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Monday, 19 January 2009 09:18

David Bornstein Details the Power of Social Entrepreneurship -- A Path To Changing the World (Part Two)

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Social entrepreneurs ... create all sorts of structures – nonprofit, for-profit, social enterprises, which combine aspects of business and aspects of social organizations, and even innovative agencies or programs within government.

-- David Bornstein, Author, How To Change the World, Social Entrepreneurs and the Power of New Ideas

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Part One of this interview was posted January 13, 2009. 

BuzzFlash is a huge admirer of David Bornstein's How To Change The World:  Social Entrepreneurs and the Power of New Ideas (updated in a paperback edition released in August 2007), and we're not alone.  We've recently seen two syllabi of college courses on social entrepreneurship, and both listed Bornstein's book as required reading.  When the publisher, Oxford University Press, refers to the book as the bible on social entrepreneurship, they are not exaggerating.

Bornstein's in-depth profiles of nine social entrepreneurs (ten if you count Florence Nightingale) are inspiring and captivating.  Bornstein gives insights into each innovator's early influences and the successes and setbacks of their various projects.  Mini-sketches of other social innovators abound in the book, giving readers a really good sense of the range of personalities and initiatives in this burgeoning field of social entrepreneurship.  In addition, Bornstein distills the qualities of social entrepreneurs and their enterprises so that readers come away with a conceptual framework of social innovators and their work.

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BuzzFlash:  With all your stories, you do a wonderful job of making each individual so real by telling the ups and downs of each of the nine people that you focus on in depth.  So our BuzzFlash readers are definitely going to need to read the book if they haven’t already.  You mentioned Ashoka earlier, and it figures prominently in the book and the profile of Bill Drayton, its founder.  What role has Ashoka played in your understanding and exploration of social entrepreneurship?  

David Bornstein:  Well, I think Ashoka has played the pioneering role in social entrepreneurship in terms of explaining why we need to understand this sort of mechanism of social change, and what is necessary in order to support people who actually want to do this as a career. 

The first thing they did is ask: How does social change really happen?  There are all sorts of theories out there.  You can read the sociology textbooks and they talk about ideas sort of as if those are things that walk on the earth all by themselves and just kind of spread of their own volition.  And you really don’t have a very clear explanation of how an idea that’s controversial, that doesn’t have political support, that people don’t really understand or know how to implement -- how that goes from a concept to becoming a new social norm.    

You can look at the process, and there are many examples around the world, whether it’s microcredit from a bank or, in the case of Rosa [Fabio Rosa discussed in Part 1 of this interview last week], how an idea of a new way to deliver electricity becomes a national pattern.  And you see that the process is very similar.  Almost always, there’s an entrepreneurial base that’s part of that process – a very concentrated source of energy and determination and willingness to do whatever it takes to make sure that that idea lives.  It takes a person that is wedded to the idea like the idea is their child, and you know how much someone will fight for their child.  Well, they will fight that hard for that idea to make sure that it lives.  And at a certain point later on, that idea can live on its own and other people can carry it forward.  But almost always there’s this very early crucial role that the social entrepreneur plays.  You can see it with companies, too.  If you look at Steve Jobs, with how worried people are right now with his health at Apple Computer because he is so clearly identified with all of the innovation in that company.   

Ashoka played the role of identifying, defining the field of social entrepreneurship and developing its very early language, and recognizing the needs of the social entrepreneurs around the world way ahead – probably twenty years ahead of when most other organizations began to see what was going on and what was happening.  

Bill Drayton was quite visionary.  He saw the future about 25 years before it was clear that this was really happening.  Now it’s pretty obvious. 

You can look to programs or organizations around the world that are pioneering new models for solving social problems and the way governments are now thinking about addressing social needs, and the new emerging roles of business vis-à-vis social challenges.  It’s so obvious that the role of the social entrepreneurship field is clearly at the convergence of the way the world is heading.  But it wasn’t that clear about 25 years ago – certainly not clear to most people.  

