Tuesday, May 29, 2012

Chapter Eight: 100,000 Fully Engaged Tutors for Social Enterprises, Arise!

Chapter Eight

100,000 Fully Engaged
Tutors for Social Enterprises,

“But if you love those who love you, what credit is that to you?
For even sinners love those who love them.
And if you do good to those who do good to you,
what credit is that to you?
For even sinners do the same.
And if you lend to those from whom you hope to receive back,
what credit is that to you?
For even sinners lend to sinners to receive as much back.
But love your enemies, do good, and lend,
hoping for nothing in return; and your reward will be great,
and you will be sons of the Most High.
For He is kind to the unthankful and evil.
Therefore be merciful, just as your Father also is merciful.”

— Luke 6:32-36 (NKJV)

Social entrepreneurs often take the unconventional view that they should establish organizations solely focused on providing product and service offerings that will do the most good for everyone else, whether the beneficiaries are their enemies or their friends, rather than seek personal financial gain. Clearly, such a commitment has been formed either by God’s directions as described in Luke 6:32-36 or by an exceptionally warm heart for others.
You may be scratching your head wondering how the enterprises created to serve such social purposes are different from the typical for-profit or nonprofit organization. Let me explain through some descriptions, distinctions, and examples.
I don’t know of an accurate, narrow definition of a social enterprise because my research shows that such organizations employ a wide variety of structures and approaches. Let me instead describe what I’ve observed. The enterprises typically seek to optimize a social benefit as their top priority through making breakthrough improvements to product and service offerings they supply for those who need the benefit and cannot supply it for themselves.
How, then, is a social enterprise different from a foundation? While a foundation typically accomplishes its beneficial role by funding socially helpful activities performed by others, social enterprises directly engage in providing the helpful offerings. Social enterprises may be the recipients of foundation funds, especially during the development and testing of their business models (the “who,” “what,” “when,” “why,” “where,” “how,” and “how much” of serving stakeholders, who are all those affected by their activities). Ownership of social enterprises may also be donated by entrepreneurs to foundations when that step will enable more social benefits to be produced through attracting gifts and reducing taxes.
A for-profit enterprise’s primary purposes are typically to earn a profit above its cost of capital and to increase its value during any stock sales by its owners. Serving any social purposes would normally be considered by a for-profit firm only when such accomplishments are obviously beneficial to profits and value improvement. An emerging view among a minority in the business community is that adding social benefits can be helpful in achieving profit- and value-maximizing purposes, especially for consumer products and services companies, by attracting more customers and providing more encouragement not to waste raw materials, energy, and other resources.
A nonprofit enterprise’s primary purpose is also to accomplish some public good. However, a nonprofit enterprise may or may not be seeking to make substantial innovations. As a result, some social enterprises may be established as nonprofit legal entities in part to reduce the taxes that would otherwise increase their costs or to attract more resources from donors when tax deductions are available for gifts. In many cases, the decision to seek nonprofit status is used to help clarify to potential beneficiaries that no one is trying to take economic advantage of them.
To help you appreciate what I mean by these distinctions, let’s look at some examples starting with one that will be familiar to many: the food company, Newman’s Own, Inc. The company’s all-natural grocery products (which began with salad dressings) were developed by the late actor, Paul Newman, and his friend, A. E. Hotchner, to be healthier and tastier for consumers and to provide more social benefits for suppliers. In doing so, the success of Newman’s Own helped interest larger food companies in providing healthier, more socially beneficial products.
Newman’s Own, Inc. is owned by Newman’s Own Foundation. All profits from the operating company’s products are donated by the Newman’s Own Foundation (less the foundation’s small administrative costs) to various charities, and several hundred million dollars have been donated in this way.
In this example, Newman’s Own, Inc. is a nonprofit social enterprise, and being owned by a foundation makes it legally easier for the company’s profits to support worthy activities performed by various charities. If Newman’s Own, Inc.’s purpose were only to benefit its stakeholders (and not to help any nonstakeholders), there would be no need for a foundation. Under such an alternative purpose and ownership, Newman’s Own products could simply be sold at lower prices and be reformulated to provide even more beneficial ingredients so that consumers would receive more for their money until no profit was left to be shared with charities. For more information about these two organizations, go to http://www.newmansown.com/ and http://www.newmansownfoundation.org/.
Now, let’s take a quick trip to India and check out the Aravind Eye Care System’s medical activities there. Aravind was established in 1976 by Dr. G. Venkataswamy to treat eye conditions that often lead to blindness when left untreated, an unfortunately common circumstance for many poor people in lesser developed countries. The organization’s purpose is to serve as many patients as possible while also making big improvements in eye-care methods and training eye-care practitioners in the most effective practices. As part of its activities, Aravind manufactures some ophthalmic products (such as the intraocular lenses used in cataract surgery) to improve quality and to reduce costs.
