Leadership by Example - A Humanitarian Leader on the World Stage

A Humanitarian Leader on the World Stage
by Jim Citrin

Posted on Tuesday, February 13, 2007, 3:00AM
People all over the world recognize Bono. The Irish musician turned diplomat and philanthropist has transcended his rock-music roots to become a driving force in global economic policymaking, and a world leader in the war against AIDS in Africa.

How did he transform himself from musician to humanitarian leader? And what relevance does his experience have for you?

A Musician's Calling

Bono is a powerful role model due, in large part, of course, to the impact he makes through his dedicated efforts around the world. But Bono's influence extends beyond the causes he embraces and the work he does.

While many people would like to help solve the world's most important and intractable problems, such as curing a raging epidemic or eliminating poverty, it's not immediately obvious how exactly to do that. So what's the relevant lesson from Bono's example? Simply put, he sets an example for making the utmost of the hand he's been dealt.

We all wonder how, given the context of our work and lives, we can most creatively, energetically, and effectively apply our natural talents to make a positive impact on others. I don't think I've ever met anyone who so thoroughly addresses this question and utilizes his skills and station in life as Bono (or, to use his given name, Paul Hewson) does. "All of us want our lives to count," he told me in a private conversation recently. "Music for me was always about changing the world."

Taking a Different Path

From the start, Bono's band, U2, has been committed to addressing important issues facing the world. Starting in the early 1980s, the group's tours had cause-related sponsors -- Greenpeace, Amnesty International, and Nelson Mandela to name a few.

In 1985, U2 played in the Live Aid concert to raise money for famine-stricken Ethiopia. While that wasn't unique -- just about every other major band played the concert -- Bono actually wanted to understand the real problem around which they were rallying. So later that year, he and his wife, Ali, traveled to the African country and spent several months living and working in a refugee camp.

This is where Bono's path diverged from that of other well-intentioned celebrities across the entertainment landscape. While they made cameo appearances and public-service announcements, Bono immersed himself in the economics and policymaking apparatus of debt relief.

Bono's never been shy about leveraging his fame for access to the world's most influential people, including James Wolfensohn, a former head of the World Bank; Paul Volcker, onetime leader of the Federal Reserve; and Jeffrey D. Sachs, an economics professor and director of the Earth Institute at Columbia University. What impresses these leaders most is how deeply Bono understands capital markets, debt instruments, and who the key decision-makers are.

A Red-Hot Initiative

The latest product of Bono's creative energies is Product (RED), an innovative approach to fighting AIDS in Africa developed with activist Bobby Shriver in 2006.

Designed to find a new approach outside of traditional philanthropic channels to engage the private sector and consumers and raise cause-related funds, the project has resulted in a proliferation of products sharing a deep crimson hue. These include the Red Apple iPod, Red Motorola Razr, Red Gap Jeans, and American Express Red Card.

Just as he did with debt relief, Bono schooled himself on the science and pharmacology of HIV and the AIDS epidemic for Product (RED). Medical and health-care experts comment that he knows as much on the subject as any scientific journal editor, and when Bono talks about Product (RED) his insights about marketing budgets, consumer demand, and the business model are as sound as any chief executive or venture capitalist.

Bridging a Divide

When asked how such a project could possibly work, Bono explains that it's a function of where the science has progressed regarding AIDS treatment and the power of the marketplace to channel resources. "AIDS is no longer a death sentence," he says. "Just two pills a day will bring someone who is at death's door back to a full life. These pills, which are available at the corner drugstore, cost less than a dollar a day."

But since the poorest people in Africa earn less than a dollar a day, they can't afford to buy the medicine and they die, at the alarming rate of 6,500 people a day. "It's unnecessary," Bono says. "It's insane."

A key part of the motivation for picking the issue of AIDS in Africa is that it's an entirely winnable "war" -- the medicine is inexpensive and readily available. But while people want to help, they aren't necessarily prepared to go out of their way or spend extra money to do so.

On the flip side, companies would like to wrap their brands into the conscientious consumerism that's driving billions of dollars of purchasing power, but competition and shareholder activism are so acute that they can't afford meaningful corporate contributions to even the most important causes.

Bono's leadership genius is in devising a way for consumers to go about their normal lives and make purchasing choices that meet their needs while appealing to their desire to help, and for companies to win more business thereby funding the dollars they direct to pay for inexpensive medicine to solve Africa's AIDS crisis.

Indisputably Inspiring

Both times I met with Bono, I mused that if he weren't a rock star and diplomatic world-changer, he could easily be a great corporate chief executive officer.

He leads by example. No one works harder or delves as deeply into issues and data as he does. He surrounds himself with the best people, is an extraordinary listener, and takes advice extremely well. He understands economics, markets, consumers, media, and regulation. And he has a dynamism that attracts and inspires just about everyone he meets.

Some may question the efficacy of Product (RED). Can a for-profit enterprise really do good? How much money will ultimately be generated to pay for medicine for the people in need?

Others may question Bono's motives. After all, he's already been a Time magazine Person of the Year -- maybe he's simply interested in winning a Nobel Peace Prize. While that may be, it's indisputable that his passion for curing AIDS in Africa is genuine. One only has to spend time with him to appreciate how devoted he is to this cause.

The key lesson to take away from Bono's example is this: If an individual with a sharp mind, a dynamic personality, amazing musical skills, and a desire to make the world a better place can have such a far-reaching positive impact, it makes you wonder what else you can do.

Source: http://finance.yahoo.com/expert/article/leadership/24257

Stanford center for social entrepreneurship

Visit http://fellows.rdvp.org/

The RDVP is a Stanford center for social entrepreneurship that applies high-tech innovation to empower communities worldwide.

The next big idea - by Muhammad Yunus

Saving the world with a cup of yogurt
Nobel Peace Prize winner Muhammad Yunus, the father of microcredit, has a new idea. It's called social business enterprise, and the first step is a yogurt factory in Bangladesh. Fortune's Sheridan Prasso reports.

