In Dreams from My Father he tells of his late mother, Ann, a freethinking and fearless white woman from Kansas who married a black man from Kenya. Barely two years into the marriage, she was left to raise Mr Obama alone, yet she returned to college, studied for an anthropology degree and remarried, to an Indonesian student whom she followed to Jakarta with her son. She worked in Asia running microfinance projects that allowed women to become self-sufficient. “She was very clear that the best indicator of how a country is going to develop is how it treats its women and whether it educates its girls,” Mr Obama recalls.

Congratulation to Natalie. Perhaps her good fortune will rub off on Stacey Monk and Mama Lucy as well (see the post below). Their jury are YOU, so please VOTE at YouTube

The reason I am posting this request now is that Stacey has entered their first video in YouTube competition for funds to equip the school further. They need lots of people to vote for them. Their jury are YOU, so please VOTE at YouTube if you agree with me that this is a worthwhile example of a social business that not only bridges continents but provides unique opportunities for all involved (whether people going to help in Tanzania or mama Lucy or her school kids) to meet, enjoy working together, learn about each other and have fun.

We need more such examples. Let us know if you come across any others.

How to Write About Failed Bottom of the Pyramid Ventures
Submitted by Rob Katz on July 17, 2008 – 09:47.
Published in: Microfinance | Miscellaneous

Like any business, base/bottom of the pyramid ventures fail – often. I have neither the space nor the inclination to list those I know of – besides, writers from Erik Simanis to Aneel Karnani to Anand K. Jaiswal have done some of the heavy lifting for me.

We don’t talk enough about failed bottom of the pyramid ventures. After all, what CEO wants to risk his company by talking about all the things they did wrong?

Answer: Matt Flannery. The Kiva CEO is incredibly forthright when discussing what they’ve done well and what they haven’t. His latest blog post is practically a how-to guide for talking about failure inside a BoP venture.

Ultimately, Flannery’s self-effacing and honest tone makes me trust him and Kiva more, even as he discusses huge loan defaults in their portfolio. Why does this work?

1. Know what you did wrong, and say it. Don’t equivocate. Matt comes out and admits – in plain English – that Kiva rushed into partnerships without sufficient due diligence.
2. Don’t blame others. Sure, the political situation in Kenya is tough, and corruption in many African countries is high – but Matt isn’t trying to pass the buck.
3. Be personal. Matt isn’t using corporate communications lingo – instead, he offers a “(sh**)list of partnerships that closed in bad faith.” Unprofessional? Only if you’re a corporate communications consultant. To the rest of us, this is honesty, plain and simple.

For maximum effect – and to learn from the master – read Matt’s post. While you’re there, subscribe to his Kiva Chronicles blog. You won’t be disappointed.

A Capitalist Jolt for Charity

By STEVE LOHR
Published: February 24, 2008

IN the summer of 2005, Miles Gilburne and Nina Zolt had long talks over dinner in their Washington home about what to do next. For more than six years, Mr. Gilburne, a former AOL executive, and his wife, Ms. Zolt, a former lawyer, had supported a philanthropy that used books and online tools to enhance skills of inner-city students.

The program, which Ms. Zolt directed, had been moderately successful. Students liked writing online about books and sharing their ideas with Internet pen pals, including adult mentors. Many teachers embraced the project, called In2Books, and participating students outscored their peers in standardized tests.

Still, the costly venture grew only gradually, classroom by classroom. The couple had put $10 million into the charity, a “meaningful portion” of the family wealth, Mr. Gilburne says. “It was enough money that I did lie awake at night thinking about the size of the checks,” he recalls.

As philanthropy, the couple’s efforts, however worthwhile, weren’t sustainable. But their vision of using the Internet for communication and collaboration to improve education has taken on a new life — as a business.

Today, the once-struggling venture has morphed into a primarily for-profit enterprise. And the striking transformation of In2Books is emblematic of a larger trend: charities are changing their spots and making use of some of capitalism’s virtues.

The process is being pushed forward by a new breed of social entrepreneurs who are administering increasing doses of bottom-line thinking to traditional philanthropy in order to make charity more effective.

To make a fresh start, Mr. Gilburne attracted like-minded angel investors, and at the end of 2006 the group bought a for-profit company, ePals Inc., to expand on the original mission and support the foundation. The ePals company has grown and now offers classroom e-mail, blogs, online literacy tools and Web-based collaborative projects on subjects like global warming and habitats.