How is Aravind different from any other eye-care product or service provider? Typically, such operations are based on a for-profit purpose and legal structure. Aravind is actually a hybrid organization, combining for-profit and nonprofit practices. What’s unusual is that Aravind uses for-profit activities as its primary source of funds instead of the way that many charities solicit donations to permit serving those in need. This nonprofit organization serves two kinds of patients, those who can afford to pay and those who cannot. Profits from treating the paying patients subsidize services for those who cannot pay.
You may be imagining that the paying patients are charged high prices to allow for more poor people to be helped. That’s not the case. Instead, Aravind has become a world leader in cutting the costs and improving the outcomes of many eye-care services, especially cataract surgery.
The results are so extraordinary that the National Health Service in the U.K. flies thousands of its patients to India for cataract surgeries that are conducted by Aravind physicians. Even after paying for the travel and other expenses, the total costs to the National Health Service are lower and the medical results are better for these U.K. citizens than what the patients would experience from treatment by National Health Service surgeons back home.
As a result of its innovations and educational activities, Aravind is advancing the practice of eye care for everyone, but even more rapidly for poor people around the world as the use of its business model and highly effective, low-cost practices spreads. In doing so, Aravind’s approach has made it clear that medical executives and practitioners often lack the skills necessary to create innovative business models and to make cost-reducing breakthroughs in improving care. If you would like to learn more about the organization’s experiences, visit Aravind’s Web site, http://www.aravind.org/. The scope of what this social enterprise does is increasing rapidly, so be sure to read the latest annual report while you are there.
Let’s next consider a more recently established organization, the Bangladeshi social joint venture, Grameen Danone Foods, founded by Bangladesh’s depositor-owned Grameen Bank (a social enterprise that primarily provides microloans and educational assistance to help eliminate poverty) and France’s publicly owned, for-profit Groupe Danone (best known for its yogurt, bottled water, and baby food). The joint venture provides a lower-priced, healthier yogurt snack that improves nutrition for children in poor families at low cost through an innovative, small-scale-manufacturing technology and employment of local small farmers as suppliers and poor women as distributors. The company also seeks to minimize any environmental harm through its use of solar power and innovative packaging.
Grameen Bank brought to this joint venture its local knowledge of a pressing social need for serving poor children and its experience in establishing enterprises that improve the quality of life and provide more income for poor people living in Bangaldesh’s rural areas. Groupe Danone brought to the venture its depth of expertise in creating, manufacturing, and distributing yogurt products.
Unlike many joint ventures involving only for-profit, publicly owned enterprises, Groupe Danone didn’t connect with Grameen Bank to make its shareholders rich. The joint venture was founded with the understanding that it would provide no profit or dividends on its investment to its founders, but would instead attempt to avoid incurring losses. Any profits would be reinvested to expand the company so more poor people would be served and more kinds of nutritional products developed.
Groupe Danone’s financial expectation was simply to have its initial capital investment returned over time. The original intent was for the company’s stake to eventually be sold at cost to the poor people who work in and supply the joint venture. Groupe Danone stands prepared to provide additional technical expertise after such a stock sale should other products or services need to be developed for the venture.
Despite the lack of profit incentive, Groupe Danone’s management felt very well rewarded for their efforts by having the chance to see the good that their activities have helped accomplish. The joint venture’s work gave their lives more meaning than would have occurred by focusing on traditional, for-profit activities in serving wealthier customers.
The heart of this venture’s brilliance is ultimately found in the innovations that create so many more nutritional, poverty-reducing, and environmental benefits at low cost. Without the combined skills of the Grameen Bank and Groupe Danone, such innovations would not have occurred. In the long run, however, the venture’s success in serving rural poor people will primarily depend on the hard work and insight of its employees, suppliers, and distributors who serve local households.
If you would like to learn more about this venture, its founding and initial development are described in Creating a World without Poverty — Social Business and the Future of Capitalism, by Muhammad Yunus (PublicAffairs, 2008). You’ll also gain a helpful perspective on principles that can be applied for creating social enterprises that succeed by complementary organizations working together to make socially beneficial breakthroughs that neither one alone could accomplish.
With these three examples of social enterprises in mind, let me discuss possible roles for tutors to play in assisting social entrepreneurs and enterprises. While the potential list of roles is quite long, I believe that these are the largest and most beneficial opportunities:

