February 14, 2008

What is Social Entrepreneurship?

Interest in "social" entrepreneurship has been soaring. The number of conferences and business plan competitions on social e-ship are growing rapidly, the number of courses offered on university campuses is expanding, and social e-ship is getting a lot of press. For example, the Skoll World Forum on social entrepreneurship ran out of spots after admitting 750 people several months in advance of the upcoming meeting in Oxford, England; Bill Gates gave a talk at the World Economic Forum in Davos on creative capitalism that was reported widely around the world; and companies such as B Corporation are sprouting up that encourage companies to bake a social mission right into their by-laws.

So, what differentiates a social entrepreneur from a plain old vanilla entrepreneur? I must stay that it isn't clear to me.... To loosely quote Carl Schramm, president of the Kauffman Foundation, when he spoke at Stanford last year, "all entrepreneurship is 'social' because at a minimum it generates jobs and stimulates the economy." Given that as a baseline, companies can be socially responsible in an endless number of ways. If a company has family friendly policies, it is socially responsible. If a company recycles used materials and installs solar panels on the roof, it is socially responsible. If a company makes medical products that save lives, it socially responsible. If a company makes energy efficient cars, it is socially responsible. A company certainly does not have to be a not-for-profit to be socially responsible.

I would argue that people use the word "social" entrepreneurship because they don't always know what entrepreneurship is... The way we teach it, entrepreneurship is about identifying problems and solving them by leveraging scarce resources. It means creating value, where value can be measured in a wide range of ways. It is extremely limiting is you define value only as making lots of money.

For many years, I have been an advisor to a large student group at Stanford, called BASES, that runs the campus-wide business plan competition. Several years ago they started a parallel competition for "social" business plans. The number of submissions were small and the prizes were much smaller than for the traditional business plan competition. Over the past few years, the number of submissions for the Social E-Challenge has grown until now there are as many submissions as the E-Challenge. There has always been healthy debate about whether a plan can be entered in both competitions at the same time.... My fantasy is that some day the winner of the Social E-Challenge will also be the winner of the E-Challenge. It will demonstrate that a company that is attractive using traditional metrics can also have a powerful social agenda.

This is one of the most popular video clips on the STVP Educators Corner featuring Guy Kawaski. In this clip he talks the importance of having the goal of making meaning for your company as opposed to making money. He argues that if you make meaning, you are more likely to make money; but if your major goal is to make money, then you are unlikely to make either.


NTemple said...

The difference, ultimately, is that the primary mission or objective is a social one, not a financial one. So a social entrepreneur is using their traits / skills for social benefit, rather than (or in addition to) personal profit / gain.

Obviously, all entrepreneurship and organisations have a 'social' element (at some level, every enterprise is a social enterprise), but the primary driver for most commercial businesses is financial, rather than mission.

Tina said...

Good point. But, I think that it can be both.... What would happen if you didn't have to decide between the two? If I want to work to stop world hunger, I can start a company with that social goal in mind. But, in order to survive and thrive, the company has to be profitable.

NTemple said...

You can certainly be aiming to achieve a social objective and make that financially sustainable: aka the double bottom line (or triple, if you include environmental stuff). Every organisation has to survive and be profitable (even charities: they have to make a surplus).

I guess our experience at the School for Social Entrepreneurs is that ultimately our students have to make a decision: are they trying to be sustainable in order to achieve their social objective, or are their socially-focussed activities helping them achieve profits?

You actually answer this question in your post above: you start the company to stop world hunger...and then decide how (i.e. with a sustainable business model). And, of course, there are a whole range of legal structures, business models, governance, investment and funding options to choose from.

Anonymous said...

Yes--I too agree with the above.

The WSJ article online.wsj.com/article/SB123879888700588243.html states, "The Kauffman Foundation, known to National Public Radio listeners and a few others as "the foundation for entrepreneurship," is difficult to categorize, but its president seems to like it that way."

Indeed, that is what makes Schramm a great economist and socialist--his inability to use words that mean things. He has parlayed that talent into tranferring millions of dollars from an entrepreneur's foundation into his own "too big/smart/indecipherable to fail" pocket. While Kauffman the man stood for something--for character, integrity, jobs, and wealth creation, under Carl's leadership the Kauffman Foundation has come to stand for Carl's indecipherable vanity press and legions of goupthink, Kauffman-funded bloggers--which is why it is an innovation free zone which refuses to fund entrepreneurs and innovators as the economy crashes and the government grows.

This is what Schrammenomics does to the DOW: finance.yahoo.com/q/bc?s=%5EDJI&t=5y&l=on&z=m&q=l&c=

This is what Schrammenomics does to college tutions, as Schrammenomics is the best economics that a fiat currency can buy: blog.cleveland.com/metro/2009/04/oberlin_college_breaks_50000ay.html

Scrhammenomics excels creating wealth by placing others in debt, while dumbing down and feminizing entreprneurship, rendering it as formless and indecipherable as the Orwellian Kauffman Foundation. In Orwell's 1984, the slogans were "War is Peace, Freedom is Slavery." At the Kauffman Foundation the sycophantic groupthinkers begin each day by kneeling before Carl, stating, "Entreprneurship is Larger Univeristy Administrations, Entrepreneurship is fuding mot entrepreneurs, but 6,000 papers on entreprneurship, Entrepreneurship is a Vanity Press Powered by a Foundation, Entrepreneurship is PR releases for Schrammenomics."

