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:
My personal experiences working with local entrepreneurs in emerging market countries.
Leading business initiatives such as Intel's "World Ahead" program that (uncomfortably at times) straddles business and philanthropic objectives.
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?
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Today's turn is for Alfonso Gamboa, an entrepreneur that is revolutionizing the practice of blue crab fishing in his native Philippines. Alfonso's leadership and efforts have earned him recognitions in venues like the World Bank Development Marketplace and the Business in Development Challenge.
Nothing better to explain Alfonso's vision than the following excerpt from a recent Wall Street Journal article. By the way, these were his opening words during the final business plan presentation at GSBI.
"Teach a man to fish," Mr. Warren says that is "not good enough." He explains, "If all you do is teach a guy to fish, you create a village of fishermen and everybody does the same thing. They all catch the same fish. They all sit on the side of the road. They all sell the same fish. The same fish rots. They go home and they never get above subsistence level."
As if channeling Adam Smith, Mr. Warren continues, "You have to develop a complex economy, where one says I'll make the hooks, I'll catch the fish, I'll can the fish, I'll skin the fish, I'll fry the fish, I'll do the fish accounting, I'll build the boats. I'll franchise the fish markets. The answer to poverty is business development, not charity. . . . Trade, not aid."
Pop!Tech (www.poptech.org), the renowned annual ideas summit and social innovation network, today unveiled the 2008 Pop!Tech Social Innovation Fellows: a corps of high-potential change agents incubating breakthrough – or “big bet” – approaches to the world’s most pressing social, economic and environmental challenges.
After a longer-than-anticipated delay, I am pleased to bring you the third installment in the series of interviews about Lapdesk, an Endeavor company based in South Africa that provides portable desks to school children who need them, all 4.2 million to be exact.
If you'll recall, I had a great conversation with Harvard Business School Professor Dan Isenberg back in February about what inspired him to write a case about Lapdesk (this is the first case that HBS MBAs encounter). After chatting Professor Isenberg, I probed Lapdesk founder Shane Immelman about the birth and evolution of the company. Now, after a number of near misses, I am happy to share the Lapdesk story from the perspective of Greg Durst, the Managing Director of Endeavor South Africa. How's that for 360 degrees of coverage? Anderson Cooper, eat your heart out.
So, let's get to it.
Tayo Akinyemi, NextBillion.net: What made you select Lapdesk as an Endeavor company and Shane Immelman as an Endeavor entrepreneur?
Greg Durst, Managing Director, Endeavor South Africa: Lapdesk has an innovative business model with powerful social applications. We particularly appreciate Shane's belief that it is critical for the business to be profitable while preserving its social mission.
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In my previous post about Anand Jaiswal’s article, Erik Simanis left a comment adding one more critique to the approach to BoP markets from a producer/consumer framework. In this critique he refers to “Beyond Basic Needs Business Strategies”, an article he recently co-authored with Stuart Hart and Duncan Duke.
The article offers a very good overview of the current approach that is being developed in their Base of the Pyramid Program and that, by extension, lays the groundwork for their BoP Protocol Initiative. It is written in a clear and concise language and I would strongly suggest anyone interested in their work to take a look at it. (And for those who want to get a better feeling of what he means, do check out Robert Katz’s interview from last April).
In his article, Simanis et al. criticize the oversimplification of the BoP term, which has ended up reducing poverty alleviation and development to the managerial terms of customer needs and product development. The talk about a “BoP market” has falsely created an image of a homogeneous market, where there is no homogeneity and where, often, there is no market either.
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The product is something people everywhere need, but is often costly or – for more than a billion people worldwide – simply unavailable. It has to be produced locally on a daily basis. And the market price, in rural India, is less than $20 per household per year. An impossible business? I say no; in fact, I'd argue that this is a classic base of the pyramid business opportunity: low-margin, high volume; leveraging advanced technology; scalable; and potentially very profitable.
I'm talking, of course, about clean water for drinking and cooking. And two of the businesses I've been mentoring at Santa Clara University's Global Social Benefit Incubator have already achieved proof of concept for this market. Environmental Planning Group Limited (EPGL) is a fully commercial entity operating in Gujarat state. The Naandi Foundation is an NGO that partners with the government but operates with business-like efficiency and is already starting to scale in several states outside its Andhra Pradesh base. Both deploy reverse osmosis water treatment plants, primarily in rural villages that do not now have access to clean water.