• Help nonprofit and for-profit leaders learn about the potential to make more breakthroughs in providing complementary, exponential benefits by founding and teaming with others in social enterprises.

• Increase the capabilities of experienced social entrepreneurs to develop more complementary, exponential benefit breakthroughs.

• Assist people who would like to advance social purposes to learn the advantages of encouraging the founding of, establishing of, and support for social enterprises.

• Alert political leaders to the benefits of creating more incentives and reducing barriers for establishing and expanding highly effective, innovative social enterprises.

Let’s shift to examining each of these primary roles, beginning with helping leaders learn about the potential to make more breakthroughs in providing complementary, exponential benefits through social enterprises.

Help Nonprofit and For-Profit Leaders Learn
about the Potential to Make More Breakthroughs
in Providing Complementary, Exponential Benefits
by Founding and Teaming with Others in Social Enterprises

“Send men to spy out the land of Canaan,
which I am giving to the children of Israel;
from each tribe of their fathers you shall send a man,
every one a leader among them.”

— Numbers 13:2 (NKJV)

We shouldn’t fool ourselves by thinking that most nonprofit and for-profit leaders are eagerly leading their organizations to make breakthroughs by founding and teaming with others in social enterprises. Just the opposite is usually the case. Disinterest predominates because most leaders don’t see much potential for social enterprises to add value to what their organizations are attempting to accomplish, primarily because leaders are unfamiliar with successful examples. In addition, most leaders feel more than challenged to move their organizations forward by following their traditional paths. As a result, creating breakthroughs is not an important agenda item for most organizations, seeming to be an “impossible” dream.
In an environment filled with so much ignorance and so many misunderstandings about the potential for breakthroughs, a helpful task for many tutors will be to document and to draw leaders’ attentions to the substantial value and high potential of providing immensely valuable complementary, exponential benefits by founding and teaming with complementary partners in social enterprises. While there are many articles and some books that describe what a few social enterprises have accomplished, these resources are typically aimed at attracting the attention of those who are already very interested in making socially beneficial breakthroughs. As a result, the leader of a typical nonprofit or for-profit enterprise might not see any connection between the examples and accomplishing their own organization’s purposes and goals.
While I don’t want to prescribe (and potentially limit) how such documentation and attention-getting should be done, it may be helpful for the tutors who choose to dispel the ignorance and misunderstandings about social enterprises to keep in mind these potential organizational benefits:

• Breakthroughs in solving one problem frequently have valuable applications for serving others in both the nonprofit and for-profit contexts. (A more nutritious yogurt product designed for poor rural children may suggest formulations that would do well for better nourishing and reducing obesity among middle-class urban and suburban children with poor eating habits.)

• Opportunities to work on emotionally rewarding breakthroughs can be an important way to attract and retain some uniquely talented people who would otherwise migrate into jobs with the best-paying employers, providing a lasting effectiveness advantage for those organizations that cannot afford to offer the largest financial rewards. (Profit-oriented law firms have long understood this point and usually allow their highly talented partners and associates who would like to provide socially beneficial legal work to do so while charging no fees for their services.)

• Breakthroughs developed in social enterprises can multiply effectiveness in such substantial ways that the benefits from the breakthroughs can substitute for the need to gain vastly increased resources that would be required for an organization to grow by doing things in the same old ways. (Breakthroughs can be thought of as potential “shortcuts” to achieving what the organization intends to accomplish.)

• Customers, suppliers, distributors, and other stakeholders may show valuable preferences for and provide more practical support for organizations that are known to have developed socially beneficial breakthroughs. (The time, money, and effort that go into working with or as a social enterprise may eliminate the need for some more expensive marketing and administrative expenses and investments.)