Small-souled Boomers such as Schramm would have done well in the Soviet Union, heading the Ministry of Entreprneurship. They killed true entrepreneuership and innnocation and recreated it in their own image. Empowered by the massive debt, a fiat currency, printing presses, wealth transfer to the rich's foundations, TARP funds, condescdening words about the "delta of black males," and Wall Street corruption, the Kauffman foundation's endowment grew in a massive, unprecedented manner. Schramm saw an opportunity in this--"What if"--he realized, "I could harness the cash and strategically parcel it out to policy wonk socialists and hand-picked groupthink bloggers while promoting a vanity press and filling Kauffman with unthinking, sycophanitic supporters? Then my general indecipherability and lack of integrity, amplified by an honorable man's estate, could garner me a Nobel Prize in Economics!"

Schramm has created an Orwellian institution in which he dictates via fiat and personally profits immensely by flying around and attempting to take credit for entrepreneurship's natural wealth creation with his intentionally opaque and indecipherable pamphlets/books, while simultaneously funding the bureaucratic forces/socialist MBAs who oppose entrepreneurship and prefer growing the state, soulless univeristy administrations, and student debt.

You can read about Schramm's loyal army of sycophanitic MBAs here: www.greenchange.org/article.php?id=3652 "The best and brightest led America off a cliff"

Under his opaque leadership where words mean whatever he wants them to mean, the Kauffman Foundation has become a formidable Orwellian beast that divides its time between writing PR releases and furthering Schramm's vanity press, while suppressing all deviations from the One True Way of Entrepreneurship--debt-glorifying, Schramm-glorifying Schrammenomics.

Schrammenomics--"Making Entrepreneurship Safe For Keynsian Socialists"

The WSJ article (puff piece) states, "On the theoretical level, Mr. Schramm, who started his own health-care company and merchant bank, believes that the foundation has a duty to foster an environment hospitable to entrepreneurship." Yes--and that would be one in which entrepreneurs are funded, not socialistic univeristy administrators. An environment where foundation CEOs boast about their nameless "phantom" companies, backed by a $2.5 billion warchest used for phantom research and PR, is just not conducive to entreprneuership. And over time, the tyranny only increases as Hayek noted, as the dictator secures their position by offing all independent thinkers and actual entrepreneurs, creatingan empire based not on freedom and welath creation, but dependence--unthinking dependence on schrammenomics. While presidents are elected, it appears that the Kauffman Foundation presidency is a permanent appointment; just as long as one makes sure to fund clones and fill the ranks with policy wonk bloggers echoing the tyrant's double-speaking, government-growing indecipherableness.

Why does the WSJ article name Kauffman's companies, but not Schramm's?

If anyone knows the names of Schramm's companies, pelase do post!

One of the games Kauffman plays is that it funds risk-free policy wonk sociliasts who condescend to entrepreneurs, translating entrepreneurship's common sense and natural integrity into economist code-speak/doublespeak, killing the exalted spirit, rendering words useless, redefining entreprnmuership in tehir own indecipherable image, and creating dumbed-down, feminized bureaucracies and red tape, and then they fly Schramm in (first class of course) to lecture to the true entrepreneurs on how they need Kauffman's help in transferring their technology. Rather than teaching innovators ownership and their natural rights, Kauffman teaches innovators that they are not good enough to own their innovations without the innovationless Kauffman MBA's/socialists's help. The innovationless Kauffman Harvard MBAs present their phantom research on what makes a good technology transfer program--risk-free, innovationless Kauffman/state bureaucrats. And they high-five and fly off to their next honorary dinner, as one gets a lot of invites to five course dog and pony shows when one sits atop a $2.5 billion endowment, flirting with university administrations all over the world, and now and then wiring them money when they agree to pen glowing PR pieces for Kauffman's "schrammenomics(TM)" brand.

The WSJ rpeorts, "Finally, the foundation goes out of its way to support minority entrepreneurship. Mr. Schramm doesn't use any social-justice lingo to explain the program, but reverts to a kind of charming nerd-speak. He says that after a lot of analysis, Kauffman has found that there is "the greatest delta among black males." " Well, why doesn't Schramm step down form his vanity press and give his job and Kauffman's funds to those more deserving?

How charming! He used the word Delta! Our Savior has arisen, and now entrepreneurship can empower the people!

Indeed, when Schramm steps down and Kauffman's capital is reallocated to support entrepreneurs, instead of doublespeaking anit-economists, 1,000 flowers will bloom.