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The Power of Unreasonable People; How Social Entrepreneurs Create Markets That Change the World

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A book review by our MD Ron Cacioppe

“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

– George Bernard Shaw

Even the world‘s most optimistic leaders can become daunted when they look at today‘s massive global challenges, including poverty, environmental pollution, terrorism and climate change. Many people throw up their hands in despair, retreat behind their protective gates, and hope they can somehow ride out the storm while the world cracks apart. In contrast, social entrepreneurs do not run away from trouble. They develop workable solutions to the world‘s most pressing problems. In this book on social entrepreneurship, John Elkington and Pamela Hartigan examine the activities and accomplishments of inspirational leaders of social businesses. John Elkington was one of the first and most prominent corporate sustainability advisers, while Pamela Hartigan is the Pamela Hartigan is the Director of the Skoll Centre for Social Entrepreneurship at Oxford University’s Said Business School.

Many social entrepreneurs are focusing their efforts where the bulk of the world‘s population will be by the 2030s: the swarming megacities. Every year, some 70 million people leave their rural homes and migrate to cities. It is estimated that, by 2030, there will be some 2 billion squatters in the world—most living in what Robert Neuwirth has called ―shadow cities,‖ or megaslums and are creating a huge hidden economy. ―Squatters are the largest builders of housing in the world,‖ says Neuwirth, “and they are creating the cities of tomorrow.” Anyone looking for clues about how a world of 7 billion to 10 billion people might be made survivable, let alone sustainable, ought to support social entrepreneurs, including such people as Tasneem Siddiqui in Pakistan, Sheela Patel and Jockin Arputham in India, and Taffy Adler in South Africa.

Elkington and Hartigan explore how altruistically and commercially minded people operate differently in the business arena than typical entrepreneurs. This book describes the wide-ranging categories of social entrepreneurship and introduces a new generation of social and environmental entrepreneurs. They explore the value of social business for society, describe several business models, and the leadership styles of entrepreneurs in order to shift mainstream thinking to new possibilities.

The various business models they describe are:

  • Leveraged Nonprofit Ventures; these are nonprofit that use community resources, volunteers and government grants. Examples are Bunker Roy and Barefoot College
  • Hybrid Nonprofit Ventures: These entities make a profit, but not a large one. Partnership with private organisations can be central to this model. Examples are; Rubicon‘s Landscape Services and Rubicon Bakery and Eye Care System.
  • Social Business Ventures: These are for-profit entities focused on social missions, doing good for society. Grameem Bank and BRAC in Bangladesh, SKS Microfinance and Basix in India and Accion, Finca and Whole Foods in the United States, Sekem in Egypt and La Fageda in Cataluna, Spain.

 

The Power of Unreasonable People provides many excellent and creative examples across a wide spectrum of business models from all over the world including; The Childline India Foundation which offers a free hotline for the countless street kids of Mumbai, India, Sekem, a cluster of Egyptian companies that produce organic food and medicines, among other things, reported joint profits of $1.7 million in 2005. The first is a charity run by volunteers and funded with donations; the second, a financially strong, profitable business that operates on the world market. Both fall into the category of ―social entrepreneurship,‖ a broad term that encompasses organizations that offer goods and services of benefit to society. Fully commercial and profitable companies such Whole Foods lead by John Mackrey to charity endeavours such as Band Aid are included.

Elkington and Hartigan demonstrate how compassionate entrepreneurs use market based solutions to tackle problems and opportunities in a variety of situations. They cover how to build an innovative enterprise, create markets of the future and lead sustainable and scalable change.

This book describes an emerging blend of activism and entrepreneurship. It‘s a fascinating look at the achievements, challenges and limitations of this relatively new field. The social entrepreneurs described are unreasonable because they want to change the system, because they are extraordinarily ambitious, because they aren‘t guided by reason but emotion, because they think they know what the future will bring, because they will not listen to ―no.‖ And that is why they‘re so successful.

Elkington and Hartigan shower praise on non-profits for their idealism, but claim the greatest impact comes from combining forces with the commercial sector. The authors believe the ideas that can be carried out and repeated on a large scale come from social enterprises that are allowed to make a profit. This explains the recent expansion of the Indian telephone support line to include the organization Aflatoun, which teaches children about their rights and how to handle money. The alliance with banks is meant to ensure that this strong model can stand on its own financially.

Social entrepreneurs overflow with confidence and know that the best way to predict the future is to create it and the best way to build momentum—and attract funding and other resources—is to develop and communicate a clear vision of how things might be different. These entrepreneurs see a bigger picture, sometimes mulling it over for decades. For them, Winston Churchill‘s adage that the further you can see back, the further you can see forward holds true.

Importantly for possible social entrepreneurs, they outline the common characteristics that social and environmental entrepreneurs share, including some shared by all entrepreneurs and a few that aren‘t:

  • They shrug off the constraints of ideology
  • They identify and apply practical solutions to social problems
  • Have an unwavering belief in everyone‘s innate capacity regardless of education, to contribute meaningfully to economic and social development.
  • Focus first and foremost on social value and are therefore willing to share their innovations.

 

The book also point out a number of other interesting things about social enterprises;

A growing number of companies, like Accenture, have found that offering the opportunity to work alongside accomplished entrepreneurs results in staff retention. This indicates a new trend among Generation Y employees (those born after 1982) – they want meaningful careers as well as well paying jobs. Young people want to do meaningful work and want to be well paid for it. Companies need to step into the social business area if they want to attract and retain top talent.