By Sheridan Prasso, Fortune
January 29 2007: 1:54 PM EST
(Fortune Magazine) -- Along a dirt road in Bangladesh's green, fertile heartland, 140 miles northwest of Dhaka, workers in flip-flops are hauling bricks, pouring cement and hammering boards. The object of their labor: a small yogurt factory being built by Danone, the French food company, on the outskirts of Bogra.

It may not look like much, but the one-story building behind a wrought-iron gate is the epicenter of a Big New Idea - one that Muhammad Yunus, the winner of last year's Nobel Peace Prize for his pioneering work on microcredit, thinks can revolutionize a world still being transformed by his first big idea.

"I hope it will be an important landmark in the annals of business," Yunus says a few days later in Dhaka, at the opening ceremony for the factory in early November. "The concept it represents is very powerful."

That concept is called "social business enterprise." It may not be as concise or as self-evidently defining a term as microcredit, but Yunus believes it represents the evolution of his old idea in a new direction. Yunus's first idea started with lending $27 out of his own pocket and a belief that the poor, particularly poor women, could be empowered as entrepreneurs if only they had the means to start their own small businesses.

The institution he founded to fund them, Grameen Bank, took three decades to receive worldwide recognition but has now transformed thinking in the banking, development, and nonprofit worlds - attracting the political left to the idea of poverty alleviation and the political right to the idea that entrepreneurialism, rather than charity, is the solution.

Even before winning the Nobel Prize, the self-effacing and charismatic Bangladeshi economics professor was becoming the equivalent of a rock star. He counts Bill Clinton among his close friends, has been hosted by princes and queens of Europe and was offered a private plane to Chicago to appear on "The Oprah Winfrey Show."

Replicas of Yunus's program have spread to nearly every part of the globe, including Africa, Latin America, even Harlem. The resulting $9 billion microlending industry, which has drawn names that include Citigroup (Charts), Deutsche Bank (Charts) and the Bill & Melinda Gates Foundation, hinges on the belief that people do not need the threat of seized assets to have an incentive to pay back loans. Grameen boasts an audited repayment rate of 98 percent, far higher than the industry standard for loans to those who have collateral.

Combatting poverty
But microcredit is only half of what Yunus wants to leave as his legacy. Social business enterprise, he says, is next. The idea marries the interests of corporations with economic development in a way that has never been tried before.

Companies would draw on microcredit-funded businesses to incorporate nonprofit models into their bottom-line operations, seeking not just revenue but social returns, and returning the profits to the communities where they operate. "If we can create this," Yunus says, "the world will be a much better place."

To put it simply, Yunus believes not that Adam Smith's concept of profit-motivated, free-market capitalism is flawed, but that it is too limited. The conventional thinking that capitalism breeds wealth creators and competitors who spread that wealth by creating jobs and opportunities for the good of societies has not worked out very well for the majority of the world, Yunus says.

And indeed, a recent UN study concluded that the richest 2 percent of the world's adults, mostly Americans, Europeans and Japanese, own more than half of global household wealth.

So why isn't it working? Why do three billion people - almost half the world's population - still live in poverty? The answer can't be blamed entirely on inefficient markets, corruption and dictatorships: Even the U.S., the wealthiest country in the world, has 36 million people living below the poverty line. Yunus invites anybody who is listening to think bigger about the concept of capitalism itself.

While Yunus didn't invent the notion of nonprofit enterprise or of doing business for social good - Harvard Business School added a course called Social Factors in Business Enterprise back in 1915 - it is a concept, like climate change before Al Gore, in need of a frontman. Yunus is becoming that person, articulating his vision in ways CEOs understand.

"Many of the problems in the world remain unresolved because we continue to interpret capitalism too narrowly," Yunus told an audience at Oxford University last year. "We have remained so mesmerized by the success of the free market that we never dared to express any doubt about it."

Well, actually, Karl Marx once did, and that didn't end well. But Yunus isn't calling for capitalism's abolition; he's calling for its enlightenment.

What if we lived in a world where companies didn't measure their performance only in terms of revenue and profitability? What if pharmaceutical companies reported on their bottom lines, along with those familiar figures, the number of lives saved by their drugs every quarter, and food companies reported the number of children rescued from malnutrition?

What if companies issued separate stock based on social returns, and people could buy the shares of those that saved more lives than others, or sell the shares of energy companies that polluted more than their competitors? What if, by raising "social capital" and investing it in sustainable businesses without a profit motive, companies could reach into new markets, expanding their core businesses at the same time they improved lives?

That's the world Yunus envisages. "It could be a very big idea," says a fellow Nobel laureate, the economist Joseph Stiglitz, who has been hearing Yunus talk about his new endeavor for years. The question, he says, is how to implement it.

The yogurt experiment
At a lunch in Paris, in the fall of 2005, Yunus invited Danone CEO Franck Riboud to come to Bangladesh and build his first social business enterprise. Riboud listened, then agreed. The yogurt Danone would make would be fortified to help curb malnutrition and priced (at 7 cents a cup) to be affordable. All revenue from the joint venture with Grameen would be reinvested, with Danone (Charts) taking out only its initial cost of capital, about $500,000, after three years.

The factory - and ultimately 50 more, if it works - will rely on Grameen microborrowers buying cows to sell it milk on the front end, Grameen microvendors selling the yogurt door to door and Grameen's 6.6 million members purchasing it for their kids. It will employ 15 to 20 women.

And Danone estimates that it will provide income for 1,600 people within a 20-mile radius of the plant. Biodegradable cups made from cornstarch, solar panels for electricity generation and rainwater collection vats make the enterprise environmentally friendly.

International organizations such as Unicef believe it may be such a revolutionary means of improving nutrition through a sustainable business model that it is watching closely - and may seek to replicate around the world.

For Riboud the enterprise is about expanding into new markets with nutrition-enhancing products. "It's really a growth strategy for our company," he says over a bowl of onion soup in a Dhaka hotel. "We are convinced that in this world, when you are a consumer-goods company and the country is a developing country, it would be crazy to think only about the peak of the pyramid."

