- Center for Entrepreneurial Studies
- Center for Global Business and the Economy
- Center for Leadership Development and Research
- Center for Social Innovation
FOR FURTHER INFORMATION: Helen K. Chang, 650-723-3358, Fax: 650-725-6750
Social Entrepreneurs Enjoy More Opportunities
November 2005
STANFORD GRADUATE SCHOOL OF BUSINESS—Socially minded entrepreneurship will not wane but rather will offer more and more opportunities for business-trained professionals well into the future. That was the forecast from leaders of organizations that support social entrepreneurs and social enterprise at the 13th annual Net Impact Conference.
Social entrepreneur veteran Laura Scher and more recent entrants Kirsten Gagnaire and Jenny Shilling Stein offered advice and fielded questions at a packed session at the Stanford Graduate School of Business on what it takes to create a successful for-profit or nonprofit social enterprise. The key components, they agreed, are a strong leader, a clear social mission, consistency, and focus.
Gagnaire, who as principal and founder of the consultancy Social Enterprise Group LLC helps social ventures enhance their efficiency and effectiveness, said socially minded entrepreneurs must go through a kind of checklist as they consider starting or improving their firms. "Clearly define your social mission," she told several hundred MBA students and young professionals in the audience Nov. 11. "Is it providing job training skills for clients, for example? If so, determine what represents success for your particular enterprise. Is it providing 50 jobs? More?"
Similarly, she said, an organization must pin down its profitability expectations. "Is your idea of financial success simply breaking even or doing more than that?" she asked. "Evaluate whether your business idea truly has the potential to meet those social and profitability goals." Finally, she said, a social venture must assess its risks. "What is the norm for risks in your field and does it align with the realistic risk level of your venture? How might failure affect stakeholders? If your clients are sustainable farmers, for example, what would happen if you could no longer pay them?"
In the nonprofit arena, Stein, executive director of the Draper Richards Foundation, an organization that provides funding and business mentoring to social entrepreneurs starting nonprofits, said, "When we look for an organization to fund, we first look at the leader. That person needs to have a plan for growth, funding sustainability, and scalability from the beginning. The quality of the leader turns out to be even more important than the organizational model itself for determining whether the nonprofit will succeed or not."
Scher, CEO of Working Assets, a firm that donates to nonprofits a percentage of profits from its long-distance, wireless, and credit card services, echoed the advice. "Get a model that doesn't need a lot of capital to prove itself," she said. Jumpstart, for example, an organization that helps improve literacy of underprivileged children, created simple literacy goals that could be measured early on, she said. "Once you prove yourself, you can get funding," Scher advised. "And there's plenty out there versus 20 years ago when I started out."
Focus and consistency also are key elements for a social enterprise, she observed. "At Working Assets, we determine how we can create the greatest value and stick with it. We don't scatter our energies trying to do everything. We also stay lean and outsource as much as possible," Scher said, noting that the company farms out functions such as customer service and the production of customers' monthly phone bills. "And we fund the same issue areas as we did 20 years ago. In doing so we've created allies and partners."
Scher also reminded the audience that starting a new enterprise, be it a for-profit or nonprofit, is not the only way to make a difference in the world. "There are lots of levels of social responsibility," she said. "At a big giant like Toyota someone came up with the idea for the hybrid. That has turned out to have an impact on a lot of people. Don't discount the opportunities there may be at big corporations."
The panel was one of more than 50 held Nov. 11-13 as part of the Net Impact conference at the Stanford Graduate School of Business. The conference was organized in conjunction with the School's Center for Social Innovation and Public Management Program. Net Impact is an organization of some 12,000 members with 100 chapters around the globe dedicated to using the power of business to improve the world.
—Marguerite Rigoglioso