THOUGHTS POST SKOLL WORLD FORUM:

When it comes to sustainability, one of the things that has always nagged me about companies that “go green” is that it typically just means recycling things around the office, some minor carpooling and installing or purchasing renewable energy.  There is nothing wrong with these efforts, but it’s a bit like the Human Torch staving off Mr. Freeze with a Bic Lighter.  Sure it’s the right direction and maybe even setting a good example others will follow, but it’s a serious, nearly negligent under-utilization of power.

The vast bulk of most companies’ environmental and social impact comes well before they decide how to power the lights in their offices.  The majority of a product’s impact is often in the sourcing and manufacture of its material components.  In others, like automobiles, the impact is in how the product is used (ie burning fuels for 10 years).  Rarely, therefore, is the majority of a company’s impact in the scope of a typical greening agenda.

Sustainable sourcing is a major step forward and was the subject of the session Sustainable Sourcing: The Business Imperative.  Moderator Roger Martin, Dean of the Rotman School of Management at the University of Toronto led an interesting discussion on the topic and seeded the most interesting and actionable insight in the process.   Together with the panelists, William Rosenzweig, Co-Founder and Managing Partner of Physic Ventures, Mary Jo Cook, Chief Impact Officer of FairTrade USA and Jason Clay, Senior Vice President, Markets of World Wildlife Fund US, the Dean Martin explored audience selected topics.  The process started with a macro conditions exploration including these gems paraphrased from Jason Clay –

The foreboding:   In the next forty years we have to produce as much food and fiber as in the last 8000

The more hopeful (room to improve):  the bottom 25% of producers create 50% of the impact and only 10% of the products

The most interesting portion of the discussion was that on the barriers to adoption of truly sustainable sourcing, playing off some highly relevant audience members.  It became clear that there are indeed political barriers in convincing CEO’s and investors that sustainable sourcing can be good or at worst neutral to the bottom line and communication challenges in bringing that message down through organizations to the purchasers who ultimately select products.  But, an undercurrent that had been popping up throughout the discussion became acutely apparent.  There is a very real practical challenge in enacting a sustainable sourcing policy.  Supply chains are so complex and often opaque that it is incredibly challenging to actually determine how much carbon or water may be required to produce a product or whether all components meet humanitarian or labor standards.

The need, as Dean Martin highlighted, is for a comprehensive toolset to allow all actors in the value chain to enact sustainability goals.  He advocated an assemblage of foundations and non-profits working in related areas to come together around this issue as one that can transform so many others.  I believe he is right that all too often those seeking change will look to closely at their particular issue’s direct on the ground impact, and miss the root causes or potential solutions that could exist.  He further advocated that this assemblage work to create a tool map of sorts which can be disseminated and then broken off by anyone who can fill the puzzle.

This got me excited and thinking:  This could be a real step towards real change.  But, what would such a toolset include?  My own first pass would be:

-        Open supply chain mapping data & software

-        Common ranking and metrics for impacts – positive and negative

-        “Additive Impact Analysis” – my name for the ability to take the impact of a component product and add it to the whole, all the way through the value chain

-        Choice software that allows a purchaser to quickly see the impacts and balance them against cost and more common factors quickly and clearly

-        Better business methodologies for measuring supply chain risk as it relates to environmental and other “soft” factors

-        A mechanism for supply chain insurance that does not require creation of a duplicate supply chain but instead makes existing ones more distributed, sustainable and secure

-        Public indexes for key environmental data from suppliers around the world.  This can help bring aid and attention to the worst and plaudits for the best

-        A more comprehensive consumer facing labeling system – there are too many to the point where impact is being lost

-        Metrification of environmental and social impacts

It’s imperative that those who have super-hero leverage over the levers of the global sourcing system activate them.  The top 1000 companies control 33% of the global economy; if they act, the world changes.  What tools do you think are missing to convince even a less forward leaning company that they can source sustainably?

This is a guest post by Michael Thornton, a current Skoll Scholar and MBA student at Said Business School, University of Oxford, who attend the Skoll World Forum this April.

(Photo: Antonio Viva, Creative Commons)

By Brittany Koteles

In 2012, crowdfunding platforms grew 81 percent, while venture capital investments fell for the first time in three years. While I’m not here to forecast the death of VC, I do believe that the growth of crowdfunding implies some radical changes for the future.