But it's clear also that Riboud agrees to a large extent with Yunus's worldview. "Is the classic economic model working?" he asks. "No! But I told him, 'I don't want to make charity.' The strength is that it is a business, and if it is a business, it is sustainable. Your shareholders are happy."

And, Riboud adds, they can see social benefits, something he says may ultimately be reported on Danone's bottom line along with the revenue from its Dannon and Stonyfield yogurts and Evian and Volvic mineral waters. "We're saying that profit maximization is not going to be the only way to measure value," says Emmanuel Faber, Danone's former CFO, who now runs Asia-Pacific operations for the company and who arranged the lunch between his boss and Yunus. "There is a whole emerging area of picking stocks for social impact."

Ideas along these lines are being discussed within corporations such as GE (Charts), Unilever, Coca-Cola (Charts), PepsiCo (Charts) and Cargill, says Marc Van Ameringen, executive director of the Global Alliance for Improved Nutrition in Geneva.

"The new wave in business is, forget corporate social responsibility and philanthropy - how do you integrate this into your core business?" he says. "The idea Danone has of creating a social dividend for shareholders - that's cutting-edge. No one else has come up with this interesting a model. It supports your brand, returns your capital, you're not going to lose money and you give your shareholders a vision of doing something good."

Adds Antoine Hyafil, dean of faculty at the HEC School of Management in Paris, where the MBA program in sustainable development includes studies in social business enterprise: "This is the kind of thing that can change the mentality within business. Even if it replaces corporate giving, money given for philanthropy is often misused." Rethinking the divide between profit motive and social good, Hyafil says, is an emerging trend for business, and Yunus is at the forefront of the movement.

Yunus says business schools should start turning out social-business MBAs trained in creating social returns: "People say, 'Don't be stupid.' I say there are a lot of stupid people like me. I don't want to make money. Lots of young people don't want to make money, because their mother, their father made so much money. They don't know what to do with their lives. There are many such kids in the U.S. They don't have any challenge left. Give them the challenge: Fix the world. Create a social business enterprise."

On a peaceful Friday morning in November, during a lull between strikes and riots that have brought Dhaka to a standstill in advance of parliamentary elections, Yunus pays a visit to the village of Basta, a half-hour drive from the capital. He has come to check on Grameen Bank's microlending programs.

In a country like Bangladesh, paralyzed by strikes and inept governance, it's obvious why Yunus sees business rather than the state as the way to solve social problems. Without Grameen and other nonprofits, the situation in Bangladesh would be far worse.

While half the country still lives below the poverty line, Grameen says that 5 percent of its borrowers escape poverty every year, helping to double the country's annual poverty-reduction rate from 1 percent to almost 2 percent since the beginning of the decade.

Fierce opposition
Yunus had to work hard to convince mullahs in the majority Muslim country that the Prophet Muhammad would have supported the idea of lending primarily to women. The idea of economically empowering women was a radical one, and Grameen branches in Bangladesh became the targets of occasional bomb blasts by Islamic fundamentalist groups.

Yet it's the criticism from both left and right intellectuals that has hurt the microcredit movement most over the years. "They don't throw grenades and firepower, but they throw intellectual grenades all the time, so it's no less harmful," Yunus says. "The grenades coming from the mullahs attack only one branch, but the grenades that the intellectuals and academics throw at us hit the whole system."

Among the more frequent criticisms leveled at Grameen by these critics is that microlending is too small to make a difference - that it's making poverty more tolerable rather than eliminating it. But after starting out granting small loans of $10 to $20, Grameen now allows members with solid repayment histories to up the ante and borrow as much as $18,000.

Ravia Khatun, a wizened woman dressed in black who gives her age as around 60, says she graduated from buying cows with her Grameen loan to buying a $6,000 Toyota pickup truck, which her sons use to ferry passengers and produce to the local market in Basta.

"Farming cows is a troublesome business," she says, calculating her family's daily profit from the taxi business at nearly $23 - more than the minimum wage of a garment worker for a whole month in Bangladesh. "This taxi business is better, and my sons can take care of it," she says, "so I sold all my cows."

Microlending also offers many families a way into the middle class. Take the case of Riziya Begum, who bought her first cow with a $30 loan from Grameen Bank. Before that, she and her husband were among the millions of poor farmers in Bangladesh, growing rice and living day to day.

"Sometimes I ate, sometimes I didn't have food," she says, sitting in her corrugated-tin house - the equivalent of a middle-class home in Basta. Begum, who is about 40 (she doesn't know her birth date), bought land with the money she earned from selling cows. She sent her eldest son to work in Saudi Arabia with money she earned from selling some of her land. And he sent enough money home a few years ago for her to buy a TV.

Begum also has her own well for drinking water, a second plot of land on which she and her husband plan to build brick homes for their two sons when they get married, and an electric fan. "Even my cow has a fan now," she says.

But her greatest pride is her 8-year-old daughter, Aklima, who attends school every day - the first girl in many generations of Begum's family to have an education. Begum is considering taking out a Grameen higher-education loan to send Aklima to a university. Aklima, it turns out, wants to be a doctor. "I saw it on TV," she says.

The women members of Grameen Bank rely on peer pressure to encourage one another to pay back loans, and few, if any, ever default - instead turning to relatives and friends to help them make their payments.

Yunus concedes that those really in trouble, such as victims of Bangladesh's recurring natural disasters, may be allowed to take more time to pay by rescheduling their debts. In the case of death or incapacitation, an insurance plan paid into by all borrowers covers the loan principal.

Grameen is self-sustaining, charging interest rates of 20 percent on basic loans and lending only the money it takes in from members repaying loans (and the 33 percent of depositors who are not borrowers). Money lenders, to whom villagers would otherwise turn, sometimes charge up to 10 percent a day. Interest rates on Grameen home-improvement loans and mortgages are 8 percent.

Grameen also set up an interest-free loan program for beggars. There's no obligation to pay back the loans, but the beggars are encouraged to use them to buy small trinkets or food to take on their rounds and try to sell. If they do pay back their principal, they can get another loan.

