MN3194 Entrepreneurship

Block 4: Social Entrepreneurship

Essential Reading
• Dees, J.G. The Meaning of "Social Entrepreneurship". (Durham: The
Duke Innovation and Entrepreneurship, 1998)

• Hirzel, A. To Grow, Social Enterprises Must Play by Business Rules.

(Harvard: Harvard Business Review, 2013)

• Investing’s Final Frontier: Impact Measurement | Forbes (Forbes’

YouTube Channel, 2018)
https://www.youtube.com/watch?v=hTE2oDWPdXQ

• Yunnus, M. et al. Building Social Business Models: Lessons from the

Grameen Experience. Long Range Planning issue 43 (Elsevier: 2010)
Introduction
1. Definition and motivation
2. The difference between for-profit entrepreneurship and social
entrepreneurship
3. The characteristics of social entrepreneurship
4. Two different models how the impact of social
entrepreneurship can be measured
5. The hybrid organisations that merge the concepts of for-profit
and social entrepreneurship
What is Social Enterprise?
1. A definition
• Social entrepreneurs are
looking to drive social change Schumpeter’s
by entrepreneurial means. concept of
‘creative

(Social Entrepreneurship: The Case destruction’

creative social
for Definition (Martin & Osberg destruction
2007) =
transformational
=> Social entrepreneurship benefit to
promises a sustainable payoff society
with a larger impact other than creating
social good
exclusively on the commercial
side.
1. A definition
• Social entrepreneur shares the same set of skills and
competences with the commercial entrepreneur. With the only
difference being that the social entrepreneur creates social value
as the principal output. (The Dichotomy of Entrepreneurship Between
Business and Social (2014)
• Approximated to economic development: medical care, implementation
of sewage systems in rural areas, access to education, etc.
• Focus on human and social needs = raise awareness
• A process that distills the factors required to achieve a common social
objective
• SE is a cross-sectoral model transcending the for-profit sector and
the not-for-profit sector across the private and the public sector.
1. A definition
• Each year the Schwab Foundation awards successful social
entrepreneurs prices for achievements in the field. Their definition
is more hands-on (Schwab Foundation 2019):
• “Put simply, it’s the use of new approaches to solve old social
problems. Over the past couple of decades, a distinct, more
entrepreneurial approach to alleviating the problems associated
with poverty has emerged. That path-breaking generation of social
entrepreneurs broke free of the false dichotomy between “it’s a
business” or “it’s a charity” to experiment with business models,
innovate new distribution and replication methods, and hold
themselves accountable for results.” (Schwab Foundation 2019).
Schwab Foundation award 2024
1. A definition
• J. Gregory Dees (2001) from Duke University, introduced social
entrepreneurship as an academic field
• The lines between social and commercial entrepreneurship have
become blurred due to the operative nature of organisations.
• By merging for-profit and non-for profit organisations social
entrepreneurship can include social purpose business ventures,
such as for-profit community development banks, and hybrid
organisations mixing not-for-profit and for-profit elements.
1. A definition by J. Gregory Dees (2001)
• Social entrepreneurs play the role of change agents in the social
sector, by:
• Adopting a mission to create and sustain social value (not just private value),
• Recognizing and relentlessly pursuing new opportunities to serve that mission,
• Engaging in a process of continuous innovation, adaptation, and learning,
• Acting boldly without being limited by resources currently in hand, and
• Exhibiting heightened accountability to the constituencies served and for the
outcomes created.
Combines Say’s emphasis on discipline and accountability with the
notions of value creation, Schumpeter’s innovation and change agents,
Drucker’s pursuit of opportunity, and Stevenson’s resourcefulness
from.
Change agents in the social sector:
• Social entrepreneurs are reformers and revolutionaries with a
social mission. They
• make fundamental changes in the way things are done in the social
sector.
• have bold visions.
• attack the underlying causes of problems, rather than simply treating
symptoms.
• reduce needs rather than just meeting them.
• seek to create systemic changes and sustainable improvements.
• May act locally => potential to stimulate global improvements in their
