RDVP Class (11/1/2004)

The topic this week was Social Entrepreneurship. Readings were drawn from Bronstein's How to Change the World and Mark Twain's Adventures of Tom Sawyer (think the fence white-washing scene...)

People connected with the readings on a very personal level. Several people said "Ahh, so now I know what I am!" saying that this mindset was an integral part of who they were, how they operated, what goals they pursued. It permeated other things that they did, "leaked out" in other aspects of our lives. Some of the common themes were:

1. Leading: Setting out and encouraging others to follow along
   
2. Gathering resources: Asking people to help with specific things that they could contribute (often in-kind donations), but also broadcasting big requests with no clear idea of who will respond or how.
   
3. Unshakeable belief in the goal: A sense of drive that might be genetic, mystical, or from some past reincarnation, but simply not allowing one's self to stop or fail. [Taken to extreme, this toughness and perseverance can bleed into "stubbornness", an unwillingness to listen to reason, especially since a social entrepreneur isn't "accountable" to anyone.]
   
4. Resistance to the lure of (personal) money: Money is a way to advance the goal of the project, not an end in itself. Or, as Dipak said, "Your corner office is not in this world, but the next." On the other hand, people recognize the need to raise funds for the projects, and preferred the models where money came at least partially from the served community as a sustainable enterprise, freeing people from the need for continuous fund-raising and the unreasonable expectations of well-below-market salaries imposed by donors.
   

Stuart posed an interesting question: much of the interest in the dot com boom was generated by stock options and the promise of wealth. What's the equivalent in the social entrepreneurship space? This ended up being a rhetorical question, but it does offer an interesting notion: Most social ventures don't generate personal wealth (practically by definition). But they can generate good will, social capital, PR, etc. In many cases, the founders are only too happy to share that with others. They avoid, rather than seek, the spotlight, sometimes to the detriment of the project. Is there a way of splitting and sharing that credit? It might be like the "meeting with a real American" stories that US Presidents tell during the State of the Union address. "I was sitting down with Marge Tinelius in Akron, Ohio, and marvelling at the way she put 3 kids through school while working 5 jobs and volunteering as an ambulance driver." Could the founder of a non-profit encourage greater devotion by constantly (and explicitly) talking up members of his or her organization at every opportunity?

Stuart continued, describing entrepreneurial mindset as one of the key screening criteria for the RDVP program, quoting a previous fellow: "I'm 57 years old. This is the last thing I will do in my career. It will not fail."
Durga cited Peter Drucker's claim that there were two types of leaders: visionary leaders and "executives" that implement the ideas.
Mans talked about the challenges of intrapreneurship, where there is someone who tells you to stop or that your targets don't meet the cut-offs to be "interesting".
Jack Higgins pointed out that the entrepreneur can play an important part of the company without being the CEO, and that some of us just aren't cut out for the CEO role. The entrepreneur, according to Stuart, needs to communicate the mission so that other people understand it. Once you've pushed it far enough that they not only understand it but also accept it, you can declare victory and move on. Margarita said that the challenge in achieving operations that scale is for the entrepreneur to get other people to do the hard work.

Carlos commented that his previous assertion that Latin America was full of entrepreneurs was not really accurate. Latin America is full of resourceful people, but to truly be entrepreneurs, they would need to:

1. Get others to do what you want, convince them to support you
   
2. Empower others to do more than what they could do
   
3. Work with corporations, venture capitalists, etc
   
4. Scale their projects

Durga concurred; most people couldn't even change thier own lives, much less influence others. There was a brief discussion on whether people who ran a dry-cleaning business were "entrepreneurs". If not, what about a telecenter with a couple of terminals but no plan for growth? Carlos thought that they were successful entrepreneurs when they could grow their business, but most lack managerial or financial skills and access to capital. Dipak commented on the creation of the software export business for India, saying that it was the result of far-range thinkers, starting with an individual vision, building a shared vision that was able to sustain itself over the 5 or 10 years required to build the infrastructure.

From there, we transitioned to a discussion of why Social Entrepreneurship was necessary. Was it, Stuart wondered, the failure of the government? the market? Margarita wasn't sure whether "failure" or "limitation" was a better qualifier, but pointed out that the market doesn't have a conscience. Carlos asked "What if market incentives aren't pushing in the direction of development? If Bottom of the Pyramid (BOP) is a market, wouldn't developing it destroy that market? What producer has an incentive to destroy its market?" [SPK note: I don't think it destroys the market--the pyramid remains, it just has cut-offs at higher absolute levels, relatively, little changes....] Margarita said that if everything is reduced to dollars, the market pushes competitors in a race to the bottom (not in the sense of BoP, but more in the "negative direction"). Carlos said that markets are good for establishing equilibrium prices, not improving the well-being of people. Jose said that he sees the BoP literature as joining the market with development and that he believes development will come from the people themselves, using ICT as a way to organize. Margarita wondered whether US companies should attempt to enter BoP at all, if the lost cost advantage of cheap labor is required to meet the price points, won't China be the source of BOP goods? Greg argued that the benefit to BOP only comes when there is competition to fulfill their needs, and really only when the goods are those that increase the productivity capability, enabling them to escape poverty. Margarita plugged the Maria Flores Letelier paper. Carlos said that sometimes the big companies shut out "development" projects (or other low cost competitors) but eventually someone will compete in a way that forces everyone to adopt it.

Margarita shifted the focus to the importance of protecting human rights while alleviating poverty, wondering if newly industrializing countries can achieve that status without brutalizing their people. Durga said that Grameen was making great strides in this area; Margarita agreed focusing on the economic empowerment of women. Greg argued that a new type of market innovation was required for intangible goods. The traditional market has its familiar prototypes that can be easily explained: farmer's market, department store, stock exchange. What are the narratives you need to tell with intangible goods? Mans talked a bit about IP in developing markets saying that while piracy was beneficial in the short term, it may stunt their development long term. Greg said the analogy to the original piracy (on the high seas) was valid: originally "privateers" were hired mercenaries that could confiscate goods being shipped. Only when this practice became illegal was the "pirate" label applied. Carlos asked whether "fully licensed" photo content appropriately compensated the subject or just the photographer? Greg pushed that to the next level where each contributor to a community paper (writer, editor, photographer, commentor, etc) all have their contributions tracked and share in the revenue according to some formula.

Stuart summed up by saying that ICT can lower costs and increase access, and BoP "exploitation" markets (selling consumer goods) have been validated. But now we're seeing a productive side of this market, where people get more value for their efforts. Margarita concurred: "Faster, better, cheaper" isn't enough to start a new company any more. You need to be at the nexxus of technology and sociology.