So far, the program has turned 78,000 beggars into merchants, and some 2,000 of them report that they have stopped begging entirely, breaking generations of tradition. Sajeda Begum of Ittahata village north of Dhaka, who gives her age as around 35, is an example. With a loan of 1,000 taka ($15), she started buying eggs from the market in the mornings, taking them home and boiling them, then selling them for a 2-cent markup to factory workers leaving their shifts.

Her 40-cent-a-day profit is enough to feed her family and make loan payments. "No more begging," she says. "I hope to borrow another 3,000 to 4,000 ($45 to $60) to expand this business. It makes money."

Grameen has provided Bangladeshi women the financial means to leave abusive husbands. They own homes in their own names, no longer pay dowries, live longer, have improved nutrition and hygiene and are better able to care for their families. They transcend the class status they were born into through entrepreneurialism and education.

"I am destroying the culture, yes," Yunus says, beaming mischievously at the thought. "Culture is a dynamic thing. If you stay with the same old thing over and over, you don't get anywhere."

The same applies to Yunus's concept of microcredit. Sticking with the same old idea over and over only gets you so far. To really get somewhere, Yunus says ... well, there's this Big New Idea.


Source: http://money.cnn.com/magazines/fortune/fortune_archive/2007/02/05/8399198/index.htm

Is a for-profit social venture impossible?

Submitted by Erik Sundelof on Mon, 03/06/2006 - 4:42pm. :: Business and Markets
I am collaborating with the Graduate School of Business here at Stanford, and usual working with students is always an intriguing and fruitful experience, which I usually cherish a lot. We did touch a quite interesting matter of what a social venture really is during a discussion on the project. Do all social ventures include a non-profit approach or can you have social ventures based on a ‘purely’ for-profit model? Can a commercialised approach ever do any good?

I am fully confident that you can and in some sense we really should pursue it, especially to obtain financial sustainability and decrease the dependence of external funding. Funnily that would mean that you have a wider manoeuvre space, and thus you have better control over your social venture.

What is really a social venture? Much simplified and according to me, a social venture is any venture in which you also value a (good) social outcome of the same. The very abstract word ‘social outcome’ could be discussed in length (which I will not), but refer to literature on measuring success in social venture. It is very much an interesting matter in itself. Personally and of course much simplified, I think we could consider a good social outcome as anything that makes the life or the earth itself to become a better place to live. Let’s keep this simple and leave it as that.

What amazes me is that so many people think that a (good) social outcome never can be married to the thought of a commercial activity. This puzzles me. Why? I see no reason why a good social outcome is inconsistent with a for-profit approach. I especially remember speaking to one of the last year fellows on this matter. He told me that an outcome of a project might even be better when people have to pay for the project. This is a very interesting thought, which has stayed with me since that date.

What is it in us that make us feel that it is better to pay something, even though extremely small? I think it is quite simple. The sense of ownership is still quite strong in us, but also the need to give back to someone that helps us. When someone offers you a hand you normally want to give back something. Probably it is as simple as keeping your self-respect. The more you feel like you are dependent on another person, the less self-esteem you usually have. I think you get it.

However, I think it is important to remember that there is a narrow path to walk on here. Having an approach that is for-profit can quite easily be turned in to an exploiting approach, where any good social outcome will be shadowed. Here the management of and leadership in these projects become increasingly important. The need for good managers and leaders become ever so high in those ventures, but we have all those people out there.

Hybrid business models, corporate social responsibility and industrial anthropology are some examples why I believe the trend is really towards such business models instead of the traditional highly fund-dependent ones. There will of course exist ventures where this approach is impossible, but for all other cases I think it is really a good idea to look at such business models.

Thus, I think it is important to keep an open mind about this and realise that for-profit is not by definition evil or bad.


Source: http://fellows.rdvp.org/eriksundelof/blog/isafor-profitsocialventureimpossible?PHPSESSID=2c1760eab4239035b5f7ec3f5b10832e

Is a for-profit social venture impossible?

Submitted by Erik Sundelof on Mon, 03/06/2006 - 4:42pm. :: Business and Markets
I am collaborating with the Graduate School of Business here at Stanford, and usual working with students is always an intriguing and fruitful experience, which I usually cherish a lot. We did touch a quite interesting matter of what a social venture really is during a discussion on the project. Do all social ventures include a non-profit approach or can you have social ventures based on a ‘purely’ for-profit model? Can a commercialised approach ever do any good?

I am fully confident that you can and in some sense we really should pursue it, especially to obtain financial sustainability and decrease the dependence of external funding. Funnily that would mean that you have a wider manoeuvre space, and thus you have better control over your social venture.

What is really a social venture? Much simplified and according to me, a social venture is any venture in which you also value a (good) social outcome of the same. The very abstract word ‘social outcome’ could be discussed in length (which I will not), but refer to literature on measuring success in social venture. It is very much an interesting matter in itself. Personally and of course much simplified, I think we could consider a good social outcome as anything that makes the life or the earth itself to become a better place to live. Let’s keep this simple and leave it as that.

What amazes me is that so many people think that a (good) social outcome never can be married to the thought of a commercial activity. This puzzles me. Why? I see no reason why a good social outcome is inconsistent with a for-profit approach. I especially remember speaking to one of the last year fellows on this matter. He told me that an outcome of a project might even be better when people have to pay for the project. This is a very interesting thought, which has stayed with me since that date.

What is it in us that make us feel that it is better to pay something, even though extremely small? I think it is quite simple. The sense of ownership is still quite strong in us, but also the need to give back to someone that helps us. When someone offers you a hand you normally want to give back something. Probably it is as simple as keeping your self-respect. The more you feel like you are dependent on another person, the less self-esteem you usually have. I think you get it.

However, I think it is important to remember that there is a narrow path to walk on here. Having an approach that is for-profit can quite easily be turned in to an exploiting approach, where any good social outcome will be shadowed. Here the management of and leadership in these projects become increasingly important. The need for good managers and leaders become ever so high in those ventures, but we have all those people out there.

Hybrid business models, corporate social responsibility and industrial anthropology are some examples why I believe the trend is really towards such business models instead of the traditional highly fund-dependent ones. There will of course exist ventures where this approach is impossible, but for all other cases I think it is really a good idea to look at such business models.

