Read My Social Earth Posts!

Much of my writing time these days is being dedicated to SocialEarth.org, where I’m a contributing writer.  It’s a fantastic site, so please check it out – http://www.socialearth.org.

My articles on SocialEarth can be found here – Mike’s Posts.  Thanks for reading!

Why the Social Entrepreneurship Club Feels Exclusive… Part 3

Ashni Mohnot wrote a fascinating and fairly provocative blog post on “Who’s in the social entrepreneurship club… and who isn’t.”

The post, which I found somewhat unsettling, garnered such attention that I felt a need to respond.  This is part 3.  Part 1 can be found here, Part 2 here.

III. The Developing World: Excluded from the Intellectual Conversation

“Are the only innovations in social entrepreneurship Anglo-Saxon?” asked Rod Schwartz, CEO of ClearlySo, sparking a lively debate on SocialEdge, the premier online hub for social entrepreneurship. Forum participants struggled with his controversial but timely question; many had just returned from the 2009 Skoll World Forum where they noticed that a majority of the speakers and panelists were Caucasian. They wondered – why weren’t more attendees from diverse racial, linguistic, and national backgrounds present?…Why are the voices of talented social entrepreneurs scattered across the globe rarely heard in the hottest online community of practitioners in the field? While over-representation of Caucasians is unsurprising in most fields, it is tragically ironic for this to be true in social entrepreneurship, especially in efforts to support international development.

What Ashni and others seem to be lamenting here is not the lack of existence (social entrepreneurs from diverse backgrounds are plentiful) but the limited visibility of non-WASP or non-“Western” social entrepreneurs.  I’ll lament with them, but only kind of.

First, it is absolutely unacceptable that ground-breaking social entrepreneurs outside the US and the UK might be left out of the conversation simply because they have not been invited or given a reasonable opportunity to participate.  I don’t know to what extent this is the case, but it’s entirely feasible and is an issue we all need to be aware of.

However, it’s also likely that many of the social enterprises that are achieving scale and notoriety are doing so because they are based in the US and the UK, where the support network for social enterprise is much larger and growing, and where there is a more ready pool of highly skilled talent ready to staff these endeavors.

That’s not to say that it is acceptable that more resources aren’t available to social entrepreneurs in less developed countries.  However, we need to remember that social entrepreneurship is about a hand up, not a hand0ut.  The ultimate solution is not coming to the rescue by providing American resources to Senegalese social entrepreneurs, for example. We need to support processes and policies in developed countries that will create friendly environments for social business and eco-systems capable of supporting local entrepreneurship.  In other words, the goal should not be a more diverse set of entrepreneurs at the Skoll World Forum in Oxford, but the rise of African, Asian, 0r Latin American-based Skoll equivalents that will host their own forums that outpace and out-impress those held by us in the US and UK.

This may mean that we wait another decade or two, but I do believe that the alternative threatens to lead us down the same ineffective path of dependence and dis-empowerment that brought us to social enterprise as a solution in the first place.

Why the Social Entrepreneurship Club Feels Exclusive… Part 2

Ashni Mohnot wrote a fascinating and fairly provocative blog post at PopTech on “Who’s in the social entrepreneurship club… and who isn’t.”

The post, which I found somewhat unsettling, garnered such attention that I felt a need to respond.  This is part 2.  Part 1 can be found here.

II. Young Graduates: Square Pegs in Round Holes

Opportunities in the field also seem to be limited to positions either requiring many years of experience or roles that are unpaid… Even tech giants like Google or major consulting firms like McKinsey offer positions of great responsibility like the Associate Product Manager or Business Analyst roles to college graduates, preferring to train employees in-house to ensure excellence. Why don’t social ventures (or even traditional nonprofits) do the same?… Given that young graduates, especially those who opted for nonprofit careers, are often armed with world-changing passion, it is unfortunate that so few avenues exist for them to channel their energy into the world of social entrepreneurship that thrives on the drive to make a difference.

The conundrum faced by younger people who are not professionally trained (not nurses, architects, engineers, etc.) is an old one and nothing unique to this space.  Speaking again from my own experience… I was trained in a liberal arts setting and, like all my liberal arts friends, left school feeling hugely capable of something, but unsure of what that something was.  In addition, as Ashni states, nearly every interesting-sounding job out there either paid nothing or required five years of experience.  So despite my academic credentials and internship and volunteer experience, finding a first job was, for me, hell.

