On Social Entrepreneurship

I recently shared lunch with a young friend home from college for the holidays who is engaged in a social entrepreneurship project at his university where teams of global participants compete for grant money.  These teams will be judged on their “social entrepreneurship.”  While I have seen the term social entrepreneurship in print media, I didn’t really know much about it until I started doing some research.  My conclusion is social entrepreneurship is nothing more than a 21st  century label used for marketing purposes.

triple-bottom-line-environment-2-mar11According to Wikipedia: “Social entrepreneurship is the process of pursuing innovative solutions to social problems.  More specifically, social entrepreneurs adopt a mission to create and sustain social value.  They pursue opportunities to serve this mission, while continuously adapting and learning.  They draw upon appropriate thinking in both the business and nonprofit worlds and operate in all kinds of organizations: large and small; new and old; religious and secular; nonprofit, for-profit, and hybrid.”

After several hours researching social entrepreneurship, the only distinction I can see that separates the social entrepreneur from the conventional entrepreneur is WHO appreciates the entrepreneur.  Those who are deemed champions of social entrepreneurship seem to have one thing in common; they tend to be left leaning liberals who are quite vocal about their social passions.  You are not going to find many WASP Republicans in the social entrepreneur’s hall of fame, even if they donate millions (e.g., Chik-fil-A) to worthy social causes.  If a successful entrepreneur is not overtly liberal in their social and political leanings, they are often vilified as being greedy capitalists; however, if they have earned billions of profits as capitalists but actively support liberal causes such as gay marriage, environmental issues, or wealth redistribution, they are awarded the more respected moniker of social entrepreneur.

I can’t think of three entrepreneurs who have done more to improve society than John D. Rockefeller (cheap oil), Andrew Carnegie (cheap steel) and Bill Gates (cheap computing); however these three icons of innovation and positive social change evidently aren’t studied, emulated, or valued by those who hand out the social entrepreneur certifications.  On the contrary, industrialists who grow wealthy enough to give billions to worthy social causes are often vilified by those who hold social entrepreneurs in high esteem.

You don’t even have to be very effective at positive social change to be lauded as a social entrepreneur, you just have to make the people supporting you (customers and employees) feel good about doing so.  Take for example the appropriately named company FeelGood.  FeelGood is an organization recently highlighted in Forbes as a social entrepreneurial success, and since 2005, has logged 128,000 volunteer hours handing out 150,000 grilled cheese sandwiches from 25 locations for the purpose of raising money (in their case, $1.5 million) for the goal of eradicating world hunger.  While $1.5 million seems like a lot, when you start doing the math, it would have been more economically effective if those volunteers had just worked as waiters at Applebee’s or the Olive Garden (not deemed socially entrepreneurial) and donated their tips.  I know dozens of businesses who have given away more than $1.5 million since 2005, and they didn’t have the manpower resources that FeelGood has at its disposal.  In contrast, The Economist estimates the Catholic church donated $171 billion towards social causes in 2010 alone, and practically every Mormon church in the world is more effective at food distribution than FeelGood, so what is so entrepreneurial about FeelGood?

triple bottom line SeptemberTo me, the social entrepreneur labeling phenomenon is a 21st century marketing ploy to attract Millennial customers, investors, and employees who choose feeling good over being good.  As another young friend recently said about his generation:

“It is very important that we feel good about our social contributions, even though we aren’t necessarily interested in DOING the difficult things necessary to bring about positive change.

Paying a few dollars more for a product or service to a company that promises to use some of its profits to protect the Amazon rain forest or eradicate poverty in Bangladesh seems like a fair tradeoff to feel good, particularly if it doesn’t deprive us of anything or require any effort on our part to promote sustainable social improvement.  The sticky point is, more social good would probably come from buying less expensive products or services from companies not deemed socially entrepreneurial and donating the difference to worthy causes.  However, like my young colleague stated, it is easier just to pay more for the social entrepreneur’s product, feel good about it, and not have to do any unpleasant check-writing, volunteering, or rainforest-saving ourselves.

In the same way food companies are ethically and unethically attempting to secure hormone-free beef stamps or organically grown vegetable certifications, companies are working hard to impress Millennial customers, investors and employees with their social entrepreneurship credentials.  The next generation of consumers wants to feel good about the products they are buying or the companies where they are working.  Millennials have grown up having the cash to pay more than market price for the goods and services that make them feel good, and earning less wages from a social entrepreneur employer is often offset by parents paying for many of their living expenses (housing, cell phone, car insurance, etc.).  

Even colleges and universities have gotten on board, offering entrepreneurship degrees at the undergraduate and graduate level for the purpose of attracting Millennial students more interested in good feelings than good outcomes, especially when someone else is paying the tuition.  (I really shouldn’t be so hard on Millennials;  it isn’t their fault they are being played by older college recruiters and professors who are appealing to the naiveté’).

Many of the participants in my young college friend’s social entrepreneurship project come from third world countries where rule of law, free market capitalism, freedom of speech, and limited government are merely pipe dreams.  It is very difficult to apply business solutions to social problems when corrupt and immoral governments aren’t interested in reducing bureaucracy, opening new markets, or supporting free trade.  There is very little incentive for aspiring entrepreneurs to succeed in business for the purpose of positive social change when local thugs, constables, and government bureaucrats are allowed to shake them down for extortion money whenever they earn a few bucks.  Until an environment exists where entrepreneurs (social or otherwise) can prosper without fear of losing the fruits of their efforts to corruption, usury, and outright theft, there will be little incentive for entrepreneurs to bring positive social change to their respective communities.

When I shared with my young college friend at lunch my cynical views on social entrepreneurship, he asked me what I thought was a better alternative.  First of all, I recommended he study and apply the principles of limited government, free markets, and federalism as they were understood at the time of the U.S. Constitution’s ratification.  The more liberty a citizenry has, the more innovation and economic security a society will enjoy.  Secondly, I told him the most effective positive social change always comes from individuals with indomitable spirits, creative minds, proper knowledge, and most importantly, good hearts.  As a student of a prestigious university, others will naturally expect his leadership upon his graduation; therefore, if work towards positive social change is his life calling (which should be the calling of all of us), I encouraged him to: 1) seek truth, 2) study hard to be the best businessman, lawyer, teacher, doctor, leader, whatever, and 3) continually work on having a good heart.  Finally, I encouraged him to run, not walk, away from any college classes, departments, or degrees that specialize in social entrepreneurship, lest he be distracted from taking classes that will legitimately equip him for the important work of finding workable solutions to society’s biggest challenges.

History shows the greatest social contributions come from individuals who are focused on doing good rather than merely feeling good.  Labels like: Social Entrepreneur aren’t catalysts for positive social change; in fact, such labels are divisive, distracting, and wasteful.  Instead, positive social change comes from people who systematically give more than they take from every personal and corporate relationship.  If we want to positively change the world via business style innovation, wealth creation, and leadership processes, then we should focus on innovating, creating wealth, and leading effectively, and avoid wasting our time pursuing fancy labels.

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