Countless leaders have had enormous impact on the world, but are they social entrepreneurs? Calling them by this name, as many today may be tempted to do, is based on a desire to validate important work leading to real and significant social benefits.
And while this tendency is understandable, it's equally unhelpful. If the term social entrepreneurship is used to characterize every act of leadership generating public benefit, it will simultaneously become everything and nothing.
Definitions and Distinctions
These distinctions are critical to our fundamental understanding of social impact. These distinctions are critical to our fundamental understanding of social impact, because they allow us to distinguish among four groups that have been conflated.
Our intent in making these distinctions is not to claim that social entrepreneurship is better than the others. Countless organizations and individuals that take direct action, seek to ameliorate social ills, or advocate to legislative decision-makers do incredible and important work. They simply don't fit under the umbrella of social entrepreneurship.
This is in large part pragmatic. The more specific we can be in defining social entrepreneurship and tease out its distinct elements, the more readily we can identify and support those who are gravitating to this ever-more necessary field.
Building on the work of Sally Osberg and Roger Martin, in their article "Social Entrepreneurship: The Case for a Definition", we've characterized four types of social impact.
1. Social Responsibility
Social responsibility describes individual or organizational commitment to minimize negative and/or enhance positive social or environmental impact of their actions. Its outcomes can range from incremental to transformational.
Patagonia pioneered the 1% for the Planet movement, which allocates 1% of their profits to organizations and initiatives designed to reduce our environmental footprint. They aim to use the resources they have - including their voice, their business, and their community - to do something about climate crises.
2. Social Servants
Social servants have a long and honorable history of working to make communities and the world more equal, safe, healthy, and better. These kinds of organizations are vital to the well being of our society. They take direct action, but leave the existing system in place, while seeking to reduce its negative effects.
Food Banks works directly to ameliorate the effects of poverty, by providing food for families in desperate need. This food relieves the family's hunger that day, but it doesn't fundamentally change the dynamic that leaves the family so poor that it needs to use the food bank the next week. It doesn't change the drivers of poverty, so much as seek to mitigate its worst effects.
3. Social Advocates
Social advocates work indirectly, advocating for legislative changes that can transform the environment or context in questions.They desire to transform a suboptimal social or environmental status quo, to advance the collective best interest of society.
Martin Luther King Jr. advocated to transform America's treatment of African Americans and other disadvantaged minorities. They fought to end race-based discrimination and implement equal rights legislation in the US. To create sweeping change, however, they needed others to act, in this case federal and state governments to pass new legislation that would enshrine more equal rights, to produce fundamental and permanent beneficial change to take hold.
4. Social Entrepreneurs
Social entrepreneurs take direct action intended to transform the existing system. They go beyond 'improvement' to bring about 'change',in order create a stable new system that is fundamentally different from the one that preceded it. They envision a new state of affairs, work directly with the communities they serve, and leverage their own assets to spark a solution.
Muhammad Yunus took direct action by creating micro-finance loans to India's rural poor, which broke them out of the cycle of poverty, prevented further exploitation by predatory lending practices, and provided economic agency that allowed them to drastically and independently improve their quality of life.
The Four Quadrants of Change
Indirect action is one in which the actor convinces another person or entity to take the specific action that brings about the desired outcome.
Direct action is one in which an actor personally engages with key stakeholders in order to bring about a specific and desired outcome.
Incremental change results in the maintenance or incremental improvement of the current system. Process enhancement make small improvements, which may make things marginally better, but don't necessarily take us beyond better, into entirely new ways of thinking.
Transformational change results in shifting the current system to a new, more optimal system. Shifting a stable, yet unhappy, equilibrium requires a profound shift in outdated yet persistent ideas and pervasive attitudes.
Social entrepreneurs, by this definition, are taking direct action to create transformational change. Significantly, recent Nobel Peace Prizes were awarded to social entrepreneurs: Wangari Maathai, founder of the Green Belt Movement in 2004; and Muhammad Yunus, founder of Grameen Bank in 2006. Because social entrepreneurs are advancing systemic solutions to significant social or environmental problems. And social entrepreneurship is the future of good economics and strong democracies.