Entrepreneurship with a positive social and environmental impact
HEC Paris Professor Florian Hoos, an expert in social entrepreneurship and change-making, defines social entrepreneurs as individuals who see innovative solutions to social and environmental challenges and then turn their ideas into a business reality in an entrepreneurial way.
The starting point for most social entrepreneurs is identifying a social or environmental issue, Professor Hoos says. Their next step is to determine how this challenge can be addressed within the framework of a sustainable business model.
The aim is to find a market opportunity that helps to solve social and environmental issues at the same time. "When you create your business model and later on scale your business, the main challenge is to not drift away from the social mission, which should be your priority,” he states.
THE RISE OF THE SOCIAL ENTREPRENEUR
Social entrepreneurship is gaining momentum and Professor Hoos attributes this upsurge to an increased sense of social awareness among three key groups.
First of all, there is the younger generation. Just approaching the job market, they want to make an impact through their work. "They understand, as Greta Thunberg said, 'our house is on fire'," Professor Hoos explains. "They feel the quickest, most efficient and perhaps the most rewarding way to contribute to a better world is through social entrepreneurship.” He states that this younger generation also has powerful tools to mobilize the masses – an obvious asset when you want to create an impact.
The second group is composed of individuals who have already achieved financial success and now want to contribute to the greater good. Often, these entrepreneurs have reached a turning point in their lives where they want to stop focusing on their own careers and start giving something back.
The third group is made up of people who have suffered from social injustice or have been directly impacted by environmental issues. Professor Hoos refers to this group of emerging social entrepreneurs, who have dedicated their lives to correcting past wrongs, as the “warriors.”
The challenges of social entrepreneurship
If you are in a traditional company, says Professor Hoos, your main goal is, to put it simply, to make a profit. When you are a social entrepreneur, however, "you have different targets that are equally important.” Not only do you have to generate revenues, you also have to achieve tangible social and environmental impact. He adds that this can make the management of the organization difficult – "especially when it comes to adequately setting up your management control system and the incentive system for your employees ". Then, there is the challenge of attracting investment. Investors might be interested in the entrepreneur's business ideas, but less enthusiastic about the underlying social mission – and those investors who are interested in social and ecological impact often do not invest in early stage social entrepreneurs. This is also why early stage social entrepreneurs often use crowdfunding platforms.
Another challenge for social entrepreneurs is measuring the organization’s impact on society and the environment. He says traditional companies measure profit according to a "standard set of rules like International Financial Reporting Standards or US-GAAP". However, when the aim of a project is also to have a social and environmental impact, then it is harder to measure these non-financial impacts. There is simply no single standard for social and ecological impact measurement.
Entrepreneurial projects making an impact
Many social enterprises are achieving success. For Professor Hoos, two organizations in particular come to mind. The first is bKash, a Bangladesh-based company that provides money transfer services via mobile phone. The business model of bKash has been built around one key observation – that although only 15% of Bangladeshis have bank accounts, over 70% have mobile phones. This type of service is a striking example of financial inclusion that provides a route out of poverty.
Another socially impactful company is Dialogue in the Dark. During its Dinner in the Dark service, blind waiters provide customers with a unique sensory experience by serving a surprise meal in complete darkness. The aim is twofold - to offer well-paid and meaningful jobs to blind individuals and to “change mindsets and facilitate the social inclusion of visually impaired people on a global scale.”
Professor Hoos believes passion plays an essential role in launching an entrepreneurial project that has a positive social and environmental impact. In many cases, the most driven change-makers are people who have experienced social or environmental issues themselves. “Ultimately it is this passion to find innovative solutions to social and environmental issues that drives success.”