Social venturing, right up our alley

UMass Boston’s fulfillment of its urban mission is often touted through the prism of its engagement with the community to improve the human condition. So it seems like the new wave of "social venturing" washing over our community ought to be something we pay attention to.

An announcement last month of the winner of the MIT 100K Entrepreneurship Competition represents a coming of age of sorts for social ventures. A social venture won the grand prize of what is arguably the leading business plan competition in the world. Diagnostic for All is a not-for-profit venture from Harvard University aimed at delivering cheap, dispensable diagnostic tests to impoverished countries. Social entrepreneurs are similar to regular entrepreneurs with one main difference--their gains aren't measured in just financial success, but by the impact they have on society.

Perhaps the best known local social venture is One Laptop Per Child which is mass producing the extremely low cost, low power XO computer for children in the developing world. The mission is to provide a means for learning, self-expression, and exploration to the nearly two billion children of the developing world with little or no access to education. The XO initiative is not without controversy, but has inspired other businesses to market low-cost laptops of their own.

Some entrepreneurs arrive at the blending of mission and business as a practical matter of having to achieve self-sufficiency in an increasingly competitive environment. Today there are three times as many nonprofits as three decades ago all at the same watering hole. Other entrepreneurs have started social ventures because they see a business opportunity that can best be realized through a social venture.

No matter how they get there, either seeking to do well by doing good, or by seeking to do good by doing well, social venturing is really taking off around the world. This according to David Bornstein, author of the 2004 book How to Change the World: Social Entrepreneurs and the Power of New Ideas. A PBS series The New Heros ran a year after this book was published. "Take a journey into a world where people take action to make a big difference."

Harvard Business School gave legitimacy and gravitas to social ventures by creating the Social Enterprise Initiative in 1993, which has published more than 400 cases and teaching notes on topics related to social enterprise. It was the first formal academic program in the field.

In 1999, the Haas School of Business at UC Berkeley, Columbia Business School, and Yale School of Management launched the Global Social Venture Competition, the largest and oldest student-led business plan competition providing mentoring, exposure, and prizes for social ventures from around the world. Nearly 25% of entrants are now operating companies.

A group of faculty, alumni, and other leaders committed to social change at Stanford Graduate School of Business created in 2000 the Center for Social Innovation that publishes Social Innovation Review. In 2002, Columbia Business School launched the Research Initiative on Social Entrepreneurship. Also in 2002, Duke University established the Center for the Advancement of Social Entrepreneurship in the Fuqua School of Business. It is a research and education center that promotes the entrepreneurial pursuit of social impact through the thoughtful adaptation of business expertise.

The efforts undertaken by the business schools have not gone unnoticed by the Aspen Institute, a leadership think tank, which ranks MBA programs that are integrating social and environmental topics into their core classes, electives, and academic research. Stanford was the 2007 top school in its "Beyond Grey Pinstripes" biannual rankings of business schools.

How have social ventures fared? In 2002, the Investor's Circle collaborated with Harvard Business School and McKinsey & Company to conduct a study of the financial returns on $72 million of member investments over 10 years. The study found that companies generated respectable returns comparable to the stock market. The study was published in the McKinsey Quarterly, A Halo for Angel Investors.

Many of those who manage non-profits will tell you that it seems that they spend more time raising money than actually working toward their cause of choice. The competition for donations and gifts seems to get tighter every year. And so-called donor fatigue seems to be becoming almost epidemic. That is why more social ventures are moving toward business models that are self-sustainable without reliance on the generosity of benefactors.

The relentless won't-take-no-for-an-answer quality of entrepreneurs is what give social ventures an edge. They absorb failure, they learn, they surround themselves with a good team and then they redirect. These same attributes can result in community-changing solutions.