Profit and Purpose

Today's student entrepreneurs want it to do it all: Make a profit and make a difference.
Profit and Purpose

While academics produce a variety of definitions for the term social entrepreneurship, they generally agree on the basic outline: It’s practiced by an organization that addresses social and environmental needs that aren’t being adequately met by governments or private enterprises.

But there’s a new dimension creeping into the definition. It’s sustainable. It’s profitable. It exists not only to do good, but also to make money in the process. David Townsend is one of those who’s closely watching as the traditional nonprofit view of social entrepreneurship widens to include for-profit models. The assistant professor in the department of management, innovation and entrepreneurship at North Carolina State University’s Poole College of Management in Raleigh has joined with co-authors to make the case that “the organizational form itself doesn’t matter as long as the goal of the organization is to create social and economic good simultaneously.”

In fact, both sides of the social entrepreneurship equation are coming to the conclusion they need each other, says Raymond M. Smilor, the Robert and Edith Schumacher Executive Faculty Fellow at Texas Christian University’s Neeley School of Business in Fort Worth. “You can have a social enterprise, but unless it’s also a business, it’s not going to be sustainable,” he says. “And you can have a for-profit business, but if you don’t create meaning along the way, you’re less likely to succeed in the marketplace.”

That puts a challenge straight before the growing number of business schools designing social entrepreneurship programs today: How can they teach students to build businesses that are both sustainable and profitable? What kinds of classes should they deliver, and what kinds of experiences should they offer? Here, five experts in the field offer eight ways to make social entrepreneurship a key part of the business school curriculum.

1. Capitalize on student interest.
Students no longer want to wait until they’re 50 to start giving back, says Pamela Hartigan, director of the Skoll Centre for Social Entrepreneurship at the University of Oxford’s Saïd Business School in the U.K. “They want to start now to make meaningful choices in their careers.”

In fact, these experts say, to some extent social entrepreneurship initiatives have always been driven by the demands of students, no matter what their ages. For instance, older students such as executive MBAs are experiencing a “craving for meaning” in their lives and jobs, believes Johanna Mair, associate professor of strategic management at the University of Navarra’s IESE Business School in Spain.

But younger students, the so called Millennials, are also agitating for social entrepreneurship, says Townsend of NC State. Idealistic and community-oriented, these students are determined to save the world once they learn the skills. “For all the criticism they get, the members of this generation are an amazing bunch with a tremendous amount of potential,” says Townsend. “If we can give them structure and turn them loose, they’re going to accomplish some incredible things.”

Others agree. Smilor notes that more than 350 students belong to TCU’s College Entrepreneurs Organization. And many students are coming to school with a whole new set of motivations, says Cheryl Kiser, managing director of the Lewis Institute at Babson College in Wellesley, Massachusetts.

Kiser adds, “Most have already done significant community service, and they’ve been raised to understand social issues. They want to work for companies that are responsible. They care about the opportunities that can be met by the tools of business.”

2. Infuse social entrepreneurship throughout the coursework.
As students and schools become more committed to social entrepreneurship, the topic is increasingly integrated across the curriculum.

“In our practicum courses, students go after opportunities that create social and economic value,” says Townsend of NC State. “In our business plan competition, they come up with ideas for social entrepreneurship ventures. We don’t intend to expand to a unique course set on social entrepreneurship because it’s so fundamentally integrated into what students want and how we teach in general.”

Other schools are slowly adopting the same approach. “Topics and cases that have previously been associated with social entrepreneurship are now being integrated into the mainstream curriculum,” says IESE’s Mair. She admits that kind of mainstreaming is difficult for professors who have taught strict disciplinary courses for a long time, but she adds, “It’s time for us to open up a little.”