chosen arenas, whether that is education, health care, economic
development, the environment, the arts, or any other social field.
Adopting a mission to create and sustain
social value:
• For a social entrepreneur, the social mission is fundamental.
• This is a mission of social improvement that cannot be reduced to
creating private benefits for individuals.
• Making a profit, creating wealth, or serving the desires of customers
may be part of the model, but these are means to a social end, not the
end in itself.
• Profit is not the gauge of value creation; nor is customer satisfaction;
social impact is the gauge.
• Social entrepreneurs look for a long-term social return on investment.
• Social entrepreneurs want more than a quick hit; they want to create
lasting improvements.
• They think about sustaining the impact.
Recognizing and relentlessly pursuing new
opportunities:
• They are not simply driven by the perception of a social need or by
their compassion, rather they have a vision of how to achieve
improvement and they are determined to make their vision work.
• The key element is persistence combined with a willingness to
make adjustments as one goes.
• Rather than giving up when an obstacle is encountered,
entrepreneurs ask
• How can we surmount this obstacle?
• How can we make this work?
Engaging in a process of continuous
innovation, adaptation, and learning:
• Their innovations may appear in how they structure their core
programs or in how they assemble the resources and fund their
work.
• On the funding side, social entrepreneurs look for innovative ways
to assure that their ventures will have access to resources as long
as they are creating social value.
• This willingness to innovate is part of the modus operandi of
entrepreneurs.
• It is not just a one-time burst of creativity. It is a continuous
process of exploring, learning, and improving
Acting boldly without being limited by
resources currently in hand:
• Social entrepreneurs do not let their own limited resources keep
them from pursuing their visions.
• They are skilled at doing more with less and at attracting
resources from others.
• They use scarce resources efficiently, and they leverage their
limited resources by drawing in partners and collaborating with
others.
• They explore all resource options, from pure philanthropy to the
commercial methods of the business sector.
Exhibiting a heightened sense of accountability to the
constituencies served and for the outcomes created:
• Seek a sound understanding of the constituencies they are serving.
• Make sure they have correctly assessed the needs and values of the
people they intend to serve and the communities in which they
operate.
• Understand the expectations and values of their investors, including
anyone who invests money, time, and/or expertise to help them.
• Seek to provide real social improvements to their beneficiaries and
their communities, as well as attractive (social and/or financial) return
to their investors.
• Assess their progress in terms of social, financial, and managerial
outcomes, not simply in terms of their size, outputs, or processes.
2. Characteristics (Schwab Foundation)
1) OPEN APPROACH TO 2) DRIVEN BY VALUES
CONTINUOUS LEARNING
• By applying an open approach more • A certain level of dignity, access to
effective ways to existing needs that opportunity, transparency,
are poorly addressed can be accountability, equity, and
conceived. empowerment.
• This includes testing, and refining of • Social entrepreneurs are passionate
fluid concepts and then mobilising the about solving a problem and sticking to
resources and partners required for their social mission in the process.
scaling the social business model. • “In many cases they have left
• To apply continuous testing, rigorous potentially lucrative careers to found
impact measurement and an openness their social enterprise, motivated by
to incorporate feedback is paramount a desire for a more meaningful
for success. purpose or struck by an “aha”
moment that compelled them to act.”
(Schwab Foundation)
What Makes Social Entrepreneurs Different?
• Social entrepreneurs seek to fundamentally solve the problem
that their solution is designed to address resulting in “working
themselves out of a job” in the process.
Organisational models and the fourth sector

The public sector, represented

The private sector comprises for- mainly by governmental
profit organisations such as private organisations and affiliated
businesses and soletraders. organisations such as development
agencies.