EPals says 125,000 classrooms around the world are using at least some of its free tools, reaching 13 million students, and its ambition is to become a global “learning social network.”

National Geographic is to announce this week that it is investing in ePals, based in Herndon, Va., and will supply educational content for the ePals learning projects. Worldwide distribution should get a lift from Intel, which will soon ship its Classmate laptops, designed for students in developing nations, with the ePals icon on the screens. And ePals is also offered for use on the low-cost computers from One Laptop Per Child, a nonprofit group trying to bring the content and experience of the Internet to children in developing countries worldwide.

Various versions of efforts like this are appearing across the philanthropic landscape as business-minded donors, epitomized by Bill and Melinda Gates and their foundation, have treated their charitable contributions more like venture capital investments. They seek programs that can be catalysts for broad changes in fields like health, education and the environment, they measure performance and results, and they encourage nonprofits to become more self-sustaining.

Yet to have the greatest possible impact, a further step down the capitalist road is sometimes needed, analysts and others in the field say. Muhammad Yunus, the microfinance pioneer and Nobel laureate, calls this next step the “social business.” The goal, according to Mr. Yunus, is to create ventures that more than pay for themselves — in other words, turn a profit.

Social business entrepreneurs, he writes, can help “make the market work for social goals as efficiently as it does for personal goals.”

PHILANTHROPIES are discovering that for-profit status and financing can be a useful tool. For example, many microfinance lenders, modeled after Mr. Yunus’s project, the Grameen Bank in Bangladesh, aim to make the crossover to profit-making institutions.

Mozilla, the nonprofit foundation that developed the open-source Web browser Firefox, decided that it needed a for-profit unit to accelerate its business activities and gain market share against Microsoft’s Internet Explorer. The business unit is freer to spend on marketing, charge for software service and technical support, and pay to compete for engineering talent in Silicon Valley.

Likewise, Google.org, the search giant’s corporate foundation, chose for-profit status to be able to easily make investments in for-profit companies including alternative energy start-ups like eSolar and Makani Power.

“Capitalism is a very mutable, flexible beast, and what we’re seeing is social entrepreneurs addressing some of these social challenges in profoundly different ways than traditional nonprofit organizations,” said John Elkington, co-author with Pamela Hartigan of “The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World,” a new book that was handed out last month to attendees at the World Economic Forum in Davos, Switzerland.

Even among its hybrid peers, ePals has evolved into an unusual combination of a business and a social venture. When Mr. Gilburne and Ms. Zolt established the for-profit arm in 2006, they attracted like-minded investors, acquired ePals Inc. and began hiring talented staff. They gave the original education foundation a 15 percent stake in the ePals company, and its endowment will grow if the business prospers. The nonprofit division is focusing on educational research and bringing technology into classrooms.

But the company is where the action is. “This needs to be a large business to have a really significant social impact,” Mr. Gilburne said. “We couldn’t do what we’re doing as a nonprofit.”

Very few nonprofits get big. Only 144 of the more than 200,000 nonprofits established since 1970 had grown to $50 million or more in revenue by 2003, according to a study published last year by the Bridgespan Group, a nonprofit consulting firm that advises philanthropies.

With the rising influence of social entrepreneurs in philanthropy, many nonprofits have sought to generate revenue to become more self-sustaining. But it is still rare for a nonprofit to cross the chasm to become mainly a profit-seeking business, as in the ePals experience.

“It’s tricky, but it makes sense when the business is highly aligned with the mission of the social entrepreneurs,” said Jeffrey L. Bradach, a managing partner of Bridgespan.

As a for-profit business, ePals can more easily attract financing for growth. But outside investors raise the risk that the original social ideals will be lost in a single-minded pursuit of profit. Mr. Gilburne has tried to avoid that pitfall by gathering a stable of angel investors among his longtime business friends, who bring not only money but also a shared belief in the promise of the Internet to improve education.

The group includes Stephen M. Case, the former chief executive of AOL; Mitchell Kapor, the founder of the early spreadsheet maker Lotus Development and an open-source software supporter; and Yossi Vardi, an Israeli Internet entrepreneur.

“None of our investors are interested just in making another financial score,” Mr. Gilburne said.

