UABS KNOWLEDGE

ENTREPRENEURSHIP

Jamie Newth on social entrepreneurship

14 March 2018

 Jamie Newth, a Research Fellow in the Business School's Department of Management and International Business, explains why social entrepreneurs are uniquely suited to tackle 'wicked' social and environmental issues. He is CEO of Soul Capital, an organisation that invests in New Zealand social enterprises.

Video Transcript

0:06

Social entrepreneurship is a challenging thing to define because it captures a big range of activities, but at its heart it is still entrepreneurship as you would understand it in a commercial environment. So, it is about using innovation to exploit opportunities. That happens regardless of whether you have got enough resources at the outset, and it can happen in any context. We understand it in start-ups most commonly,  but it can happen in any kind of organisation. Social entrepreneurship is all those things,  but with a focus on trying to address a social or environmental issue at its heart as well.

Social entrepreneurs act where they see some kind of failure, whether it is by the market not providing the conditions for humanity that we would like, or where government intervention hasn't been successful either, and where not-for-profits or NGOs typically intervene as well to address these kinds of issues.

Where social entrepreneurship has a powerful but complementary role to play is that generally they are not constrained by particular modes of operating that traditional businesses or not-for-profits or government policy often is. So, they can use models which blend the best of different models of trying to achieve the social and environmental change. So that leads to quite innovative combinations of ways of doing things, including combining different types of capital with different types of business models. So, it is an exciting and compelling mode of getting change done.

1:27 Success where it counts

One of the great examples of social entrepreneurship globally, which has achieved real scale, is the Grameen Bank model of microfinance. It is one of the more famous models, that led to Mohammad Yunus the founder receiving a Nobel Peace Prize. But, probably more important than that, he proved that it is possible to lend to the poor and provide them with banking services, with an opportunity for them to participate in the economy, whereas previously they had been marginalised from that. From a global perspective, that is a great example of social entrepreneurship achieving scale.

In New Zealand we don't have many examples of organisations scaling like that, but we have got some exciting early-stage companies which are proving the case. One of which is Thought-Wired, which takes a technological approach to trying to dramatically improve the quality of life for people with severe disabilities. They take a head-sensing helmet or headset which will sense the brainwaves of people who are locked in because of disability or injury, and enable them to use that technology to communicate or control devices to increase their ability to interact with the world around them. So, quite an exciting commercial opportunity in terms of the technology and its ability to scale, but also has a huge impact on the quality of life for people for whom the market hasn't yet served.

2:59 A new model for business

The development of the social entrepreneurship ecosystem in New Zealand is lagging behind some of the other economies that we would look to and care about what is happening over there, particularly the UK and North America.

The big reason why the growth of this type of activity is difficult is because it doesn't fit with what is normal. We have institutionalised that traditional businesses have shareholder primacy that drives the bulk of their behaviour, and that the addressing of social and environmental issues is done by not-for-profits and charities. So we have got this binary kind of model. Social entrepreneurs are violating that to some extent because they are blending the principles and practice of business with impact measurement models and the understanding of issues that traditionally belonged to the charity and not-for-profit sector.

So, the way that capital flows in an economy, the way that our legislation is set up, is around that binary model. And this creates challenges for anyone who is hybrid. At the big picture, that is one of the big challenges. And what we have seen has been successful at catalysing and supporting the growth of social entrepreneurship is a number of things. Government has played a strong role in creating a space for this stuff to happen. That can exist as particular policies which incentivise investors to invest in these kinds of businesses, to provide legal frameworks to incorporate in a legal form or organisation which encompasses both the social and environmental with the commercial.

And, increasingly, it requires leadership from investors to say actually I want to invest in a way which aligns not only with the commercial or financial returns that I am looking for but with the change I want to see in the world as well. And that flow of capital is crucial for scaling these ventures. So, it does take an ecosystem. It is not one particular lever you can pull, it is a number of factors interacting.

Social entrepreneurship is a very rewarding activity. You have got all the benefits that any other entrepreneur would realise in terms of pursuing a passion, innovating, and solving a problem. But social entrepreneurs have the motivation and the excitement of trying to grapple with some of those 'wicked' problems which are really troubling us in a global sense as a society. So the rewards are, we are really trying to change things, we are trying to create systemic change.

So, it is a rewarding activity in and of itself. But, then you have also got, as employers, you create an environment where people are able to align their talent with their passion and what they find meaningful work – it creates a significant competitive advantage when you are attracting talent.

I think the core of why people should do social entrepreneurship, and continue to be excited about it, is because you have got that real alignment between your talent and what you find as meaningful work, and to be able to create change in the world. Who wouldn't want to get excited about that?

 

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