BuzzFlash:  You write about the fact that most theories about social change emphasize that ideas are what motivate people to change, rather than people being the forces of change.  You did a wonderful job of showcasing people who are the impetus of change.  

One last question:  You cite funding as one of the biggest challenges to sustaining social innovation over the long term.  And I wonder if you have a take on the current potential of funding social entrepreneurs, given our very dismal economy? 

David Bornstein: The short-term issue is that social entrepreneurship now is very dependent on philanthropy.  The social businesses are also very dependent on the business market. Philanthropy has contracted because a lot of the foundations that give away portions of their endowment have endowments that have contracted and so on.  In the short term, the funding is definitely tighter.  You see social organizations that are in the unhappy position of having to lay off people now.   

If you look beyond the recession right now and beyond the economic cycles and you think about the patterns we’re seeing in society that give you a sense of where we could be heading five or ten years from now, what you see is a real creativity in business to try to figure out how to structure businesses -- create businesses, and even, in fact, create new laws that allow businesses to exist that currently are not possible.  It’s very difficult to have a business that’s fully a social business today because shareholders can always sue the company and say: Hey, you’re not maximizing my shareholder wealth.  You’re doing philanthropic things and very nice things, but that’s not what the law says you’re supposed to be doing.   

There’s going to be new legislation, new kinds of charters -- people call them B corporations instead of C corporations -- where companies will exist where the primary mission of the company -- not a secondary mission, but the primary mission is basically to provide a good or a service at a reasonable and affordable price to people who currently don’t have that good or service but need it.    

So let’s take an example.  What’s a classic good that would be really helpful to low-income people?  Let’s look at Bangladesh now.  The Grameen Bank, the most pioneering organization in microcredit, has signed a deal with Danone Foods [known as Dannon in the U.S.], which is a large French multinational food company.  And Grameen basically said: We have all these people in Bangladesh who have terrible health problems because they lack simple micronutrients.  And very often, if you don’t have basic nutrients like iodine or zinc, you suffer health consequences. Nutritional problems can lead to goiter or   mental deficits.  People could become anemic if they don’t have enough iron and there are many other massive global health problems.   

People in Bangladesh love yogurt and Grameen said, why don’t we create a new kind of yogurt that is full of micronutrients.  And why don’t we set it up so it sells for one taca or two tacas -- a very modest price that people in the local villages can actually afford.  And let’s set this up as a business and see if we can do it and still make a little bit of money, or at least break even. 

But the business will be recovering its costs.  It won’t have to take grants.  It won’t need to take government handouts.  It will be a business.  And the people who will work for this business will work for it because they’re still making a good living.  They’re working for a good company that pays their salaries, but at the same time, they’re able every day to know that the company they work for is alleviating all these health problems in Bangladesh and helping them deal with the nutritional problems globally in some sense by showing the way.    

People said at first:  Why would a company want to do this thing?  And the companies are in it for only making money, right?  That’s actually not the case.  I mean, Danone Foods wants to understand the Bangladesh market.  There are a lot of people at Danone who, given a choice, would switch to that division.  It’s great experience.  They want to do something that’s meaningful.  Lots of people do things because it’s meaningful, not for money.  And those things have just taken off.  

That’s one example of the kinds of things you’re going to see. Hundreds and thousands of businesses will emerge over the next ten years that are basically social enterprises.  You’ll see health delivery systems, water delivery systems, Stanley Kaplan courses for low-income kids instead of the rich kids, whatever.  People will set them up.  And they will not be profit-maximizing companies.  They’ll probably make some profit, but the goal won’t be to maximize profit.  The goal is to maximize social well-being for a group of people. 

