Social Entrepreneurship

Social entrepreneurship uses business models – selling products or services – to solve social problems.

Defining Social Entrepreneurship & Embracing Your Why

The Trico Foundation defines social entrepreneurship as follows:

“Social Entrepreneurship uses business models – selling products or services – to solve social problems.”

This echoes most Canadian definitions of the term, including this iconic one used by the Canadian Task Force on Social Finance:

“Social enterprise is defined as any organization or business that uses market-oriented production and sale of goods and/or services to pursue a public benefit mission.”[1]

The Trico Foundation has tried to take a wide-tent approach to defining social entrepreneurship. After all, when it comes to people dedicated to solving social problems, the more the merrier. However, something was troubling us. The power of the concept was getting lost in a sea of models, many struggling to survive and many seeming to be driven by a grant-based focus.

Then it hit us. We had neglected our ‘why’ – the crucial concept so brilliantly explained in Simon Sidek’s Start with Why.

 

If you are confused, thinking “But there is a ‘why’ in your definition, the ‘why’ is solving social problems!”, we fell into the same trap for a number of years. The following hypothetical shows how we got out of it:

• Assume you drive a car to work.

• If you were asked “Why did you drive to work?” you may reply with “To get to work”, (perhaps fighting off the urge to add “obviously” at the end).

• But imagine if you had replied, “It is the best way for me to get to work.” Note how this seems to tap into a deeper truth. There are many ways to get to work, so getting to work by itself cannot be the whole story of why you drive to work. This more nuanced response also invites a line of thought the other didn’t – namely, how is it the best? This, in turn, calls into question a wide array of important considerations: Presumably you prefer driving because it is faster for you, you enjoy it more, you can afford it, etc.

 

Let’s apply a similar process to social entrepreneurship:

  • Why engage in social entrepreneurship?
  • Initial Answer: To solve social problems.
  • This can’t be the whole truth for there are many ways to solve social problems – through donations/philanthropy, government intervention, etc.
  • Deeper Answer: It is the best way for me to solve social problems.

We now have our true ‘why’: you engage in social entrepreneurship when it is the best way for you to solve the social problems you have targeted.

The pull of markets: “I must buy!”

We felt this was great progress in grappling with our dilemma, but it begged a follow-up question:  When is social entrepreneurship the best way to solve a social problem?

 

Among all the efforts seeking to address social issues, what makes social entrepreneurship unique is its use of business models/markets. Thus, the answer was clear: Social entrepreneurship is the best way to solve a social problem when it can make the most of business models/markets to solve that problem.

When are business models most effective? When they can tap into what is known as the ‘pull’, versus the ‘push’, of markets. The difference between the ‘push’ versus the ‘pull’ of markets is the difference between a venture saying “please buy!” versus a customer saying “I must buy!” Of course, “please buy” is a question of degree, but the more desperate it becomes, the more trouble your venture is facing. On the other hand, the market pull of “I must buy” opens up the promise of sustainability, of profitability and all the options that brings, and scale.

Embracing social entrepreneurship without the pull of markets makes as much sense as using a car to get to work when you don’t have fuel.

This begs a further follow-up question: How does social entrepreneurship tap into the pull of markets?

Note how you have moved from seeking to understand what social enterprise is, on to why you wish to pursue it, to now asking how best to pursue it.  That “how” will depend on how you combine the social and the entrepreneurial. The next step in your journey takes a deeper look at those combinations, something we call The Blender.  To learn more about the Blender click here.

[1] “Mobilizing Private Capital for Public Good”, Canadian Task Force on Social Finance, December 2010, at p. 4 http://www.marsdd.com/wp-content/uploads/2011/02/MaRSReport-socialfinance-taskforce.pdf