With the emergence of

The not-for-profit organisations in
social entrepreneurship
between such as charities, religious
these lines have
organisations or associations.
blurred.
Amy Blyth about Organisational models
• The main types of organisations haven’t served societies’ needs
well enough in the long term to prevent global threats such as
climate change, the consumption of natural resources, inequality,
and the economic crisis.
• Corporations are mainly pursuing “short-term goals” such as
profits and dividends at the cost of society.
• “The economic crisis we are living today has given us a glimpse
into how short-termism, corruption and greed threaten the
security of our economic systems and the viability of our civic
institutions”.
Amy Blyth about SE
• SE are new types of hybrid organisations which are meant to
better fit the short and long term needs of the economy, society,
and the environment.
• By maintaining an income generating structure, similar to purely
private-sector originating for-profit organisations, these new
organisations will have a larger positive social and environmental
impact.
New hybrid organisations
• "Non-profit social enterprise
• A non-profit organisation to drive the adoption of an innovation that addresses a market or
government failure. The entrepreneur engages a cross section of society, including private
and public organisations. There is a dependency on outside philanthropic funding, but their
longer term sustainability is often enhanced given that the partners have a vested interest in
the continuation of the venture.
• For-profit social enterprise
• A for-profit organisation created with the explicit intent to solve a social problem. While
profits are ideally generated, the main aim is not to maximize financial returns for
shareholders but to grow the social venture and reach more people in need. The
entrepreneur seeks investors who are interested in combining financial and social returns on
their investment. charitable expenditures in an optimal structure.
• Hybrid social enterprise
• A non-profit organisation that includes some degree of cost-recovery through the sale of
goods and services. Often requires setting up several legal entities to accommodate earning
income and
• Fourth sector
comprises "for-
benefit" organisations
that combine market-
based approaches of
the private sector with
the social and
environmental aims of
the public and non-
profit sectors.
Hybrid Spectrum
New organizations move beyond black and white thinking about for-profit vs nonprofit.

• The Hybrid Spectrum categories organizations how much of the value generated by an organization
is shared with society as a whole: on the far right, very little; on the far left, nearly all.
• However, each type is useful in different situations and in pursuit of varying outcomes.
• For-profit companies can generate both competitive returns for shareholders and broader
social and environmental value.
To Grow, Social Enterprises Must Play by
Business Rules
• Social enterprises can not have a big impact if they can’t get the
resources they need to grow bigger.
• In Britain, for example, fewer than 10% of the tens of thousands of
social enterprises generate more than £1 million in revenue.
• Why is that?

• (To Grow, Social Enterprises Must Play by Business Rules by Alan Hirzel)
The most vital requirements for a SE
1. A real venture capital support network
2. Real professional support
3. Top business talent that works full-time
4. Winning business models

• (To Grow, Social Enterprises Must Play by Business Rules by Alan

Hirzel)
To Grow, Social Enterprises Must Play by
Business Rules
• Many of the social enterprises are too small to support the growth they
need in order to generate the impact they want to have.
• Unlike their for-profit peers who can turn to a global and robust venture
capital community, social entrepreneurs are not able to rely on external
support as much.
• In order to fill the gap Alan Hirzel and six other partners of his firm Bain
& Company set up Social Business Trust (SBT) in the UK.
• The firm provides top-tier, in-kind expertise, and working capital to promising
social enterprises.
• Between December 2010 and January 2013, SBT invested in five social
enterprises, which collectively increased their revenues by 77% upon
investment. Approximately 100,000 people benefited directly or indirectly from
the services of these organisations.
• In addition to venture capital, social enterprises
To Grow, Social Enterprises Must Play by
Business Rules
• In addition to venture capital, social enterprises need human capital,
external suppliers, and service providers just as any other business.
• The business models need to fund growth or pay for debt and be
sustainable just like any other business.
• => Social enterprises are not different than for-profit enterprises
neither in their operational model nor in their requirements for
excellence and venture capital.
• In essence, the only difference between a for-profit venture and a
social venture is that instead of benefiting shareholders through
dividends and capital gain the profits of a social enterprise will be
reinvested to provide more sustainable benefits to society.
How to measure social impact?

