Unreasonable People

They Think They Know the Future

Social Edge — Tue, 15 Apr 2008 00:00:00 -0700

They’re Unreasonable Because They Think They Know the Future

At a time when most of us are confused and uncertain about what the future might hold, leading social entrepreneurs brim over with conﬁdence. They know that the best way to predict the future is to create it and the best way to build momentum—and attract funding and other resources—is to develop and communicate a clear vision of how things might be different. These entrepreneurs see a bigger picture, sometimes mulling it over for decades. For them, Winston Churchill’s adage that the further you can see back, the further you can see forward holds true.

Anyone looking for clues on how to spur innovation and creativity in the real world should listen to David Galenson, the economist whose work in this area started pretty much by accident. He was spurred to wonder—while bidding for a painting at auction— about links between the age of artists at the time they create a piece of artwork and its subsequent fame and price at auction. This led him to what some have described as the “uniﬁed ﬁeld theory of creativity,” distinguishing between two broad types of innovators.

Conceptual innovators are revolutionaries, break with the past, are blessed with certainty, know what they want, and tend to bloom early, like Picasso in painting, Mozart in music, and Orson Welles in ﬁlm. Experimental innovators, by contrast, include people like Cézanne in art, Beethoven in music, and Alfred Hitchcock in ﬁlm. They tend to proceed in ﬁts and starts, work endlessly to perfect their technique, move slowly toward goals they don’t totally understand, and as a result, never know when a work is ﬁnished. Interestingly, many experimental innovators—including great entrepreneurs like Edison and Ford—didn’t die early.9 Instead, they tinkered on into ripe old age.
As Galenson explored the patterns of creativity in others areas, such as architecture and economics, he began to realize that these two fundamental types of genius could be found across all forms of human creativity and endeavor. Over time, too, he came to understand that innovators aren’t either conceptual or experimental, but that they can be located along a continuum, with conceptual innovators at one end and experimental innovators at the other. As he dug deeper, he concluded that since economic activity is all about value creation, then investors, companies, governments, and business schools need to wake up to these differences and support both types of innovators.

The entrepreneurs we proﬁle are all very much experimental in how they operate, but most are also conceptual thinkers. They are also optimists, conﬁdent that it is possible to change the world for the better. And, again, they are ambitious. “I think the ultimate challenge of sustainable business,” HydroGen president Joshua Tosteson explained during an Investors’ Circle survey, “is how to undercut the compelling advantages of economies of scale with quality-focused business models. In 10 years’ time, there will be no distinction between a ‘social venture’ and most major businesses— it will be a sine qua non of business going forward.”

At their best, such people see things others do not. They draw conclusions that others cannot. They instinctively reframe challenges as opportunities, looking well beyond today’s horizons. In the process, they offer those in the mainstream a way of getting a glimpse of the social and environmental drivers that will shape the future. Take China. The country’s population may stabilize at around 1.5 billion people sometime in the 2030s, but those with the eyes to see suspect that China will grow old before it grows rich. Worse, because of the way its one-child policy has favored the birth of boys, the country will be short of 30 million brides within fifteen years. The social, economic, and environmental implications are likely to be profound, and the efforts of people like social entrepreneur Wu Qing, who founded the Beijing Cultural Development Center for Rural Women to help raise the status and expectations of rural Chinese women, will be central.

Many social entrepreneurs are focusing their efforts where the bulk of the world’s population will be by the 2030s: the swarming megacities. Every year, some 70 million people leave their rural homes and migrate to cities. It is estimated that, by 2030, there will be some 2 billion squatters in the world—most living in what Robert Neuwirth has called “shadow cities,” or megaslums. These people are busily building a huge hidden economy. “Squatters are the largest builders of housing in the world,” says Neuwirth, “and they are creating the cities of tomorrow.” Anyone looking for clues about how a world of 7 billion to 10 billion people might be made survivable, let alone sustainable, ought to focus on—and support— social entrepreneurs, including such people as Tasneem Siddiqui in Pakistan, Sheela Patel and Jockin Arputham in India, and Taffy Adler in South Africa.