As Peter Drucker loved to remind me during our conversations, “People have no imagination.” Even after learning about compelling examples of social enterprises’ successes and benefits, many leaders won’t be able to connect the dots to see how one organization’s experience might apply to their own circumstances. I believe that the most important task for tutors in expanding such leaders’ perceptions will be to identify, document, describe, and provide detailed instructions for specific breakthrough opportunities that are obviously relevant and easy for each type of for-profit and nonprofit organization to use for gaining enormous benefits.
Where should tutors start? I can think of no better place than the four potential organizational benefit items listed in this subsection.
Beyond that, I encourage tutors to continually study examples of new breakthroughs emerging from social enterprises’ activities. Each example should be evaluated for the potential of what was accomplished being applied to traditional nonprofit and for-profit organizations. My suggestion is that tutors give highest priority to the potential applications that will have the largest total benefits for stakeholders after all organizations that could benefit have applied the new approaches.
How might comparisons among applications be made to determine their relative potential benefits? I don’t want to spell out a computational method here and discourage someone coming up with a better idea, but let me suggest the outlines of an approach that might work well and not be very difficult to employ.
Categories might be established that include somewhat similar types of benefits (for example, life-saving improvements might be combined in a category with substantial life-long, life-enhancing improvements, such as avoiding debilitating diseases like malaria). Each category of benefits could be arbitrarily assigned a numerical value for each directly affected beneficiary. The greater the social benefit for an individual, the higher would be the assigned value of a benefit category.
Tutors could then estimate how many people might receive each category of benefit. By multiplying the numerical value for each benefit category by how many people might be helped, a total value of benefits could be calculated. Obviously, this value shouldn’t be taken very seriously except for purposes of setting priorities for which potential applications of social-enterprise breakthroughs should receive immediate attention.
If you think of a better way to set priorities, please use your method. It would be a blessing to me if you would also share your improvement by sending me an e-mail to askdonmitchell@yahoo.com.
Let’s next shift our attention to ways tutors can help increase the capabilities of experienced social entrepreneurs to develop more complementary, exponential benefit breakthroughs.

Increase the Capabilities of Experienced Social Entrepreneurs
to Develop More Complementary,
Exponential Benefit Breakthroughs

Though your beginning was small,
Yet your latter end would increase abundantly.

— Job 8:7 (NKJV)

I often attend speeches and panel discussions given by leaders of social enterprises. I’m continually struck that their perceptions of the opportunities to serve social purposes usually reflect some of these assumptions:

• Expansion of their methods should come by many others exactly emulating what they have done rather than by their seeking to expand their organization into a much larger enterprise.

• Financial resources for expansion should come from foundations, donors, and government grants rather than from making their organizations more efficient in developing and using resources.

• Having found one improved solution to providing a social benefit, there is unlikely to be an opportunity to find better solutions.

• Leaders should focus on attracting attention to what has been done rather than on seeking new opportunities.

• Heavy involvement by political leaders will speed expanding services and goods to those in need.

• Little knowledge of organizational development is needed to successfully direct social enterprises.

As I listen to the speeches and remarks, I often notice that the social enterprise leaders don’t understand the potential to grow their nonprofit organization well beyond small-scale operations. For instance, the Aravind example of competing effectively in the for-profit world to gain resources to serve poor people would not occur to most of these leaders.
I believe that these leaders’ views about serving social purposes are shaped in part by a lack of experience in leading and managing larger organizations. Many social entrepreneurs are the founders of the organizations they lead. In quite a few cases, the founders had few jobs prior to heading their organizations. Even fewer leaders come from educational backgrounds that provide leadership or management expertise.
From these observations, I believe that it’s highly likely that tutors can greatly help many of these leaders by focusing their attention on:

• Documenting processes for installing breakthrough methods that don’t require much operating knowledge to perform

• Identifying high-potential organizational partners who could quickly add skills that would permit more breakthroughs to be developed or implemented

• Strengthening the management team so that more types of high-priority tasks can be effectively accomplished for making breakthroughs or growing

• Alerting leaders to easy ways to add resources and to reduce the need for resources in serving more beneficiaries

