5 Social Entrepreneurship Essentials

The following excerpt is from Jason Haber's new book The Business of Good. Buy it now from Amazon | Barnes & Noble | iTunes | IndieBound

In The Business of Good, serial and social entrepreneur Jason Haber intertwines case studies and anecdotes that show how social entrepreneurship is creating jobs, growing the economy, and ultimately changing the world. In this edited excerpt, Haber offers his insight into what exactly social entrepreneurship is and why it’s catching on in larger numbers year after year.

What precisely is social entrepreneurship? Ask three people to define it, and you’ll get three different answers.

This isn’t to suggest the movement is shrouded in mystery. There are accepted understandings of it. Social entrepreneurs are agents of change. Their reason for existing is to tackle problems confronting society.

Writing in the Stanford Social Innovation Review a decade ago, New York University professor Paul C. Light gave a definition that I feel perfectly describes the term. “A social entrepreneur,” he wrote, “is an individual, group, network, organization, or alliance of organizations that seeks sustainable, large-scale change through pattern-breaking ideas in what or how governments, nonprofits, and businesses do to address significant social problems.”

I like to define social entrepreneurship broadly as the mechanism by which private sector actors solve public and private sector problems that are currently not being addressed.

Traditional entrepreneurs look for opportunities in new markets. So do social entrepreneurs. Traditional entrepreneurs need to return capital to investors. So do social entrepreneurs (albeit in differing structures that we’ll examine later in this book). Traditional entrepreneurs require scale. So do social entrepreneurs.

But there are differences between them as well. The key distinguisher is: why. An entrepreneur is in business to deliver a bottom-line profit for serving a market in a better or more efficient manner. Social entrepreneurs have a triple bottom line to consider: people, planet, and profit. They’re not looking to solve an immediate problem. Instead they’re looking for scalable wholesale change to the underlying condition that led to the problem. As Bill Drayton of social entrepreneur network Ashoka put it: “Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.”

Within the social entrepreneurial community sits a schism that makes its definition illusive. On the one hand, the school of thought championed by 2006 Nobel Peace Prize winner Muhammad Yunus. He sees social business as a virtuous cycle where profits are reinvested back into helping lift more people out of poverty. On the other hand are social entrepreneurs who believe profit-driven businesses with self-sustaining models will deliver more benefits, more efficiently, and to a greater number of people. To this day, the for-profit versus non-profit debate remains heated. But there is an answer: They are both right. Yet they are both wrong.

We need to encourage more people to enter social enterprise and to be embraced by the community of change. But as several people said to me: Not every problem is a market. It would be overly simplistic to believe that the slate of global problems could be eradicated solely by market forces. For this reason, the market also includes nonprofits that fill a tremendously important space.

Despite the degree of difficulty in social entrepreneurship’s practice and definition, more and more are flocking to the movement every day. What’s new is the velocity in the movement and the attention it now receives. The volume of and the speed at which new ventures are being launched under the social entrepreneurial banner is staggering.

For today’s social entrepreneurs, the status quo has little meaning or significance to them. They’re driven by a unique alchemy. A zeal to repair the world, coupled with a frustration with the way things are, created a group of people who have just HAD IT:

They’ve HAD IT with problems that have gone unsolved.

They’ve HAD IT with models that have haven’t yielded enough results.

They’ve HAD IT with naysayers who see no alternative to the world as it is.

Channeling their passion to make a difference, social entrepreneurs apply a HAD IT attitude: Hope, Audacity, Disappointment, Ingenuity and Tenacity. They’ve HAD IT and because they have, they’re poised to make a difference.

1. Hope

Social entrepreneurs are arguably one of the most hopeful groups of people you’ll ever encounter. Problem solving is hard. Harder still is to solve the underlying issues that lead to those problems in the first place. Their ultimate goal is to put themselves out of business by creating a world without poverty, with equal access to health care and education, gender and racial parity, and a protected, natural environment.

2. Audacity

“We got this,” superstar Millennial Maggie Doyne told me. Doyne wasn’t just referring to her incredible charity based in Nepal. She was referring to the global problems facing us today -- all of them. This same level of audacity runs through the veins of all social entrepreneurs. They dispel the notion that some problems are intractable. It takes a certain level of audaciousness to believe you can have scalable impact on not just thousands but potentially millions of people. Several social entrepreneurs I met told me their goal was to touch more than 100 million lives.

3. Disappointment

Pick your poison: the environment, poverty, human trafficking, public health, education, water, food. The list goes on. Social entrepreneurs have inherited a world not of their creation and not of their design. Venture capitalist John Doerr began his remarkable TED Talk on clean energy with a story about his teenage daughter. She was disappointed in those in her father’s generation. She believed they caused global warming and thus they needed to fix it. An emotional Doerr pleaded with the audience to tackle climate change so he could “look forward to the conversation” he would have with his daughter in 20 years.

There’s a level of sadness social entrepreneurs experience. They can’t believe these problems have gone on without an effective solution. Like any athlete knows, disappointment can hold you back or it can motivate you to work harder. The key for social entrepreneurs is to channel that disappointment to fuel positive social change.

4. Ingenuity

The approach of the social entrepreneur is new. It requires challenging the status quo. Instead of looking to the poor as a group to be pitied, social entrepreneurs view them as a market where goods and services can benefit both parties. Any successful product made by a social entrepreneur is either disruptive, innovative, or, perhaps, both. When selling a product in the developing world, it’s very possible that no competition exists.

In the developed world where consumers tend to have choices, social entrepreneurs need to disrupt existing models. From healthy food choices to better educational and vocational opportunities, social entrepreneurs take ingenuity to a whole new level.

5. Tenacity

Social entrepreneurs tackle problems that have a high degree of difficulty. To mount a proper charge against large obstacles it takes a certain attitude and mindset. It takes tenacity to the tenth degree.

“This is hard work,” said D.Light co-founder Sam Goldman. “If you’re going to leverage your time, your relationships, your sweat, your money, into solving a problem, why not try to solve problems that if you are successful in, you move history in the right direction?”

NYU professor Paul Light once said: “I also find that social entrepreneurs are driven by a persistent, almost unshakable optimism. They persevere in large part because they truly believe that they will succeed in spite of messages to the contrary.”