They Are Propelled by Emotion

Social Edge — Tue, 08 Apr 2008 00:00:00 -0700

They’re Unreasonable Because They Are Propelled by Emotion

Whether or not we admit it, we are all fueled by emotion to some degree. That said, you ﬁnd, time and again, that these entrepreneurs have had a life-transforming experience, some sort of an epiphany, that launched them on their current mission. They may be deeply concerned—even angry—about the loss of biodiversity, about the treatment of ethnic minorities, or about the fact that 750 million people worldwide are illiterate and that 100 million children have no chance of going to school. But their passion and the experiences that originally turned them on to the cause do not make them crazy—at least, not in the clinical sense. Among those who have reported some form of conversion experience are people as diverse as Bob Geldof, Bono, Fazle Abed of BRAC, Bunker Roy of Barefoot College, Roy Prosterman of the Rural Development Institute, and, in the corporate mainstream, Wal-Mart CEO Lee Scott (whose transformative experience came in the wake of Hurricane Katrina).

Yes, some of these people get angry—as we all should when faced with the challenges they are trying to spotlight and get decision makers to tackle. What is different is that their anger, their passion, isn’t simply blown away as steam. Instead, they work out how to turn it into useful locomotion. In the process, they have to strike a balance between passion and effective change. People Tree, for example, is a social enterprise that directs 10 percent of the profits from its ethical fashion collection to promoting awareness of the fair trade agenda. Founder Saﬁa Minney notes that sophisticated consumers may recoil from in-your-face campaigns, so most of People Tree’s designs do not include messaging or slogans; they instead provide information with the use instructions and packaging, what Minney dubs “subtle education.”

As such pioneers evolve effective new marketing and communication strategies, the potential for others to move into the resulting opportunity spaces could grow exponentially.

They Are Insanely Ambitious

Social Edge — Tue, 01 Apr 2008 00:00:00 -0800

They’re Unreasonable Because They Are Insanely Ambitious

It’s true, many of them are insanely ambitious. That is what makes them so interesting—and potentially transformative. They are can-do thinkers, frustrated by the don’t-do, can’t-do, and won’t-do people they often ﬁnd themselves confronting.

But ambition often gets a bad rap.

The difference is that these entrepreneurs’ ambition is not about them; it is about achieving for the beneﬁt of a far greater goal. Think of 2004 Nobel Peace Laureate Wangari Maathai of East Africa’s Green Belt Movement and her insanely ambitious plan to plant 15 million trees. Her supplier never believed that she was serious; he wasn’t even close to being able to deliver the number of trees he had promised as she got started.

Now, with 30 million trees planted, Maathai and her colleagues talk about ultimately planting 1 billion trees, moving far beyond their initial efforts in Kenya.

As the then president (and despot) Daniel Arap Moi must have sometimes wondered, is there no stopping the woman?

They Want to Change the System

Social Edge — Tue, 25 Mar 2008 00:00:00 -0800

They’re Unreasonable Because They Want to Change the System

Look around, and the world is full of unsatisfactory equilibriums that entrepreneurs like Rincón love to disrupt. We are very likely in the early stages of the greatest periods of creative destruction in our global economy. Social and environmental entrepreneurs are not the answer to all our prayers, but they signal some of the ways in which we can steer the processes of change.

Their power derives from the fact that they spot dysfunction in the current system, and, unlike reasonable people who accommodate themselves to the status quo, they try to work out how to transition the system equilibrium to a different—and more functional—state.
Coming decades will require unprecedented levels of system change, so we had better listen to the unreasonable entrepreneurs who are exploring when, where, and how to effect change. In this spirit, some leading funders are already trying to identify and support social and environmental entrepreneurs.

For example, the Schwab Foundation for Social Entrepreneurship has joined forces with the Lemelson Foundation to establish the Leapfrog Fund, designed to spur the transfer of successful innovations between entrepreneurs in different parts of the world. Such replication is one key part of system change, but another is altering the system conditions, the strategy adopted by would-be game changers like those behind the transparency, accountability, and emission-trading movements we will discuss in later chapters.

