ENTR4800 Class 1: Introduction to Social Entrepreneurship and Social Enterprise

ENTR 4800: Social Entrepreneurship

Class 1: Introduction to Social

Entrepreneurship and Social Enterprise

Monday, September 12, 2011

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Instructors:

Norm Tasevski ([email protected])

Karim Harji ([email protected])

© Norm Tasevski & Karim Harji

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Before we begin…

This course is designed for those that want to start a social venture, and/or work in social enterprisesocial venture, and/or work in social enterprise

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Course Director – Norm Tasevski

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Course Director – Karim Harji

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What Makes YOU

a (Social)

Entrepreneur???

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Agenda

• Class Intros

• Syllabus and Class Structure

• Ground Rules

• Defining Social Entrepreneurship

• Defining Social Enterprise

• What did we learn?

• Next week

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Syllabus

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Class Rules

– Participation - quality, not quantity!

– No stupid questions (only stupid answers)

– Respect your classmates –attend and be punctual! attend and be punctual!

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Defining Social Entrepreneurship…

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First, we need to understand

entrepreneurship...

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Entrepreneurs…

…are motivated

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Entrepreneurs…

…are innovative

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Entrepreneurs…

…are resourceful

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Entrepreneurs…

…take chances

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How is Social Entrepreneurship

Different?

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How is Social Entrepreneurship Different?

Motivation Resourcefulness Risk TakingInnovation

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But…

…motivations are different

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Barefoot College

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But…

…innovation is different

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Registered Disability Savings Program

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But…

…resourcefulness is different

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“Civic Engagement, Scaled Up”

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But…

…risk taking is different

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“Banking for the Poor”

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Other Differences

Focus on “systems thinking” and

“systems change”:

“Social entrepreneurs are not content just to give a fish or

how to teach fish. They will not rest until they have

revolutionized the fishing industry”

Bill Drayton

Seek “profit” in

“(Social entrepreneurs) work in areas where there is partial or

total market failure…what distinguishes them is that they are prepared to strike a very different balance when it comes to

Seek “profit” in traditionally

unprofitable pursuits:

prepared to strike a very different balance when it comes to

creating value for those who would not normally be able to afford it”

John Elkington

Possess a strong “ethical impetus”:

David Bornstein: “Why do you work on the kinds of projects you do? Why don’t

you just want to make a lot of money?”

Fabio Rosa: “I am trying to build a little part of the world in which I would like to

live. A project only makes sense to me when it proves useful to make people happier and the environment more respected, and when it

represents a hope for a better future. This is the soul of my

projects.” 26


Some Definitions

• “Social entrepreneurs identify resources where people only see problems. They view the villagers as the solution, not the passive beneficiary. They begin with the assumption of competence and unleash resources in the communities they are serving”

David Bornstein

• “A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to make social change”

Wikipedia

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Break

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Defining Social Enterprise…

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What is a Social Enterprise?

• Organizations (non-profit or for-profit) that imbed both social purpose and business purpose into their organization

• Returns are both Social (i.e. impact) & Financial (i.e. profit)profit)

• Key distinguishing factor: How deep social & business purpose is imbedded

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A Question…

What makes a business a business?

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Components of a Business

A transaction

A product/service

A goal A legal form

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How is Social Enterprise Different?

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Social Enterprise has…

Yep

A transaction

Absolutely

A product/service

A goal A legal form

Yeah, but…

This one’s

complicated

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The SE Product/Service

It’s still…

But…

• “Social benefit” is added somewhere on the value chain

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What is Social Benefit?

• For our purposes, social benefit may arise when one attempts to overcome an injustice or inequity in society that the market, on its own, cannot respond to – E.g. creating employment opportunities for individuals that may not otherwise be

employable in the marketplaceemployable in the marketplace

• A similar concept – “environmental benefit”

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Exercise

• Add social benefit to:

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The SE Transaction

Traditional Business Social Enterprise

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Customers

Customers

“Clients”


TurnAround Couriers

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The SE Goal - Social vs. Financial Purpose

Social Purpose

– Creating a “social return” by making positive change within an inequitable social system

• Examples: Reduced Poverty, Improved Literacy

Financial Purpose

– Creating a “financial return”, usually through the sale of products/services in the marketplace

Blended Purpose

– Effecting social change by combining social and financial return

– Also called “Blended Value”

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A Common Dilemma

• Usual: Social enterprises feel they need to sacrifice social purpose for financial gain, or vice versa

• Ideal: Financial returns depend on social mission (and vice versa)

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Viewing SE Through a “business lens”

• How you think about cost– Additional costs borne on business that achieves a social

benefit (how do you incorporate? Valuate it?)

