Social Messiahs or Smart Entrepreneurs?
The field of social entrepreneurship has
attracted great global interest on account of its role in providing sustainable
solutions to a diverse range of challenging environmental and social problems - health, poverty and climate change - with limited resources.
Social entrepreneurs are drawn by a variety of
social missions. They are passionate about tackling a problem, have an idea for
a solution, and the determination to make that solution happen. This fertile field has given rise to
extraordinarily ingenious people who have conjured brilliant ideas and used
them with operational prowess to dramatically improve people's lives. Social
entrepreneurship is an appealing construct precisely because it gives primacy
to social benefits while at the same time remaining firmly grounded in sound
financial principles. Finding the balance between social purpose and commercial
viability is the toughest challenge for any social entrepreneur.
The social entrepreneurship community has now a
big tent, and a major challenge is to protect the purity of its mission. At the
core of social entrepreneurship is the recognition of a new mindset, one that
believes in an agenda oriented around making the world a more just and equal
place. Yet we are witnessing several unsavoury trends which
are mudding the
waters and putting this noble
field under strain.
An increasing number of purely business ideas are
being masqueraded as social innovations. Several so-called entrepreneurs are
being hailed as gamechangers or saviours, when the impact and outcome of their
work is nowhere near proven, and still less studied are the damaging,
unintended consequences of their enterprise. In many cases their mission is not
their work, but they themselves. There is a huge mismatch between rhetoric and
reality, as is the misalignment between their personal lifestyle and the public
stance about the poor.
These high-flying denizens are using the art of
lobbying to manipulate the system to pass off self-serving agendas as
altruistic programmes. Several business magazines are boasting them on their
covers and award juries are knighting them. These new social climbers need to
be made to understand that the poor cannot be used as raw material for
individual or corporate salvation. An inclusive vision and robust ethical
values are at the core of the entire cycle of anything that aspires to be a
social innovation. This is crucial for galvanising the community.
In the natural sciences, experiments are carried
out under painstakingly controlled conditions, most frequently in a laboratory
setting. However, all authentic economic and social experimentation takes place
in the real world - which is no carefully controlled lab. This is the prime
reason why economic and social experiments demand greater caution and
Poor societies have long been used as guinea pigs
by development scientists. This is perfectly all right as long as the
objectives are fair and rational. But the emergence of a tribe that sees the world
through a business lens, and wants to use these vulnerable communities as a
constituency for furthering its commercial goals, has set the activist camps on
The avowed social mission of these self-serving
entrepreneurs is only meant to camouflage their rapacious business interests.
In this pursuit, they are using their semantic skills to garb their wolfish
acts in sheep's clothing.
Social science tends to focus on average outcomes and makes little
allowance for negative tail-end effects. Most
modern entrepreneurs are the product of business schools, where the training is
focused on maximising shareholder value with only limited understanding of the
ethical and social considerations essential to a truly visionary leadership.
In the present system one section of society is trying to maximise
profits totally unconcerned with the consequences it is having on the
well-being of the larger society, while another section is investing its time
and effort in dealing with the fallout. This system is not working.
The Alfred Nobel Memorial Prize in Economic
Sciences, instituted in 1968 by Sweden's central bank, was recently awarded for
such randomised, controlled trials that have changed the face of development
economics. What was earlier used for clinical trials of medicines has now
become a tool for gauging the efficacy of financial and social medicines.
The tragedy is that foundations cobble up money
to honour innovations by instituting awards, but they don't have enough money
for undertaking rigorous evaluation. This is one of the reasons why several
unproven innovations are making up award lists. We need a lot more rigorous due
diligence and follow p field visits to properly assess them.
The latest prize marks a new chapter in
development research, and it is a reflection of the concern which the economic
community places on a need for stringent evaluation of social interventions.
Much damage has already been done by ideas bolstered by sporadic and selective
evidence that validated the claim of the protagonists, while playing down any
negative effects. They have violated the principles of scientific enquiry and
research that are essential tools for society's betterment.
There is no that doubt that millions of people
lack access to basic services, but there are ethical questions to testing and
selling products and services in the guise of a public service, especially if
this disguise earns you subsidies or concessions from the public.
Everyone has heard depressingly familiar tales of
poor and uneducated people saying how privileged they were made to feel as they
were suddenly offered the chance to receive medicines and nutritious food they
couldn't usually afford - such interventions are in many cases part of clinical
or field trials. These people are chosen because they do not understand the
implications and agree to participate "without any fuss".
