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Social Entrepreneurship:The Power of Changing the World

Spring 2013

Chull-Young Lee

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Chull-Young Lee

Founder & Chairman, Social Enterprise Network(SEN)

Visiting Professor(SE), Sookmyung Women’s UniversityAdjunct Professor(SE), Ewha Womans University

Chairman, ARK Private Fund (Value Investing + SRI)Co-Chairman, Bausch & Lomb Korea

Seoul National University Business College(BA)Columbia Business School (MBA)

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Social Enterprise Network

Mission: Study and education of Social Enterprise.

Help youths grow to responsible leaders of the society. Partner: Fourteen(14) Business Schools, KDI, British Council Korea,

Foundation and Corporations Program: (1) Social Venture Competition Asia

(2) Social Enterprise Forum

(3) SEN Student Club Topic: Social Entrepreneurship, CSR&SRI, Global Poverty & Emerging

Markets(BOP),

Environmental Sustainability, Social Capital Market & Impact In-vesting, Non-Profit Management & Governance, ACE*, Strategic Philanthropy

*ACE: Arts, Culture, Entertainment(Education)

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Contents

I. Emergence of Social Entrepreneur

II. Social Entrepreneurship

III. Strategy and Practice

IV. Summary

Appendix: Social Enterprise Enlarged

•Social Entrepreneur: 5

Cases

•Social Entrepreneurship

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I. Emergence of Social Entrepreneur

Public Sector and Private Sector

- Industrial Revolution: 18 – 19C

Private Sec-tor(Business Sector)

Public Sector

-Social Problems: Concentration of wealth, Suppressed Hu-man Rights,

Destruction of Environments

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- Gov’t and market neglect or fail to cure social problems- Emergence of NGO/NPO: in mid 19C- Explosion of NGO, NPO numbers: from 1970

Emergence of Social Sector and NGO/ NPO

Public SectorPrivate Sec-tor(Business Sector)

Social Sector(Civil Society)

NGO, NPO

NGO, NPO:Indonesia 2,000, Bangladesh 20,000India 2,000,000, Europe 1,000,000, U.S. 1,000,000, Korea 20,000

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○ Social Service Provider: Social Enterprise- Charity-based approach- Ex: Rainbow Cookie: Employs 40 mentally retarded youths. Produces

cookie.

○ Cooperative, Community Business: Social Enterprise- Employee and Community ownership- Ex: Mondragon Cooperative Corporation(MCC), Late 1950’s, Spain

Coin Street Community Builders(CSCB), 1984, South Bank, Lon-don

○ Social Innovator: Social Entrepreneur, Social Enterprise- Market-based approach- Bill Drayton, Ashoka: Founded 1980. Fostered 2,700

social entrepreneurs in sixty countries.

Emergence of Social Entrepreneur

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Social Enterprise Institution

• Social Entrepreneurship

– Ashoka Innovator for the Public(1980)– Schwab Foundation for Social En-

trepreneurship(1999)– Skoll Center for Social Entrepreneur-

ship, Oxford University(2003)

• Social Enterprise Program

– Social Enterprise Initiative (1993)

Harvard Business School

– Social Enterprise Program (1998)Columbia Business School

Skoll World Forum

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II. Social Entrepreneurship

Social Entrepreneur: 5 Cases

Case 1 : Muhammad Yunus

- Started 1976 with USD 27 loan to each of 42 women in

Bangladesh. Bank founded 1983.

- Micro loan of USD 6.6 Billion (5.9 Billion paid-back) to

8.1 million poor women by 2,100 branches in

Bangladesh 2007.

- Grameen’s business model(micro loan) exported to 40

countries. Helped 100 million poor women in the world

get out of poverty.

GRAMEEN BANK

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Case 2 : Paul Polak, IDE

- IDE founded in 1981, with $30,000 seed money.

- Helped 19 million poorest farmers get out of poverty

in Africa and Asia.

- Appropriate Technology

- Grant of USD 41 million from Bill & Melinda Gates

Foundation

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Case 3 : Robert Redford,

- Disappointed with money, violence & sex overly dominating Hollywood.

- Founded 1980: Movie “Butch Cassidy and the Sundance Kid” 1969

- Indie film movement: Sundance Film Festival

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Case 4: Mary Gor-don,

- Started in a class room, Toronto, Canada, 1996.

- Empathy teaching program for children:

Children observe interactions between a baby(“teacher”) and a

mother. Develops social skills.

- For 10 years since 1996, bullying was reduced by 90% in Canada.

- Program affected 325,000 children and spreaded to U.S. ,

New Zealand , Ireland, Scotland and Germany.