Partnership between not-for-profit and private business can be an important route to success. Grameen Bank, the bank headed by Mohamed Yunis, partnered with a large food provider, Danone, to provide low cost yogurt to third world countries. The Schwab Foundation for Social Entrepreneurship joined forces with the Lemelson Foundation to establish the Leapfrog Fund, to spur the transfer of successful innovations between entrepreneurs in different parts of the world.

Major companies are finding that these models can significantly extend the reach of products and services into communities who were unable to pay for them and, in the process, create new markets.

Most social entrepreneurs are acutely aware of the problem of the ‘missing middle’ – the gap between traditional funding…and financial investments necessary for rapid expansion. A host of organizations are mobilizing to address the issue of the missing middle, including NextBillion allies Acumen Fund, New Ventures and Technoserve. Google.org’s recent announcement of its philanthropic commitment to addressing the missing middle will no doubt keep its profile high in the coming months.

A public good (waste collection) that the government fails to provide opens up the opportunity for a social business. People in slum areas are willing to pay for the waste collection service. Examples such Dhaka’s Waste Concern show that clean water provision and clean energy access are not necessarily the sole purview of government, and that the private sector has an important role to play in a variety of infrastructure-related sectors.

By addressing all three issues – access, price, and quality – together, these social and environmental entrepreneurs are seeding and growing significant new markets where none existed before. The authors defined the ‘base of the pyramid’ proposition not on size (dollars) or scope (number of people), but on the business potential instead. This is characteristic of the entire book – instead of haphazardly bouncing from one element of social entrepreneurship to another, the authors carefully define, sort and discuss a range of important trends.

Limitations of The Book

The Power of Unreasonable People doesn‘t describe the failures that have occurred in starting a social enterprise or the many of the major difficulties that were occurred including the personal catastrophes along the way. I get a sense there might have many sleepless nights, divorces and family problems that occurred during the long hard road to sustainability but these were discussed in the book.

All of the social entrepreneurs are described as heroes to a large extent. Yet some of the leaders can display compulsive or Alpha behaviour that may not be the best example of great leadership qualities. Having a good cause is not sufficient justification for poor leadership or compulsive behaviour.

While the book describes the range of business models, it does not discuss or step into the debate that is occurring between a full not-for-profit approach, like that of Grameen Bank which invests all of its surplus back into the business and the other social businesses such as SKS Finance that attracts investors who expect and get a return for their investment just like any profit making business. Mohamed Yunis is against this type of business because he states that the line and priorities between making profit and doing a social good will be lost while the proponents of a profit based model say that the only chance of social businesses happening on a large scale is if they can show the investment market there are sufficient gains to be made to be an attractive investment. The Power of Unreasonable People didn‘t discuss or enter this important debate.

The authors do not cover or include any of the cooperative type companies that could be considered to have a place in the social business field. Cooperatives are owned and run by the members or staff and often play an important social role. In Australia, CBH and Bendigo Bank have cooperative elements and help their members as well as operate successful businesses. In the northern part of Spain, cooperatives in Mondragon have had 50 years of successful business operations and employ over 17 million people. They give 10% of their earnings to the community and have a cooperative approach to job creation and maintenance

There were no Australian examples but I am not sure if this is a limitation or whether Australia doesn‘t have any significant examples to point to. It may be that Australia‘s affluence isn‘t fertile ground for social enterprises. I am sure this is going to rapidly change with a number of organisations in Australia stepping into

the field of social business. I hope some of the leaders exposed to the ideas of social business will become case studies for the second edition of this book.

Practical Application

The Power of Unreasonable People is a call to action with blueprints included. This book provides a wide range of very good examples and models for a budding social entrepreneur to consider. It is certainly a starting manual for the new type of business and new type of leaders. If you don’t have time to read the whole thing, be sure to read the conclusion.

The real hope that this book offers is that it shows it is possible to undercut the compelling advantages of economies of scale with quality-focused business models. In 10 years‘ time, there may be no distinction between a ‗social venture‘ and most major businesses— it will the standard way for a business to move forward.

According to the authors, the globe‘s public and private organizations should quickly line up to support and fund the work of innovative social entrepreneurs. No one can escape the world‘s problems so this inspiring book helps you meet a few of the brave souls who are doing all they can to develop imaginative solutions to the challenges everyone shares.

This book is substantive and wide ranging and therefore can earn a place in university courses in social responsibility and entrepreneurship. If university MBA programs and post graduate business programs include books like this in their curriculum, I am sure it will give a major impetus to young, idealist students who do not resonate with the typical MBA approach that business is all about creating profit for shareholders. A new generation of leaders who have business, leadership and organisational skills may be spawned as a result of this book and the social enterprise field.

This book provides a lot of good advice and thoughtful discussion, The Power of Unreasonable People, engages and stimulates while providing practical a good summary of the field of social entrepreneurs and advice for entrepreneurs who want to do well by doing good.

We had the pleasure fo Brodie McCulloch’s company at our last book forum to review the Power of Unreasonable people. As Mananging director of Social innovation in Western Australia, Brodie came to speak about social entrepeneurship in WA. Find out more about SiiWA

Ron Cacioppe

Ron Cacioppe is the Managing Director of Integral Development and holds a BSc, an MBA and a PhD. He has taught in the Graduate School of Management at Macquarie University, Curtin University and the University of Western Australia.

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