Compared to the rigid nature of traditional funding mechanisms – where most social entrepreneurs won’t raise anything but eyebrows – crowdfunding is the biggest democratization of capital access in history. That’s big. According to a recent study by Massolution in 2012, it’s 2.7 billion dollars big.

Over ten percent of that hefty sum comes from Kickstarter alone, one of the leading platforms in the field. Kickstarter, along with peers like Indiegogo and RocketHub, has pioneered the crowdfunding market and refined the user experience of online giving.

Another wave of change will come with the pending implementation of the JOBS Act, allowing a person to sell his company’s equity on crowdfunding sites. Besides a handful of countries in the world, law usually reserves this power for accredited investors – really rich people that make up about 1 percent of the population.

But while we still expect change from the giants, we’ve only begun to scratch the surface. With hundreds of other platforms coming onto the radar, crowdfunding still has much of its story to write.

Crowdfunding may have been born on the internet, but the best innovators in the market are finding ways to build meaningful bridges between projects and their funders. “The true power of the crowd isn’t about random people showing up on the web,” says Chance Barnett, founder of Crowdfunder, one of the companies leading these changes. “Crowdfunding has a higher evolution…one that is all about connecting real people in real communities. It’s an idea whose time has come.”

Identity, not serendipity, is what gets funding to ideas that deserve it. There are a few ways crowdfunding is beginning to evolve beyond massive platforms, but all of them have this basic tenant in common.

Face-to-face.

On April 23, Crowdfunder will launch its first edition of CROWDIMPACT, an online-offline live pitch event for social enterprise. Over 100 social enterprises have vied for twelve spots to pitch to over $100 million in capital, and one of them will walk away with a $20,000 prize. Finalist Tippy Tippens says that like-minded partners are a timely necessity Matter, Inc, which she founded in the wake of the BP oil spills. “We just became the first B-Corp in Louisiana and we have a whole stock of new social goods…making new connections at CROWDIMPACT could significantly help us extend our reach. And it wouldn’t hurt to win one of the prizes!”

Crowdfund thy neighbor.

Another emergent breed is hyper-local platforms, where backers invest in the people and projects in their own community. With platforms like New York-based Lucky Ant, a backer’s zip code – not an algorithm – determines the projects she browses. This spring, Lucky Ant went a step further by launching a special campaign to help Coney Island SMEs get back on their feet before the summer season.

“Small businesses aren’t going to be getting assistance from the Red Cross,” said cofounder Jonathan Moyal. “Sometimes, the little guys get left by the wayside.” If each community had its own crowdfunding platform, citizens could quickly respond to both immediate needs and inspiring ideas.

Divide and conquer.

What will happen when there are thousands of platforms out there? Will the glass ceiling shatter?

According to Alex Feldman, probably not. Feldman founded CrowdsUnite to help individuals make sense out of the huge amount of platforms in the market (they count more than 700). According to him, “As long as niche sites differentiate themselves from the larger players, they will not go out of business.” In fact, they just might end up driving the social innovation industry.

Many smaller, specialized platforms have converted into critical rabble-rousers for a specific cause. MedStartr, for example, clearly states that its mission is to “crowdfund the healthcare revolution.”

The startup – whose seed money was also raised with crowdfunding capital – filters projects with a rigorous clinical review process and offers free mentoring for participating projects. “The consultative services is our secret sauce,” says Alex Fair, MedStartr’s founder. “These people didn’t go to business school, they went to medical school. [Supplemental mentoring] is one of the reasons why our clients have raised millions online and offline.”

Mosaic is turning the energy industry upside-down by bringing solar power to the mainstream. Through Mosaic, individuals invest money in solar projects like the People’s Grocery in Oakland, CA. When the project is up and running, investors receive interest that’s higher than they would get at the bank.

Although debt equity is technically different from crowdfunding (a close legal “cousin” of sorts), Mosaic is one of the most innovative examples of how investment from the masses can spark a movement.

Similarly, Kiva’s Green Loans have provided over 2,600 small-scale loans for renewable energy projects in developing countries.

“The reality is that clean renewable energy is out of reach for the vast majority of those who need it most,” says Premal Shah, president and co-founder of Kiva. “Now, with crowdfunding, we have the opportunity to come together to support a cause that affects all of us, one microloan at a time.”