- Ashoka Fellow 2002, Invited by OECD and WHO.

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Case 5 : Jacqueline Novo-gratz,

- Founded 2001 by Jagueline Novogratz (Stan-

ford MBA: worked at World Bank, Rockefeller

Foundation).

- Seed capital from Rockfeller Foundation, Cisco

Systems Foundation and three individuals.

- Patient capital(equity or loan) invested in

small & growing businesses for Water, Health,

Housing, Energy, Agriculture: 26 enterprises,

36 million people in India, Pakistan and Africa

- Fund Size : USD 40 million, Investment per

project: USD 250,000-3 million, Pay-back: 5-7

years.

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- Social Entrepreneur’s characters & doings

- See social problems as opportunities.

- Use business skills to solve social problems: Market-based Approach

- Start-up business (For-Profit, Non-Profit) and change the world: Social Innovation

- Pursue Social(Environmental) and Financial values simultaneously: Blended Val-

ues

Social Entrepreneurship

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III. Strategy and Practice

• Social Mission (Social Value Proposition): Primacy

• Social Innovation• Max Social Impact (Social benefits created)

Purpose

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• Scalability- Replication- Economy of Scale

• Sustainability- Systemize∙Organize- Financial performance

Max Social Impact

Social Innovation: Replication or Economy of Scale, Mass-Market Adoption, Imitation, Ecosystem

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Social Service Provider vs Social Entre-preneur

“Social entrepreneurs are not content to give a fish, or teach how to fish. They will not rest until they have revolutionized the fishing industry.” , Bill Dray-ton

* Alleviation of the pain vs Solution to the pain

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“Almost all governments seek to work with social en-trepreneurs and their organizations. Basically they(governments) confuse them(social entrepreneurs) with service delivery providers to be subcontracted, much the same way they relate to charities and NGOs to carry out the work the state cannot do or does not choose to.” , Pamela Hartigan

* Social Enterprise Promotion Act, July 2007, Korea

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“Social service provisions never break out of their limited frame: Their impact remains constrained and their service area stays confined to a local population ∙∙∙. Millions of such organizations exist around the world – well intended, noble in purpose, and frequently exemplary in execution – but they should not be confused with social entrepreneur-ship.” , Roger Martin

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• Application to market- Technologies- Ideas

• Mobilize market power- Target market- Different interest groups

*Appropriate technologies*Use feet

Market Application

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• Start small• See large issue (opportunity)

*Use feet

Prac-tice

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Market Sur-vey

- Existing cases- Potential competitors

*Use feet

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Alliance and Partnership

PPP Model:Gunpo English Language School Hybrid Value Chain (HVC)

Partnership: Corporation + Social En-terprise

*Use feet

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Entry Barrier: Competitive Advantage

- Build- Open

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Chemical Integration

- Social value + Financial value

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Replication, Economy of Scale

- Cooperative- Community development- Global perspective

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Hybrid Model• Social Service + Social Activism + Social Entrepreneurship

Ex: Florence Nightingale

• Standard Setting or Certification (Social Activism)+Social En-

trepreneurshipEx: Fair Trade USA, Cafedirect UK

• Social Activism + Social EntrepreneurshipEx: DiD(Dialogue in the Dark)

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Social Impact

- Quantify & Monetize- Impact Value Chain- Social Return on Investment: SROI- Qualitative assessment

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Impact Value Chain

Inputs

Activities

Outcomes

Outputs

SROI

: Social Indicators

: Social Impacts (Social benefits cre-ated): Social Return on Invest-ment

Social Mis-sion

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- Make breads to employ?

- Teach how to catch fish?

- Distribute profit to giving-back?

- Higher Social, Lower Financial Values?

- Social Entrepreneurs are born?

- Social Venture is a growth without employment?

Misunderstandings & Truths

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Key Words

• Social Mission

• Social Innovation

• Scalability & Sustainability

• Market Application

“Doing Good, Doing Well”

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MarketSocial Mis-

sion

“Put Horse before Cart”

IV. Summary

“Doing Good, Doing Well”

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Appendix: Social Enterprise Enlarged

Strategic Philanthropy

Non-ProfitManagement

& Governance,

ACE*

Social Entrepreneurship

CorporateSocial

Responsibility

Global Poverty,Emerging Markets

&

Int’l Development

Environmental

Sustainability

Social Capital Market & Impact Investing

Social Blended Value Spectrum Financial

Sustainable Development

SociallyResponsibleInvestment

*ACE: Arts, Culture, Entertainment(Education)

Cooperative Community Busi-ness