How to Change the World: Social Entrepreneurs and the Power of New Ideas

Posted on January 24, 2008
Filed Under Books |

I just finished reading How to Change the World: Social Entrepreneurship and the Power of New Ideas by David Bornstein, the award winning author of The Price of Dream: The Story of the Grameen Bank. I loved the ideas and the general thesis presented, but I was unimpressed with the organization of the book (haphazard) as well as the way in which the stories of the entrepreneurs were told (still inspiring, but definitely not made to stick).

The economist Joeseph A. Schumpter observed that entrepreneurs are motivated not by profits, but by the ‘desire to found a private dynasty, the will to conquer in a competitive battle, and the joy of creating.’ Schumpter also characterized the entrepreneur as the source of the ‘creative destruction’ necessary for major economic advances. According to the management expert Peter F. Drucker, the term ‘entrepreneur’ (from the French, meaning ‘one who takes into hand’) was introduced two centuries ago by the French economist Jean-Baptist Say to characterize a special economic actor-not someone who simply opens a business, but someone who ’shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.’

What then, distinguishes social entrepreneurs from business entrepreneurs? The answer, according to Bornstein, is not in temperament or ability, but in the nature of their visions. In a question: Does the entrepreneur dream of building the world’s greatest running-shoe company or vaccinating all the world’s children?

Today, when most people talk about social entrepreneurship they are talking about a social venture that has some sustainable income producing component to it. One of the best examples of this is the Girl Scouts vs. the Boy Scouts. The girls sell cookies to raise funds and the boys just keep asking for donations. This income-producing type of social entrepreneurship, while immensely important, is not what Borenstein is talking about in How to Change the World. Instead, this book sees social entrepreneurs as transformative forces: people with new ideas to address major problems who are relentless in the pursuit of their visions, people who will simply not take no for an answer, who will not give up until they have spread their ideas as far as they possibly can.

Among the stories told of social entrepreneurs is that of Florence Nightingale, the author of the 1860 book Notes on Nursing: What it is and What it is Not. Nightingale is credited with instituting the teaching of nursing, and her book is still read by nursing students today. She was relentless in pursuing her vision, and she created a lasting change and impact.

Another notable profile is that of Bill Drayton, who created Ashoka.

There are ten stories of social entrepreneurs in all, and haphazardy spread throughout the text are chapters of the findings of Bornstein. While good, these tended to feel out of order and did not flow well together.

I was most excited about the conclusion of the book, which I would recommend reading first. Bornstein talks about the rise of the citizen sector (social entrepreneurs/non-profits/NGO’s etc.) and the one very large problem facing these organizations. The problem with a social business is that they are often difficult to measure and monitor and they mostly survive on donations. So, unlike a business entrepreneur, so long as the social entrepreneur can continue raising donations, it doesn’t much matter whether he or she is effectively ’shifting economic resources out of an area of lower and into an area of higher productivity and greater yield.’

That is precisely the problem with nonprofit institutions - there is no mechanism to keep them in check and there are no easily attainable metrics for donors and potential donors to use in order to evaluate a social organization’s effectiveness (as the price system does in for-profit businesses). And, I would argue (as would Bornstein) that we should all be much more selective with the money we give away, and apply the same type of diligence as we would in choosing our investments.

Bornstein’s solution is to create research organizations that examine these social institutions and provide written reports, much like stock analysts do for publicly traded companies. These reports would go to great lenghts to measure the effectiveness of the instution and make recommendations for donors (buy, sell, etc.). Initially these rating companies would be funded by the larger philanthropic organizations, and eventually by individuals who purchase the reports to guide their own giving.

I think this is brilliant. And with the help of Google, I was able to find some former Goldman Sachs employees who are doing this very thing.

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