The risks of relative failure with such wildly ambitious goals are much greater, but the payoffs are also likely to be proportionately greater.

Orlando Rincón Bonilla

Social Edge — Tue, 18 Mar 2008 00:00:00 -0800

ParqueSoft is a nonproﬁt innovation park that draws budding software enthusiasts from poor communities. Within ﬁve years, it grew into a network of twelve technology centers in as many major Colombian cities in the Valle del Cauca, the southwest corridor of the country. The network houses two hundred software companies, comprising some twelve hundred workers, about 75 percent of whom are young entrepreneurs.

ParqueSoft is not a traditional incubator, however. Once an enterprise has reached a determined size and turnover, it does not leave ParqueSoft; the young people who create and develop their companies at ParqueSoft want to stay and keep growing. They also welcome new entrepreneurs who join the fold and beneﬁt from the extraordinary leverage that comes from belonging to a dynamic, creative community where talent and know-how can solve the most complicated problems that are brought to bear from clients all over the world.

Each of ParqueSoft’s ofﬁces is a beehive of activity. Within a large open space, enterprises are organized into blocks, depending on the size of the team. Each team is a software company that designs, develops, and sells many different types of software, including optics, artiﬁcial intelligence, edutainment, bioinformatics, and nanotechnology tools. These companies currently sell their software in over forty countries. The open-space system allows for continuous informal exchanges within and between companies. Parque-Soft has created an ecosystem that stimulates innovation, inquiry, and the improvement of software products for sale to national and international clients.

Yet anyone who thinks that ParqueSoft is mainly about information technology businesses is mistaken. “ParqueSoft is a social initiative that happens to use science and technology as a vehicle,” Rincón explains. “Its objective is to stimulate democracy and social justice through the inclusion of previously marginalized young people living in low-income communities, transforming them into protagonists of their own enterprises, not employees.”

With a head of wild curly hair and a uniform of open shirts and jeans, Orlando Rincón Bonilla could easily be mistaken for one of the entrepreneurs at ParqueSoft. He is brilliant without being arrogant, frequently irreverent, and very funny. Most of all, he loves the young people with whom he works. On the day we spent at one of the ParqueSoft sites, we had many questions: “How can you be sure that the entrepreneurs that grow their ventures at ParqueSoft will also be committed to their communities’ development? What if all they want is to become as wealthy as possible and forget about being good corporate citizens?”

Within minutes, Rincón assembles a group of about twenty young men and women working in various ventures housed on the third ﬂoor of the building. He asks them the same questions. All of them start speaking animatedly and at once. An hour into the conversation, it is clear that these young people are not waiting to become successful before becoming involved in their communities. They are already involved almost as fully as they are in growing their own ventures.

Rincón is a tough act to follow, so any question of succession seems irrelevant. Nonetheless, he has set up ParqueSoft to function well without him, fully run by a council of entrepreneurs elected by the collectivity. His succession plan has been delineated from the outset, in part by how he chose the entrepreneurs who came to ParqueSoft initially and now form part of its council. Rincón is a ﬁrm believer that entrepreneurs are born, not made. “It’s genetic,” he frequently says. “You can walk into a room full of people and pick the entrepreneurs out in seconds. It’s something about the look in their eyes.” What, then, is it that makes these people seem so unreasonable?

From Social Activist to Disruptive Innovator

Social Edge — Tue, 11 Mar 2008 09:24:16 -0800

Orlando Rincón Bonilla

Rincón’s studies in systems engineering marked a turning point. The exposure to other ways of thinking inﬂuenced his own, convincing him that ideology alone was not the answer. With a double specialization in engineering and anthropology and a passion for mathematics, he gravitated to computer science and software. So did one of his university classmates, William Corredor. In 1984, the two decided to go into the software business. They created Open Systems, a private company that makes software products and services for ﬁxed and mobile telephone networks as well as for the cable television, Internet, domestic gas, electricity, and drinking water sectors.

