At the World Economic Forum on Africa next week, we'll be talking about entrepreneurship models that can fuel growth AND address social challenges. This is timely since I think we're in the early stages of a global revolution in "social entrepreneurship" which Bill Gates summarized in a speech at Harvard University: "we can make market forces work…for the poor if we can develop a more creative capitalism."
This revolutionary idea of harnessing market forces for social good is happening on multiple levels:
1. Consumers – consumer spending patterns are shifting as we seek to create social or environmental value while conducting our usual transactions in the marketplace. The popularity of Tom's Shoes is one example of many.
2. Companies – some multinational companies are beginning to focus on creating profits while doing good for people and/or the planet (Toyota's Prius, Coca Cola's water initiatives , WalMart's sustainability initiatives). New "social enterprises" seek to profit by doing good for people and/or the planet (see BetterWorldBooks ; search other examples here, African examples include more than 200 Ashoka Fellows).
3. Capital markets – as YGL member Mathew Bishop wrote in the Economist recently, there is an effort to establish "Impact Investing" as an asset class that yields "a financial return alongside a social or environmental benefit."
4. Regulations – Kenya, Tanzania and 26 other African countries now have regulations supporting microfinance; this is a sneak peak into what's ahead for social enterprise more broadly as regulations evolve around the world (see, for example Community Interest Companies (CIC) in the UK and the Low-profit, Limited Liablity (L3C ) and BCorp structures in the US).
We can all play a role in this revolution – as consumers, as executives, as investors or as policy makers – which fits nicely with other WEF themes of "Having an Impact" and "Empowering Change".
Geoff Davis, Principal, Geoff Davis Advisors, USA (YGL 2008)