A social innovation typically involves an
unsettling of the status quo - and these disruptions may impose new costs for
some members of a community or elements of an ecosystem. Yet when the impact is
measured, there's a tendency to avoid assessing the full range of positive and
negative impacts, and to only focus on measurable effects within the "good part
of the impact spectrum", which is what is crucial to mobilise investment.
Much less effort is put in for measuring the
potential negatives, knowing which is critical from the perspective of the user
community. While it is true that several innovations become useful after a
period of refinement, the final impact can only be measured by understanding
the damage caused in the transition period.
Innovators must give importance to this window
before embarking on large-scale experimentation, and must take measures to
minimise the negative consequences.
We often mistake innovation for invention.
Innovators are anything but inventors. They offer deliverables because their
focus is on taking something already known and improving it. Inventions are the
real breakthroughs, as they transform entire cultures for the better. But the
real touchstone for genuine innovation and invention is their transformative
potential - they should be able to change the lives of neglected people for the
However, the results of strategies which are not
grounded in hard research will always be speculative. Several innovations fail
because their promoters hurry into scaling up - big numbers are important to
attract investors. All too often, the rush to scale up ends up compromising on
key design elements that made the pilots a success.
A fresh nuance in the innovation discourse is the
concept of ideas which have potential business value or strong commercial
proposition. In the new paradigm, the net benefit to society is usually
outweighed by the profit accruing to the innovators' financial backers - the
investors and political actors who are now important players in the ecosystem.
Most innovations are measured in terms of their business worth, and how
effectively they can be pitched to the investment world.
The language of innovation is getting increasingly
grounded in financial logic. Entrepreneurs may be quite well intentioned but
their funders may have a narrow agenda. Startups should think before going for
external funding because the moment they do, the investors will control and
govern the business, and they can think only about returns and exit for the
There are several beneficial social innovations
that do not get strong champions because they lack business value. Such
innovations must oftentimes be skewed to meet the needs of the funders and
their rigid financial framework. This usually results in a compliance culture
that's highly regimented, leaving little scope for creativity or attention to
important social dimensions.
Thus the tramlines are set. What can be measured
becomes the defining metric, and what cannot be measured is completely
overlooked, even though it may have meaningful impact for people. Instead of
being viewed as long-term development stewards, managers are seen solely as
agents of the owners - the shareholders - responsible primarily for maximising
We now have plenty of awards to celebrate social
innovation-and there is enough to celebrate. But there is not much recognition
for those in the social sector who are unable to scale. We do not support organisations
that innovate on a continuous basis and bring about transformational change in
the lives of neglected communities.
Societal change is very complex; it requires
system change and the acknowledgement of agency. The path to change at scale
needs many experiments, much innovation. Many ideas will not work on the ground
and will have to be abandoned, but are persisted with for supporting the
For the social sector, recognising failure early,
acknowledging one's personal and institutional role in it, leaning from the
insights, and then correcting course is very critical.
Those who work towards transformational change
will experience a higher failure rate-but these are precisely the ones who are
most likely to deliver significant results. The desire to succeed at all costs
often leads to lack of transparency about failure and destroys the critical
link between innovation and scaling-up process and damages the entire sector.
This often means that flawed strategies are replicated and iterative
improvements are delayed. This culture has profound consequences for the
There is now huge money in the field of
innovation. But much of it comes from business-minded investors who are using
this double-edged sword for their ruthlessly selfish agenda. Since the targeted
population is mostly illiterate, the innovations usually do not get subjected
to rigorous scrutiny, and negative effects are brushed off with deft diplomacy.
Even small benefits are telescoped into messianic acts.
Since such innovations have the backing of
powerful people, even genuine and widespread resistance can be overcome. The
real dilemma is that most investors take an exit immediately after they have
reaped benefits on their own, and don't have to see the longer term outcome of
their investments. They may not be around to answer and become accountable when
the evil consequences start appearing.
In their book Poor Economics, Esther Duflo
and Abhijit Banerjee list hundreds of "common sense" development projects-micro
insurance, housing, food aid, microcredit-which either don't help poor people
or make them poorer. Many of the serious problems of farmers and the rural poor
are largely a result of misguided projects that have severely impaired the
local ecology, leading to soil degradation, acute shortage of water, and
resistant pests. Such interventions also encourage "social Darwinism".
Then there are several policies which have novel
features that are not organically integrated. They have excellent ingredients
but have to be meshed in the proper proportions so that they make an effective
recipe. A policy must be seen as a living organism where each organ has its own
Every society is going through different forms of
development and the necessary solutions and interventions must be appropriate
for its unique cultural and economic context. By respecting the cultural
outlook of the people and embracing their concerns, we enlist their buy-in, and
that is what paves the way for enduring and sustainable success.