Entries in mutuality (54)


Social entrepreneurship – new management theory or new marketing buzzword?

Social entrepreneurs, social enterprises – you’d be hard-pressed not to find these terms in recent headlines. Many businesses are starting to turn their attention and their dollars towards making a social impact. But are these terms simply new marketing buzzwords or part of a new management theory set to transform the corporate world?

In a recent Forbes article, Willy Foote, CEO and founder of Root Capital, a non-profit agricultural lender building rural prosperity in developing markets, set out to determine the difference between social entrepreneurship as a marketing buzzword and as a true management theory.

Foote turns to Sally Osberg and Roger Martin, experts in the field. Osberg, president and CEO of the Skoll Foundation, and Martin, a former dean of the University of Toronto’s Rotman School of Management and a Skoll Foundation board member, co-authored the book Getting Beyond Better: How Social Entrepreneurship Works.

The book explains that in its true form, social entrepreneurship doesn’t aim to replace an existing broken system. Rather, the enterprise takes direct action by leaving the broken system in place, with the ultimate goal being to transform it permanently into a superior and stable system. Take small-scale farmers in developing markets for example. A true social enterprise doesn’t aim to replace the existing system of workers, operations and supply chain management. Rather, the goal becomes providing financing and training so jobs are created and incomes increased, and as a result, related issues such as food insecurity, emigration and youth unemployment are addressed. A true social enterprise recognizes that challenges won't be solved overnight and that changing equilibrium takes time and patience. To become a true social enterprise, Osberg and Martin offer the following four-step management-style approach:

•    Understand the system in its current state;

•    Envision a future state;

•    Build a sustainable model for achieving the future state; and

•    Scale the model appropriately.



Corporate longevity

If corporate success can be defined, at least in part, by longevity then it is sensible to look for common elements among organizations that have survived and thrived for the longest period of time. The Financial Times has been doing just that, and I enjoyed this piece on corporate values.

One interesting finding was that strong corporate values appeared to be essential to corporate longevity; essential but not sufficient on their own.

Probing further, one theme that emerged was that sensitivity and agility--an ability to cope with change--is an essential skill. Companies are communities of people, and Gerald Storch, chief executive of Hudson’s Bay Company, noted that adaptability meant paying attention not only to customers, but to employees too. “Listen to your people because they know what is going on. They know what is right and what is wrong, what will work and what will not work.”

Tolerance is also called out as an essential trait; companies that survive over the long term are tolerant of elements within the business exploring around the far edges of the current business. They are well positioned to take advantage of innovations and new opportunities when the competitive, regulatory, or technological landscape shifts.

-- Clara Shen


Money as a system of rights and duties

I enjoyed a recent feature in the Financial Times that made me think differently about the meaning and purpose of currency.

Sardinia, a large island in the Mediterranean sea with a population of about 1.6 million, has seen its fair share of economic struggles over the past several decades – most recently, the 2008 financial crisis. Although the eye of the financial crisis' storm wasn't directly over Sardinia, its effects were seen locally. Banks stopped lending, people stopped seeking loans and unable to secure credit, businesses began to fold.
A group of Sardinian natives took matters into their own hands and developed a solution – creating Sardinia's first local currency, the Sardex. "There was no other option," said Giuseppe Littera, one of the currency's co-founders, "but to let companies create their own money." The initiative has turned into a symbol of action over the past six years since its launch, spreading to create a new network of thousands of businesses. Together, they have traded nearly ‎€31.3 million in Sardex this year.
It has some interesting characteristics. The Sardex is not printed, nor is there an algorithm that generates digital coins. Rather, it functions as a system of mutual credit. Each participating firm begins at zero and earns its digital currency as it offers goods or services to others in the network. Companies may go into debt, but only to a certain point – the level determined by what they can offer the other participating firms. There is no interest on Sardex; it functions solely as a means of exchange.
"Money becomes information," explains Sardex co-founder Carlo Mancosu. "But, above all, money (here) is a system of rights and duties. From the monment that I take from a community – as is the case in Sardex – I am in debt towards that community; when I settle that debt with the community, I have given what I have received."
Sardinia isn't the first region to launch its own currency – others have tried, having varying degrees of success – nor will it be the last. The model is already finding its way into Italy and there are reportedly trials under way to create local currencies in Veneto, Piedmont, Emilia Romagna, March, Lazio and Sicily.
It goes to show that regions, businesses and individuals can be innovative in many ways in order to address pressing economic issues.

Image source:

-- Clara Shen


Another view on sustainable social business

We are very interested in the work that Erik Simanis is doing in the sphere of social business and new business models. Erik is passionate about social impact, and with an MBA and PhD in business strategy and sustainability, he has guided start-ups, green-field ventures, and product teams in Eastern Europe, Africa, India, and South America over the past 20 years.

As his work makes clear, he is not interested in vague notions of social responsibility or “shared value” that have no foundation in real-world business principles. We recommend two papers (both published in the Harvard Business Review) for an overview of Semanis' outlook and approach (click on titles for the full text):

  • Reality Check at the Bottom of the Pyramid -- "If companies wish to launch flourishing ventures capable of transforming the lives of millions of low-income people across the developing world, they must get back to basic business tenets. However laudable its mission, a business built on unrealistic expectations will fail just as surely at the bottom of the pyramid as in a developed market."
  • Profits at the Bottom of the Pyramid -- "Blinded by devotion to social missions, too many companies with grand ambitions overlook profitable opportunities that match their resources and skills and jump into ventures that overwhelm their capabilities. A more realistic assessment of the challenges at the bottom of the pyramid can help companies generate the profits that will make socially beneficial businesses sustainable over the long term."

While we may approach some of the practical challenges from a different direction, we share a commitment to rigorous measurement and building an approach to social business that is sustainable for the long term.

-- Bruno Roche and Clara Shen


Addressing Ghana's counterfeit drug problem one text at a time

Image Source: Bloomberg, Photographer: Nana Kofi Acquah

Drug Lane, which runs through a market in the heart of Accra, Ghana, is littered with vendors selling painkillers and antibiotics from various pharmaceutical companies, reports a recent Bloomberg article.  Drug Lane's system, however, has such little oversight and is so permeable that as many as one in three medicines sold there could be counterfeit, according to the U.S. Centers for Disease Control and Prevention, compared to just 1% in the U.S. and Europe. This is a major issue for Ghana and other African regions, where according to one study, fake and poorly made malaria drugs contributed to the deaths of more than 100,000 children across Africa.

While many agencies and NGOs have tried to address the issue, one Ghanaian entrepreneur in particular is making headway in the crackdown of Drug Lane and other areas like it. Bright Simons launched his company, mPedigree Network, in 2007. The company sells software that manufacturers use to label individual packs of medication with a 12-digit code hidden under a scratch-off panel on the packaging. Those who purchase the medication can text the code to mPedigree to determine if the product is authentic or not. The company believes that being based directly in one of the regions worst hit by counterfeit drugs offers a competitive advantage, and others agree. According to Jorn Lyseggen, a San Francisco-based entrepreneur:

African entrepreneurs, African startups, (and) African companies, of course are the first and the best to find a solution to local problems.

Technology and local knowledge are powerful tools to help address social issues like counterfeit drugs in African regions. Here at Mars, we are working with one startup through our Kenya-based entrepreneur accelerator program, Maua, called Reliefwatch. The startup helps developing countries that lack the infrastructure to effectively manage supply chains track expired and out of stock medications and medical supplies through cloud technology.

We want to hear from you. Are there other examples in developing countries where technology is intersecting with social issues to drive solutions?

-- Clara Shen