It’s true, there are lots of large organizations like Google and McKinsey that do have more traditional entry-level career tracks that are designed to provide training and mentorship to young employees.  However, this is a luxury that fewer and fewer companies, smaller enterprises in particular, can afford.

It’s not a matter of not caring or not wanting to help younger professionals get their feet wet (though companies often do invest a considerable amount in developing new hires, only to have them leave after a couple of years).  Rather, it’s simply the case that smaller companies and start-ups don’t have the resources or infrastructure to support these kinds of jobs. Young companies need experienced, independent, “hit the ground running” types of recruits who can help get their organization off the ground.

So, again, I agree it’s unfortunate that more young people’s desires to change the world aren’t effectively channeled into interesting and well-paying jobs with up-and-coming social enterprises.  But this is not a matter of exclusion.  It’s a matter of practicality and necessity.

The fact that we must find ways to use these people’s passions and gifts, and in the process get them valuable job training, is indisputable.  We just can’t assume that social enterprises will be the avenue for achieving that.

Why the Social Entrepreneurship Club Feels Exclusive… Part 1

Ashni Mohnot wrote a fascinating and fairly provocative blog post at PopTech on “Who’s in the social entrepreneurship club… and who isn’t.”

The post, which I found somewhat unsettling, garnered such attention that I felt a need to respond.

Ashni organizes her post around three major categories. I’ll do the same here, addressing each in order, but in different posts.  Also, I’ll incorporate quotes from her post to give readers the gist of her arguments and tee up my response.  If taking words out of context plucks them of their intended meaning, I apologize. It’s certainly not the intent.  Readers are encouraged to read Ashni’s full post – again, here.

I. “MBA Preferred”

Social ventures, the funds and foundations supporting them, and other socially entrepreneurial organizations are in love with MBAs… I understand that the MBAs bring to the role the business acumen these enterprises value…Of course, traditional nonprofit workers will probably require some business training to work effectively in socially entrepreneurial organizations. However, MBAs will also likely require training on the social issues the organizations are targeting. It is probably no more arduous to give entrepreneurial nonprofit workers a crash course in business than it is to give socially-minded MBAs a crash course in sociology or anthropology. Why then is it comparatively tougher for nonprofit workers to enter this field than it is for MBAs?

Frankly, I think Ashni’s argument here misses the point.  Are MBA’s overrated?  Sometimes, yes.  Is requiring “MBA or equivalent experience” irrational or somehow discriminatory?  I don’t think so.

First of all, MBA programs more and more frequently require several years of work experience.  So “MBA preferred” is another way of asking for people who have both 1) knowledge of and experience with the internal workings and operations of for-profit organizations and 2) some advanced training in business-related theory and practices.  This is a hugely valuable skillset for a small and growing business and is not something acquired through a bit of training – it takes years.

Secondly, MBA’s will generally have a much broader base of business knowledge to work from than a typical college grad or someone with only non-profit experience. But what’s often more important than “business acumen” is the fact that they may bring a reasonable level of expertise in a niche area that a social enterprise requires.  Knowledge of finance and financial modeling is a good example.  While these are trainable skills, they are 1) seldom taught in non-profits (at least in my experience) and 2) it would be both foolish and wasteful for a growing social enterprise to hire someone without this experience in the hopes that they could just pick it up.

But what about the knowledge of the social issues?  I have two responses along those lines.  First, one of the beauties of organizations is that they allow specialization. If my work in consulting has taught me anything, it’s that only particular people in particular jobs actually require deep knowledge of the customer issues the company handles.  People can be enormously valuable to the organization for the technical and general management skills they bring (VP IT, Director Marketing, HR Generalist, Financial Analyst), even if they don’t know boo about the subject matter.

Finally, and on a personal note, as someone who has a degree in sociology, deep knowledge of particular social issues, and who has spent the last four years in business development and consulting roles in the for-profit sector, I can tell you that learning “business acumen” is nothing to take lightly.  It’s easy to dismiss this skill set, but the combination of legal, marketing, business development, strategy, people management, finance, and other specialty knowledge that is required to build business acumen makes business administration a very complex profession.  It should be taken as seriously as, say, learning nursing or mastering a fine art.

So where does that leave those without MBAs or similar experience?  What about people with non-profit backgrounds? That’s a good question.  Without a doubt, there are hugely valuable skillsets to be leveraged there, as well, but to what extent and how will depend on the social enterprise, I think.  What we do know is that a desire to make a social impact may be a coveted, transferable value, but it’s not a transferable skill.