Thus, I think it is important to keep an open mind about this and realise that for-profit is not by definition evil or bad.


Source: http://fellows.rdvp.org/eriksundelof/blog/isafor-profitsocialventureimpossible?PHPSESSID=2c1760eab4239035b5f7ec3f5b10832e

Booz Allen Hamilton Social Venture Challenge - HK, China

This is an innovative collaboration between leading management consulting firm Booz Allen Hamilton (BAH) and the Faculty of Business Administration of The Chinese University of Hong Kong (CUHK) to help develop socially responsible business leaders for the Greater China region. It is the first collaboration of this kind in Hong Kong. Participation is restricted to full-time MBAs at the Chinese University of Hong Kong.

More information: http://www.baf.cuhk.edu.hk/research/gem/_new/EN/practice/booz.asp

Events, Harvard & SE Business Plan

The Social Sector (R)evolution Conference, sponsored by the Social Enterprise Alumni Association (for HBS alumni only), Saturday, March 3. For more information or to register, visit: www.hbs-seaa.org.

The Social Enterprise Track of the Business Plan recently hosted a HELP session on Developing a Social Enterprise Business Plan. Link to PDF of HELP Session PowerPoint. Link: http://www.hbs.edu/socialenterprise/pdf/creatinganSEbplan.pdf


Source: http://www.hbs.edu/socialenterprise/pdf/creatinganSEbplan.pdf

2007 Social Enterprise Conference

Social Enterprise brings together the nonprofit, private, and public sectors - and puts best practices from across industries and around the globe to work toward the common good.

The 2007 Social Enterprise Conference is a forum for sharing ideas to create a better world. We are in an exciting time for social enterprise - each week brings news of multi-billion dollar philanthropic initiatives to solve global problems and new corporate strategies fostering sustainability and social responsibility. Social enterprise offers not only economic resources, but also the strategic and management expertise to ensure that change is long-lasting and large-scale.

As students and practitioners - and as present and future leaders - it is up to us to turn these ideas into reality. Are you ready to engage your values, your work, your world?

More information: http://www.socialenterpriseclub.com/conference/index.html

NEW BOOK PROPOSES BUSINESS SOLUTIONS FOR THE GLOBAL POOR

Business Solutions for the Global Poor
John Wiley & Sons, Inc.

BOSTON - The problem of global poverty is ubiquitous and enduring. According to the latest World Bank statistics, nearly half the world’s population (2.8 billion people) is forced to survive on less than $2 a day, with 1.2 billion (nearly 20 percent of the world’s population) living in abject poverty under $1 a day. In an effort to aid those who dwell at the base of the economic pyramid (BOP), more than 100 academics and business, non-profit and government leaders from around the world converged on the Harvard Business School campus in 2005 for a conference affiliated with the school's Social Enterprise Initiative that explored business approaches to alleviating poverty.

One result of that important event is the book Business Solutions for the Global Poor: Creating Social and Economic Value, just published by John Wiley & Sons, Inc. Edited by Harvard Business School Professors V. Kasturi Rangan and John A. Quelch; Gustavo Herrero, Executive Director of the HBS Latin America Research Center; and HBS Research Associate Brooke Barton, the volume brings together a variety of perspectives on how serving the poor can be both a profitable business proposition and help improve the lives of the world's impoverished.

The volume includes illustrative case studies that explore the role of business in meeting the poor’s basic needs for security, healthcare, housing, and utilities. The contributors show how companies have successfully adapted their value proposition to the needs of low-income consumers in the retail, technology, and consumer good sectors. The book also reveals how the private sector can help facilitate the integration of the poor into the global production system. In addition, it outlines the challenges companies face when trying to operate at the base of the pyramid and includes overarching business principles for serving the BOP.

Business Solutions for the Global Poor is a “manifesto on how to combine profits and poverty alleviation,” says Professor C.K. Prahalad of the University of Michigan’s Ross School of Business. “By focusing on a range of industries – from housing to microfinance, from agriculture to health – and covering a geographical spread from India to Mexico and South Africa, the collection helps managers and public policy makers anchor their thinking on the role of the private sector and market-based solutions to poverty alleviation.”

Adds Rattan N. Tata, a graduate of Harvard Business School’s Advanced Management Program and chairman of Tata Sons Limited, “This volume focuses on a challenge that business, worldwide, has hitherto not regarded as being within it ambition: The challenge of banishing poverty. The book makes a significant contribution towards setting business on that endeavor.”

ABOUT THE EDITORS:

V. Kasturi (Kash) Rangan is the Malcolm P. McNair Professor of Marketing at Harvard Business School and cochairman of the School's Social Enterprise Initiative.

John A. Quelch is Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School and former Dean of London Business School.

Gustavo Herrero is the Executive Director of the Harvard Business School Latin America Research Center in Buenos Aires, Argentina.

Brooke Barton is a Research Associate with the Harvard Business School Global Poverty Project.


Source: http://www.hbs.edu/news/releases/012607_gp.html

NEW BOOK PROPOSES BUSINESS SOLUTIONS FOR THE GLOBAL POOR

Business Solutions for the Global Poor
John Wiley & Sons, Inc.

BOSTON - The problem of global poverty is ubiquitous and enduring. According to the latest World Bank statistics, nearly half the world’s population (2.8 billion people) is forced to survive on less than $2 a day, with 1.2 billion (nearly 20 percent of the world’s population) living in abject poverty under $1 a day. In an effort to aid those who dwell at the base of the economic pyramid (BOP), more than 100 academics and business, non-profit and government leaders from around the world converged on the Harvard Business School campus in 2005 for a conference affiliated with the school's Social Enterprise Initiative that explored business approaches to alleviating poverty.

One result of that important event is the book Business Solutions for the Global Poor: Creating Social and Economic Value, just published by John Wiley & Sons, Inc. Edited by Harvard Business School Professors V. Kasturi Rangan and John A. Quelch; Gustavo Herrero, Executive Director of the HBS Latin America Research Center; and HBS Research Associate Brooke Barton, the volume brings together a variety of perspectives on how serving the poor can be both a profitable business proposition and help improve the lives of the world's impoverished.

