Explainer: What is a social entrepreneur?

Hilde Schwab
Chairperson and Co-Founder, Schwab Foundation for Social Entrepreneurship, World Economic Forum Geneva
Katherine Milligan
Director and Head, Schwab Foundation for Social Entrepreneurship
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Agenda in Focus: Social Entrepreneurs

Social entrepreneurship is a growing global movement. More and more universities are offering courses on social entrepreneurship, with social enterprise clubs the largest student bodies on many college campuses; governments and corporations alike are setting up social innovation funds and incubators; and many young people we talk with all over the world tell us they work for a social enterprise or have become a social entrepreneur in their own right. Clearly social entrepreneurship has come into its own, recognized as a model that combines the financial disciplines of market capitalism with the passion and compassion required to create a more fair and just world.

But what is social entrepreneurship? Put simply, it’s the use of new approaches to solve old social problems. Throughout history there have been social change agents and activists who have put their societies on a better path. But 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.

Successful social entrepreneurial interventions create a distinctive break from the status quo, as Zia Khan, the Vice-President of the Rockefeller Foundation, explains:

“Social innovation is not just an invention. Social innovation has to do with how that invention, whether it’s a change in a product or a process or a new organisation, actually changes the status quo, is sustainable over time, and has a big scalable impact on a large group of people, particularly poorer, vulnerable populations. Take a new water pump, for example. There are some great new water pumps that work well in the lab. But how will you distribute them to communities that need them? How will you change people’s behaviour so that they use them? What’s the business model behind the endeavor to ensure the pumps are well maintained and the model is scalable and sustainable? That’s the difference between an invention and a social innovation.”

Whether for-profit or non-profit, whether working in education or healthcare or employment, social enterprises all share certain characteristics. The first is innovation. The innovation can take the form of new products and services, new production and distribution methods, or new organizational models. For example, First Book designed a new distribution model to serve low-income children in the US with top quality education content, while mothers2mothers in South Africa tapped into a new labor supply – HIV positive mothers, called Mentor Mothers – to reduce dramatically the mother-to-child HIV transmission rate in pregnant women.

Creating the greatest impact requires leveraging market forces and business practices wherever possible. That means generating income from the sale of your products or services, yes, but it also means driving a relentless results-based focus throughout the organization, just as any commercial enterprise would. This requires strong accountability and auditing systems, robust strategic planning processes, the discipline to measure what’s working and what’s not, and the flexibility to adjust sales channels or product lines accordingly.

This is true whether you are a $130 million B-corp like Revolution Foods in the US, which is helping to change America’s eating habits by providing affordable, nutritious school meals and disrupting the industry in the process, or whether you are Aravind Eye Care Center in India, the largest provider of vision services and the most widely celebrated social enterprise in the world.

Aravind is financially sustainable even though it charges no fees to the 55% of its patient who cannot afford to pay precisely because it is run with hard-nosed business sense. Aravind’s operational efficiencies and specialized functions enables it to reduce costs to $0.50 per consultation; move patients from check-in to post-operative care in less than two hours; and provide consistently high-quality patient outcomes at staggering volumes (15,000 outpatient visits and 1,500 surgeries per day).

In addition to continuous innovation and business practices, social entrepreneurs have two other key characteristics in common. The first is that they maintain an openness to learning.  Social entrepreneurship, after all, is a learning process by design. That process involves conceiving a more effective way to address a poorly met need; testing and refining the initial concept; mobilizing the resources and partners necessary to scale the model; and continuously improving the offering through rigorous impact measurement and an openness to incorporate feedback.

Finally, and most importantly of all, social entrepreneurs are driven by values: dignity, access to opportunity, transparency, accountability, equity, and empowerment. They are passionate about the problem they are trying to solve and keep their social mission front and centre as they scale up their impact. In many cases they have left potentially lucrative careers to found their social enterprise, motivated by a desire for a more meaningful purpose or struck by an “aha” moment that compelled them to act.

Social Entrepreneurs: Innovators for Impact

This post is part of a major series of interviews with leading social entrepreneurs associated with the Schwab Foundation. For further insights from the world of social enterprise see the following posts:

5 powerful ideas for global impact from social entrepreneurs
10 lessons from leaders — social entrepreneurs tell all
How to make everyone a microentrepreneur
Driving up school standards in Kenya with smart data
The full set of interviews

Authors: Hilde Schwab is the Co-Founder and Chairperson of the Schwab Foundation for Social Entrepreneurship in 2000. Katherine Milligan is the head of the Schwab Foundation.

The Schwab Foundation manages the largest late-stage network of social enterprises in the world: 320 for-profit and non-profit organizations with operations in 60 countries. The Schwab Foundation defines social entrepreneurship as innovative, practical, sustainable, market-based approaches that achieve transformative social and/or environmental change, with an emphasis on underserved populations. Learn more about the principles of social entrepreneurship and our selection criteria

Image:  Children work on their teacher’s table inside a classroom,  Nairobi June 25, 2013. REUTERS/Noor Khamis

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