Monday, November 1, 2010

Social Entrepreneurship

Text and the power point presentation of the lecture delivered by me at Young Indian Entrepreneurs on 31st October at Hyderabad India on the topic.

"Social Entrepreneurship: A Change in perspective, from “Not for Profit” activity to a "transaction" towards Social Assets Accumulation"

“I am extremely happy to note that so many young entrepreneurs have taken time today to attend my lecture on Social Entrepreneurship. I hope this will probably help in removing misgivings in the minds of the youngsters about Social Entrepreneurship.

Social Entrepreneurship is an entrepreneurial effort like any other business. Only difference is, it is wholly or partially cause driven and more often than not, it complements in terms of increased brand equity to the brand that supports it.

The debate about the capitalism and “All Truism” is eternal and will continue till eternity. We arenow looking at a model that is a combination of the two. “All truisms” is a noble concept, but it is too noble a concept to sustain. What is an ideal combination depends on geographic, demographic and other factors. However there has to be a flexibility and scalability in action & approach as per the need and situation.

Social commitment and Business ethics can co-exist as has been shown by many social entrepreneurs. Prof. Mohd. Yunus’s Grameen Foundation has been doing it since 1980s in Bangladesh, where 95% of Bank’s Capital is owned by poor farmers and 97% of the borrowers are women. The people who were borrowers at one time have settled down in their business have now become investors in the same bank. “A unique case of beneficiary becoming a benefactor”

Social business as Prof. Yunus would like to call it, does not entail working without profits. The organizations do make profit, but the investors only get back their investment when the organization becomes self-sustaining. They do not take back any profit.

Any normal entrepreneur can invest an amount that is easily dispensable for him in to the social business and continue with the rest in his normal business. Prof Yunus also does not advocate social business at the cost of self-survival.

The marriage of capitalism and altruism is never very comfortable. One is about making money. The other, though often indirectly, is about giving money.

In India, which still has a socialist ethos, there is distaste for extreme monetary objective behind social lending, and what some might even perceive as greed.

The Difficulty of Being Good

Globally, the social development model accounts for about 90% of microfinance organizations, but 10% of profit-oriented providers are very large and account for over half of the industry assets.

The nonprofits lend more to the bottom of the pyramid while the for-profits tend to focus on a slightly higher tier. Also nonprofits are more likely to go for group-lending while for-profits go largely for individual-lending.

India is a land of unlimited human capital; can human capital be leveraged to build social capital?
550 million youth and still counting…. These need to be transformed into Young Indian Entrepreneurs, and their dreams need to be converted over a period of time into solid, tangible, successful business propositions.
China is the fastest growing economy in the world. It has now replaced Japan as the second largest economic power. All this because they have adopted the social model and excellently leveraged their human capital assets.

Dr. Kalam feels that there is much more to business than investment and capital. It is the commitment to take India forward to leadership position in the comity of nation. For this he feels that the youth need to be ignited to work for self-development. When an individual develops, nation automatically develops. It has been has been proved true in India‘s case.

India today is the second fastest growing economy in the world. Now this represents   phenomenal growth. This growth is contributed to by small entrepreneurs located in more than 600,000 villages in India which delves its rural economy. More than 65% of the population is dependent on rural agriculture or agriculture related business.

This is the strength of the rural work that has to be leveraged. Varghese Kurian in 1946 started the movement by mobilizing the farmers in Khaira district. He formed a confederation of small farmer cooperatives into a farmer’s movement. The movement slowly spread across to all the districts of the state and transformed itself into a revolution “The White Revolution” and created a brand “Amul”, and when Amul calls itself “Taste of India”. It is not only justified, it also reflects people extreme association with the brand that has madeIndian farmers famous throughout the world.

Social Entrepreneurship should not be considered to be a giveaway. It is a value enhancer in more ways than one to an enterprise.

Let us briefly examine how it helps in various domains.

Business and academia

There are many instances where associations were formed between the two benefiting both immensely thus promoting the cause of education.Some of them being

Google and Stanford


Progressive software and Cambridge University

NGOs and Entrepreneurs

Change in perspective from adversaries to partners. There was a time when the businesses used to avoid the NGOs and were very protective in revealing information  to them. Now the times have changed international organizations like Oxfam and Greenpeace, have forged associations with the corporates and are complementing each other’s efforts in serving the social cause.

Each day represents a success conquering a new horizon in the entrepreneurs commitment towards the social cause. This is a new augury for the future of social entrepreneurship. 

Let us hope and pray for the development of this domain, because in it lies the upliftment and development of millions of young, energetic, and ignited youth the world over.

Thanks for your patience in listening to me.

Best wishes to Young Indian Entrepreneurs.

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