And the people who work for the companies will know that that’s the goal. They’ll be very happy doing it, just as doctors are very happy when they cure people, or the way nurses are happy when they take good care of people.  So if you think of social change from a funding perspective, you now have a different model for solving problems which requires a lot less capital, and, in fact, can recycle capital much more effectively.  One of the benefits of the social enterprises is that they’re forced to listen to low-income people much more respectfully than charities have to and governments have to.  Because even if you’re paying one taca for the yogurt, if the yogurt doesn’t taste good to you, you won’t buy it again.  

BuzzFlash:  And that’s your customer.  You have to listen to your customer.  

David Bornstein:  Right.  And with social enterprises … at first, a lot of people said, oh, no, this is capitalism.  This is the free market taking over the other thing [philanthropy].  Can’t we at least save some things that are pure mission?  What we’ve actually seen is that when a social enterprise is running well, it gives people at the end of the chain a lot more power to voice themselves.  

By the way, you can muck up social enterprises, too.  You can make them just as corrupt as anything else.  They’re not a panacea.  But when they work, they tend to be very respectful.  They tend to be very responsive because there are built-in mechanisms whereby people are engaging in a transaction that is voluntary, rather than a transaction that is coercive.  That’s the fundamental difference.  It gives people at the end of the chain a lot more power to voice themselves.  That’s what we’re seeing.  It actually frees up a lot of choice. 

It means people at the far end of things say:  You’ve been giving us vanilla yogurt; we’d like it in strawberry.  Suddenly the company has to respond to the market. 

And wealthy people always think that low-income people have no preferences.  They’ll just take anything.  They’re so poor they’ll just take anything.  Well, that’s not true.  I’m on the board of a company that sells reading glasses at very low prices to poor people in India, a social enterprise.  And one of the things that we learned very early was that if you have the cheapest, cheapest reading glasses, and you sell them in a village in India, and people literally can’t see, they still won’t buy the cheapest pair because nobody wants to have that pair.  They want to have the slightly less cheap pair.  So if there’s one that sells for 100 rupees and it’s all black, and there’s one that sells for 110 rupees with a gilt edge, they’ll buy one with the slight gold edge, because people care about fashion at every level of the economic spectrum except perhaps for the very poorest people in the world.  So there are these surprising things that you find in social enterprise.   

The last thing in terms of the funding is that it’s clear that social entrepreneurship is becoming more massive.  As that happens, there’s going to be two changes that are going to occur.  One of them is government.  Governments are going to realize that in order to implement policy, they have to work in much richer partnerships with the social entrepreneurs.  And that is not just signing a contract and hiring the low-cost bidder for some set of services, but actually developing policy in partnership and allocating public funds that social entrepreneurs have the right to use in order to grow their organizations.  So it’s much more like the relationship of banks with entrepreneurs rather than governments telling people what to do with this money that they’ve gotten allocated for them.  So that’s going to change the way public money is deployed.  And I think more will be deployed more successfully.   

I also think individual giving is going to change.  Rather than give money to people who they happen to know and like, people will have more information and more awareness that will allow them to be more discerning about which organizations are really solving problems well and which ones might have a beautiful brochure but are not really spending the money very well.  That also is going to free up low-impact dollars that are being in some ways squandered now, and will cause them to be reallocated to social entrepreneurs who are getting more bang for the buck.  

So the long-term trends I think are positive.  There’s more information, more awareness.  There’s certainly a lot more people who are going into this, and they’re talented people who are choosing it as a career, whether they be entrepreneurs themselves or want to work with social entrepreneurs.  And I think all of those things, if you add them up, are very promising.  It’s very, very hopeful.  But in the short term, the recession is putting a damper on a lot of people’s plans. 

Part One of this interview was posted here January 13, 2009.

BuzzFlash interview conducted by Terry Soto.

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How to Change the World: Social Entrepreneurs and the Power of New Ideas, Updated Edition (Paperback) By David Bornstein, available from the BuzzFlash Progressive Marketplace.

David Bornstein Bio 


Read 2815 times Last modified on Thursday, 19 February 2009 23:00