Creating Social Value: The Joys and Perils of being a Social Entrepreneur

Author : Chetan Kapoor

Source : From LinkedIn Archives

Date first published : January 25th , 2015

While surfing the net, I recently came across a list of the top ten social entrepreneurship heroes in India. The list had Mahatma Gandhi as the first entry, and the others that made the grade were Dr. Verghese Kurien, Vikram Akula, Sam Pitroda, and Sunil Bharti Mittal. If this list appears somewhat eclectic, it is only because the term Social Entrepreneurship does not have a standard definition. It is usually referred to the type of entrepreneurship that is concerned with finding a solution for a social problem, and then applying the solution at scale.

Unlike conventional (or commercial) entrepreneurship, where the focus is on maximizing returns for the shareholders irrespective of whether the enterprise has a social benefit, the focus of a social entrepreneur is on maximizing returns for the society. A social enterprise can be structured as a non-profit or a for-profit, is generally philanthropic in nature, but is not dependent on charity for its sustenance. In the Indian context, perhaps the best example of a social enterprise is Amul, which was founded in 1946 as a response to the exploitation of milkmen at the hands of middlemen and large dairies. Dr. Kurien was given the task of managing the cooperative in 1950, and as a sterling social entrepreneur, was instrumental in establishing Amul as a household brand and the largest milk producer in the world.

In the past few years, as commercial start-ups have garnered increasing attention and have found an easier ecosystem to operate in, social start-ups too have seen a fair share of growth. More and more organizations which intend to ‘make the world a better place’ have sprung up, working in areas such as health, environment, energy conservation, and education. Graduates from top B-schools and IITs are being drawn towards social enterprise. Indeed, there is scarcely a joy more thrilling than finding a solution to a problem that can help thousands — or even millions — of people. However, those who choose to tread this path must ensure that they have the mental strength to go through a precarious trajectory, and a burning conviction that their solution is indeed the one that the world has been waiting for.

Just before I started off on this journey a few years back, I had the chance to listen to Mr. Victor Menezes, the former Vice Chairman of Citigroup worldwide, at a conference. He spoke of the 4 P’s of a social enterprise — the critical success factors for a social venture. These are: Passion, Purpose, People, and Processes. Mr. Menezes had an interesting analogy to explain this — if your social enterprise is a car, he said, then Passion is the fuel, Purpose is the steering, People form the driver, and Processes are the brakes. Just as a car cannot run without these four, a social enterprise needs to have the four Ps in ample measure to achieve success.

Along with these, the social entrepreneur has to keep in mind that there may not be the proverbial pot of gold at the end of the journey even if he is successful — his motivations have to clearly lie elsewhere. Making a social development program financially sustainable — let alone profitable — is one of the greatest challenges in the sector. Unfortunately, the social investment ecosystem is yet to make a serious headway in India, with only a few organizations such as Acumen India and Dasra actively supporting social enterprises.

Another critical factor that needs to be considered is the pace at which the enterprise can be scaled up. Unlike a pure commercial enterprise where scaling up can be done as soon as the proof of concept is established, in a social enterprise there is often a trade-off between quality and scale because of the high dependency on human factors. A case in point is the education sector, which has several examples of ideas that worked well at a small scale or in a controlled environment, but which fell flat as soon as they were scaled up to cover a larger beneficiary segment. The scaling up must happen only after the idea has been tried out in multiple environments, and the processes have been established and documented so that they can be easily replicated. Even with these, achieving quality with scale is perhaps the most daunting proposition for a social enterprise.

Entrepreneurship — whether business or social — is not for the faint hearted. A social entrepreneur needs to have not only a strong heart, but a kind one as well, as his ultimate aim has to be to benefit the lives of others. The journey of social enterprise may be perilous, but is also by far the most satisfying and joyful journeys one can imagine.