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One in eight people on the planet lives in an Indian village. That's 775 million people, about half of whom live on less than $1 per day.
To Drishtee and its founder, Satyan Mishra, these numbers aren't daunting; rather, they represent an incredible opportunity. Drishtee is franchisor that helps Indian entrepreneurs set up internet-enabled kiosks to provide basic services in their villages. (Full disclosure: Drishtee is an Acumen Fund investee; I work for Acumen Fund.)
Since 2000, Drishtee's network has grown to encompass nearly 1,900 villages, bringing goods and services to about 2 million customers.
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Some time ago, we at NextBillion had the pleasure of facilitating a debate about how - and how much - bottom of the pyramid strategy can improve the plight of the poor. The University of Michigan's Aneel Karnani wrote a very insightful paper critiquing various points about the BoP proposition. This paper then received a response by Michigan's C.K. Prahalad and Al Hammond (then at WRI; now at Ashoka).
As I read his paper, I found myself agreeing with many of his points, similar to when I read Karnani’s publication. This is because Jaiswal, like Karnani, doesn't refute BoP strategies as a means to approaching poverty problems, but rather contends that reality is sometimes more complex than theory, which is why I find it refreshing to read such articles.
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A recent report, "Wireless Technology for Social Change: Trends in NGO Mobile Use," by the United Nations Foundation and The Vodafone Group Foundation highlights emerging trends by NGOs in the use of mobile technology to affect social change in global public health, humanitarian assistance and environmental conservation. While this report offers some great insights on how to use technology and telecom tools to address some of the world's toughest problems, it leaves out one of the most important challenges that NGOs, and most ICT for Development projects face; how toensure sustainability.
To shed some light on this tension, I spoke with Ken Banks, the founder of FrontlineSMS (a tool for mass text messaging) about sustainability and the choices he is currently grappling with. FrontlineSMS was initially funded by Ken's hard work, and more recently by the MacArthur Foundation, to fulfill his belief that "all non-profits, whatever their size and wherever they operate, should be given the opportunity to implement the latest mobile technologies in their work." Today, FrontlineSMS is free for non-profits and is being used by over 40 NGOs in programs around the world.
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I was recently pointed to GreenMango - an interesting project and winner of the Echoing Green Fellowship. GreenMango is based out of Hyderabad and profiles small time, base-of-the-pyramid owned businesses such as plumbers, carpenters, tailors, mechanics and electricians. The data and service is also currently restricted to Hyderabad. The platform is currently in Beta version - with a simple interface to search for local businesses, using filters for business type, business name, or the area/pin codes.
Unlike Babajob, which depends on a more complicated variant of social networking, GreenMango offers a simple design and user reviews - that help one connect directly with the business. I was not able to write a review for my electrician, but I suspect that similar to popular auction sites, few people may try to game the system. While initiatives such as GreenMango as laudable in concept, even the more socially conscious friends I speak to seemed to prefer to use offline referrals to identify such help.
The question is: Is GreenMango a scalable concept? Does the initiative create value for the individuals in the businesses profiled? (To be fair, not all social initiatives are launched with the goal of achieving scale - and our interest in this analysis is only to better understand models that might scale)
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Daniel Lubetzky's "not-only-for-profit" business has created profitable joint ventures with Palestinians and Israelis. His model deserves attention.
By Stacy Perman
I recently came across an article in The Jerusalem Post about social entrepreneur Daniel Lubetzky. The Mexican-born son of a Holocaust survivor, Lubetzky founded PeaceWorks, a successful global business that promotes peace through commercial ventures among Israelis, Palestinians, Egyptians, Turks, Indonesians, and Sri Lankans. The far-flung success of PeaceWorks helped Lubetzky to found OneVoice, a global movement (with some 640,000 participants at last count) that seeks a comprehensive two-state solution between the Israelis and Palestinians via a negotiated peace process.
Social entrepreneurship (BusinessWeek, 12/14/07) has become a hot topic in recent years, attracting people filled with the loftiest of intentions who want to do good by doing good. But it's the tricky feat of running a sustainable operation that is the more elusive goal. So when I learned that Lubetzky had created a viable business model (in operation since 1994) that brings Arabs and Israelis together while plowing profits into peacemaking efforts, I rang up PeaceWorks' New York office and was invited down for a visit.
