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
Instructors:
Norm Tasevski (norm@socialentrepreneurship.ca)
Karim Harji (karim@socialentrepreneurship.ca)
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© 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 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!

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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 Innovation Resourcefulness Risk Taking

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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
“Social entrepreneurs are not content just to give a fish or
Focus on “systems how to teach fish. They will not rest until they have
thinking” and revolutionized the fishing industry”
“systems change”: Bill Drayton

“(Social entrepreneurs) work in areas where there is partial or
total market failure…what distinguishes them is that they are
Seek “profit” in prepared to strike a very different balance when it comes to
traditionally
unprofitable pursuits:
creating value for those who would not normally
be able to afford it”
John Elkington

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?”
Possess a strong
“ethical impetus”: Fabio Rosa: “I am trying to build a little part of the world in which I would like to
make people
live. A project only makes sense to me when it proves useful to
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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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)

• 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
Absolutely
A transaction

A product/service
This one’s
complicated
Yeah, but…
A goal A legal form

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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 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

Customers

Customers

“Clients”
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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
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
Nonprofit Structure

For-profit Structure
Emphasi Nonprofit Business Emphasi
s on Conventi with Social with Conventi s on
Social onal some Enterpris social onal Financial
Return Nonprofit earned e responsi Business Return
income bility
Philanthropic Capital

Commercial Capital

Source: Stanford Social Innovation Review, Spring 2008; Jed Emerson cited as contributor 44


A test…
I am:
• A retailer Facts:
• Sells goods at rates affordable by low- • $115M raised for charity since 1995
income individuals ($18M in 2009)
• Employs individuals with barriers to
employment • Over 1,000 environmentally-
• Goals: approved products on sale
– 92% of imported goods from green • 1700 new jobs created in Canada in
factories 2009
– 95% of waste redirected from landfill
– Desire to be supplied 100% by
renewable energy by 2015

Social Enterprise or Not?

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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
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

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What does this mean?

Social CSR
Enterprise

Social Complexity
Enterprise

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What SE is and is Not

Social Enterprise Is Not… Social Enterprise Is…

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

• Solely focused on either “customers” • Focused on both “customers” and
or “clients” “clients”

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

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

• 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)

• “… 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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