The volume includes illustrative case studies that explore the role of business in meeting the poor’s basic needs for security, healthcare, housing, and utilities. The contributors show how companies have successfully adapted their value proposition to the needs of low-income consumers in the retail, technology, and consumer good sectors. The book also reveals how the private sector can help facilitate the integration of the poor into the global production system. In addition, it outlines the challenges companies face when trying to operate at the base of the pyramid and includes overarching business principles for serving the BOP.

Business Solutions for the Global Poor is a “manifesto on how to combine profits and poverty alleviation,” says Professor C.K. Prahalad of the University of Michigan’s Ross School of Business. “By focusing on a range of industries – from housing to microfinance, from agriculture to health – and covering a geographical spread from India to Mexico and South Africa, the collection helps managers and public policy makers anchor their thinking on the role of the private sector and market-based solutions to poverty alleviation.”

Adds Rattan N. Tata, a graduate of Harvard Business School’s Advanced Management Program and chairman of Tata Sons Limited, “This volume focuses on a challenge that business, worldwide, has hitherto not regarded as being within it ambition: The challenge of banishing poverty. The book makes a significant contribution towards setting business on that endeavor.”

ABOUT THE EDITORS:

V. Kasturi (Kash) Rangan is the Malcolm P. McNair Professor of Marketing at Harvard Business School and cochairman of the School's Social Enterprise Initiative.

John A. Quelch is Senior Associate Dean and Lincoln Filene Professor of Business Administration at Harvard Business School and former Dean of London Business School.

Gustavo Herrero is the Executive Director of the Harvard Business School Latin America Research Center in Buenos Aires, Argentina.

Brooke Barton is a Research Associate with the Harvard Business School Global Poverty Project.

Business and the Global Poor
Published: February 5, 2007
Author: Sean Silverthorne
Executive Summary:
Companies have more or less ignored 80 percent of the world's population—the global poor. The new book Business Solutions for the Global Poor, created from research and a conference at Harvard Business School, shows how both business and societal interests can be served at the base of the economic pyramid. A Q&A with co-editor V. Kasturi Rangan. Key concepts include:

The goals of poverty reduction and economic profit begin to align to the degree that these ventures empower the poor, either by improving their quality of life, providing them with productivity tools and services, or by creating jobs.
The productive capacity of the poor can be leveraged in creating products and services.
To succeed in low-income markets, companies must strengthen their bottom-up market intelligence; utilize local leaders and community agents to bring people together; and educate investors that bringing BOP initiatives to scale and sustainability may happen more slowly than the time frames dictated by traditional corporate targets.
Companies must strike a delicate balance, keeping in mind both their legal obligations to return profits to their investors as well as their social responsibilities. Companies cannot afford to treat their social license callously.




About Faculty in this Article:


V. Kasturi Rangan is the Malcolm P. McNair Professor of Marketing at Harvard Business School.

More Working Knowledge from V. Kasturi Rangan
V. Kasturi Rangan - Faculty Research Page
E-mail V. Kasturi Rangan: vrangan@hbs.edu
About Faculty in this Article:


John Quelch is the Lincoln Filene Professor of Business Administration at Harvard Business School.

More Working Knowledge from John Quelch
John Quelch - Faculty Research Page
Are the world's poor, who individually have less than $5 a day in disposable income, a viable market for new goods and services? Consider the fact that there are four billion people around the globe that fit this description and you have the start of an answer.

But businesses that want to enter this market at the bottom of the economic pyramid (BOP) must look beyond just selling products—they must find ways to create social and economic value, according to the editors of a new volume, Business Solutions for the Global Poor.

The book grew out of a Harvard Business School conference in December 2005 on business solutions for alleviating poverty. The work combines chapters from a variety of perspectives—business, academic, government, nonprofit—to examine the nature of poverty, how the poor can become producers as well as consumers, and the roles to be played by policymakers and society at large. Of particular interest to business leaders are a number of case studies of successful BOP business models.

The co-editors are all associated with HBS: V. Kasturi (Kash) Rangan and John Quelch are faculty, Gustavo Herrero is executive director of the Latin America Research Center, and Brooke Barton is a research associate. We talked with Rangan about the research and the courses he teaches on business and poverty.

Sean Silverthorne: Traditionally, it was thought that the goal of the private sector—to maximize profit—was at odds with efforts to alleviate global poverty. How do these two interests align?

Kash Rangan: At its core, the private sector has always been about value creation—producing goods and services valued by consumers, generating employment, and delivering profits for shareholders. Nothing has changed in that respect. The shift we see is in a new understanding about who the customer is. Traditionally, leading companies—both in the West and in developing countries—have operated under the assumption that the world's poor majority—those four billion people on the planet with a disposable income of $5 a day or less—were simply a non-market, just a void. Writing off four billion potential customers was short-sighted, because even if their individual incomes are tiny, collectively they represent a massive business opportunity.

But the myopia of the past toward this market is starting to correct itself. More and more companies now see the possibilities of undertaking traditional value creation activities—from sourcing to engaging the poor in production to distribution and sales—in low-income markets. To the degree that these ventures empower the poor—either by improving their quality of life (clean water, for example), providing them with productivity tools and services (cell phones, for example), or creating jobs—that's where the goals of poverty reduction and economic profit can align.

Q: One of the interesting perspectives you offer is that the global poor are not only potential consumers to be tapped; they're also potential producers as well. Could you describe some of these entrepreneurial efforts?

A: There is a lot of talk—both in this book and elsewhere—about the massive potential consumer market at the base of the economic pyramid. However, for a poor consumer, participating in the marketplace requires having cash in your pocket, which at the end of the day is all about having a job. So you could say that the drive to sell consumer products to the unemployed and underpaid may be putting the cart before the horse. We are not arguing the fact that, in some cases, much-needed, good-quality consumer goods could enhance one's quality of life, just that the pecking order from the poor person's perspective is likely to be different.

