Social ventures and business modeling: Becoming a Robin Hood for ideas

Steal from business models, give benefits to the poor

Social entrepreneurs often find themselves walking a fine line between the “social” side and the “venture” side of their social venture. Should we (and how should we) integrate business philosophies and practices into our social venture? Would we somehow be selling our soul to the capitalist devil (or more pragmatically, risking our charitable or nonprofit status) if we become too businesslike? Where can we find a balance, or is a balance even possible?

These omnipresent questions are at the heart of a recent debate between two thought leaders in the social enterprise space: Mathhew Bishop (co-author of Philanthrocapitalism: How the rich can save the world) and Bunker Roy (Director of a social enterprise in India called Barefoot College). The debate was facilitated through the “What Matters” initiative through consulting firm McKinsey & Company.

Before I discuss the debate itself, I want to take a moment to shamelessly promote the What Matters site. The site was born out of a McKinsey research initiative (they posed “10 big questions” to thought leaders in the summer of 2009). One of the sections is dedicated to social entrepreneurs. This is a fantastic resource for the social entrepreneur, as the articles and debates provide a business and economic perspective to many of the issues social ventures face (integrating financial and social mission, how to scale, collaborating to compete, etc). There are also other sections that are germane to the social entrepreneur – climate change, health care and innovation are three examples. It’s worth a brief glance at the very least.

Now, on to the debate (check out the debate and the discussion here: “The Debate Zone: Should social entrepreneurs adopt the language and practices of business?”). Bishop and Roy stake their claim to polarized positions on the pros/cons of business modeling for social enterprise – surely on purpose to start a debate. Bishop focuses on the venture itself and emphasizes scale as essential to generating the impact social entrepreneurs are after. Roy focuses more on the nature of the social entrepreneur and feels that they should reject business modeling as there is a risk the entrepreneur may move too much on the side of profit making rather than systems changing.

Perhaps not surprisingly, my opinion falls somewhere in the middle, though perhaps somewhat more on Bishop’s side of the spectrum. Roy seems to think of a business model as necessarily forcing an entrepreneur to think about profit maximization. This is not always true. Granted, some social purpose businesses are looking to do well by doing good (which is not inherently an evil thing, but I digress). Many are looking only to break even, or at least find ways to make sure their venture is financially sustainable.

Business modeling does not mean that you automatically cede to the beck and call of the dirty capitalist. Rather it provides one additional lens for a social entrepreneur to understand his/her venture. It need not replace or quash the passion that the entrepreneur feels. If anything, the social entrepreneur may take solace in the fact that they are acting as a Robin Hood of ideas (steal the business model toolkit from the rich and give to the “poor” the benefits it generates).

Bishop’s view is a bit of a cold analysis, though I don’t think this means his points are not valid. The ability to scale is an omnipresent challenge. If there is a truly game-changing innovation in the social space, why not focus on scaling it so that others can reap the benefits?

Bishop also concedes that social change need not “become a business”. There is perhaps little risk of this happening, as the average social entrepreneur’s passion and dedication to their cause will surely preclude most from going too far down this path. However, this does not mean that the social entrepreneur shouldn’t use business concepts to her/his advantage. There are too many useful and transferable business concepts out there to pass up solely on ethical or ideological grounds.

Become a Robin Hood for ideas – take what you can from business modeling, but be true to the social mission. It need not be a polarizing issue.