3. Teach it across disciplines.
At TCU, social entrepreneurship reaches across campus to schools as diverse as engineering, journalism, nursing, and fashion design. “We’ve found that entrepreneurship applies to any discipline where students see the potential to be their own bosses,” says Smilor. Using and matching a small grant from the Coleman Foundation, TCU supports eight Faculty Fellows in entrepreneurship who are promoting the notion that “entrepreneurship isn’t a business discipline. It’s a way of thinking. It includes skills that can be applied to any discipline.”

Similarly, NC State encourages entrepreneurship initiatives across disciplines, particularly through a technology program that brings together students from engineering, textiles, management, and other majors. While many of the connections have been informal, the university’s new chancellor, Randy Woodson, is promoting social entrepreneurship as a universitywide mission, says Townsend. Among other initiatives, he’s advocating a cross-functional agenda that’s likely to lead to more formalized joint degree programs.

Multidisciplinary efforts in the past have often centered around the schools for textiles and engineering, the major players at NC State, Townsend explains, and that’s likely to continue as social entrepreneurship is ingrained even more deeply into the curriculum. For instance, the textile school has discovered that a particular kind of fiber technology can also be used to filter bacteria and other organisms out of water. The business school is working with the textiles school to develop “early stage ideas about how to implement this product in a global southern context to provide a cheap, cost-effective filtration system,” Townsend says.

4. Offer more role models.
While most business programs expose students to successful executives, schools focusing on social entrepreneurship bring in a special kind of business owner with a certain way of looking at the world.

That’s because, as Oxford’s Hartigan says, “the best way to get students infected with the social entrepreneurship virus is to bring successful entrepreneurs to campus to share their experiences.”

At NC State, to introduce students to many different sectors where entrepreneurship is essential, Townsend brings in speakers from industries as diverse as energy and biomedicine. At TCU, students learn about entrepreneurs like John Mackey of Whole Foods and Tony Hsieh of Zappos, who have created wildly successful enterprises built on expressed values. But they also meet more local heroes.

“I find people in the community who are doing stunning things, and invite them in to tell their stories,” says Smilor. “That’s a powerful way to help students understand the key elements involved in social entrepreneurship and for outsiders to communicate the spirit and challenge of running a social enterprise.”

Students also have a chance to meet role models in a TCU class billed as the “entrepreneur’s road trip.” They tour the state visiting companies to learn what makes them successful and how the owners have engaged with the community in ways that reflect their values.

5. Take it outside the classroom.
In 2010, Babson launched an initiative called From Day One: Making a Difference, an all-day event that took place directly after freshman orientation. During the day, students could participate in a variety of activities related to social responsibility and entrepreneurship, including completing service work with nonprofits, hearing guest executive speakers, and watching video snippets of social entrepreneurs discussing their businesses. At lunch, food services supplier Sodexo provided a meal that was completely sustainable, locally sourced when possible, and labeled so students could see the origins of menu items. The day was capped off with a presentation by Ron and Arnie Koss, organic food icons who founded Earth’s Best baby food.

“Students could choose which activities to participate in, but we provided this ‘marketplace of social entrepreneurship’ to let them know this is what Babson is all about,” says Kiser.

From Day One is part of Babson’s effort to integrate its SEERS approach—a focus on social environmental economic responsibility and sustainability—into every aspect of the curriculum and school experience. The school underscores its commitment to social entrepreneurship with optional evening programs that cover topics such as cleantech and sustainable food sourcing. Introducing freshmen to this focus during their orientation, explains Kiser, is one way that the school makes it clear from the beginning how closely it focuses on social innovation.

6. Offer real-world experiences.
Any educational experience is richer when students can learn by doing, and that’s true for social entrepreneurship as well. In one Babson course, a professor takes students to Turkey, where they write case studies about social entrepreneurship in that country. In another Babson course, freshmen take turns pitching ideas to the class, which chooses two. Then students divide into teams to create those companies, choose their business strategies, source and manufacture their products, sell them, repay their loans, and use those funds to give back to society.

