One of the hottest topics over the last decade is the idea of ‘Social Entrepreneur’ and ‘Social Entrepreneurship’. A social enterprise creates double bottom line results — Profits to sustain the enterprise and social impact. A few great social enterprise examples below
A. Muhammed Younus’ Grameen Bank and his microfinance initiatives created sustainablelivelihood for the rural poor in Bangladesh while making profits for the enterprise
B. My favourite social enterprise is Aravind Eye Hospitals in my hometown Madurai. They provide high quality eye care to the affording class and from the margins, provide free services to the poor patients who cannot afford an eye surgery.
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Ashoka Social Entrepreneur network defines social entrepreneurs as individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to move in different directions.
While Embrace Innovations and D-Lite are great social enterprises, what about businesses which do all the above but still dont fall under this category and most importantly, why?
Let’s explore a couple of examples — RedBus in India and Facebook.
RedBus, started by Phanindra Sama aka Phani, to computerize the bus industry in India is one such example. Several years ago, the founder of RedBus, who was a Software Engineer at a large MNC in Bangalore in India couldnt get a bus to go home during the Diwali holidays. This is not just the problem of Phani but also the problem of millions of travellers across India because of the unorganized bus industry. He created RedBus to integrate the system — bus operators, tickets, travel agents — and also launched an integrated platform for 10,000 bus routes in India. Customers can sit at their home and view open seats from multiple operators, purchase tickets, and post ratings. Meanwhile, bus operators can track seat availability in real time, and travel agents can prebook passengers. RedBus tripled sales last year, adding 4.25 million riders. — Red Bus reduced the pain points of the middle class Indian traveller and it also helped the bus industry to grow itself significantly riding on the power of technology. It made a handsome profit while creating this social impact. Is it not a Social Enterprise? Why?
Facebook became mainstream in 2007. Because of Facebook, there is so much life after work and family. I talk to my Kinter garden friends, college friends, school friends almost on an everyday basis. Also, I have connected with long lost friends through Facebook. Earlier this week, I connected with Ramki, my cricket buddy during my time in Madurai and he left Madurai in 1994. After 20 years, I found a way to connect with him through Facebook. He lives in Houston and I live in Geneva. How else this relationship could have survived? I am sure this is the case with most of you who are using Facebook and it is a great business that reconnects people and helps to build lifelong relationships. Is this not social impact? Is it not a Social Enterprise? Why?
I think the distinction between a traditional business and a social enterprise is very blurry. If you compare a gadget manufacturer or carbonated drinks manufacturer with Aravind Eye Care, then Aravind is a Social Enterprise but if you compare Medtronic, the world’s leading medical device company that produces pacemakers, stents etc with Aravind Eye Care, which one is a social enterprise? I was struggling to answer this question. While Aravind’s model of generating profits from their paying customers and using the profits to give free eye surgeries for poor patients is definitely social and commendable, Medtronic’s efforts is no less.
I was an innovation strategy consultant for Medtronic and played a key role in launching the Edison Award winning ‘Healthy Heart for All’, a low cost business model aimed at providing affordable cardiac therapies to the poor patients and even, helping them with a loan. Even without this model, Medtronic produces pacemakers, stents, defibrillators that saves the lives of millions of cardiac patients around the world. Let me list out a few social things that Medtronic does as part of their business model
1.Develop high quality technology that comes out of top class R&D that goes through through stringent FDA approvals after clinial trials for years, to make this technology universal.
2.Share best practices from all over the world — a doctor in Durgapur, a city in the eastern corner of India has access to some of the best operating procedures that are practiced by Cardiologists in USA.
3.Adopt a stringent Global Compliance Model where their sales staff cannot bribe or use unethical means to sell their products.
4.Provide world class training to Cardiogists all over the world on a periodic basis by exposing them to new products and new ways of doing things.
5. Save the lives of millions of cardiac patients across 140 countries through their 46,000 employees.
Is Medtronic not a Social Enterprise? Why? At first glance, one may easily dismiss all the above saying that they are doing this for profits but let’s trace the time back.
If go back in history, Medtronic was founded in 1949 by Earl Bakken, an electrical engineering graduate and Palmer Hermundslie, an enterprising entrepreneur in a garage and wood working shop in Palmer’s family home in Minneapolis. Today, it serves 140 countries through 46,000+ employees while generating USD16 Billion. In the 70’s, Medtronic’s products saved a life every 52 mins and in 2013, it was reduced to every 3 seconds.
In today’s context, the founders of Medtronic will be identified as one of the world’s leading Social Entrepreneurs and Medtronic would have been called a role model social enterprise — Medtronic is saving lives while generating profits and that too, successfully for 65 years. It is investing a huge amount of its profits into developing new products through their R&D division, creates value for its shareholders, pays its employees well, follows ethical business practices with strong compliance procedures, educates cardiologists all over the world, shares best practices so that cardiologists can learn from each other and has grown to touch 140 countries across the world.
Unfortunately, any business that targets the poor is considered social and the rest are not.Medtronic as a business was started in the US where the definition of poor is different from the definition of poor in developing countries. It also didn’t start as a business to serve the poor. It started as a business to serve cardiac patients and the primary goal of the Founders was to design an innovative solution to tackle the cardiac problem. They were not thinking whether it will serve a rich cardiac patient or a poor cardiac patient but rather for humanity in general. Once they found a technology that can solve the problem, they started selling the technology hospitals across the US and then, across the world. Unlike disruptive innovations which targets the least demanding and price sensitive consumers, traditional innovations require massive investments and till a business achieves economies of scale and scope, it is hard for them to serve low income consumers. But now through ‘Healthy Heart for All’, they are now trying to reach the low income patients who cannot afford expensive technologies fully realizing that this will call for massive changes in their business model, organizational culture and relationships with their existing hospital customers.
Profit making is not evil. What is evil is selling an evil product and making profit. If the profit is helping to save lives all over the world every 3 secs, educate cardiologists globally, serve 140 countries, employ 46,000 employees, follow ethical business practices and continue to invest their profits into R&D to develop new products that is making our lives lot easier, then that organization is a socially conscious organization. Medtronic is a social enterprise and so does many large companies that transform the lives of millions of people all over the world by selling good products and services in a responsible way.
Also, it is time to re-define ‘Social Entrepreneurship’ and move towards ‘Responsible Entrepreneurship’.
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