a lot more today given the deflated bonuses and stock options.
Today Social Entrepreneurship has arrived. People are no longer asking “What is Social Entrepreneurship?” but “What has Social Entrepreneurship achieved?”
A Mexican study showed that 55 companies with 500 or more employees would move the countries GDP by 1%. While supporting 300,000 microfinance customers would not have the same effect. Endeavor has a significant number of companies in Mexico and will eventually have an impact on the economy.
With this kind of impact, Social Entrepreneurs have gone from being charming to important.
In response to one of the questions, Linda said that it is important that a social enterprise take their core competency and direct it to sustainability – but at the same time it should not run a business for business sake. Having a non-profit to run a restaurant just because they want to generate revenue does not make sense if it is not part of its core mission and if it is not what its people are geared to doing.
Endeavor is setup independently in each country. Each country looks at sustainability differently. In Mexico, companies pay $5000 per year to Endeavor. In other countries, the portfolio companies give 2% of their revenue – they pay it forward to allow future generations of entrepreneurs to grow.
More about Endeavor at http://www.endeavor.org/
The Social Ecosystem 
Hi Raj,
Very nice post. However I do think that there is a false choice placed before us in the Mexico Microfinance study.
The goal of microfinance is to help the poor, those living in absolutely poverty lead a better life, offer a better future to their children and eventually break out of the cycle of poverty. Their GDP is by itself is at such a low base since many of them might be earning less than $2 a day. Thus expecting the GDP to be significantly impacted by microfinance programs is unrealistic.
Second, true microfinance is still nascent in Mexico. It would be interesting to see which Microfinance institutions were studied, as some MFIs in Mexico such as Compartamos charge interest rate of the order of nearly 100% which cannot be truly called as microfinance.
Bhalchander
True about the 100% interest rate part.
In Linda’s complete remarks she says that when they were starting Endeavor, social investors complained because they were not really targeting the “poor” but encouraging entrepreneurship in the “middle class”. All these terms being relative to the general level of economic development in that country.
However one of the issues around MFIs is that while it might take the vegetable vendor out of being indebted to a moneylender at 10% a day and provide them with less expensive capital at maybe 24% a year, they still continue as a vegetable vendor.
Is it better to put that money into a micro enterprise that will grow and lift 100 people out of poverty?
Linda Rottenberg’s complete remarks from the Keynote at HBS are at :
Click to access HBS_keynote.pdf
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