Social entrepreneurs are individuals who deploy innovation and market forces to fill social needs rather than seeking financial rewards (although rewards are not automatically excluded).
Many forces are driving this entrepreneurial trend and feeding into it. Bringing lighting to Africa, mobile banking to Bangladesh, and low-cost healthcare to Nepal, among other examples, are social entrepreneurial initiatives.
Two questions arise here: what do such enterprises need to do to achieve growth, and how can they do it?
RippleWorks, a private foundation that supports emerging market entrepreneurs by providing them with leading Silicon Valley executives as advisors asked these questions in a recent survey of 628 social entrepreneurs from all over the world. The research, conducted with analytical support from McKinsey, and funding from Omidyar Network, included interviews with 37 investors and 10 social enterprise leaders. The entrepreneurs reported that the two most important barriers to growth are the following:
- Money: Almost half of the interviewees said raising funds was “very” or “extremely” challenging. Other resources are not readily available either.
- Finding and keeping talented people: Three-quarters of funded, early-stage companies believe that the inability to access the talent they need will have a critical impact on their businesses. The prestige, pay, and job security of big companies are difficult to resist. Even when funded, social entrepreneurs cannot compete head to head on that basis.
Other challenges faced by social entrepreneurs might be:
- Conflicts: While the overall goal is to meet a social need, there may be conflicts in how this can be balanced against the need to generate revenues to sustain the enterprise.
- Voluntary nature: The traditional forms of motivation and organizing, in addition to the different managerial functions, might not be applicable to social entrepreneurs since the motives for work are different.
Key Characteristics of Social Entrepreneurs:
A social entrepreneur uses the same process of entrepreneurship but does so to meet social needs and create value for society. These people have the entrepreneurial profile but target their effort at a different, socially valuable direction.
Key characteristics of this group include being:
- Ambitious: social entrepreneurs are driven by the purpose to reverse major social issues–poverty, healthcare, equal opportunities, etc. with the underlying desire and passion to make a change.
- Mission driven: their primary concern is generating social value rather than wealth.
- Strategic: like business entrepreneurs, social entrepreneurs seize and act upon opportunities that others miss.
- Resourceful: due to the limited access to resources, social entrepreneurs are exceptionally skilled at mustering and mobilizing human, financial, and political resources.
- Results-oriented: social entrepreneurs are motivated by the desire to see things change and to produce measurable returns. These returns are related to making the world a better place by improving the quality of life, providing access to basic resources, and supporting disadvantaged people.