My First Blog Post on SocialEarth.org

I’m proud to have my first blog post up on SocialEarth.org!

SocialEarth is an up-and-coming media dedicated to the promotion of social innovation and social entrepreneurship.  They are doing fantastic work, and I’m excited to be taking part.

Here’s a link to the post, “Making a Profit: A Great Problem to Have.”  Check it out and leave comments!

Wal-Mart!?? Wait, what?

That’s right.  The business profiled yesterday is Wal-Mart.  Apparently, though, this didn’t really come as a surprise to those brave enough to venture a guess.  I must be far more transparent than I had thought.

Anyhow, whilst I await my severe flagellation from the anti-Wal-Martians, here are those bullets again, with some specifics added.

• Mission to serve customers who have not traditionally been beneficiaries of the innovations and successes of the broader economic system
  • Wal-Mart’s initial mission was to serve rural communities that were in many ways excluded from the mainstream economy
• Obsession with providing the greatest value to customers at price points they can afford
  • There mission statement is, “Save money. Live better.”  Finding ways to provide quality goods at the lowest possible prices is ingrained in the culture.
• Meritocratic work environment that puts results and work ethic ahead of shining academic credentials and other factors that are more susceptible to “privilege.”  (The organization has consistently rewarded highly capable and hard-working individuals regardless of their level of formal education.  Much of the company’s leadership is made up of these individuals.)
  • Many executives and middle managers started as store or distribution center employees.
• Works feverishly, both internally and externally, with industry groups and suppliers,  to make improvements in “green-ness” of both internal operations and its supply chain
  • This has been a more recent push, in part thanks to Adam Werbach‘s efforts.
• Has achieved amazing financial returns and successfully grown and scaled without sacrificing commitment to its original mission (see first bullet); puts some of those profits back into the communities it serves through philanthropic structures
  • Wal-Mart’s financial success is self-evident.  What is less well-known is that both Wal-Mart corporate’s giving program and individual store managers are allowed discretion in putting money back into their communities.

Now, don’t get me wrong.  Wal-Mart should by no means be considered a darling of the social enterprise movement. Throughout its history it has made a number of questionable decisions, including but not limited to:

• Providing uncompetitive wages and zero health benefits to store-level employees
• Until recently, writing off green practices as unpractical and unprofitable
• Using its hegemonic position to place extreme pressure on suppliers to engage in unsustainable business practices
• Indulging Americans’ insatiable appetite for consumer goods

I’m sure the list could go on, but I’ll stop there.

The point of this exercise is not to lift up or cut down Wal-Mart.  The point is to be provocative and make a point.  Actually, a couple of points:

• Through scale, BOP businesses can achieve both social impact and financial returns.  And achieving both is ok. This was Prahalad’s initial thesis, but is something that we seem to forget.
• Classifying companies as social or not is inherently grey business, perhaps undoable, and maybe even undesirable or counter-productive.
• Any self-proclaimed social business that makes it big will, at some point, be characterized as a sellout.  Big companies, even those with the best of intentions, ultimately make some missteps.  Also, their dominant position comes to be resented and viewed negatively by certain groups.  If you’re a social entrepreneur with larger-than-life aspirations, be ready for this.

Ok, now I’m ready for my flagellation.

One Amazing Social Business You Haven’t Considered!

Thinking through what makes a business “social,” I started putting together the following “stats” for one company that you may or may not be aware of.  As I compiled the bullets below, I was blown away by the success of this company in both providing a social good and generating strong financial returns.

X Company has:

• Mission to serve customers who have not traditionally been beneficiaries of the innovations and successes of the broader economic system
• Obsession with providing the greatest value to customers at price points they can afford
• Meritocratic work environment that puts results and work ethic ahead of shining academic credentials and other factors that are more susceptible to “privilege.”  (The organization has consistently rewarded highly capable and hard-working individuals regardless of their level of formal education.  Much of the company’s leadership is made up of these individuals.)
• Works feverishly, both internally and externally, with industry groups and suppliers,  to make improvements in “green-ness” of both internal operations and its supply chain
• Has achieved amazing financial returns and successfully grown and scaled without sacrificing commitment to its original mission (see first bullet); puts some of those profits back into the communities it serves through philanthropic structures

So what is the company, you ask?

I’ll post the answer tomorrow (Friday).   In the meantime, place your bets in the comments below!

