I've long been an advocate of using for-profit business principles (e.g. capitalism) to promote development and world progress, specifically in technology. This belief has been formed from:

1. My personal experiences working with local entrepreneurs in emerging market countries.
2. Leading business initiatives such as Intel's "World Ahead" program that (uncomfortably at times) straddles business and philanthropic objectives.
3. Reading/following various proponents of marrying for-profit businesses and non-profit philanthropies into win-win scenarios (e.g., CK Pralahad, Muhammad Yunus).

This phenomenon has been gathering steam signaficantly over the last few years. Descriptors are abundant. From the original founders of NextBillion.net came "Eradicating Poverty through Profit" and "Development through Enterprise," the last being the site's current tagline. Social entrepreneurs and social capitalists are converging at SoCAP in mid-October 2008. Bill Gates introduced the term "creative capitalism" earlier this year at a speech in Davos and it has appeared frequently on NextBillion.net and the blogosphere.

In writings on this subject, you'll find a complex set of ideas, theories, and debates. If you follow my postings, you'll find that I'm a bit of a "simpleton." I like to simplify the complex. So what does all of this really mean to someone who wants to create a social enterprise?

Simply put, you need to develop a business mindset and run your business like a business. You need to create profits to cover your costs and reinvest in future growth and development. You don't depend on volunteers and grants/contributions. This should seem easy to do, right? Just think like a capitalist or for-profit business owner. But I don't think it's that easy because the "mindset" switch of the owners/founders of the social enterprise is usually set on "social," not "business."

If I'm starting a business to create a product and make money, I have a certain overarching mindset guiding everything that I do in developing and running the business. On the other hand, if I'm starting a business to do some type of social good in the world, my overarching mindset is about what is the best way to make the biggest impact possible toward that social goal. Here's an example of this mental limitation at work.

As an advisor/mentor to startups here in Northern California, I have had the opportunity to review many business plans. Some of these plans are for "social enterprises" (i.e. the core of their business is about doing some form of societal good. These business plans contail all the typical sections (market overview, competitive analysis, financials, etc.) and a section focusing on what impact the company's product or service will have on the intended social goal (e.g., environment, education, etc.). That last section is where I usually find the founders' "heart and soul." It is better written, more detailed, and contains conviction that the "business" part of the plan sorely lacks. My typical advice:

"Take off your social/philanthropic hat for a moment and pretend you are doing this only to make a ton of money. Pretend I'm a heartless VC or angel investor who is only in it for the money. Show me a plan that tells me how you'll bring me a huge return with a great, highly differentiated product accompanied by a kick-ass business model and management team. Then put your "social hat" back on and add in the part about how this will also make the world a better place."

I told this to one team and I never heard from them again. Not surprisingly, they did not make it to the finals of the respective business plan competition I was a mentor/judge for. I didn't penetrate their "social" mindset. I liked the social goal they were trying to achieve, but the business portion was seriously lacking.

One of my blog postings on why Negroponte's OLPC project should have been built as a "for-profit" business got re-posted on OLPC News. One of the comments was: "Do Intel executives really care about helping poor school kids?" My truthful answer is: Yes, I really cared. But running it as a successful business was my first priority and was the primary filter I put most of my decisions through.

I think the days of being called a "capitalist pig," or "sandle-wearing do-gooder" are over. The two sides are merging. But the business mindset required to develop successful strategies to grow a sustainable, scalable high-impact business is something that needs to be developed and nurtured for all of the budding creative capitalists out there.