For a commercial enterprise For a social venture

• Measuring the standard key • Measuring impact is the
performance indicators (KPIs) process of understanding how
such as revenues, sales, profit much social change occurred
margins, return-on-investment as a result of the organisation’s
(ROI), etc is largely a activities.
quantitative process. • More complex affair
Social Impact Measurement Framework
• The Social Impact Measurement Framework was developed by
Rachel Dodd (2017).
• It is a mix between quantitative and qualitative methods.
Social Impact Measurement Framework
• Firstly, one needs to set out the vision, mission and goals.
• Vision: is a brief statement that represents the ‘ideal world
scenario’ the organisation is looking to create. It’s the overarching
goal.
• Mission: is a brief description about the ‘how’. How exactly is the
organisation looking to achieve its vision? What are the steps
required and what are the activities and processes to be
implemented?
• Goals: milestones just like in any organisation that works along a
predefined roadmap. Measuring the performance via milestones
is relatively straightforward.
What is mission?
Mission - Why do we exist?

• What is the mission of your

company?
• How does it motivate you, your
employees and your partners?

32
Why do we need a mission?
1. Mission defines who you are.
2. Mission helps you attract comrade.
3. Mission helps you persist during dark moments.
4. Mission helps you make the right decision in dilemma.
5. Mission helps you to build a long-lasting company.
What is good Mission?
Requirement for a good Mission
• Basic Requirement: Clear and easy
to remember
• If a company has a great mission, it
shines
• Exciting, Providing inner motivation
• Altruistic
• Long-term perseverance
• Truly Believe

34
Example – Disney’s Mission statement

Mission statement should be

clear and easy to remember. It
should be concise and succinct and
inspiring to customers and
employees alike.

35
 Mission-driven
companies
• Mission-driven
companies are the only
ones who can stand the
test of time while
serving both the public
and the environment.
Key attributes that make businesses on
a mission more successful
1. Authenticity and Branding

2. Success Models

3. Our Problems Are Greater

Mission-driven entrepreneurship
• From a problem that truly matters to you.
• Around this problem, a solution gets built.
• And beyond this initial solution, a vision emerges.
• Express your true essence and have that impact the world.

Mission-driven entrepreneurship
Not just a solution, but a vision.
And a mission to get there.
Examples of Mission statement

To challenge the status To inspire and nurture the human To create happiness
quo. To think differently. spirit - one person, one cup and for people of all ages,
one neighborhood at a time everywhere.

To accelerate the To bring inspiration and To build, move, To empower every person
world’s transition to innovation to every power, and cure and every organization on
sustainable energy athlete in the world the world the planet to achieve more.

39
Purpose-Driven Company vs.
Mission-Driven Company
Both purpose and mission:
• Define why an organization exists
• Serve as an organization’s “North Star,” which helps
align teams and guide business decisions
• Help inspire employees and attract loyal
customers
Purpose-Driven Company
• Objective is to make a lasting, beneficial impact on society, often by
creating a more ethical, equitable and/or sustainable world
• Aim to deliver an impact to a community broader than just those directly
affected by their business (e.g., customers, employees, shareholders)
• Measure their success based on the impact they have on the specific social
issues they’re trying to influence
• Must take an extra step to demonstrate they are acting according to their
purpose through third-party validation
• Organize their business and operational processes around impacting the
greater good
• A purpose is both timeless and often global in scope. It rarely, if ever,
changes
Mission-Driven Company
• Objective is to deliver value back to their key stakeholders, including
customers, shareholders and employees
• Aim to make a positive impact for a narrower set of stakeholders than
purpose-driven companies. They don’t seek to benefit a broad population
beyond their stakeholders
• Measure their success through their revenue, profit, customer engagement
and customer outcome (e.g., improved quality of life for a medical device
company)
• Responsible for holding themselves accountable to their mission through
internal measurement and reporting
• A company’s mission might change over time as the market shifts or
business objectives change
How to choose purpose vs. mission
1.Who is the organization serving? Is the organization willing and able
to embed a broad-reaching, perhaps global purpose into its business,
process and culture? Or, will the organization drive a greater impact
by focusing on the stakeholders it directly impacts?
2.How committed is the organization to transparent reporting on all
business practices? (e.g., reporting related to supply chain partners,
sustainability, diversity, equity and inclusion, and corporate giving)
3.How well equipped and motivated is the organization to embed
purpose into its business, legal, financial and operating structures?
What is vision?
Vision
• Vision is the long-term goal for an
organization.
• Vision is about what the future look
like.
• How do you embody the results
you want to achieve through your
mission?
Definition
• How do you capture the essence A vision statement reveals, at the highest
of your purpose in concrete levels, what an organization hopes most to
terms? be and achieve in the long term.

