This January, teaching at MIT, I think I had an important realization about social entrepreneurship. In simple terms I think of social entrepreneurship as entrepreneurship directed at solving a social problem. (The sophisticated, academic definition I like is here.) "Social" is just a comment on the type of problem one selects to solve. Nothing more.
So, if social entrepreneurship is just entrepreneurship then why cannot we just use Osterwalder or Bill Aulet or BCG or my own concept of business model to think through scaling a social entrepreneurship venture. (That was the realization.) So, why do we need a special business model for social entrepreneurship. There are three reasons:
- The market conditions in much of the developing world are so tough that almost everybody needs partners to handle distribution, sales and marketing.
- To get the proper resources, one frequently has to find private sector partners where there is a match between market forces and social objectives
- If you can satisfy 1. by 2. then you can avoid the shortfall likely in qualified staff to pursue the social objective; if not revisit 1 and 2.
When one starts a new company in the U.S. one chooses the distribution channel(s), but one hardly worries about how to get product to Des Moines. In Honduras, for example, the complexity of distribution to remote cities can not be described. The best hope is to find an existing distributor knowledgeable in your product category who has the capital to finance more inventory of your product. Should one fail to secure this distributor (lack of matching between market forces and social objective), the alternative may be a donkey train at best. Repeat story for sales channels, marketing, customer education, after sales service.....
In conclusion, the difference between business models for entrepreneurship and social entrepreneurship is that one needs to find the partners and construct the matching between market forces and social objective in social entrepreneurship. In entrepreneurship, particularly in advanced countries, it is more a matching of market forces at all times and markets are efficient about allocating the necessary resources
Note (1): In determining 1 and 2, please pay attention that the business model can be replicated from country to country to continent.
Note (2): Some would argue that "becoming a movement" is a requirement of a scaleable business model in social entrepreneurship. I would agree it makes it much easier, but one needs a very special set of circumstances to pull it off.