March on Washington, Version 2.0

There is no shortage of examples of how crowdfunding is becoming a vehicle for broad social causes – from (legally) freeing copyrighted books to the world, to solving domestic hunger – and their numbers are growing every day. Community-centered, issue-specific crowdfunding platforms could become the next big revolution-igniters in 2013 and beyond. No longer about funding isolated projects, these networks are investing in relationships, communities, and downright movements.

May the crowd go wild.

Brittany Koteles is a Spain-based writer on social impact and serves as the community director at HUB Barcelona.

(Photo Courtesy of Creative Commons Images)

by Mark Clayton Hand

The Skoll World Forum, the world’s glitziest talking shop on social entrepreneurship and impact investing, is full of conversations. Here are four topics receiving major attention this year (and one that should be).

1. How to engage governments

At the CASE-hosted conference on impact-investing at Skoll on Wednesday, Katherine Fulton reminded her audience that when the term impact investing was coined five(ish) years ago, policy was nowhere on the agenda. Today, however, most impact investors and social entrepreneurs are ready to acknowledge the centrality of policymakers to having more than local-level change. For impact investors in developing markets, access to policymakers serves as a critical component of its investment model. Big Society Capital’s increasingly central role in the UK social entrepreneurship market would not have been possible without support by politicians, and social impact bonds often depend on a governmental partner. The Strive Network in Cincinnati work on collective impact relies upon the participation of government partners. And so on.

2. The importance of telling stories

Wandering around the Skoll World Forum this year is an interesting bunch: the Sundance Institute, Participant Media (the folks that brought us Lincoln), NPR, PBS Newshour — storytellers. At the same time that the social entrepreneurship world is wrestling with how to tell its story, storytelling itself is changing to reach the Millennials who, according to Sundance’s Cara Mertes, multitask so much that we pack 36 hours of activity into every 24 hour day. On August 1, Participant will launch its latest, most ambitious effort yet: Pivot, a television station to carry forward its efforts to tell stories with meaning and purpose.

3. Impact investors’ (lack of?) risk tolerance

During a session with Skoll Scholars, IGNIA’s Álvaro Rodríguez read out a quote from a much-discussed report on social entrepreneurship:

The overwhelming majority of impact investing funds and  we spoke to expressed a strong preference for investing in the later stage, certainly after commercial viability had been established and preferably once market conditions were well prepared for sustainable scaling.

This, Rodríguez pointed out, is not risk-tolerant capital. If impact investors want their investments to be truly disruptive (the theme of this year’s Forum), they will have to follow the lead of their most risk-tolerant peers; risk, Rodríguez argues, is a necessary by-product of innovation.

4. How foundations (mis?)manage their assets

In the U.S., foundations are required to give away 5% of their total assets each year. The rest is handled by finance professionals trained to invest in a wide range of assets, maximizing return in order to ensure the perpetual existence of that foundation. What does this mean? That many foundations — including those focused on changing how markets hold investments in the very same companies and structures that they are fighting against.

Total Impact Advisors’ Arthur Wood says that shifting 20% of foundations’ assets to mission-related investments could unlock over a trillion dollars of investment at a cost of roughly five billion dollars. Debra Schwartz of the MacArthur Foundation pointed out another cost of shifting dollars into riskier investments, namely the money that would no longer be available to put into causes and research that no investor with profit motives will touch.

5. The unspoken centrality of faith and religion

Ten years on, social entrepreneurship remains primarily charity-funded, be that through philanthropic families like those of the Bing Bang network or, foundations like Skoll and Echoing Green, or indirectly by foundations like DOEN Foundation that act as limited partners (LPs) in impact investing funds. The link between charity and religion is a similarly tight one: in 2011, religious groups took in a third of U.S. charity, and religious people are more likely to donate to charity than secularists. If social entrepreneurship is charity-funded, and much charity stems from religious conviction, religion ought to be a (big, open) part of the conversation.

This was originally posted on PolicyMic.

Photo Courtesy of Skoll World Forum.

Recently Priya Jaisinghani, Teressa Trusty, and I brought together a few folks to have an informal Technology Salon around the pertinent question of how can the development community get technology to scale?

We all know we have a problem – just look at the map above. We say our work in ICT4D, M4D, mHealth, ICT4E, etc will reach “scale” and even (financial) sustainability, yet the reality is a profusion of similar software and technology applications around the world that never leave the pilot phase. We focus on responding to RFP’s that ask for something new or innovative with limited, bespoke solutions that die the day after funding ends.

We keep reinventing the flat tire.

