When we talk about social entrepreneurship and explain that it isn’t about just adding the social and entrepreneurial together, that it doesn’t need to be about balancing the social and the entrepreneurial, and that a blend is strongest when there is true synergy, people will smile, nod, and then ask “which is more important, the ‘social’ or the ‘entrepreneurial’?” A question that suggests they are missing the point we are trying to make.
To be fair, it is an easy mistake to make, because in one sense simply adding the social and the entrepreneurial together can sound like a synergistic blend of the social and the entrepreneurial. What we needed was a way to convey the similarity and the key difference. Then it hit us, the perfect metaphor: When the colors blue and yellow come together. Specifically, consider two situations:
Situation One: Blue + Yellow (where the two colors are beside each other; technically combined, but not mixed);
Situation Two: Blue + Yellow = Green (where the blue and the yellow have been mixed to produce green).
Here is the fascinating thing and why talking about a synergistic blend of social entrepreneurship can be so hard/confusing: In one sense, these two color combinations are the same – they are both examples of yellow and blue. But in another sense, they are totally different – one yields a different color entirely.
Consider that in the first situation it is easy to separate the blue, but it is impossible in the second situation. In the first situation we can talk about balancing the blue or the yellow, or talk about which is more important, but we can’t do that in the second situation.
Imagine if you had never seen green before and were asked to imagine how blue and yellow would combine. It is highly unlikely you would imagine green.
This is one of the key problems facing social entrepreneurship: Because people rarely get to see a truly synergistic blend of the social and the entrepreneurial they are having a hard time imagining it. Instead, they are equating it with the more common (and easier to create) model of “the social + the entrepreneurial”. People are hearing “social entrepreneurship” and thinking “blue + yellow” rather than “green”. We’ll have turned a corner as a society when “in social entrepreneurship, which is more important, the social or the entrepreneurship?” gets the same looks of incredulity as “in green, which is more important, the yellow or the blue?”
As we dove deeper into understanding social entrepreneurship, we noticed that there are two fundamental ways the social and the entrepreneurial can blend:
- The degree to which the social model addresses the customer’s needs; and
- How the social model impacts market value.
To make sure we were on the right track, we checked and were pleased to see these two basic blends reflect the two fundamental issues all start-ups face:
- Making sure the venture solves a customer problem; and
- Figuring out how to make money from solving that problem.
It should also be pointed out that although our model may sound entrepreneur-centric because it talks about meeting customer needs and providing market value, we are finding it is the best predictor of social impact. What’s more, it’s enhancing our understanding of the many intricate ways the social can impact the entrepreneurial and the entrepreneurial can impact the social.
For example, digging even deeper we noticed the two fundamental blends of social entrepreneurship could each be divided into three sub-categories:
- A blend that is in tension: The social model adds costs that cannot be passed on to the customer.
- A blend that is in harmony: The social model adds costs that can be passed on to the customer.
- A blend that is synergistic and leads to competitive advantage in the market: The social model results in a higher quality product or service that the customer is willing, able, and indeed excited, to pay for. This advantage is beyond any customer urge to buy the product or service due to a desire to engage in social purchasing, although that motive may also be present. When a social model blends with an entrepreneurial model to create a competitive advantage, the synergy of the social and the entrepreneurial builds to the point where the effect each has upon the other is virtually instantaneous.
- The social model does not have a role in addressing the customer’s needs, but the purchase funds the social model (often there is a customer desire to ‘buy social’). Here there is a disconnect (or tension)in the social and entrepreneurial blend.
- The social model has a role in addressing the customer’s needs but that role could be replaced by a traditional business (the customer’s needs being addressed are over and above any desire to ‘buy social’). Here the social and entrepreneurial blend is in harmony.
- The social model has an irreplaceable role in addressing the customer’s needs (the customer’s needs being addressed are over and above any desire to ‘buy social’). Here the social and entrepreneurial blend has synergy.
The three types of blends of ‘tension/disconnect’, ‘harmony’ and ‘synergy leading to a competitive advantage’, follow a continuum from the ‘tension/disconnect’ extreme, where the organization has friction that leads to pressure points, to the other extreme of ‘synergy’, where momentum abounds. For example, a social enterprise with a synergistic blend leading to a competitive advantage enjoys success as the market is more likely to pull demand, rather than a never-ending uphill sales push.
Naturally, this has huge implications for our ability to predict what challenges any social entrepreneur will face and has huge ramifications when it comes to scaling social enterprises. A complete matrix of the blends is reproduced here in something we call “The Blender”:
While blending a social mission with an entrepreneurial model can be powerful, it can be surprisingly tricky. However, by mapping how your social model impacts your market value and the degree to which your social model addresses your customer’s needs (and how these two aspects interact) you have the opportunity to identify a number of possible pressure points to keep an eye on as you move forward with your social enterprise.