What is Social Entrepreneurship?

How to actually create change with business

This piece is based on Week 1 of Social impact Strategy: Tools for Entrepreneurs and Innovators by Upenn on Coursera. Check out this course here

Bill gate calls it creative capitalism

Muhammed Yunus calls it social business

Jeff Skoll calls it practical dreaming

Considered one of the best inventions of the 20th century. Social enterprises have only been on the rise. So what is a social enterprise? And what is a social entrepreneur?

What is a Social Entrepreneur?

A social entrepreneur is someone who adopts a mission to create value. They are relentless, constantly exploring and finding new opportunities to create change. This also means that must be flexible as each opportunity presents its own unique set of challenges. Adjusting, evolving, and recalibrating is an iterative process that social entrepreneurs constantly have to go through. Often times the ability to bootstrap is key in the initial stages, and the ability to be accountable is often important in later stages.

So what does this look like in practice? Let’s look at an example.

In many countries, infant incubation is an issue. Incubation units cost thousands, making them unaffordable for many countries. So students at Stanford Engineering wondered what if they could reduce the price from $2500 to just $25? So they created a sleeping bag that used space-aged wax technology, that would be inserted into the back pouch of a sleeping bag. The wax — that can be heated with just boiling water — is slid into the back of the sleeping bag keeping the baby warm for four-hour intervals. This wax can then be removed, reheated, and further reused.

We can see how this example displays the traits of social entrepreneurship. It’s affordable and can sustain itself as a business model with the ability to scale even further. With a reimagined, and radical interpretation of pre-existing solutions. And at its core solving a far-reaching, and impactful social issue.

What is a Social Enterprise?

In the previous section, we saw an example of a social enterprise. But that was just one example. So what is a social enterprise? And why is it better than current methods?

In order to understand social enterprise we first need to understand the current institutions that facilitate change. Namely,

1. NGOs
2. Governments
3. Businesses

Each of these groups has specific methods they employ when creating change, stakeholders they are accountable to, and unique traits that affect how they create change. Let’s look at the way these three groups tackle the issue of housing and compare that to social enterprises.

Government

Government housing projects have existed and been implemented in all corners of the world. These are large-scale projects, with a focus on equality and evenness. Due to its nature, there are strict rules government must follow, making the entire process is slow-moving and cautious.

Company

When the business sector tackles this problem profit is a massive consideration. The main question being “How can we best generate a product?” Businesses are sensitive to the market, aiming to meet demand. And at the end of the day, they’re responsible to their shareholders.

NGO

NGOs will often ask questions about a specific community and local needs. They're able to tackle the problem with more nuance than the government, always sticking to their mission. Nonprofits are ultimately driven by change.

So where would social enterprise lie?

Well, it helps to think of social enterprises, not as a concrete definition but as a mix of for-profit and non-profit businesses. Social enterprises are ultimately driven by change, and their mission, but also need to be sensitive to the market and meet demand. For many social enterprises generating money is imperative but not the end goal.

I think this quote from John Mackey “The purpose of business is not to make money anymore than the purpose of the human body is to make red blood cells” illustrates the role of money best. Our bodies have a much higher purpose than simply creating red blood cells, but red blood cells are still critical for a functioning human body. The same goes for social enterprises, there exists a higher purpose than money, but money is still critical for a functioning social enterprise.

Let’s look at two more examples of a social enterprise to better understand this point.

The husk is an enterprise with the goal of electrifying rural areas. This resourceful group realized that rice husks were being discarded all over India, so they thought — why not use them as a source of power? As of now, they’ve set up 60+ generators. Their model is financially sustainable that charges a low price while being able to sustain and grow themselves.

Another example is Ecotact. A public health-oriented enterprise that offers high-quality showers, and toilet facilities to eliminate health risks. It charges a small fee for sanitation which allows it to be financially independent, with massive opportunity to scale.

Through these two examples, we can see what social enterprises are about. How they take the best components from for-profits and non-profits. And the positive impact they contribute to society. So what makes a successful social entrepreneur?

When it comes to being a social entrepreneur there is a multitude of factors and traits that contribute to success. But broadly 5 core characteristics come to mind.

1. Persistence. All entrepreneurs will face disappointment, setbacks, and No’s. This is no different as a social entrepreneur. The ability to persist through it all until success is critical to becoming a good social entrepreneur
2. Resourcefulness. We can see in previous examples the bootstrapping mentality of many enterprises. Being able to create something out of nothing. And finding ways to achieve their end goal with few resources
3. Collaboration. Any form of social change requires teamwork. Social entrepreneurs need to effectively collaborate in order to maximize success
4. Curiosity. The ability to constantly ask why? To ask “how can I solve this problem?” And the ability to question the status quo is a catalyst for change.
5. Lastly Empathy. Social entrepreneurs need to see things from the perspective of others. To truly understand the problem in order to solve it.

Social Entrepreneurs are everywhere. They exist in every country working on many different issues. Some are young, some are old. Some are poor, some are rich. Some are starting off, some already have years of experience. And maybe some are reading this article right now.