The shift we see is in a new understanding about who the customer is.
That's why we think that more companies should be looking to leverage the productive capacity of the poor as an input to business. We have several great examples of that.

First of all, Nestlé. Since World War II, Nestlé's milk has by and large been produced by thousands of small farmers in developing countries. And their supply chain efforts have gone way beyond just sourcing. Nestlé has provided the technology, training, and supply-chain investments to make it possible for the small farmer to produce good-quality milk, transport it, and sell it to the company. This makes sense for the company because it needs fresh, locally produced milk, and for the small farmer, an assured steady source of income.

Unilever is another important example. In 2003, the company's Indian subsidiary refocused its efforts on the country's rural poor in the face of growing competition from new market entrants. By training and hiring low-income, community-based saleswomen, the company successfully expanded the reach of its products to an additional 60,000 rural villages. By relying exclusively on low-income women as their frontline sales force, it also provided a significant source of income to a traditionally marginalized group.

Q: What are some of challenges that companies face operating at the base of the pyramid? Certainly the poor are very different consumers from the more affluent. What kind of business models are needed?

A: There are three major challenges. First, there is the issue of cultural distance between corporate decision makers and the poor. Let's face the facts: the men and women in the executive suite are often out of touch with the realities of the poor. They tend to come from the upper economic classes and primarily interact with people like themselves. Because of this difference in world view, corporate leaders may overlook crucial business opportunities in low-income markets if they do not proactively transform their organizational culture. The case studies in this book show that the companies which have succeeded in low-income markets were ones that strengthened their bottom-up market intelligence—finding novel ways to integrate the preferences, constraints, and habits of the poor into their business development—and very importantly had a corporate leadership that set a tone of engagement and commitment from the top.

Many consumers at the BOP don't have a voice—social, political, or economic.
The second crucial challenge businesses face is a serious lack of infrastructure in poor markets that can make operating at the base of the pyramid difficult, and potentially costly. For instance, a basic lack of physical connectivity is typical in many rural markets in developing countries, which is a real barrier for companies trying to deliver goods and services efficiently. Just as important, companies must contend with a lack of formal institutions regarding the "rules of the game." This means that company success may rely on local leaders and community agents who have the social capital to bring people together and build incentives for everyone to play by the rules. The role of social capital is also key to overcoming obstacles related to weak economic institutions. In the absence of formal credit bureaus, many micro-credit organizations, for example, rely on the self-selection and mutual monitoring of a group of micro-entrepreneurs to reduce credit risk and minimize default.

Finally, companies are challenged to find ways to bring BOP initiatives to scale and sustainability within the time frames dictated by traditional corporate targets. In many BOP ventures, the true profit driver lies in volume rather than in profit margins. However, because of the other two challenges, few BOP ventures can be expected to reach scale at the pace seen in their mainstream counterparts. Indeed, those BOP ventures that do quickly reach scale often credit some of their success to support from governments, multilateral donors, and nonprofit organizations. Others that grow more slowly have benefited from enlightened managers who take the view that a BOP venture's steep start-up costs are a long-term investment.

Q: The case is made that companies in BOP markets can't just operate to make profits, they also must create social value in the areas where they operate. Could you elaborate a little on why this is important?

A: Frankly, this always the case regardless of whether they operate at the TOP or BOP of the pyramid, except that at the top, there are enough agencies protecting consumers, and consumers themselves have the choice to spurn suspect offers. Not that misalignments don't happen; they correct themselves in the long run. That is not the case at the BOP. Many consumers at the BOP don't have a voice—social, political, or economic. That's why the onus is on the "business" to demonstrate how their participation improves people's lives. If they do so, then nobody will begrudge their due share of profits.

Even when companies do carefully consider the economic and social impacts of their products on the poor, they may still face reputational threats if their BOP ventures are seen as "excessively profitable." Of course, it can be argued that without this profit, businesses targeting the poor will not attract the level of investment necessary to be sustainable or scaleable across the entire BOP. According to this view, above-average profitability should be seen as a sign of success, one that will no doubt invite competition and thereby bring down prices, ultimately benefiting the poor. To minimize negative public perception, however, companies that find that they are "profiting from the poor" must be willing to publicly address the profit debate, work collaboratively with NGOs and governments, and also measure and report on the social value they are creating for the poor.

In conclusion, companies should not look to the poor merely to exploit their untapped purchasing power or dip into low-cost labor pools. Over the long term, such a cursory and extractive approach will draw the attention of governments and NGOs—many of which already question the legitimacy of the private sector's involvement in BOP operations. To succeed in serving this market, companies must strike a delicate balance, keeping in mind both their legal obligations to return profits to their investors, as well as their social responsibilities. Companies cannot afford to treat their social license callously.

Q: Long term, what impact could the private sector have towards alleviating global poverty?

A: The private sector brings a performance-driven culture when addressing any market. The poor are no different. Once management has figured out the business model, bringing the operation to scale is a necessity for their own bottom line. Investments will flow automatically without many gut-wrenching debates on theories of economic development and so on. That is the nice thing about the private sector. When they choose to focus there is action. At the same time it would be a wild dream to believe that private sector investment is going to save the world. Unless the appropriate government participates actively as an investor, regulator, or guarantor, there will not be the rush of private entrepreneurs to participate in this market. We believe that much of private sector efforts will come through an enlightened approach involving partnerships.

Government partners are essential for companies that may be attempting to build new markets where existing infrastructure is weak. In addition, to create a secure environment for business to operate, governments can also play a role in helping companies to provide socially beneficial services (particularly in sectors such as water, energy, and healthcare), by subsidizing service provision to certain consumer groups (e.g., those who cannot pay), or by providing the seed funding necessary to reduce cost structures and generate the incentives for business involvement.

Companies that have productive relationships with NGOs and nonprofits can find it very useful as well. Through partnership, companies can leverage the strengths of their civil society counterparts—including deep knowledge of local conditions and legitimacy as local representatives—to dramatically lower their costs of market and gain valuable on-the-ground feedback. Some NGOs provide the much-lacking "voice of the customer" input for design of products, programs, and services.

Q: You teach several HBS elective offerings in this area. Could you describe those courses and the reaction of students who take them?