Jeff Bezos and Patient Capital

I’ve been intrigued and, I guess, pleasantly surprised to read about the Amazon acquisition of Zappos.  I’ve purchased from both companies and have been consistently happy with the experience, so kind of cool to see them come together.

Two things, though, that I’ve found particularly noteworthy:

• Simply, the way they’ve approached communicating the acquisition. Most mergers and acquisitions are communicated very formally through an intricate plan concocted by an expensive PR firm.  What comes out is too often impersonal, full of business jargon, and seemingly disingenuous.   In the case of Zappos and Amazon, I, presumably like many others, found out about the acquisition through a letter that was published on Tony Hsieh’s blog and pushed out through @zappos on Twitter.  The letter includes a YouTube video introducing Jeff Bezos, dressed in jeans and a casual button-down, talking about his values and telling stories about his early days as a bootstrapping entrepreneur.  What a breath of fresh air!
• Jeff Bezos’s support for patient capital. While he doesn’t come out in support of patient capital explicitly, Jeff is very clear that doing what is best for the customer often is not at first best for investors.  It takes time and lots of hard work for customer-obsessed innovations to pay off.  If that’s not a full-throated endorsement of social entrepreneurship and patient capital, I just don’t know what is. Listen for yourself.

Succession Planning and Achieving Scale in Social Enterprises

Rod Schwartz from ClearlySo started up a great conversation on SocialEdge about a week ago.   The conversation revolves around the double-edged phenomenon of charismatic social entrepreneurs (here for Max Weber’s definition of charismatic authority).  In addition to providing great commentary himself, Rod references a series of fantastic blog posts from Jessica Shortall on the topic of succession in social enterprises, which I found particularly compelling.

Here are some highlights:

The transition from entrepreneur to second-generation leadership is fraught with difficulty in any sector. Charismatic, passionate entrepreneurs are by their very nature difficult to replace overnight. They usually have a few things going in this respect:

• Deep knowledge of the organisation and its networks
• Loyalty from and personal ties to staff and stakeholders
• Credibility (sometimes even awe) from all those years of hard slog in the start-up phase

However, across the board, it’s often true that the entrepreneur type is not the right (wo)man for the job in the later growth and maturity phases of the venture – this is a CEO’s job, and requires a different skill set.

The first few sentences here remind me of research I did several years ago on the relationship between socio-cultural norms and economic development.  The research at the time commonly cited China as evidence that cultures emphasizing strong intra-familial ties and values (i.e., Confucianism) tend to develop more slowly in economic terms.

Part of the reason, according to this theory, is that strong intra-familial ties are associated with lower levels of trust in individuals outside one’s family.  This increases transaction costs in general business dealings and, from an entpreneurship standpoint, makes successful founders less likely to pass on their growing businesses to professional management outside the family.  The result is an inability to scale over the generations.  Companies start to get big then fizzle out as less adept family members take over the business.

In fact, there is some evidence that China has traditionally struggled with this.  I challenge you, for example, to list three major global brands that are based in China.  It’s not easy, despite the fact that China has the fastest-growing economy in the world.

They also have an expression in China that, thought it varies from region to region, goes something like this:  “Rags to rags in three generations.”  The idea, again, is that the founder builds the company from scratch and hands it over to the son, who grew up working his tail off in the family business.  The third generation, however, raised in the lap of luxury, develops an interest in more leisurely pursuits and/or lacks the skills needed to continue building the enterprise.  Without a logical successor within the family, the company dies.

It’s a fascinating concept.  And guess what… an almost identical expression has long-existed in the English language.  “Shirt sleeves to shirt sleeves” or “Clogs to clogs in three generations.”  The proverb is so ubiquitous in the West, in fact, that we can only conclude that this has been a universal problem within budding industries and societies.  Wrestling a successful enterprise from the clutches of its founder is no easy task.

So what to do about it?

Well, for one, we need to acknowledge that that entrepreneurs play a critical role and can be, under the right circumstances, good CEOs.  Marc Andreesen, former founder of Netscape, confirms this in his outline for the vision of his new VC firm:

Above all else, we are looking for the brilliant and motivated entrepreneur or entrepreneurial team with a clear vision of what they want to build and how they will create or attack a big market. We cannot substitute for entrepreneurial vision and drive, but we can help such entrepreneurs build great companies around their ideas.

We are hugely in favor of the founder who intends to be CEO. Not all founders can become great CEOs, but most of the great companies in our industry were run by a founder for a long period of time, often decades, and we believe that pattern will continue. We cannot guarantee that a founder can be a great CEO, but we can help that founder develop the skills necessary to reach his or her full CEO potential.