AFTER pooling their money, the angel investors bought the ePals company in December 2006 for an undisclosed price. Mr. Gilburne had watched ePals for years, starting when he was at AOL in the 1990s, and he saw it as the foundation on which to build an educational social network.

EPals started as a Web-based electronic pen-pal service in 1996, offering point-and-click tools that teachers could use to control how students use e-mail. A teacher in California, for example, set the controls so her class could communicate online only with a class in China that was engaged in a joint cultural exchange project.

Since the angel investors came aboard in 2006, the ePals work force has more than doubled, to 43, and the company continues to hire. It has improved the e-mail and blogging software and added links to outside resources, like National Geographic’s digital library, to its Web-based software for online projects.

“We were a small company with little capital,” said Tim DiScipio, a founder of the original ePals, who is the chief marketing officer of the revamped company under its new ownership. “But now we have the resources to really pursue the vision of social learning over the Internet.”

Until last fall, ePals charged $3 to $5 a year for each student e-mail account, but the service is now free. The effect of free distribution was immediate and dramatic. The number of registered users has nearly doubled, to 13 million, since September.

The growth and ambition of ePals have impressed National Geographic enough to make an investment and forge a partnership.

“We’re looking at them as a global network to distribute National Geographic content,” explained Edward M. Prince, the chief operating officer of the venture arm of the nonprofit scientific and educational organization.

The ePals team is betting that it can build a worldwide social network in education — a serious, controlled version of Facebook, for students in kindergarten through 12th grade. “When markets go digital, they go collaborative and sharing,” said Edmund Fish, the chief executive of ePals and a former executive of AOL, where he oversaw online education offerings. “That can happen in education, too. A learning social network is not an oxymoron.”

Even the basic social networking of ePals e-mail exchanges, teachers say, helps improve writing skills and stirs curiosity about other cultures. Mirjana Milovic, a teacher in Kragujevac, Serbia, says ePals has helped the 120 students in her school with their English-language skills. Their correspondents in Alabama and Kansas have also learned that jeans and Nike shoes are popular in Kragujevac but that the McDonald’s in town closed for lack of business.

“We usually prefer our domestic food,” wrote Marija, an 18-year-old.

Candace Pauchnick, who teaches English and sociology at Patrick Henry High School in San Diego, has been using ePals for what she calls “virtual field trips.” In their online exchanges with students in Italy, China and the Czech Republic, her students have learned about family life and political systems in foreign lands and improved their writing skills.

“If they were just writing for me, they wouldn’t be as careful,” Ms. Pauchnick said. “But they’re writing for a student in another country. It’s not drudgery for them. They buy in and they enjoy it.”

Ms. Zolt, the chief program architect of ePals, endorsed the for-profit route but insisted that the digital network also provide a free searchable database for educational research.

“The promise here is to be able to study, with vast amounts of real-time data, how children learn,” she said.

Scholars are enthusiastic. “Its potential is very exciting,” said Linda B. Gambrell, a professor of education at Clemson University, who is one of the academic advisers of ePals. “This should help us quicken the pace of translating innovative research into best practices in the classroom.”

Like many start-up companies, the revamped ePals is still working on its business model. Mr. Gilburne, the chairman, says it will pursue corporate sponsors for certain project areas. These could be part of a company’s community and social responsibility activities, providing approved adult experts to help students online. For example, General Electric might sponsor ePals’ global warming section by providing environmental experts as online mentors, Mr. Gilburne said, or perhaps Intel or I.B.M. would help in engineering projects.

There are commerce opportunities, Mr. Gilburne added, for education publishers who might want to market books or curriculum materials for home-school students over ePals.

Eventually, Mr. Gilburne said, advertising will be part of the mix. “But we’ll go gingerly to figure out what is appropriate and doesn’t impose on the classroom,” he said.

The failure rate for entrepreneurs — whether social or purely capitalist — is high. Still, ePals’ backers are betting that it is worth the risk. “These kinds of opportunities to do well and do good at the same time don’t grow on trees,” said Mr. Kapor, the ePals investor and a philanthropist. “But I do think that ePals could be one of them.”
]]> http://yunusphere.net/2008/04/19/nyt-24th-feb2008-a-capitalist-jolt-for-charity/feed/ 1 lilashana http://yunusphere.net/2008/03/31/good-to-great-and-the-social-sectors-why-business-thinking-is-not-the-answer/ http://yunusphere.net/2008/03/31/good-to-great-and-the-social-sectors-why-business-thinking-is-not-the-answer/#comments Mon, 31 Mar 2008 03:45:27 +0000 Lilly http://yunusphere.net/2008/03/31/good-to-great-and-the-social-sectors-why-business-thinking-is-not-the-answer/ ]]> Michael Edwards in his article on Philanthrocapitalism issues refers to Jim Collins’s pamphlet twice.  As I think that his “Good to Great” is spot on, how he applies that thinking to Social Sector is worth a look.