Fifteen years later, Rincón had become wealthier than he could ever have imagined, but he was not happy. He was uneasy with what seemed to be the inescapable tension between maximizing proﬁts and prioritizing his country’s social development needs. He believed deeply in the innovative capacity of his fellow Colombians. One question in particular troubled him: what model would allow Colombia to grow economically without compromising the values of justice and equity to which Rincón was ﬁrmly committed?

He went in search of the answers. First, he visited India to see how this country had managed to transform itself into a global leader in information technology services, but he did not ﬁnd entrepreneurs. Rather, he found managers and millions of workers, all contracted by large national and international companies whose executives lived in comfortable neighborhoods in Delhi, Bangalore, Los Angeles, New York, and London. Rincón interpreted what he saw as a new form of slavery justiﬁed by the rationale that these workers were earning somewhat better salaries than they would have received in the local market. Moreover, he was troubled by what he saw as the forced Americanization of the workers, who were able to advance their careers to the degree that they spoke English “like a Yank” and had adopted American-sounding names.

From India he went to Ireland. Perhaps the secret to Colombia’s economic and social development lay there? After all, Ireland had been touted as one of the hot spots for competitive industries, including IT. Despite the tremendous afﬁnity Rincón developed for the people there, the Irish miracle he discovered was akin to a large maquiladora for multinational corporations such as IBM and Microsoft. It seemed that there was little or no indigenous IT entrepreneurial activity—it had all been imported from abroad. For Rincón, whatever model Colombia followed would have to recognize the ingenuity and capacity of Colombians and to stimulate, wherever possible, their ability to be entrepreneurial, self-employed, and independent. Upon his return, he decided to invest his fortune in boosting entrepreneurialism and, in the process, changing Colombian society.

His stake in Open Systems, a leading technology solutions provider based in Colombia with 10 million customers across six Latin American countries and 2004 revenues of $14 million, had made him independently wealthy. In 1999, he left Open Systems— although he still owns a stake in the company—and started Parque-Soft.

“Once I found my way, I wanted to generate a shortcut for many intelligent, educated, poor young people so that they could generate companies of their own and create new leadership for our society,” he explains. “So instead of spending my money on luxuries or vices, I began to invest in people in the belief that my money could be useful to others like me.”

What Makes Them Unreasonable?

Social Edge — Tue, 04 Mar 2008 12:10:48 -0800

A few years ago, Muhammad Yunus—the world’s leading social entrepreneur, founder of the revolutionary Grameen Bank, pioneer of microﬁnance, and winner of the 2006 Nobel Peace Prize— described his breed to us as “70 percent crazy.” It’s extraordinary how often his fellow entrepreneurs have told us that they have been called crazy by the media, by colleagues, by friends, and even by family members. But they are crazy like the proverbial fox. They look for—and often ﬁnd—solutions to insoluble problems in the unlikeliest places. They are driven by a passion to expand business thinking to reach people in need. Thus, many are pioneering and helping map out future markets where most of us would only see nightmarish problems and risk.

Consider Orlando Rincón Bonilla and his nonproﬁt model designed to bootstrap poor communities into the twenty-ﬁrst century. Mention his native Colombia, and the drug cartels, guerillas, and paramilitary are among the ﬁrst things that come to mind. A youngster growing up poor in this beautiful Andean country might seem to have only those three options before him. But Colombia is nothing if not a country of contrasts, and it was in the very barrios that feed criminal activity that Rincón was born.

One of ten siblings from a poor family in Cali, he grew up feeling the sting of both poverty and exclusion.6 As a teenager, he became a leftist activist and joined a youth organization run through his neighborhood church. The priest named him president of the association, but Rincón refused to even set foot in the building. He didn’t want to be constrained by organizational expectations, including those of the Catholic Church. Instead, the group met in the park— the center of community life. His political activism soon earned him a reputation. It also cost him a place at the public university but, in the process, opened up other opportunities. He won a scholarship and attended the University of Medellín, which was particularly surprising given that, as a private university, it was geared to educate the sons of the elite, most of them businessmen.