7. Prepare students for a wide range of jobs.
Graduates with a passion for social entrepreneurship no longer have to look for jobs within a narrow range of small startups and charitable organizations, say these experts. Not only are there specialized consulting firms focused on social entrepreneurship, but established global firms like McKinsey have divisions devoted to these ventures. “The same is true in finance,” Mair adds. “There is a whole new industry shaping up in responsible investment and social impact investment.”

Students who take such jobs are set to make a difference. Says Oxford’s Hartigan, “Even when students go into mainstream consulting, they still carry that fanaticism around. We had a student who went to work at Morgan Stanley and started its whole microfinance department.”

At the other end of the spectrum are the social entrepreneurship majors who start their own companies. For instance, recent Babson graduates launched a business called Give Back a Pack. When any retail customer buys a backpack, its price includes a second backpack stuffed with school supplies that is donated to children in developing communities.

In the future, even more opportunities will open up, Mair predicts. That’s because she expects there to be more dual-degree programs between business schools and governance schools, meaning more graduates with social entrepreneurship backgrounds might work their way into governmental and public policy positions.

8. Keep fine-tuning the program.
Once a school claims that it’s committed to social entrepreneurship, it has to make sure the curriculum and the university operations reflect that, says Kiser. “At Babson, our trucks use biodiesel fuel because it’s hard to espouse the principles of sustainability if you don’t understand the challenges,” she says. “A school starts to teach differently when it authentically acts on the beliefs it promotes.”

If a school isn’t committed to its social entrepreneurship programs, Hartigan notes, those initiatives can get trapped in what she calls the academic ghetto. “Some university social entrepreneurship programs remind me of the gender diversity programs at big corporations. You have one poor woman in the corner screaming, but no one is paying any attention.”

To stay on course, these educators also recommend that schools choose faculty champions for their social entrepreneurship programs and stay abreast of current content in publications such as Stanford University’s Social Innovation Review. Smilor suggests that schools expand their own perspectives on teaching social entrepreneurship  by inviting faculty from other schools to talk about what they do and how they do it.

Above all, says Kiser, schools should stay connected to what students want. “They’re only in class for a certain amount of time, so look at what they choose for their co-curricular activities,” she says. “If you can do it and still stay true to your core, integrate the passion of the students into your business courses.”

These academics are convinced that social entrepreneurship is becoming part of a movement that simply can’t be overlooked. Says Kiser, “Creating both social and economic value is what a good business in the 21st century does. You can’t operate a business today if you are not aware of the social environment and all the other dimensions of your impact.” That same awareness is percolating through all levels of business school in every corner of the world.

Ventures, Values

TCU’s Raymond Smilor won the John E. Hughes Award for Entrepreneurial Advocacy from the United States Association for Small Business and Entrepreneurship (USABE) at its annual conference in January. There, the entrepreneurship program at TCU’s Neeley School also was named the 2011 National Model Undergraduate Entrepreneurship Program.

At TCU, we have a program called Ventures and Values, which has two objectives. First, we help students improve their strengths, instead of trying to improve their weaknesses. Second, we help them determine their core virtues. Then we say, “Build an enterprise that reflects both your talents and core virtues.”

In my opportunity recognition class, I teach creativity and feasibility assessment, where students learn that everyone is creative—just in different ways. We do a “jam session” exercise, where student teams choose musical instruments and take 20 minutes to prepare an original score that they must perform for three minutes. While some claim they’re not musical, each group always manages to create successful songs.

Then I debrief them. “Who wrote the music? Maybe that person is innovatively creative. Who did the organizing? Maybe that person is adaptively creative.” This exercise helps students identify their creative strengths.

In the “flying device game,” students use any material to build something that will fly across the room; the winning entry goes the farthest in the straightest line. Afterward, students reflect on how they treated each other to better understand how they would like to act in their own companies someday.

We’re in the process of launching a business plan competition, involving other schools, which will be an extension of this approach. We’ll ask students to present a plan that’s not only economically viable, but also reflects their values.

