Is the Social Enterprise a Passing Fad?

IMG_0001The backlash against the deficiencies of capitalism has led people to rethink the purpose of businesses. Governments are advocating the development of social enterprises as a viable alternative to public service delivery. Impact investing has emerged as a new asset class. There are stock exchanges established specifically for social enterprises. Business schools are setting up social entrepreneurship programmes one after another.

Amidst all the interest and enthusiasm, there is still no shared consensus on the essential nature of a social enterprise. Many people think that social enterprises exist to help the underprivileged by building up their capacities and creating opportunities for them. Some believe that social enterprises must be non-profits.

Wikipedia defines a social enterprise, based on the book “Understanding Social Enterprise: Theory and Practice” (Ridley-Duff and Bull, 2011), as “an organisation that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximising profits for external shareholders.” A social enterprise can be structured a for-profit  or a non-profit. This is a very broad definition, and certainly encompasses more than just organisations with a charitable purpose.

If we take a look back at history, the function of business was to provide the goods and services that a society needed. It is largely in the last 100 years that the meaning of “business” has been distorted. Instead of satisfying needs, companies now “thrive on” creating wants and desires and value creation has become synonymous with returns on shareholder value on a quarterly basis.

The relentless pursuit of profit has wreaked havoc on our economy, society and environment. It is also unsustainable for businesses themselves. The average life expectancy of a Fortune 500 company is between 40 and 50 years. The pace of corporate funerals is set to accelerate, according to a Yale study.

Delivering HappinessStudies have shown that the companies that perform best over time are purpose-driven organisations. These companies make money but profit is not their raison d’être. They improve the lives of people, address environmental issues, provide meaning for their employees and build sustainable businesses in the interests of all stakeholders.

My favourite example of such a purpose-driven organisation is Zappos. Tony Hsieh, CEO of the online retailer, says Zappos is all about “making customers and employees happy.” By demonstrating the crucial link between the purpose of an organization and sustainable growth, the Zappos culture is influencing companies around the world in a big way. Nonetheless, most people would not equate Zappos with a social enterprise.

Instead of singling out social enterprises as a desirable category of business, there is a strong case to be made that every business should integrate a social purpose into its core. Instead of teaching social enterprises as an elective, business schools should inculcate in every student the imperative of building for-purpose organisations. We need to encourage all aspiring entrepreneurs to think about in what ways they can make a difference to society. It is with this objective in mind that we launched the Make a Difference (MaD) Venture Fellows Programme in Hong Kong last year.  The Programme celebrates and supports young, innovative, doing-good and doing-well entrepreneurs. 16 MaD Venture Fellows from Hong Kong and 9 countries participated in an intensive 4-day programme, meeting with mentors, potential investors and business partners, as well as inspiring other entrepreneurs.

The three 2013 MaD Venture Stars, selected through an expert judging and crowd-voting process, demonstrate the myriad possibilities for a business to create a better world through innovation:

  • Insight Robotics, Hong Kong (www.insightrobotics.com) applies robotics technology to protecting critical infrastructures and key resources around the world. It detects and visualises remote incidents such as forest fires, oil leaks, water pollution, floods, droughts and security breaches for management authorities and assists them in devising the most efficient disaster recovery and contingency plans.
  • Wibbitz ,Israel (www.wibbitz.com) has created text-to-video technology that automatically turns any text-based article, post or feed on the Web into a video within 20 seconds. It helps reduce costs and production time for SME publishers and content providers, breaks down language barriers and has tremendous application potential in education.
  • Wifinity Tech, India (www.wifinitytech.com) applies simple and cost-effective wireless technology and artificial intelligence to help enterprises and buildings monitor, manage and economise on energy and water consumption. Enterprises and public institutions can reduce energy bills by 20% and water wastage by 15%, with ROI in less than 12 months.

None of these MaD ventures identify themselves as social enterprises, but their founders definitely have the vision to change the world for the better. It is cool to talk about social enterprises these days. We hope that this will just be a passing fad, as one day all businesses should have a social purpose. It is time to get back to the basics.

For more information about the MaD Venture Fellows Programme, visit http://www.MaD.asia or email: venture@MaD.asia.

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Make a Difference Venture Fellows: A New Generation of Asian Entrepreneurs

MaD V Logo

A new Make a Difference (MaD) Venture Fellows Programme took place in Hong Kong from 24-27 Jan. The Programme aims to celebrate and support a new generation of doing good and doing well entrepreneurs who seeks to change the world for the better.

2013 MaD Venture Stars

2013 MaD Venture Stars

“We take a very board view of what make a difference can mean, because we believe “doing good” should go mainstream and sustainability should be an integral part of every business,” explained Rachel Chan, Convenor of the MaD Venture Fellows Programme and Founder and Chief Catalyst of InnoFoco. The MaD ventures can be non-profit or for-profit, but they must have a core purpose other than just making money. They can serve different segments of the society, but they must be innovative, have a viable business model and demonstrate strong impact.

Sixteen innovative and high impact MaD Venture Fellows were invited to present at the MaD Ventures Salon on 25 Jan, pitching to 300 people in the investment, finance and business communities in Hong Kong.  The Salon is Hong Kong’s first international pitching platform to connect start-ups with potential investors and business partners.