Ten Characteristics of Successful Social Entrepreneurs

Social Edge — Tue, 26 Feb 2008 11:16:46 -0800

WHAT CHARACTERISTICS do these social and environmental entrepreneurs share?

Capturing the common characteristics of such extraordinary, diverse people is tough, but here are some especially noteworthy qualities.

Among other things, these entrepreneurs:

•    Try to shrug off the constraints of ideology or discipline
•    Identify and apply practical solutions to social problems, combining innovation, resourcefulness, and opportunity
•    Innovate by ﬁnding a new product, a new service, or a new approach to a social problem
•    Focus—ﬁrst and foremost—on social value creation and, in that spirit, are willing to share their innovations and insights for others to replicate
•    Jump in before ensuring they are fully resourced
•    Have an unwavering belief in everyone’s innate capacity, often regardless of education, to contribute meaningfully to economic and social development
•    Show a dogged determination that pushes them to take risks that others wouldn’t dare
•    Balance their passion for change with a zeal to measure and monitor their impact
•    Have a great deal to teach change makers in other sectors
•    Display a healthy impatience (e.g., they don’t do well in bureaucracies, which can raise succession issues as their organizations grow—and almost inevitably become more bureaucratic)

But as interest grows in trying to solve the world’s great social, environmental, and governance challenges, the deﬁnitions —and the boundaries between ﬁelds— blur. In the process, the ﬁeld of social entrepreneurship has become “a truly immense tent into which all manner of socially beneﬁcial activities may ﬁt,” as two board members of the Skoll Foundation —Roger Martin, dean of the Rotman School of Management, and Sally Osberg, the foundation’s president and CEO— put it.

One result, inevitably, is confusion.

So, they argue, the real measure of social entrepreneurship should be “direct action that generates a paradigm shift in the way a societal need is met.” What such people do, in effect, is to identify and attack an “unsatisfactory equilibrium.” Their endeavors are transformative, not palliative, with the power to catalyze and shape the future. And, once you know where to look, you ﬁnd them at work almost everywhere, as described in the appendix of our book.

Who Are These Social Entrepreneurs?

Social Edge — Tue, 19 Feb 2008 00:00:00 -0800

There is no standard-issue entrepreneur, but there is a consensus on what entrepreneurs do. Through the practical exploitation of new ideas, they establish new ventures to deliver goods and services not currently supplied by existing markets. Social and environmental entrepreneurs share the same characteristics as all entrepreneurs—namely, they are innovative, resourceful, practical, and opportunistic.

They delight in coming up with new products or services, or new approaches to delivering products or services to existing or previously undiscovered markets. What motivates many of these people is not doing the “deal” but achieving the “ideal.” And because the ideal takes a lot longer to realize, these entrepreneurs tend to be in the game for the long haul, not just until they can sell their venture to the highest bidder.

Social and environmental entrepreneurs operate across a spectrum of enterprises, from the purely charitable to the purely commercial. But because many of the markets they address are immature, they tend to skew toward the nonproﬁt end.

On the purely charitable side, “customers” pay little or nothing, capital comes in the form of donations and grants, the workforce is largely made up of volunteers, and suppliers make in-kind donations. At the purely commercial end of the spectrum, by contrast, most transactions are at market rates. Many of the most interesting experiments take place in the middle ground, however, where hybrid organizations pursue new forms of blended value and where better-off customers sometimes subsidize less well-off customers. Blended value is what results when businesses—whether for-proﬁt or nonproﬁt—create value in multiple dimensions—economic, social and environmental. So a key challenge for twenty-ﬁrstcentury investors and managers will be to boost the attractiveness to all key stakeholders of the value blends they create.