This problem isn’t confined to one group – funders, implementers, techies, dev experts, we are all complicit. We all have sinned in the name of scale and sustainability. It is time for us to come clean, make amends, and seek a better way forward. To that end, we came to three key conclusions:

1. Have Buy-in From the Beginning or Walk Away

Too often both “scale” and “sustainability” means a vague paragraph in a long-forgotten proposal. We need to get serious about both.

For scale, we need to recognize is it relative to the project size. Some projects reach scale when 100% of a small community changes their situation, others when a majority of citizens in a country change their behaviours. Yet, not every project is going to be regional, national, or continental – and that’s okay. “Scale” does not need to mean “global”. This is a lesson that many funders can afford to learn.

At the same token, “sustainable” does not need to mean free from donation funding – as most religious organizations can attest. It does mean that as international actors, we need to have local buy-in to the intervention, where whomever we are working with agrees from the beginning to not only support the project long-term, but also have a clearly defined plan for that support.

Now this can be government adoption (and funding) of the activity as a new service to the community. Or it can be fee for service, a social enterprise, or even a for-profit service. The business model can take many forms, but as implementers, we have the responsibility to make sure there is a clear handoff that is expected and planned for.

For both of these parameters – scale and sustainability – all of us have to be braver. We must be willing to point out when either parameter is failing and be willing to walk away from a project if it’s not corrected. Yes, that’s easier said than done. So is real scale and sustainability.

2. A/B Test Everything

In web design, there is a concept called A/B testing, where you develop two (or more) version of a page and test to see which one has the better response rate. In fact, every Salon invite is an A/B test – 10% receive one email, 10% receive another, and the version that is opened more is sent to the remaining 80%.

What if interventions were A/B tested? Say the top two ideas were awarded pilot funding and the service that had the best intervention result received full funding to scale – something like USAID’s Development Innovation Ventures. Or if proposals were written to be honest about the need for local consultations, and rather than prescribing a solution after a short bout of rushed research between RFP announcement and deadline, implementers won based on their post-award intervention research and solution design, in addition to actual implementation methodology.

A/B testing doesn’t stop at project start. You can A/B test every step of the intervention process, constantly tweaking the project to make sure its optimized for the outcomes desired. Yes, you can say we do that now – but are you tweaking your formula hundreds of times every year like Google?

3. Stop Developing Software

The most contentious point that came out of our Salon was the idea that international development organizations should not be software development organizations. Specifically, with the reality that specialized software development organizations exist, and that they will be better than development organizations at software development, if you focus on health, education, agriculture, etc, you should focus on the intervention itself, not the technology that you use to achieve your goals.

In fact, we should have a registry of industry leading solutions – ranked software tools where we can all plainly see which are the few (3 to 5) tools that we should concentrate our efforts on. Like say this list of mobile data collection systems that came out of a previous Salon.

Only then, when we are all bought into the same tool set, can we really get scalable solutions that are robust, with the longevity for our lengthy project life cycles.

Ideally, all these tools would be Open Source to allow everyone to build on the code base and use it freely. In fact, one participant was adamant that all software development funded by the international community should be Open Source. And really Open Source – licensed as such and on GitHub.

OpenMRS, the world’s leading open source enterprise electronic medical record system platform, was put forth as a great example of this process. I personally think Tangerineshould be next, becoming the leading electronic data collection software for early grade reading and mathematics skills assessments.

Yet even now, how many other medical records or education data collection software exist? Do we really need more? Shouldn’t the development industries – software and international – come together and focus on the proven tools instead of inventing more?

Or are we destined to see more mHealth moratoriums?

Wayan Vota works at Development Gateway and is a regular contributor to ICTworks. He started ICTworks, Technology Salon, Educational Technology Debate, OLPC News, and Kurante, and is a Tech Museum Laureate, GSBI Alumni, DevEx International Development Leader, and World Bank adviser.

This was originally written for ICT Works by Inveneo.

Sheryl Sandberg’s latest book “Lean In” has been much talked about – literally.  It’s been the feature of a NPR podcast, a CBS 60 Minutes episode, and an Oprah Winfrey interview on OWN.

Some call her elitist, some refer to her as a new age feminist?

What do you think?  We want to hear your feedback on Sandberg’s stance that women need to step up to the big table and take a stronger voice in their professional environments.