• How you think about investment– Opportunities to get investment through traditional models,

but because your business is hybrid, the investment needs to be hybrid (i.e. layering of different financing to be hybrid (i.e. layering of different financing mechanisms)

• How you think about success– Part of the social enterprise motivation is social, so you

need to consider success in a dual lens. How do you articulate success in both of these spheres?

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The Legal Form

• No clearly defined legal form for social enterprise in Canada

• “Form follows function”

Spectrum of Social and Financial Returns

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Emphasi

s on

Social

Return

Emphasi

s on

Social

Return

Conventi

onal

Nonprofit

Conventi

onal

Nonprofit

Nonprofit

with

some

earned

income

Nonprofit

with

some

earned

income

Social

Enterpris

e

Social

Enterpris

e

Business

with

social

responsi

bility

Business

with

social

responsi

bility

Conventi

onal

Business

Conventi

onal

Business

Emphasi

s on

Financial

Return

Emphasi

s on

Financial

Return

Nonprofit Structure

For-profit Structure

Philanthropic Capital

Commercial Capital

Source: Stanford Social Innovation Review, Spring 2008; Jed Emerson cited as contributor


A test…

I am:• A retailer• Sells goods at rates affordable by low-

income individuals• Employs individuals with barriers to

employment• Goals:

– 92% of imported goods from green factories

– 95% of waste redirected from landfill

Facts:

• $115M raised for charity since 1995 ($18M in 2009)

• Over 1,000 environmentally-approved products on sale

• 1700 new jobs created in Canada in 2009

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– 95% of waste redirected from landfill– Desire to be supplied 100% by

renewable energy by 2015

Social Enterprise or Not?

2009


A test…

I am:• A café• 84% of all coffee ethically sourced (goal of 100% by

2015)• Supports farmers by a) selling fair trade coffee, and b)

providing loans to coffee growers• Purchase carbon credits to offset production • Goals:

– 100% of cups to be reusable/recyclable– Use recycled/renewable materials in café

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– Use recycled/renewable materials in café construction

– Organize a “month of service” (employees act as “change makers” in their communities)

Social Enterprise or Not?

Facts:

• Sells approx. 10% of all Fair Trade coffee globally

• Almost 200,000 volunteer hours made by employees worldwide

• Over 53,000 youth supported and engaged in community events


What does this mean?

Social

Enterprise CSR

Enterprise

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Social

Enterprise Complexity


What SE is and is Not

Social Enterprise Is Not… Social Enterprise Is…

• A fundraising strategy (i.e. a “give” mentality)

• A business line (i.e. a “sales” mentality)

• Solely focused on either “customers” or “clients”

• Focused on both “customers” and “clients”

• Dependent on restricted funds for • Sustainable (ideally “self-sufficient”)• Dependent on restricted funds for operations (i.e. not sustainable)

• Sustainable (ideally “self-sufficient”)

• An event or one-off activity (e.g. conferences, bake sales)

• A continuous, market-driven activity

• Providing value to clients only • Providing value to both “clients” and “customers” (and distinguishing between both!)

• Quick • A venture that may take several years to become profitable/sustainable

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Some Definitions

• “An organization or venture that achieves its primary social or environmental mission using business methods.”

Social Enterprise Alliance

• “Business ventures operated by non-profits, whether they are societies, charities, or co-operatives.”

Enterprising Non-Profits (enp)Enterprising Non-Profits (enp)

• “… social mission driven organizations which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social.”

Wikipedia

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What did we learn?

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Next Week

• 1st deliverable: – Pick a social/environmental issue (international or

Canadian), and…

– Pick a group of 4 (we will finalize groups next week based on final class numbers)

• Readings

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