One burning question that invariably comes up, particularly when successful business entrepreneurs meet successful social entrepreneurs, is “What motivates you?” The implication behind the question is “If you have been so clever in achieving what you have accomplished, why haven’t you applied your talents to making money?” In response to that question, David Green, one of the world’s outstanding examples of entrepreneurial brilliance applied to creating ﬁnancial models that deliver quality health technologies to the world’s poorest, quipped: “My reasons are purely selfish. I ﬁgure I have been put on this earth for a very short period of time. I could apply my talents to making lots of money, but where would I be at the end of my lifetime? I would much rather be remembered for having made a signiﬁcant contribution to improving the world into which I came than for having made millions.”

Against this motivational backdrop, social entrepreneurs develop and operate new ventures that prioritize social returns on investment. For example, they aim to improve the quality of life for marginalized populations in terms of poverty, health, or education and attempt to achieve higher leverage than conventional philanthropy and nongovernmental organizations. “Ten Characteristics of Social Entrepreneurs” lists other characteristics they tend to have in common.

Many consider environmental entrepreneurship to be a subset of social entrepreneurship, but the environmental entrepreneurs generally see themselves as a distinct group. For one thing, they tend to operate on the for-proﬁt end of the enterprise spectrum. Beginning in 2002, the sector has gravitated toward a major rebranding as the clean technology, or “cleantech,” industry, driven by the eponymous Cleantech Group.

Roots of Unreason, Sources of Power

Social Edge — Tue, 12 Feb 2008 14:00:58 -0800

Being unreasonable is not just a state of mind. It is also a process by which older, outdated forms of reasoning are jettisoned and new ones conceived and evolved. As the process unfolds, those mired in the older, obsolete paradigms can become threatened by—and aggressive toward—the innovators, particularly if those innovators move into the mainstream worlds of business, ﬁnance, and politics. But like it or not, the world is in the early stages of powerful, deep-running, and pervasive changes that, for better or worse, will transform its economies, its cultures, and people’s understanding of who they are and what they stand for.

Our intention in what follows is simple: to introduce a new generation of social and environmental entrepreneurs and to investigate the relevance of their thinking about value creation, their business models, and their leadership styles for mainstream decision makers. We include many predictions and observations from the entrepreneurs themselves, culled from hundreds of hours of interviews, personal conversations, and direct collaboration over decades of intensive work in related areas.

These social and environmental entrepreneurs lead by example. They attack intractable problems, take huge risks, and force the rest of us to look beyond the edge of what seems possible. They seek outlandish goals, such as economic and environmental sustainability and social equity, often aiming to transform the systems whose dysfunctions help create or aggravate major socioeconomic, environmental, or political problems. In so doing, they uncover new ways to disrupt established industries while creating new paths for the future.

Global corporations are now scouting for high-impact social and environmental entrepreneurs. Why? They give three main reasons. First, market intelligence (these entrepreneurs are seen as highly sensitive barometers for detecting market risks and opportunities). Second, retention and development of talent (a growing number of companies, like Accenture, say that offering the opportunity to work alongside accomplished entrepreneurs factors into staff retention, as well as professional development). And, third, as one CEO at a recent Davos summit candidly put it, “It is nice to be seen with people who are loved.”

All this should come with a clear caveat, however: as in any ﬁeld of entrepreneurship, many of these people will fail, and some will fail repeatedly as they tackle tough challenges. But periods of great change are built on intense experimentation and, often, high failure rates. Our reading of the evidence suggests that the work of these innovators and entrepreneurs heralds a new phase in the evolution of business, markets, and capitalism itself. The mainstream players who heed the lessons from these innovators’ experience will ﬁnd new opportunities to fulﬁll unmet needs in the vast underserved markets of the twenty-ﬁrst century.

Think of it this way: whatever they may intend, these entrepreneurs are doing early market research on some of the biggest opportunities of the coming decades. In attempting to bridge the great divides between privileged populations and the poor, they address the critical challenges where traditional markets fail. But, as we shall see, they cannot tackle market failures on their own. Instead, their efforts need to be supported by all levels of government, by business, by the ﬁnancial markets, and by civil society’s organizations and ordinary citizens—that is, by each and every one of us. We outline some necessary actions for key sectors in the conclusion.