Sofia Begum never imagined that she would be running her own poultry business. In 2000, the former housewife from northern Bangladesh was struggling to make ends meet for her family. She and her husband, a fisherman, were too poor to send their children to school. Like most of the families around them, the couple relied heavily on the local wetland to provide the protein and income necessary to sustain their daily lives. But degradation to the wetland from agricultural pollution, sediment from deforestation upstream, and overfishing had taken its toll in recent years. Fish harvests had fallen dramatically and the communities reliant on the wetlands had few other economic opportunities to fall back on.
Fortunately for Sofia, a new effort was just beginning in the area that aimed to help her community develop alternative income sources while restoring the wetlands under community management. The Managing of Aquatic Ecosystems through Community Husbandry (MACH) program was funded by the US Agency for International Development (USAID) and executed by four civil society organizations with the support of the Bangladeshi government.
Communities across northern Bangladesh created two types of groups to carry out this process: Resource Management Organizations (RMOs) designed and implemented wetland management plans to aid the wetlands' recovery, while Resource User Groups (RUGs) served as training and financing mechanisms to develop alternative income sources. Specialty vegetable farms, fruit orchards, livestock-rearing operations, energy and clothing businesses, small stores are just a few of the fruits of the RUG's efforts in MACH communities.
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EARLIER this year Mario Chady faced a crucial decision. Having built up Spoleto, his chain of casual Italian restaurants, to 150 outlets in Brazil, and opened in Mexico and Spain, the time had come for Mr Chady, based in Rio de Janeiro, to choose between expanding into America or putting the idea on hold for at least 18 months. To help make up his mind, he asked for help from an organisation called Endeavor, which had chosen him as a potential “high-impact entrepreneur” in 2003.
Endeavor is a non-profit group based in New York dedicated to promoting entrepreneurship in emerging economies. It had already supplied three teams of students from the Massachusetts Institute of Technology to help Mr Chady craft a strategy for America. But as he spoke to members of the Endeavor network, ranging from leading Brazilian business tycoons to fellow up-and-coming entrepreneurs, he became convinced that it was the right strategy but the wrong time. Mr Chady decided to concentrate on expanding even faster in Brazil, and leave America for later. “The US economy is not at a very good stage, whereas Brazil is very hot now. Endeavor helped me see this,” he says.
Ideas have the power to change history. When new ideas emerge, they challenge established ways of thinking and acting, and suggest alternative approaches to resolve problems confronting the world. Yet ideas can turn out to be birds without wings. Without visionary and committed individuals who can actualise them, new ideas will hardly make any difference to the lives of people. They will remain as wishful thinking and disappear without trace.
Many social entrepreneurs across the world today have been able to make a mark not merely because of their innovative solutions to specific problems of poverty, illiteracy, health care, inequality, insecurity and environmental degradation but because they have also worked with determination towards a systematic realisation of those ideas for social transformation.
David Bornstein's How to Change the World narrates the stories of 10 such visionary entrepreneurs. It includes people such as Fabio Rosa of Brazil who spearheaded rural electrification for poor farmers; Bill Drayton of the United States who instituted the Ashoka foundation to nurture and provide financial support to budding entrepreneurial leaders; Jeroo Billimoria who founded Childline in India, a 24-hour emergency response system to help children in distress; Erzsebet Szekeres of Hungary who championed the idea of assisted living for the disabled; and Veronica Khosa of South Africa who started home-based care for human immunodeficiency virus (HIV) and acquired immune deficiency syndrome (AIDS) patients.
When discussing the social sector, Bill Drayton, founder and chief executive of Ashoka, a non-profit organisation that promotes social entrepreneurs, remembers the sector 25 years ago.
"Salaries were pathetic, smart people would avoid it, it was disorganised," he says. "That's all gone. We've been catching up and once you go from non-competitive to competitive, organisations have to join in the party or they'll be eaten alive."
As many non-profit organisations strive to make their operations more professional, a growing number of their employees are choosing to take an MBA.
"We are definitely seeing more of them in the part-time MBA programme," says Liz Livingston Howard, associate director of the Centre for Non-profit Management at the Kellogg School of Management, at Northwestern University in the US. "There's been a statistically significant increase in the past 10 years."
NextBillion.net brings together the community of business leaders, social entrepreneurs, NGOs, policy makers, and academics who want to explore the connection between development and enterprise. Read more...
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One in eight people on the planet lives in an Indian village. That's 775 million people, about half of whom live on less than $1 per day.
I was recently pointed to 
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