Sheryl Sandberg: The 3 Biggest Mistakes Working Women Make

Oprah calls Sheryl Sandberg’s book, Lean In, the “new manifesto for women in the workplace.” Watch as Sheryl shares three lessons for every working woman: believe in yourself, make your partner a real partner, and don’t leave before you leave. Plus, Sheryl tells Oprah how her personal mantra—”What would you do if you weren’t afraid?”—inspires her, personally and professionally.

(Photo Courtesy of TodayMama.com)

In a speech at the World Economic Forum on the 21st of January, the Young Global Leader Rajeeb Dey and CEO of Enternships.com, and UK-based social enterprise for job placement, said:

“For every person hired, an average of 80 are rejected. The Head of Recruitment is actually the Head of Rejection. Every rejection chips away at a candidate’s confidence, leaving them downtrodden and often depressed – not the best attitude with which to approach the next interview. This vicious circle has to be broken.

What we need to develop is a process that removes the innate structure of rejection seen in traditional recruitment and gives every applicant powerful development opportunities, regardless of whether they get a job. I call it UnRecruitment ; the removal of our current employment single-mindedness, in favour of exciting training possibilities for all.”

Rajeeb reflects on his week at WEF and his new mission – Uncruitment.

‘Resilient dynamism’ – these are the words that would underline this year’s World Economic Forum; the idea of optimism and strength in the face of hardship. And with 75 million young people currently unemployed worldwide, nowhere is this philosophy more appropriate than in the realm of youth employment. It was this that occupied my thoughts as I traveled to Davos, and it didn’t take long to discover that I wasn’t alone in my state of mind.

Heading to the conference in Switzerland as one of the World Economic Forum’s Young Global Leaders, I was excited to see this year’s event unfold first-hand.  It didn’t take long to see that my passion for helping today’s youth find fulfilling and exciting routes into employment was shared by many.

From talking to Bill Reece, CEO of the International Youth Foundation about his plans to develop cross-mentoring opportunities, to hearing Bill Gates talk with immense passion about the educational opportunities opened by Massive Online Open Courses (MOOCs), from listening to Peter Thiel rally against the student fees that cripple the youth of the US to discussing methods to boost entrepreneurship and start-ups with Mark Rutte, Prime Minister of the Netherlands, it seemed that helping our youth was constantly on the agenda.

For my part, I was most excited about exploring how – in genuinely practical terms – we can halt the cycle of unemployment that faces so many young people, and discussed my own ideas alongside General Secretary of the International Trade Union Sharan Burrow, CEO of Publicis Maurice Levy and CEO of Springstar Jonathan Teklu.  Coming from a background of recruitment – I run a company called Enternships, which is dedicated to getting entrepreneurial graduates and students roles in innovative startups and SMEs – it’s vital to me that we find new ways of opening up methods of employment to young people in the UK.

Exploring these ideas with experts from all over the world, the theme of this ‘cycle of rejection’ came back again and again.

For me, the constant rejection – and not just rejection, but the lack of progression or growth that comes with each rejection – is the key thing keeping students and graduates from beginning their careers.

It’s interesting – for many, the criticism of Davos is that it is a week of talking about issues, rather than instigating real change. But change cannot come from blind action alone, just as it cannot come from empty words. Real, passionate discussion is the only road towards understanding what needs to be altered, and from there comes the beginnings of change. So, given my week, what change do I want to help make?

More than ever, I feel certain that if young people living in the UK today want to break free of the cycle of unemployment, businesses and recruiters have to do more to arm them with the tools they need to succeed.

It’s a change I’m calling ‘unrecruitment’ – the mission to ensure that everyone who applies for a position benefits from the process, whether they are offered a job or not.

Giving confidence, a growing skill-set and genuine empowerment to our young people is the only way we can give them the chance to succeed. Building and promoting courses and classes that candidates can do anywhere, without financial restraints, incorporating training and insight into the job application process itself, disseminating more knowledge and advice about starting up on your own, away from the ‘traditional’ career paths – this is the mission that I came to the World Economic Forum with. And now that this year’s event has come to a close, and I know so much more about those whose missions align with my own, I feel more confident than ever that we can achieve it.

Learn more about the #unrecruitment mission here.

(Photo Courtesy of Subject)

by Ben Thurman

Careering down the serpentine road from Araku to Visakhapatnam, in the Eastern Ghats of Andhra Pradesh – one eye on an ailing girlfriend in the back seat of our battered Ambassador and one eye trying to appreciate the majestic scenery despite the severity of the situation – I began to ponder the difficulties of inhabiting such a remote location.

