Our good friend Nathaniel Whittemore wrote a thought-provoking article on social entrepreneurship at change.org titled,  Top Five Controversies in Social Entrepreneurship. Below is our response and opinions on how we view the world of social entrepreneurship.

1. Do visionary individuals or collective action drive social change?

Both.  You need the top-down (collective action) and bottom-up (individuals) to create real change in any field, industry, or field.  If you read The Starship and the Spider: The Unstoppable Power of Leaderless Organizations, it talks about the sweet-spot around the optimal mix of decentralized and centralized attributes.

A great example is Ebay.  It has centralization – Ebay is the trusted source and authority figure.  Every member of Ebay must create profiles, etc.  It also has decentralization since members can list auction items and leave feedback for each other.  The “sweet spot” allows Ebay to function successfully.

The same is needed in the social entrepreneurial worlds.  There needs to be entrepreneurs on the ground making things happen.  And there needs to be an infrastructure for them to succeed – investors, legal structures, incentives, etc.  I think New Orleans is nailing this right now.  And Virgance nails this sweet spot successfully with projects like 1BoG.

2.  How narrowly should “social entrepreneurship” be defined and to whom should the term be applied?

I personally do not like the term “social entrepreneur” as I believe they are an “entrepreneur”.  According to Wikipedia, an entrepreneur is a “person who has possession of an enterprise, or venture, and assumes significant accountability for the inherent risks and the outcome. It is an ambitious leader who combines land, labor, and capital to often create and market new goods or services.”

The only thing missing from this definition is that an entrepreneur solves some type of need or problem (social or not).   I believe that ALL entrepreneurs should be solving a problem, and not creating “me too” companies such as SF tech startups that copy each other, and really believe that they are “doing it better”.

3. Can an organization grow and still meet the local community needs?

Quite simply, yes.  I think most organizations look at scale from a much different viewpoint at how I look at “scaling up”.  Honestly, I’m content with only working 40 hours per week, having a company that makes enough money to allow me to live comfortably, so I don’t end up working 100+ hours per week and get burned out.  There are more important things in life than working all the time such as family, friends, relationships, traveling, etc.  Basically the simple things in life that make people the happiest.

If you’re solving a problem and doing it well, why does it need to scale up to every community throughout the world?  The chance of *your* idea scaling up throughout the world is extremely slim.  That only happens to a lucky few companies.  Why not just serve your current community and do it well?

Great example is White Dog Cafe right outside of Philadelphia by Judy Wicks.  White Dog Cafe could have been replicated and francished to almost every major city in the world but Judy chose not to go that route.  Why?  Wouldn’t it scale faster if White Dog Cafe inspired other restaurateurs to open the same in their city?

4. Do social entrepreneurs address root causes or just symptoms of social problems?

This is the whole short-term versus long-term argument.  I believe in the Long-Now Foundation and what they stand for.  “The Long Now Foundation was established in 1996 to creatively foster long-term thinking and responsibility in the framework of the next 10,000 years.”

Most entrepreneurs need to ask themselves, “what am I doing today that will change the world in 10, 25, 50, 100 years down the road?”

No company or entrepreneur is ever going to solve every single social problem.  If you’ve ever seen the HBO show, The Wire, you’ll understand how extremely difficult and dysfunctional a city can get because  everything is inter-linked and inter-connected.  To lower the crime rate, you have to combat poverty, which is linked to education, which is linked to the drug game, which is linked to hip-hop culture, which is linked to the police department, which is linked to the Mayor’s office, etc.

The most eye-opening realization from watching The Wire is how everyone is focused on the short-term results – lower the crime rate, increase test scores, get the mayor re-elected, etc.  But if they just focused on the “long-now”, they would start seeing some results that would last over many lifetimes.

5. Is the growing relationship between the non-profit and for-profit sector a good thing?

Yes, yes, yes.  I believe that all companies should rely on the for-profit sector for many different reasons.

The most talented individuals graduating from college are attracted to high-paying careers and jobs in banking, consulting, etc.  This is probably the worst thing that could happen to a recent graduate.  I’ve seen countless young professionals who work for 2-3 years and find absolutely no meaning or purpose in their careers or their lives.  Call it a quarter-life crisis but I think this talent can be channeled into companies that solve problems and do good.  Why not?

The non-profit model is irrelevant today.  NPO’s can learn so much from the for-profit world.  Let’s be honest.  If you took the majority of non-profit organizations and put them in the for-profit world, they would fail miserably.  This is because of poor management, strategy, branding, design, etc.  It’s what we call “healthy competition”.  It needs to exist to weed out the weak and that just doesn’t happen in the non-profit world.  (However, I think this only holds true for non-profit organizations that should be businesses.)

The non-profit system has always been so paradoxical for us (except for recent developments in PRIs). Foundations invest in the for-profit sector that have created so many of the issues we’re facing today only to give the profits away to non-profits to fix up the mess? This never made much sense to us. Some progressive foundations are making strides with portfolios in socially minded companies, screening out those that don’t fit with their mission etc. but why don’t more people “give back” by investing in companies that make money AND do good at the same time? Instead of having to pull out the checkbook at the fundraiser every year and fostering a system where everyone is overworked and underpaid (for profits on the grind and non-profits fighting for the crumbs alike), investments into organizations allows “donors” to invest into creating real infrastructures that make a difference, and get their money back.  It’s kind of like Kiva but for entrepreneurs…

How do we make sure this happens? The bar needs to be set higher in the social entrepreneurial world.  How come there aren’t companies like Amazon, Zappos, etc starting in the social enterprise world?  Once companies like that pop up, it’ll attract the necessary talent and innovation which will cause this industry to thrive and create real world-shaking change!