 “I am delighted that Hong Kong is hosting this event which brings each of the key elements; capital, talent and ideas together in a great networking environment to support the entrepreneurial spirit,” said John C Tsang, the Financial Secretary of the HKSAR Government and the officiating guest at the Salon.

A distinguished panel chaired by the HKSAR Executive Council Member Bernard Chan selected 3 Make a Difference Venture Stars from the MaD Venture Fellows, together with the Salon audience. The three winners were:

3 MaD Venture Stars

Insight Robotics

Insight Robotics

Insight Robotics, Hong Kong (www.insightrobotics.com) applies robotics technology to the protection of critical infrastructures and key resources around the world. It visualizes remote incidents like forest fire, structural damage in buildings, oil leak, water pollution, flooding, drought and security breach to management authorities and assist them to make the most efficient contingency plans. It also assists the management authorities in disaster recovery and in building a better world with less disaster.

“It is very important to have programmes like the MaD Venture Fellows Programme to connect innovative entrepreneurs around the world. This will help build the international links of and facilitate collaboration amongst start-ups,” said Kevin Chan, founder of Insight Robotics.

Wibbitz

Wibbitz

Wibbitz, Israel (www.wibbitz.com) creates a text-to-video technology that automatically turns any text-based article, post or feed on the web into a video in 20 seconds. Its technology introduces a whole new way of consuming content and information in a much more visual and effortless way.  It brings costs and production time down for SME publishers and content providers. It reduces the barriers of language limitations and content complexity.

“It is a terrific experience getting to know people who want to make a difference to the world. I have got a lot of business contacts here, which will help us to succeed in the Asia market. ” said Yotam Cohen, the co-founder of Wibbitz. This Israeli start-up received its Series A funding from K S Li’s Horizons Ventures in June last year.

Wifinity Tech

Wifinity Tech

Wifinity Tech, India (www.wifinitytech.com) applies innovative wireless sensing, artificial intelligence and machine to machine learning to help enterprises, buildings, hospitals and other organisations to monitor, manage and save their energy and water consumption. Users can save on average 20% of their energy bills.

“I have benefited so much from the MaD Venture Fellows Programme,” said Jay Krishnan of Wifinity Tech, “I have got some potential investors and clients lined up and identified some manufacturing partners as well.” Wifinity Tech is looking to set up an office in Hong Kong, in addition to their presence in India and the US.

Building Silicon Valley in Asia

Apart from the young entrepreneurs, international experts were brought to Hong Kong to discuss the key ingredients of a vibrant entrepreneurship ecosystem. Prof Wong Poh Kam of National University of Singapore believed that Asia should not follow blindly the Silicon Valley.  A general consensus arising from the discussion is the importance of nurturing an entrepreneurial mindset and culture.

Prof Wong said Singapore has invested in changing the mindset of young people through the education system and establishing deep links with the entrepreneurial hubs in the world. Similar to Singapore, Hong Kong has to develop a new generation of investors with knowledge and experience in the new sectors.

Victor Hwang, Co-Founder, T2VC

Victor Hwang, Co-Founder, T2VC

Victor Hwang, co-author of ‘the Rainforest: the Secret to Building the Next Silicon Valley” spelt out the unwritten rules of the Silicon Valley, including a culture that encourage breaking rules and dream, experimenting, sharing and encouragement and the ability to embrace failure. “It is critical to move into a new paradigm of innovation; resembling a rainforest, the best environment for unpredictable weeds to grow”, says Hwang. “To thrive in this rainforest setting, entrepreneurs and investors need what makes us uniquely human – dreams, trust and love.”

Yat Siu from Outblaze echoed the comments of Prof Wong: “We need to look at ourselves as global citizens, able to grow relationships, networks and ecosystems across the globe. We should not limit ourselves to the domestic arena”. “Whilst the education system is very important, parents should not abduct their responsibiity,” he added.

The Salon also sought to encourage more investors in Hong Kong to join the rank of impact investors, in providing funding and mentorship to start-ups that seek to create positive changes to the society, whilst doing well financially.

Brigitte Baumann, Founder, GoBeyond Early Stage Investing

Brigitte Baumann, Founder, GoBeyond Early Stage Investing

“Passionate start-ups need financial, social and intellectual captial. We would like to appeal to and grow a new generation of investors who seek to make both meaning and money – people who are looking for opportunities to give back to society, to pass on their experience and to leave a legacy.” Rachel Chan said.

Brigitte Baumann of GoBeyond Early Stage Investing appealed to the investors in the Salon, ” The practical side of my being an entrepreneur and investor is to make sure that we know what makes good impact. Let’s ensure that we do not impose  heavy-duty impact reporting system on the entrepreneurs that makes them spend more time measuring rather than building.”

About Make a Difference

Make a Difference (www.MaD.asia) is a Hong Kong-based initiative launched in 2010 to inspire and empower a new generation of leaders. Targeting young people aged 16-35, MaD comprises an annual forum in January with 1,600 participants and over 20 inspiring speakers from different arenas around the world; and activities throughout the year in and outside Hong Kong to promote creativity, innovation and entrepreneurship.

MaD is a not-for-profit NGO-public-private partnership, organised by Hong Kong Institute of Contemporary Culture and co-created by InnoFoco. The HKSAR Government is the patron and founding sponsor.

For enquiry about the MaD Venture Fellows Programme, please contact Rachel Chan of InnoFoco, the Convenor of the Programme at venture@mad.asia or (852) 2560 5226.

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