Indeed, Araku, less than a hundred miles from Visakhapatnam – the second largest city in Andhra Pradesh – is hardly that remote. Yet, it took us two hours, 1600 rupees and a semi-physical confrontation with a taxi driver to cross the mountain range to the nearest hospital. For the outlying tribal communities without the financial reserve that we enjoy, the journey would not be possible in the event of critical illness or childbirth.

Despite government initiatives to make vital healthcare more accessible to the rural poor – including the public-private partnership that established the ‘108’ Emergency Response Service – the problem remains disturbingly simple:

India does not have enough doctors, and those that it has are not willing to practise in the ‘interior’. Although India produces 45,000 medical graduates each year, the National Rural Health Mission reported in 2011 that 67% of rural positions are unfilled, with doctors wooed by the high salaries and urban postings of the private sector.

The Medical Council of India seeks to address the problem by making a six-month rural placement mandatory for all MBBS students, admitting that medical education is ‘at present … urban and big town-centric’. But with little incentive to practise in the rural hinterland after graduation, this seems to be little more than a stop-gap solution. India’s failure to provide affordable and accessible healthcare to its rural population – still an overwhelming majority at around 70% – requires a more innovative approach, one that has been developed by Amit Jain, President and CEO of e-Health Point.

Speaking at the Khemka Forum on Social Entrepreneurship in November last year, Amit explicated his ‘pioneering and futuristic social business model’ that in its short existence has impacted the lives of hundreds of thousands in underserved rural and peri-urban communities. e-Health Point operates a multifaceted approach comprising safe drinking water, telemedical video consultations, diagnostic tests and an affordable, licensed pharmacy on site.

With the goal of ‘democratising’ healthcare, e-Health Point has built a comprehensive model that provides quality and affordable services without discriminating against gender, caste or socio-economic status. Women and children – so often denied medical attention – constitute 60% of its clients; mobile consultation has reduced the travel costs that previously prevented people from seeking out medical consultation; pharmacies are managed to ensure that medication remains affordable; and, in doing this, hundreds of jobs have been generated.

Since 2009, e-Health Point has reportedly conducted over 30,000 consultations, processed some 35,000 prescriptions, and provided safe drinking water to half a million people. The potential for wide-scale change in healthcare for underserved communities has drawn organisations from USAID to Bloomberg to recognise Amit as one of the world’s most promising social entrepreneurs.

Yet at the Khemka conference, Amit emphasised the ‘pioneering’ nature of his business that combines technology with ‘bricks and mortar’. Issuing a caveat that technology alone cannot drive change, he highlighted the unique multi-service platform as the reason for e-Health Point’s success. Although advances in the application of mobile technology can affect positive social change, it has to be relevant and usable – not ‘technology for technology’s sake’.

His point is pertinent; one of the biggest pitfalls of m-Health is that patients are often unable to follow up mobile consultation with necessary medical attention: if a patient does not or cannot access primary care, the diagnosis is futile. Beyond technological solutions, there is an urgent need to change the entire health ecosystem. By combining the best of mobile technology with tangible infrastructure – on site pharmacies and safe drinking water facilities – e-Health Point has evolved a new approach to enable rural communities to access quality healthcare.

But it is a solution that is still developing. Despite its plaudits, there is little evidence to support the theory that m-Health has changed healthcare. Regardless of the increased occurrence of misdiagnosis in mobile consultation and misunderstanding in self-tracking devices,

mobile technology needs to be integrated with more touch points that influence health – pharmacies, clinics, hospitals and, crucially, doctors.

Despite claiming demonstrable ‘social impact’, it is unclear if pharmacies and safe drinking water represent sufficient infrastructure to change the whole health ecosystem and influence attitudes and practices towards healthcare. Whilst m-Health makes consultation more affordable and accessible, has it impacted the number of people seeking a medical opinion? And thereafter, how often are diagnoses followed up with necessary treatment?

The ‘global m-Health opportunity’ is a rapidly emerging market, estimated by McKinsey at $50 billion. Undeniably, there is huge potential to harness mobile technology to address operational challenges, distribute information and improve accessibility to consultation and diagnosis. However, it is still a nascent market; entrepreneurs are adapting and searching for the right model to affect widespread social change.

