Existing Approaches to Social Entrepreneurship

Social entrepreneurs create social capital through the creation of a product, interaction, or service. They typically have backgrounds in sociology or public policy, see the world through a lens of policy or economic incentives, and develop solutions by working their way "down" from a given policy or business model. That means they'll work on either changing the policy or economics, or supplementing laws. For example, this type of social entrepreneur may start by thinking about the lack of enough low-income housing in a given city. Thoughtful solutions in this case may include offering vouchers, subsidies, or other forms of free or lower cost housing for those that qualify.

Solutions to problems viewed from a policy perspective typically take the form of nonprofit businesses or nongovernment organizations (NGOs) that work alongside government to influence change. This change may itself take one of two forms:

  • one-on-one interaction with someone afflicted with a problem, as in a case manager working with a homeless person. Or
  • a lobbying effort, a top-down approach, in which someone attempts to influence policy decisions at a local or federal level.

In both cases, grants or donations typically fund the work, and many social entrepreneurs find themselves entrenched in the complexities of the legal system, government agencies, and foundations. The impact to be had in these contexts is often slow and painful. Nonprofits "abhor change," and this abhorrence creates an overly conservative approach to impact. Godin, Seth. "The Problem with Non." September 15, 2009. (accessed November 14, 2011). According to Nonprofit Management Consultant Nell Edgington,Edgington, Nell. "4 Things Every Nonprofit Needs." June 15, 2011. (accessed November 14, 2011). nonprofits typically have five problems:

  1. an inability to raise enough money
  2. a lack of strategic direction
  3. an inability to "move the needle" on a social problem
  4. a disconnected, disengaged, ineffective board of directors
  5. a lack of sufficient organizational infrastructure

The operational and strategic nature of these problems implies that these institutions often have difficulty delivering any impact at all. Because a nonprofit or an NGO constantly chases grant money and funding, they are unable to drive cultural change.

Continue to the Next Chapter:
Short Projects, Shallow Focus

Wicked Problems: Problems Worth Solving