Ok, now what?  We need to learn from companies who have solved this problem.  The ClearlySo blog posts mentioned earlier have some ideas.  Here are a few more:

1. Institutionalize leadership development and succession planning programs early on. This can and should be driven by a Board of Directors in order to set the expectation that leadership of the organization will transition and to start to prepare individuals for those roles.
2. Give the founders something else to do. I don’t mean this disparagingly. Certainly, entrepreneurs are some times dedicated to a single idea, which makes moving on incredibly difficult.  But just as often they are motivated by a general desire to impact the world around them and explore and implement revolutionary ideas.  If board members and investors can nurture these ideas, they can better leverage a founder’s native skills and help her weather the identity crisis that will accompany handing over the reins.
3. Set a date for transition several years in advance. It sounds arbitrary but, like a couple thinking about having their first baby, we need to recognize that there will never be a perfect time.

Regardless of how you make it work, just be sure to never lose sight of how critical this issue is.  If we want social enterprises to succeed, this is yet another nut we’ll have to crack.

Kiva, Fishes, and Double Standards in Development

Many years ago, I was driving through downtown Minneapolis with several younger cousins from Dallas, Texas.  As we pulled up to a major intersection, we noticed a homeless man standing on the side of the road. He looked sad and desperate, wearing filthy clothes and holding a sign soliciting money from the passing vehicles.

As we passed the man, one of my cousins, who was perhaps six or seven years old at the time, leaned out the window and yelled, “Get a job!”

Undoubtedly, the United States is a “pick-yourself-up-by-your-bootstraps” society.  We honor back-breaking work and private enterprise.  When in trouble, we prefer to look to friends and neighbors, rather than ask the government for handouts and support.

We tend to have a love-hate relationship with this fact as a society. On the one hand, we hold dearly these values, which have been lauded by social thinkers like Max Weber and Alexis de Tocqueville as reason for America’s rich civil society and strong culture of entrepreneurship.  At the same time, our “bootstrapping” belief system and the associated American Dream often engender selfish behavior and harmful prejudices that none of us should be proud of.  We evade taxes to protect our hard-earned money.  We accept the inadequacy of our social safety net.  And, like my cousin once did, we categorically blame the poor and homeless for their plight.

The random confluence of two interesting stories got me thinking about this topic last week, and how it has shaped our attitudes toward development.

One story was the outrage over Kiva’s decision to begin offering micro-financing to entrepreneurs in the United States.  (More on that here, here, and here.)

The second was a report I caught on Minnesota Public Radio on the 27 year old Loaves and Fishes program.  The program was established as a temporary measure to feed the homeless and the poor after the Reagan administration cut back on welfare programs in the early eighties.

The Loaves and Fishes story represents how we have traditionally approached development within our own country.  Development is all about job creation and entrepreneurship.  It’s about creating policies and institutions that stimulate private investment and create sustainable private sector employment.  The role of aid and charity then (which are also largely private in the U.S.) has been to temporarily prop up those who are transitionally poor or  provide longer-term support to those perfectly incapable of supporting themselves.  It’s a “tough love” approach to development that places emphasis on individual motivation, capacity, and dignity.

The Kiva story, on the other hand, places the “tough love” approach to development that we have applied within the U.S. in stark contrast to how we’ve approached development in the rest of the world.  The American international aid establishment and American attitudes toward aid abroad have traditionally revolved around charity first, enterprise second.  I don’t know why this is.  It’s an utterly mind-boggling contradiction.  But it was readily apparent in the Kiva story, where individuals who were staunch supporters of “interest-free” loans to entrepreneurs in other countries lashed out against the idea of providing the same kind of  “charity” to poorer individuals at home.  It’s as though we believe people in the U.S. can and should be able to make it on their own, just like we did, while families abroad need our help and charity to get ahead.  It’s American Exceptionalism at it’s finest.

This double-standard has failed us for too long. Which makes it that much more exciting to see how our attitudes toward development both at home and abroad are evolving.  The role of poverty-focused non-profits in the U.S. can’t simply be to plug holes in the social safety net.  We’re learning this.  And the emphasis placed on entrepreneurship in international development efforts needs to be significantly greater.  Every day, we’re seeing more and more of this.

It’s an exciting time to be in this field.  I don’t know about you, but (in typical American fashion) I’m optimistic for the future.