Whilst we should continue to make use of technology and develop mobile solutions for healthcare, rural India still demands increased infrastructure – more ‘bricks and mortar’ – for the nation’s poorest and most geographically marginalised to access the healthcare they require.

Ben Thurman is an IDEX Accelerator Fellow, a career launch-pad for aspiring social enterprise practitioners. Fellows undergo six months of leadership and business development training by working full-time with social enterprises in India.  IDEX Accelerator is supported by Gray Ghost Ventures, an Atlanta-based firm of impact investors.

(Photo Courtesy of Subject)

This is a guest post by Alan Hirzel, a trustee of The Social Business Trust and a partner in the London office of Bain & Company. 

We can’t ask social enterprises to have a big impact if they can’t get the resources they need to grow bigger. In Britain, for example, fewer than 10% of the tens of thousands of social enterprises generate more than £1 million in revenue. Why is that?

One reason is that the scrappy, entrepreneurial approach that characterizes many of these organizations starts to break down as they pass that threshold. Normal business complexity sets in. Founding CEOs realize—or fail to realize—that their maniacal energy and personal devotion can only take their enterprises so far.

And these organizations face a quandary—they are too small to support the growth they need and the impact they want to have. They lack customer insights that would help tune their business model to attract more customers. Their business plans often betray a misunderstanding of how scale generates financial returns. They need new executive talent, infusions of capital, and systems capable of supporting an expanding organization.

For-profit companies in the same situation can turn to a robust venture capital community that is focused on providing the management, financing and strategy that innovative companies need to scale up quickly. Yet those resources don’t exist in the social enterprise market—even though the need is essentially the same.

Hoping to fill this need, my firm, Bain & Company and six other partners founded Social Business Trust (SBT) in the U.K. It’s an example of an organization seeking to meet this challenge of scale by providing top-tier, in-kind expertise and working capital to promising social enterprises. Others include The Private Equity Foundation and The Acumen Fund. All of these organizations are trying to fill a critical gap for social entrepreneurs.

Since it started its work in December 2010, SBT has invested in five social enterprises, which have since collectively increased their revenues by 77%. The goal for the next five years is 300% growth. Some of these enterprises were already well above the £1 million revenue mark, while others are startups that have since soared past it. Some 100,000 people benefited directly or indirectly from the services of these organizations—and that number is set to grow to one million within five years.

For example, the London Early Years Foundation (LEYF) runs 24 nursery schools in a handful of London boroughs, offering lower income parents high-quality childcare. LEYF’s initial plan for growth was to franchise its successful model nationwide. After a careful analysis of the market, the organization decided instead to grow first within London, a market that can easily support a fourfold expansion of its social impact on young children.

The Challenge Network, another organization in SBT’s portfolio, was founded in 2009 in response to the British government’s efforts to engage 16-year-olds in national service. Despite national government support, analysis again showed that plans to grow nationwide would prove an expensive way to deliver local programs. Challenge is now focused on increasing its reach through density and local scale in specific target markets, a more profitable approach. After starting from zero three years ago, Challenge likely will see revenues of over £20-30 million in the next few years.

Social enterprise stems from a desire to make the world a better place. But if we want it to do so at a meaningful scale, it is time to acknowledge that social enterprises earn their right to be in business the same way private enterprises do: by serving customer needs better than their competition.

This also means the market has to create and offer a range of financial and in-kind services to help social enterprises scale up. At early stages (0-£5M in revenue), this support will likely come from in-kind professional support and grants. At later stages (£5M+), it can come from debt and other forms of financing. (And therein lies another challenge: there are too few organizations that have funding scale to meet latent demand to grow the social enterprise industry.)

Just as social enterprises need a real venture capital support network, they also need real professional support. Giving an extra 10% to pro bono work after you’re done with your day job is admirable. But social enterprise will not achieve its growth ambitions if it is dependent on good will and spare time. These enterprises need top business talent that works full-time on the task, whether in an executive role, as a professional service provider or as a supplier.

To attract such talent to their portfolio companies, investors like SBT must apply normal investment disciplines: pick winning business models from among thousands of social enterprises; provide an exit that rewards entrepreneurial CEOs for their efforts; and build businesses whose models can fund growth or pay for debt. In short, they must apply the normal rules of business to social enterprise. With one exception: instead of benefiting shareholders, dividends and capital gain will be reinvested to provide more benefits to society.

This post originally appeared in the Harvard Business Review.

Photo Courtesy of Creative Commons.

