path to equilibrium change

January 25, 2016 0 comments

How would you define the role of a ‘social entrepreneur’ as opposed to a social service provider or social advocate?

There are two dimensions we think about when we make these distinctions. First is whether the actor is attempting to ameliorate a bad situation or transform it. And second is whether the actor creates the solution himself/herself or convinces another party to do so. Social service providers—for example, Mother Teresa—attempt to ameliorate the pain and suffering caused by an unpleasant equilibrium—e.g., abject poverty in the slums of Calcutta. Social advocates attempt to convince another party—typically government—to transform an unpleasant equilibrium. Martin Luther King Jr. is an example of a great social advocate. A social entrepreneur seeks to transform an unpleasant equilibrium by way of direct action. Nobel Laureate Kailash Satyarthi created the branding standard Rugmark (now known as GoodWeave)to produce a transformation in eliminating child labor in rug making in the Middle East and South Asia.

What is the relevance of ‘reflective practice’ in the context of social entrepreneurship?

521-2Social entrepreneurs are reflective practitioners. They appreciate, apprentice, and experiment—learning from their practice over time—in order to be able to commit expertly to solutions. They do not just think deep thoughts and put them directly into action.

Social entrepreneurship offers a distinctive approach towards equilibrium change, navigating the territory between government-led and business-led transformation. Could you elucidate this?

Government-led transformation utilizes the power of government mandate to ubiquitously transform an equilibrium for all citizens with a purpose of increasing the social good. Business-led transformation uses a product or service to enable a certain segment of customers to voluntarily adopt the innovation to produce a transformation—and in the process earn a superior economic return. Social entrepreneurship borrows from the two approaches to create a solution. An interesting example is India’s Unique Identification Authority of India (UIDAI). Even though a Cabinet-level bureaucrat with a mandate from his government, Nandan Nilekani chose not to employ mandate to drive transformational change. He created a voluntary system that he worked—as if engaging in a business-led transformation—to make as attractive as possible to consumers in order to drive adoption. The goal was not profit but rather a social good. In this way, he mixed aspects of government-led and business-led transformation.

“The dispassionate inquiry that comes from appreciation and the passionate conviction that comes from abhorrence”—how does one negotiate the relationship between the two?
It might be the single hardest thing that social entrepreneurs have to do. Their motivation is abhorrence. They would not dedicate their lives the way they do if they did not abhor a terrible existing equilibrium. That makes it hard to appreciate why the existing equilibrium has such a tenacious hold. But understanding that holds the absolute key to changing it. This was the reason for Molly Melching’s success in eliminating female genital mutilation when all before her had failed. She took years to understand why the practice made sense to the families and villages of the young woman on whom the practice was imposed. And in that understanding came the keys to a transformational village-based approach. It took years and years of appreciation—while suppressing her abhorrence—for Molly to make the transformation happen.

As you say, the imperative of ensuring a winning value equation applies to social entrepreneurship too. How difficult is it to factor in this cost and value aspect while setting out on a journey towards equilibrium change?

521-1It is a challenge but the social entrepreneurs who succeed are able to think through a way to forge a value equation that drives the equilibrium change. The willingness and desire to understand the current value equation is a key part of the solution. It is hard to transform an economic system that you do not understand. Understanding the current costs and the current value will always give clues on what big cost items need to be transformed and what pieces of value could be brought to bear.

What are the imperatives to ensure scale of impact?

The key to scaling the impact is to create an economic model in which unit costs fall as scale rises. For many social service providers, costs remain consistent as scale rises. For example, a center for battered women needs almost exactly double the resources to serve double the women. That is hard to scale. In contrast, Kiva spent the resources to build a platform for connecting micro-lenders with micro-borrowers. The bad news was that it had to incur a substantial up-front cost to build the platform. The good news is that the incremental cost of serving an additional lender or borrower is close to zero, so that as it gets bigger, the average cost of facilitating a micro-loan drops continuously as Kiva scales. As a consequence, it is successfully scaling.

How do you build the case for balancing adaptation and adherence?

It is not so much a situation in which a case needs to be built. Social entrepreneurs know that they need to achieve that balance. The world changes and they need to be willing and able to change with it. However, if they never commit to anything, they will never scale. So they know they need to balance.

To what extent is innovation crucial to social entrepreneurship?

It is essential. Entrepreneurs are innovators. Not surprisingly, so are social entrepreneurs. Essentially they must battle ‘the way things are done.’ That means coming up with a new way with a new economic formula. All of that requires innovation. However, much innovation in the world involves the application of a solution that works in a different—but not entirely different— context elsewhere. That is one of the purposes of our book Getting Beyond Better—to provide patterns of thinking and models that can be applied in different contexts.

Are there any personality traits characteristic of social entrepreneurs?

We did not study this question formally, but I have some thoughts. There are enough personality differences among the 100+ social entrepreneurs in the Skoll Foundation portfolio that I do not think that there will be classically-defined personality traits in common. My observation is that a wide variety of folks come face to face with an unpleasant equilibrium that bothers them at a deep level and they get motivated to work long and hard on transforming it. They all seem to have a well-functioning moral compass—but so do many people who never become social entrepreneurs. They all seem to have a combination of patience and resoluteness—but so do many people who never become social entrepreneurs. I could go on… My net view is that anybody could end up being a social entrepreneur. They are not born or made a class apart. But by their actions and their learning while building their venture, they become a class apart—a lovely and exalted class apart.

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