Feb
5
Social Entrepreneurship ASB - Class Five
February 5, 2008 |
Our most recent class wasn’t extremely insightful, but we covered a lot and explored a couple things in greater detail. The first half of the class was spent discussing for profit versus nonprofit and the second half involved a quick presentation by me of triple bottom line (TBL) economics and discussion of some of the trip logistics. Because the class didn’t discuss too much that can be reinterpreted into a post, I’ll spend most of my time reiterating my talk into this post.
For Profit or Nonprofit?
The first task of the night was to split into three groups with an average of four people in each group. The first round of discussion involved discussing nonprofits with for profit characteristics, and analyzing whether or not these these crossover characteristics either helped or detracted from their mission. The second round focused on for profits with nonprofit characteristics, and whether or not these characteristics helped or hurt their bottom line or return on investment. I was a bit surprised (but happy) that the overwhelming conclusion from each group was that these crossover points created a certain type of synergy that was beneficial to the organization in question. No one thought that it hurt the organization. In fact, it almost makes me want to analyze organizations that tried the hybrid model and failed.
Triple Bottom Line Economics
After the discussion of the organizations, I gave a short talk about TBL economics. As for a quick history of TBL, the term was coined by John Elkington in 1997 by his book Cannibals with Forks (a great read). He has been working in the field of sustainable development for over 25 years and operates a consulting firm called SUSTAINability with branches throughout Europe and the United States.
Seven Step Framework
- Increase in Competition. This is easy to see with internet startup. Low barriers to entry and a huge potential upside make this industry the perfect example. With increasing globalization, the trend will continue.
- Understand values and relevance to business. Social entrepreneurship epitomizes this step, and since its been gaining significant momentum, I would say we are reaching the point where values in business are becoming mainstream.
- Transparency & Accountability. This was the main focus of my paper and I feel it is the step that we are currently working to integrate. We are hearing more about individual organizations that are integrating transparency and accountability, and the positive benefits that are coming about because of their integration (Ex: IBM and its involvement in the open source community).
- Life-cycle technology. This hasn’t quite registered on the radars yet, but it’s the idea that a product with start its life and end its in the same manufacturing process. For example, old cellphones will be used to make the new cellphones, rather than being thrown away.
- Partnerships. Again, internet startups already exemplify the early stages of this step, and the major reason why this is happening is due to the necessity of speed in deployment. A new business may leverage some open source framework, Google’s advertising system, YouTube’s video system, and Facebook’s networking platform to create an integrated solution for a particular niche. This is necessary because the cost in time and resources is much too great to create equally competent internal systems.
- Faster scales with longer, strategic timeframes. The innovation process is continuing to shrink, and products are spending less and less time on the shelves before they are replaced with newer/better/faster products. Even though this is occurring, more organizations will simultaneously take long-term approaches to the potential ramifications of their business procedures. Google has incorporated this into their business strategies by advising investors not to invest in Google if their looking for short term gains.
- From exclusive to inclusive forms of corporate governance. The final step is an integration of all of the previous steps into a synergistic whole. The idea is that everyone affected by a particular company or process will have a say in that organization or process.
Quick Example of Integration
Looking for talent at community colleges, Microsoft recognized the special challenges that community colleges face: “IT curricula are not standardized, technology used in classrooms is often outdated, and there are no systematic professional development programs to keep faculty up to date.” Microsoft provided $50 million for a five-year initiative and targeted all three problems. The benefit for society was that the investment in local infrastructure and sharing of world-class knowledge and technology over time resulted in providing individuals greater career opportunities along with better teaching facilities for students. The benefit for Microsoft was obviously more qualified engineers. (Excerpt from my research paper, which is attached below).
Main Critique of TBL Economics
The most significant complaint about TBL and similar ideas/frameworks is the idea of measuring social or environmental progress quantitatively. If one organization has a 5% increase of women in management and another donates 2% of it’s profits to socially responsible causes, who is creating better change? That is a difficult question to answer, but frameworks are being developed to help facilitate the measurement. As an answer to the measurement of abstract qualities, a prime example is eBay’s reputation measurement system. Even though it’s hard to put a value on this abstract quality, eBay has successfully done it and has been extremely profitable in part because of it. As such, even though it may be hard to quantify these qualities, we shouldn’t give up before we start but instead go through a process of trial and error to develop a system that works. Even though we will fail multiple times, I have faith we will eventually develop a system that works.
Know Your Role and Conclusion
Overall, this framework has a lot of potential, but needs a lot of work and support from all parties involved to be fully implemented. Governments need to play a supportive, proactive role in developing and mandating a wide-scale framework. Businesses need to realize the upside to developing a TBL outlook and harnessing the ideas so that they work for the business as well as society. Also, citizens need to support legislation in favor of TBL and purchase from organizations that are best capitalizing on the ideas of TBL. Finally, if you thought this post was interesting, you should read my paper which focuses more on step three of the process and can be downloaded here.