44
The difference between Mission and Vision

⚫Fundamental
Mission
⚫Long term (over 10 years)

⚫Specific and time-bound

Vision ⚫Mid-long term (5-10 years)
⚫Measurable

45
Why do we need a vision?
• We are long-termists;
• Vision sets a criteria for
making strategy;
• Inspire employees;

46
What is a good vision?
A Good Vision Statement Should:
• Align with organization’s mission
• Long term goals – Describe what kind of company we are
aiming to build
• Future Outlook - Predict the future and transform your
business
• Altruistic: Highlight the benefit to others

Typical characteristics in Alibaba’s vision statement

Weekly Assignment • Have a clear timeline - in 5 to 10 years, or even longer
What is your company’s vision • Measurable - Clear numbers that measure the success
statement? • Have a customer perspective
• Have positive social impact

47
 The evolution of Alibaba’s Vision statement
– Year 2010 and 2016
Alibaba’s 10 years vision in 2010 Alibaba’s 20 years vision in 2016
To promote a New Business Paradigm We do not pursue size or power; we aspire
that embodies Openness, Transparency, to be a good company that will last for 102
Sharing and Responsibility: years.

By 2020 By 2036
• Become the first platform of choice for • We aim to serve 2 billion consumers,
sharing data • Create 100 million jobs,
• Be an enterprise that has the happiest • And help 10 million SMEs to be
people; profitable.
• Last at least 102 years
“Vision without execution is
hallucination”
— Thomas Edison.
Social Impact Measurement Framework
• The second step is defining an
organisational programme,
also called an organogram of
programmes.
• Sets the metrics later in the
process and to structure the
activities
Social Impact Measurement Framework
• The third step is defining the social impact indicators
• Is my metric mission critical?
As with any organisation there is ample of data to be collected and analysed. However, there is also a lot
not to be collected as these are not mission critical.
• Is it realistic to measure?
Some data points are difficult to collect, measure, and analyse. Make sure you have the right tools and
skills in place.
• Already being measured?
Make sure there is proper data management process in place to avoid measuring data points multiple
times over.
• Reason for measuring?
What is the proposed outcome of measuring a particular data set? What are you looking to achieve/not
achieve?
• Outcome metric?
What are your outcome metrics? When building skills, how many people are you looking to have educated
verifiably? Make sure you can verify the outcome
Outcome Harvesting methodology
• It is developed by the late Ricardo Wilson-Grau (2015) who was an
independent evaluator and organisational development consultant
supporting social change organisations.
• His methodology is widely recognised as the golden standard in impact
evaluations used by evaluators, grant makers, and/or programme
managers to formulate, verify, analyse and interpret ‘outcomes’.
• It takes an ex post approach: it collects, or “harvests” evidence of
what has changed (“outcomes”) and, then, working backwards,
determines whether and how an intervention has contributed to these
changes.
• It does NOT measure progress towards predetermined KPIs but
collects evidence of what has changed due to interventions in the past.
• It measures the causality.
When to use Outcome Harvesting
• As opposed to measuring KPIs linked to planned activities the method
is designed to measure change and how the change has been
achieved. That means the focus is on effectiveness rather than
efficiency or performance.
• The method is suitable for complex environments where causalities
between cause and effect are not fully understood. It captures more
dynamic and uncertain environments in which unintended outcomes
dominate, including negative ones => suitable to assess social