A: I teach two elective courses: Social Marketing, and Business at the Base of the Pyramid—B-Bop (with Senior Lecturer Michael Chu). Both are new to the HBS curriculum, only two years old: The former deals with challenges facing marketers promoting "social" goods rather than "private" goods. The organization itself can be a for-profit or a nonprofit (the course has half of each); that doesn't matter. It is the goal of marketing and what it is intended to do that stretches our knowledge base. In this course we deal with fascinating issues of social change, cause marketing, cause branding, and so on. The feedback from the about forty to forty-five committed students who take the course is gratifying. Next year, we plan to make it a full course (in partnership with another social enterprise course on business leadership taught by Professor Dutch Leonard), and that might broaden the appeal.

The second course, B-Bop, deals exactly with the kind of issues we have been discussing in this article, and we get about seventy-five students. Here we deal with business models at the base of the pyramid. Students seem quite enthusiastic about the nature of the cases and discussion topics we bring to the classroom. It is indeed a privilege to have the benefit of over a hundred bright minds helping us think through the many challenging managerial issues in these two domains. I am simply grateful to have the opportunity to share my passion and ideas on these very important topics with future leaders, many of whom will make a lasting contribution to society, the economy, and humanity.

Excerpt: Marketing Programs to Reach India's Underserved
by Kunal Sinha, John Goodman, Ajay S. Mookerjee, and John A. Quelch

Business models targeting low-income consumers require managers to change their mind-set from one focused on revenue and margin maximization to one concerned with sales volume and market penetration. Since the revenue potential of the underserved markets can be as much as five times that of the elite market, sacrificing short-term unit margin for volume and market share can improve long-run profitability. However, to succeed, traditional assumptions about managing the marketing mix must be challenged.

Products for poor markets have to be cheaper and therefore simpler, stripped down to the key elements most important to the consumer. Distribution is often more reliant on direct, relationship-oriented channels, leveraging the power of third parties. To keep costs low, O&M and its clients have found it useful to synchronize distribution and communication channels. Most of the communication that O&M organizes for its clients in traditional haats (weekly bazaars) and melas (fairs) includes product sampling and direct selling. Since word-of-mouth plays a significant role in poor communities, the retailer and his shop are the key to successful communication.

Reaching the poor requires less reliance on brand-building advertising than on targeted promotions and support services. The task for the marketer is to introduce and build the category. Targeted promotions—including sampling—help to change long-entrenched behaviors and shift consumers from commodities to brands. For the Hindustan Lever shampoo brand Clinic Plus, the challenge was to create dissonance among users of mud, natural herbs, and low-cost local shampoos. O&M created a "Mother-Daughter Day," a talent competition in which teams of mothers and daughters displayed their talent in the fields of study, handicraft, painting, cookery, and rural folk arts. Shampoo demonstrations were carried out during the event, creating a memorable experience. Some 250 million rural consumers participated in these events, resulting in an 8 percent increase in users.

Excerpted by permission of John Wiley & Sons, Inc., from Business Solutions for the Global Poor, edited by V. Kasturi Rangan, John A. Quelch, Gustavo Herrero, and Brooke Barton. Copyright 2007 by John Wiley & Sons, Inc. All Rights Reserved.

About the author
Sean Silverthorne is the editor of HBS Working Knowledge.


Source: http://hbswk.hbs.edu/item/5529.html

BONO ENTERS INTO BUSINESS VENTURE WITH US STUDENTS

BONO ENTERS INTO BUSINESS VENTURE WITH US STUDENTS

The clothing company founded by BONO and his wife has entered into a business venture with US college students in Florida, who will sell the firm's products. Students at Miami University's Centre for Social Entrepreneurship will buy cotton T-shirts produced by Edun Apparel in Africa, and sell them on at a profit to other organisations. The U2 frontman set up the company with wife ALI HEWSON in 2005 to boost trade and jobs in developing countries, under the slogan "trade, not aid". It is believed similar deals will be agreed with other US colleges in the near future.

Source: http://www.contactmusic.com/news.nsf/article/bono%20enters%20into%20business%20venture%20with%20us%20students_1019772

PatientsLikeMe Secures $5 Million Series A Financing

PatientsLikeMe Secures $5 Million Series A Financing
Monday February 5, 10:47 pm ET

CAMBRIDGE, MA--(MARKET WIRE)--Feb 5, 2007 -- PatientsLikeMe (http://patientslikeme.com), the leading treatment and outcome sharing website for people with life-changing diseases, announced today that it has secured $5 million in Series A funding led by Collaborative Seed and Growth Partners, LLC with participation from private equity fund Invus, LP. Previous investors in PatientsLikeMe include founding partner CommerceNet and Omidyar Network.
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"PatientsLikeMe is the most compelling health care social networking site I've seen. Patients share quantitative data on treatments and outcomes, enabling them to make better, more informed decisions, while helping to advance medical research," hails Dr. Jay M. Tenenbaum, Founder and Chairman of CommerceNet.

"Imagine knowing every medication, supplement, or device used to treat your disease. Imagine knowing what treatments work for people just like you -- and having the ability to easily connect with those people. That's what makes PatientsLikeMe different. Patients share their treatments and outcomes not just to help themselves, but to help others," says President and co-Founder Benjamin Heywood.

Founded by three MIT engineers, brothers Benjamin and James Heywood and longtime friend Jeff Cole, PatientsLikeMe launched its beta product in March 2006 specifically for ALS (Lou Gehrig's disease) patients. Benjamin and James' brother, Stephen, recently passed away after an eight-year battle with the disease. "Stephen inspired us to launch PatientsLikeMe to improve treatment options for people with ALS," explains James Heywood. "With his passing, and the overwhelming demand from leaders in other disease areas, we realized PatientsLikeMe was too important not to develop for other diseases." The documentary, "So Much So Fast," chronicles the Heywood family's fight against ALS.

PatientsLikeMe plans to expand its service to over 50 diseases during the next two years. If you would like to request a PatientsLikeMe community for your disease, please send an email to request@patientslikme.com.