In all these efforts, we make it clear there has to be a social dimension to any organization students create. They need to base their businesses on their values and the things that have meaning for them. If they do that, the money will follow.


Cheryl Y. Kiser is executive director of Babson’s Social Innovation Lab and managing director of its Lewis Institute. Babson is one of ten universities chosen by the global organization Ashoka to be a Changemaker Campus—a school committed to social entrepreneurship.

At the Lewis Center, we sponsor a year’s worth of coaching to selected graduates. That’s important because social entrepreneurs are usually on their own. Not only will we help them understand the challenges a social entrepreneur faces and create resources for them, we will use their experiences to build content for the rest of the school.

The first five participants include two graduates working at an entrepreneurship center in Rwanda; two in San Francisco working on social entrepreneurship ventures; and one driving change at a school in Harlem. We coach them individually, then bring them back together so they can learn from each other and our professors can learn from them. All five have offered to stay on for a second year to help mentor the next group selected for the program.

Pyramids and Policies

While she primarily teaches at IESE Business School, Johanna Mair also holds appointments at INSEAD in France and Harvard’s Kennedy School in Cambridge, Massachusetts, and she is academic editor of Stanford University’s Social Innovation Review.

Much of my research has focused on how social entrepreneurship drives change at the base of the pyramid and, therefore, develops markets in that sector. More recently, I have focused on understanding not only how social initiatives get scaled up but on how effects differ from one location to another. I’m looking at the varying effects of social entrepreneurship initiatives on 400 villages in India over time. This will help give us a better understanding of what it takes to scale up and what the limitations are.

On the other end of the economic spectrum, I’m working with the European Commission to study successful social entrepreneurship organizations in five countries. Because the research is driven by the European Commission, there will be policy implications. We think we can go beyond the classic sector boundaries and carve out solutions and models that aren’t categorized for the public and private sector. I find that very exciting.

Nonprofits and For-Profits

David Townsend is an assistant professor at NC State, which recently received a US$40 million naming gift for the Poole College of Management. Part of the money, Townsend says, will be used to expand the school’s focus on entrepreneurship and sustainability.

While many people give lip service to the profitable aspects of social entrepreneurship, that’s not enough. Capital markets for for-profit ventures are far larger than they are for nonprofits. If we could leverage all that capital and turn a profit that benefits the shareholders and simultaneously drastically improves the lives of people around the world, we would have the classic win-win.

My research is focused on recognizing that social entrepreneurship isn’t linked to the nonprofit organizational form. I think it’s critical for more research to address how business models are formed and what effect they have on firms, particularly if companies have double- or triple-bottom-line goals and multiple shareholders. Those issues will affect how firms organize, how they set up value chains, how they manage operations and accounting. I expect a lot of discussion around this topic in the next few years.

Competing for Ideas

Oxford’s Pamela Hartigan is also founding partner of Volans Ventures, which builds scalable solutions to world challenges.

I hate the term social entrepreneurship. To me, any kind of entrepreneurship has to be social entrepreneurship. Any time you put “social” in front of it, you just diminish it.

That being said, I see key differences between social entrepreneurs and those heading nonprofits. Many nonprofits are palliative or advocacy-oriented organizations. They’re trying to solve a social problem, but they aren’t addressing the root causes. Social entrepreneurs want to address root causes. They want to transform systems and practices. They want to create sustainable sources of funding.

Our Emerge Venture Lab competition is an idea competition rather than a business plan competition. Students submit synopses of their ideas, and a panel selects the most promising ideas after first interviewing the team. The center accompanies and mentors the teams for the next year, then chooses the final winners, who are the ones whose ideas seem most advanced and likely to succeed. We think it’s important to look at ideas, because no entrepreneur
I ever met started with a business plan. As Bill Gates says, “By the time you have the business plan, it’s too late.”