Caitlin Marinelli of Uniphore breaks down the challenges of running a social enterprise in India. Uniphore designs and delivers mobile solutions for businesses using Multilingual Speech Recognition and Voice Biometrics.  Photographed here are two of the users of Uniphore’s platform (Photo Courtesy of Uniphore).  Uniphore works under the umbrella of Villgro, a rural network of innovations for social impact in India.

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By their very nature, social enterprises are destined to face a wide variety of challenges. The target customers or employees of these businesses are a group of people for whom traditional business models have not worked well in the past. As a sector, social enterprises need to work together to build a context in which including the poor in our business operations is profitable. Specifically, we need to achieve four things: (1) Creating buying power (access to credit and income generation); (2) Shaping aspirations (consumer education); (3) Tailoring local solutions (targeted product development, bottom up innovation); and (4) Improving access (distribution channels, communication links).

These four challenges all stem from the demand side of the equation. But the core belief of social enterprise is that we can, indeed, overcome these hurdles with time as the sector becomes more sophisticated.

However, it is developing this level of sophistication within the social enterprises themselves that seems to be the biggest hurdle today. Indeed, in India, many difficulties associated with running a social enterprise spawn from the lack of an enabling environment for these kinds of businesses to prosper. The three biggest challenges in this country are investment and financing, finding and retaining talent, and policy and regulation.

In developing countries in general, the investment climate is underdeveloped, due to problems of risk, market size, informal production, lack of financial guarantees, etc. In addition to these challenges, social enterprises often have funding and financing needs that are not met either by traditional grant programs or by traditional debt/equity instruments. The good news is that new areas of social philanthropy and social venture capital are emerging. Nevertheless, both traditional venture capitalists and social venture capitalists seek a degree of certainty in the rate of growth of their potential investee. Often times, social enterprises present a business plan demonstrating a huge need, given the size of the social problem they aim to solve, but they are unable to confidently establish the level of demand. The demand is hard to determine because the target market is much less studied, and the predictability of their purchasing power and patterns is limited. Furthermore, even when a product is field tested, it is not guaranteed that the same solution will be as popular in another locality in India, given the diverse cultures and preferences. Therefore, social enterprises often present a nebulous picture of their serviceable market, which limits the confidence of risk-averse investors.

The second major challenge in running a social enterprise in India is the ability to find and maintain talent. Like any young business, social enterprises often face constraints of how much they are able to pay their employees. While some people are willing to forego a higher salary in lieu of their belief in the mission of the company, this is not common, especially in a developing country like India. Especially as a social enterprise grows, they need to focus on hiring senior management for specific roles such as finance or marketing. Experts in these roles are not typically from the ‘social’ sector, and therefore are unwilling to trade away their high salary.

Maintaining quality employees is another huge challenge. For example, at Uniphore, our sales agents are expected to grow the business and meet their targets. They are not given any leniency because the ‘market is more challenging.’ Furthermore, after the sale is made, we expect them to move on and keep chasing new customers. They don’t always get the privilege of seeing the solution deployed or its impact on peoples’ lives. This pattern of extremely hard work, constant need for creativity and resourcefulness, and limited short-term rewards is common amongst many social enterprises. The combination of these factors can contribute to a high level of burnout, if not properly addressed.

Finally, social enterprises in India often face policy and regulatory challenges. For example, there are no specific legal frameworks for social enterprise, so businesses either designate themselves as SMEs or non-profits, though their income structures don’t fall neatly into either of these categories. Moreover, India, like many other developing countries, faces problems of public authority, regulation and oversight. The most flagrant of these issues is, of course, corruption. In one instance, Uniphore had created an application for a government welfare scheme in which beneficiaries used voice biometrics to authenticate their identity and approve that they received their benefits. Despite the increases in efficiency and enhanced outcomes of the welfare project, the government eliminated the use of our application, as it exposed all the fraud and corruption that was happening in the system. This story is typical of the challenges that social enterprises face, as the transparency and visibility that we try to create within poor communities is often in conflict with the vested interests of those in power.

Together, financing, talent, and policy challenges create a very difficult environment for running a social enterprise in India, and inhibit the sophistication of the sector. As we evolve, we must work together to create strategies, organizations, and forums for addressing these barriers – exchanging best practices and lobbying for favorable policies. When we define ways to systematically address these problems, the social enterprise sector will be much better equipped for taking on the enormous social problems of this country.