change interventions or innovation and development work.
• Outcome Harvesting is designed for on-going developmental, mid-term
formative, and endof-term summative evaluations and can be used in
conjunction with other approaches.
Who should conduct Outcome Harvesting?
• a high level of participation is required.
• The leading person “the harvester” designs and facilitates the process
and ensure data validity.
• The people or the organization benefiting from the results are the
“Harvest users”.
• They should be engaged throughout the information collection and
analysis process.
• These users must be involved in making decisions about the design
and re-design of the approach as both the process and the outcomes
unfold.
• Also, the principal uses for the harvest may shift as findings are
generated which, in turn, may require re-design decisions.
Who and where has Outcome Harvesting
been used?
• Non-governmental organisations, community-based organisations, networks,
government agencies, funding agencies, universities and research institutes in over
143 countries.
• The methodology can be used by social entrepreneurs as well as by large
development agencies to track and measure the effect and outcome of their
interventions.
• In 2013, the Evaluation Office of the United Nations Development Programme
(UNDP) selected the Outcome Harvesting methodology as one of eleven promising
innovations in monitoring and evaluation practice.
• The World Bank Institute piloted a customised version of the Outcome Harvesting
before it was listed amongst its resources for internal monitoring and evaluation
(Gold 2014)
• The US Agency for International Development (USAID) chose Outcome Harvesting
as one of five methodologies particularly suited for monitoring and evaluation in
dynamic, uncertain situations (Wilson-Grau 2013).
Muhammad Yunus
A Bangladeshi social entrepreneur, banker, economist, and civil society leader.

In the 1970s, Yunus began work on what would shortly become Grameen
Bank in Bangladesh, which provides small loans to entrepreneurs, primarily
women, who otherwise couldn’t access funds due to a lack of collateral and
other resources. This model of microfinance has since been replicated all
over the world.

For more than 40 years, Muhammad Yunus has been building a

financial system for people who lack sufficient access to the one that
already exists.

In 2006, the now 78-year old won the Nobel Peace Prize for his
work as “banker to the poor.”

https://qz.com/1430076/nobel-winner-muhammad-yunus-wants-two-financial-systems-one-for-the-rich-and-one-for-the-
poor/
“All human beings are entrepreneurs. When we were in the caves we
were all self-employed . . . finding our food, feeding ourselves. That’s
where human history began . . . . As civilization came we suppressed it.
We became labor because they stamped us, ‘You are labor.’ We forgot
that we are entrepreneurs.”
2006 Nobel Peace Prize winner Muhammad
Yunus
Grameen bank
• The bank then started providing micro-loans to over 7.5 Million people below
the poverty line.
• Eventually, this helped 68% of the borrowers lifting themselves out of poverty.
• Out of the 7.5 Million borrowers 97% are female with the repayment rates
being at 98.4%.
• Grameen bank has been profitable every year since inception except for the
years 1983, 1991, and 1992.
• Alongside the bank Yunus als founded a range of organisations as part of the
• Grameen Group including a phone company or a healthcare provider.
• With its experience spanning over 30 years, the group has pioneered the
concept of the ‘social business’ (Yunus et al 2010).
Grameen Bank’s biggest impact
• Lesson 1: Challenging conventional wisdom
• Lessons 2: Finding complementary partners
• Lesson 3: Undertaking continuous experimentation
• Lesson 4: Favoring social profit-oriented shareholders
• Lesson 5: Specifying social profit objectives clearly