By Nancy Dahlberg / firstname.lastname@example.org
Robert H. Hacker often advises entrepreneurs to go after the “big opportunity.” The same advice holds true for social ventures, and he’s written a new book on it, Scaling Social Entrepreneurship: Lessons Learned from One Laptop per Child, available in paperback and Kindle versions on Amazon.
Hacker, who teaches social entrepreneurship courses at FIU’s Honors College and MIT’s Sloan School, spent 3 1/2 years as CFO of One Laptop Per Child, an organization with a mission to provide every child in the developing world with a connected laptop. Big opportunity, scaled globally. How did the organization do it? One key was by successfully creating the worldwide 1:1 computing for children movement early on, Hacker says.
While improved education worldwide and corporations committing a sliver of their profits would go a long way toward solving the world’s biggest humanitarian problems, Hacker says, the for-profit entrepreneurship model is built for scaling social ventures. Just as with entrepreneurship without the “social” modifier, tackling large, worldwide problems is more effective than tackling smaller problems and you can achieve efficiencies of scale.
How big is the opportunity? The population of the developing world will reach 4 billion by start of the 22nd century and the population of the world’s least developed countries will total another 3 billion people –- a nearly three-fold increase from this century, Hacker writes in the book. In the book that is well-researched and rich in examples, Hacker, who spent 20 years working in Asia and Latin America and is also the author of Billion Dollar Company, explains ways to scale social entrepreneurial ventures in light of their unique challenges such as lower operating returns and less startup capital.
Hacker, who also manages the GH Capital consultancy and writes the Sophisticated Finance blog, talked with the Miami Herald about his views and work in social entrepreneurship.
Q. Why do you think the private sector can do a better job on social problems than government and non-profits?
A. The private sector represents a better option to solve social problems because they have better access to capital and a history of innovating to solve customer problems. However, now customers expect their brands to be genuinely involved in solving social problems. The private sector now finds it to be in their self-interest to solve the problems if they want to maintain their customer loyalty.
Q. Why do you think that the morality (or lack thereof) of capitalism is a theme that never goes away?
A. The question never goes away because the critics make their case better than the capitalists. But as I quote in the book, The Economist estimates that approximately one billion people escaped poverty in the twenty-year period ending in 2010 through the benefits of capitalism. That fact, and the progress it represents, is hard to legitimately challenge.
Q. Who do you think is the best example of social entrepreneurship today?
A. Toms Shoes. Toms Shoes has successfully grown a company that is committed to both shareholder returns and social engagement at scale. Its recent private equity investment demonstrates that professional investors see no conflict between the social mission and future financial returns.
Q. What is the key to scaling social entrepreneurship?
A. The most important key to scaling social entrepreneurship is not capital or partners but rather to plan from the very beginning to achieve scale.
Social entrepreneurship by definition has lower financial returns, which means such organizations generate less cash internally. Therefore, these organizations have less ability to iterate on business model due to lower cash reserves. They need to execute well right from the beginning, which requires very careful business model development and planning.
Q. What was the key to OLPC's early success?
A. OLPC's early success is attributable to its achieving the status of a movement, a worldwide movement. Nicholas Negroponte created a learning movement for 1:1 computing for children worldwide. While it might appear a daunting task, I would point out that a young girl from Pakistan, Malala Yousafzai was also able to create a worldwide movement.
Q. What are three takeaways from your book?
A. Choose for-profit status for a social entrepreneurship project because it gives you better access to capital.
Partner with the private sector because they have the resources and can be motivated to support social projects.
Solve one social problem well and let others solve the myriad of other problems.
Q. Where do you see social entrepreneurship in South Florida?
A. Social entrepreneurship is in its infancy in South Florida but also worldwide. Many people are still not familiar with the concept despite the example of Muhammad Yunus of Grameen Bank and the teachings of CK Prahalad who coined the phrase "the fortune at the bottom of the pyramid." However, the Honors College at FIU and the University of Miami Business School have active programs to introduce and facilitate student involvement in social entrepreneurship. These efforts, combined with community support from Knight Foundation, the Center for Social Change and EcoTech Vision to name a few, will increase awareness of social entrepreneurship and generate positive results in the community.
Follow @ndahlberg on Twitter.