Rather than acting merely as tutors, in some cases tutors will also need to perform as intermediaries and facilitators in making these improvements. As a result, I imagine that two kinds of tutors are most likely to meet these needs: tutors who want to provide best-practice directions and guides to action, and tutors who want to work on teams with social enterprises to add more organizational breakthroughs.
Due to a substantial likelihood of encountering disbelief about the opportunity to create complementary, exponential benefit breakthroughs for social enterprises, tutors who are called to serve these needs would do well to start by gaining some successful experience in helping social enterprises that want to make such improvements. In that way, future conversations with social entrepreneurs who are skeptical can be grounded in the credibility of the tutors’ successes with one or more social enterprises. Habitat for Humanity will be a good choice for many tutors who want to gain this kind of experience because the organization has continually worked on developing new sources and methods of providing complementary, exponential benefit breakthroughs.
For either way of tutors helping social enterprises, I encourage beginning conversations with social entrepreneurs by inquiring about their beliefs concerning the best ways to provide more social benefits through their organizations’ efforts and resources. After finding out what the entrepreneurs’ beliefs are, it will often be a good idea to inquire about what those beliefs are based on. In that way, any offers of help can be made more attractive by tailoring them to the perceived needs of the social entrepreneur.
In particular, tutors may find that other tutors with different experiences than their own may be able to do more to help a given social entrepreneur. For that reason, I strongly urge those who want to tutor with social enterprises to meet with other tutors and to learn about their backgrounds, skills, and interests. I encourage someone to establish a body of practice in this area that includes a way to register and update tutors’ experiences and capabilities.
Let’s now consider how tutors can best assist anyone who would like to advance social purposes to learn the advantages of encouraging the founding of, establishing of, and support for social enterprises.

Assist People Who Would Like to
Advance Social Purposes
to Learn the Advantages of
Encouraging the Founding of,
Establishing of, and Support for Social Enterprises

Then Joshua the son of Nun called the priests and said to them,
“Take up the ark of the covenant, and let seven priests
bear seven trumpets of rams’ horns before the ark of the LORD.”
And he said to the people,
“Proceed, and march around the city,
and let him who is armed advance before the ark of the LORD.”

— Joshua 6:6-7 (NKJV)

As the preparations for the fall of Jericho showed, God sometimes uses His people to demonstrate support for His purposes through worship before providing the Godly result. God may direct action through specific instructions provided by heavenly messengers, prophets, and the Holy Spirit; but most often He simply tugs on the heart strings of His people so that they will address a distressing situation. Heart-led servants are much more effective for Him after they learn more about what needs to be done to complete His will. Without such instructions, the Israelites might never have marched around Jericho in the way that God intended, and the walls would never have collapsed.
When attending conferences about solving social problems, I’m continually struck that most of the speakers appear to be directed by pure hearts in their desires and attempts to help. Unfortunately, almost none of the speakers and attendees appear to have a sense of exactly what to do that would serve God’s purposes.
As an example, many Christians who desperately want to alleviate some particular kind of suffering will only seek support for methods that are disconnected from God. For instance, some Christians may promote increased government action … despite knowing that governments will usually insist that there be no identification with God, Jesus Christ, or the Holy Spirit. To me, that approach is if the Israelites had circled Jericho shouting praise for the idea of ending war while leaving the Ark of the Covenant and the priests at home.
Social enterprises operating under Christ’s banner can be vastly more effective in accomplishing tasks that Christian hearts are called to encourage and to perform than are totally secular organizations. Such Christian social enterprises will be blessed by His support, gain directions from the Bible and Holy Spirit, enjoy favor from prayers made for His assistance, and draw energy and resources from the willing hearts of large numbers of believers. Rather than solely sharing this critical lesson at secular conferences and political get-togethers, I believe that Christian Bible studies on the subject also need to be provided to expand understanding of how to address social needs that God wants met by following His directions.
To encourage this Bible-based teaching, I believe there need to be traveling tutors who go from church to church helping Christians learn what social-improvement tasks the Bible directs believers to do and how innovative social enterprises that seek to provide complementary, exponential benefits can help us do God’s will more effectively by seeking His guidance and support. Such tutors will also be able to help connect those who would like to carry the message forward with one another as well as to help introduce them to those who want to found, to expand, and to support a given Christian social enterprise. These tutors can also help avoid unnecessary duplication of efforts by pointing out where an existing Christian social enterprise is an effective vehicle for doing His will.
Christian social enterprises can also improve by learning how to be more effective in preparing their staff members, volunteers, beneficiaries, and supporters to attract more attention and interest from those with caring hearts who aren’t yet connected to the enterprises. Here’s another opportunity for tutors to specialize in providing their assistance by concentrating on one Christian enterprise at a time and later sharing the lessons of what was learned with other tutors so that the body of practice in this activity grows to be stronger and more effective.
Over time, developing Christian social enterprises that make complementary, exponential can also have testimonial value in helping lead more people to accept the Lord’s free gift of Salvation (after repenting of their sins and accepting Him as their Lord and Savior). Can you imagine how impressed caring nonbelievers would be by God’s mighty hand providing vastly more bountiful results for Christian social enterprises than for ones that avoid following Him and His directions? Such a result might be a little like God leading Christians to defeat their enemies by simply telling them to march around their opponents.
Let’s now consider the potential benefits of alerting political leaders to the value of creating more incentives and reducing barriers for establishing and expanding highly effective, innovative social enterprises.

Alert Political Leaders to the Benefits of
Creating More Incentives and Reducing Barriers for
Establishing and Expanding Highly Effective,
Innovative Social Enterprises

In those days Hezekiah was sick and near death.
And Isaiah the prophet, the son of Amoz, went to him and said to him,
“Thus says the LORD: ‘Set your house in order, for you shall die, and not live.’”
Then he turned his face toward the wall, and prayed to the LORD, saying,
“Remember now, O LORD, I pray, how I have walked before You
in truth and with a loyal heart, and have done what was good in Your sight.”
And Hezekiah wept bitterly.
And it happened, before Isaiah had gone out into the middle court,
that the word of the LORD came to him, saying,
“Return and tell Hezekiah the leader of My people,
‘Thus says the LORD, the God of David your father:
“I have heard your prayer, I have seen your tears; surely I will heal you.
On the third day you shall go up to the house of the LORD.
And I will add to your days fifteen years.
I will deliver you and this city from the hand of the king of Assyria;
and I will defend this city for My own sake,
and for the sake of My servant David.”’”

— 2 Kings 20:1-6 (NKJV)

Many people choose to put their faith in governments for making positive change, rather than in God. Most of the time, it is the politicians themselves who will have the greatest faith in such Earthly action. A lot of intelligent, hard-working people choose to become involved in political and government activities because they want to have greater influence over creating the kind of social benefits that their hearts stir them to support.
In encouraging governments to be more active in providing desirable social benefits, it’s easy for four important lessons to be overlooked:

1. God wants us to rely on Him, not on ourselves.

2. No small group of people in government trying to decide what to do can know or accomplish as much as a far larger group of people seeking to achieve the same purpose from a variety of perspectives and through many different organizations.

3. Government processes are easily diverted to redirect benefits to those with the most power and away from those who would benefit the most but have little power.

4. Governments are usually slower and more costly agents of helpful change than are social enterprises.

Tutors can play extremely valuable roles in documenting the folly of emphasizing governmental action to provide much needed social benefits to the poor and powerless. From that starting point, tutors can go on to compare the effectiveness of Divinely directed social enterprises with government activities focused on the same purposes.
Next, tutors can speak with social entrepreneurs and study social enterprises to gain an understanding of what government limitations are most harmful to establishing and expanding social enterprises, especially Christian-directed ones. With those hypotheses in mind, tutors can next document the evidence concerning the effects of the limitations to estimate the actual effects.
Once governmental limitations have been correctly identified, tutors can share what has been learned with government leaders, those seeking office, and their most influential supporters who favor the needed social benefits being provided. While this might seem to outsiders much like a lobbying activity, I’m simply suggesting that improved information be shared. In addition, tutors should feel free to combine with other Christians to organize prayers and other ways of gaining Godly support to help accomplish God’s intentions.

Governments can play a much more valuable role in providing for more complementary, exponential social benefits by going beyond simply lifting barriers to establishing and expanding social enterprises. In the next chapter, I describe what a national, state, or local government can accomplish through encouraging and facilitating the development of complementary, exponential breakthroughs benefits from as many helpful sources as possible.

Copyright © 2011 by Donald W. Mitchell. All rights reserved.

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