Jim Collins.com | Library

November, 2005Text excerpts from…
Good to Great and the Social Sectors
Why Business Thinking Is Not the Answer
by Jim Collins

The following are short excerpts from the monograph Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer, published in 2005 by Jim Collins. The full monograph can be obtained from many local bookstores and major online booksellers. In addition, you might like to visit the Lecture Hall section of this Web site, where you can find audio excerpts from the monograph.

Author’s Note

During my first year on the Stanford faculty in 1988, I sought out professor John Gardner for guidance on how I might become a better teacher. Gardner, former Secretary of Health, Education and Welfare, founder of Common Cause, and author of the classic text Self-Renewal, stung me with a comment that changed my life.

“It occurs to me, Jim, that you spend too much time trying to be interesting,” he said. “Why don’t you invest more time being interested.”

I don’t know if this monograph will prove interesting to everyone who reads it, but I do know that it results from my growing interest in the social sectors. My interest began for two reasons. First is the surprising reach of our work into the social sectors. I’m generally categorized as a business author, yet a third or more of my readers come from non-business. Second is the sheer joy of learning something new—in this case, about the challenges facing social sector leaders—and puzzling over questions that arise from applying our work to circumstances quite different from business.

I originally intended this text to be a new chapter in future editions of Good to Great. But upon reflection, I concluded that it would be inappropriate to force my readers to buy a second copy of the book just to get access to this piece—and so we decided to create this independent monograph. That said, while this monograph can certainly be read as a stand-alone piece, I’ve written it to go hand-in-hand with the book, and the greatest value will accrue to those who read the two together.

I do not consider myself an expert on the social sectors, but in the spirit of John Gardner, I am a student. Yet I’ve become a passionate student. I’ve come to see that it is simply not good enough to focus solely on having a great business sector. If we only have great companies, we will merely have a prosperous society, not a great one. Economic growth and power are the means, not the definition, of a great nation.

Jim Collins

Boulder, Colorado

July 24, 2005

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We must reject the idea—well-intentioned, but dead wrong—that the primary path to greatness in the social sectors is to become “more like a business.” Most businesses—like most of anything else in life—fall somewhere between mediocre and good. Few are great. When you compare great companies with good ones, many widely practiced business norms turn out to correlate with mediocrity, not greatness. So, then, why would we want to import the practices of mediocrity into the social sectors?

I shared this perspective with a gathering of business CEOs, and offended nearly everyone in the room. A hand shot up from David Weekley, one of the more thoughtful CEOs—a man who built a very successful company and who now spends nearly half his time working with the social sectors. “Do you have evidence to support your point?” he demanded. “In my work with nonprofits, I find that they’re in desperate need of greater discipline—disciplined planning, disciplined people, disciplined governance, disciplined allocation of resources.”

“What makes you think that’s a business concept?” I replied. “Most businesses also have a desperate need for greater discipline. Mediocre companies rarely display the relentless culture of discipline—disciplined people who engage in disciplined thought and who take disciplined action—that we find in truly great companies. A culture of discipline is not a principle of business; it is a principle of greatness.”

Later, at dinner, we continued our debate, and I asked Weekley: “If you had taken a different path in life and become, say, a church leader, a university president, a nonprofit leader, a hospital CEO, or a school superintendent, would you have been any less disciplined in your approach? Would you have been less likely to practice enlightened leadership, or put less energy into getting the right people on the bus, or been less demanding of results?” Weekley considered the question for a long moment. “No, I suspect not.”

That’s when it dawned on me: we need a new language. The critical distinction is not between business and social, but between great and good. We need to reject the naïve imposition of the “language of business” on the social sectors, and instead jointly embrace a language of greatness.

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The pivot point in Good to Great is the Hedgehog Concept. The essence of a Hedgehog Concept is to attain piercing clarity about how to produce the best long-term results, and then exercising the relentless discipline to say, “No thank you” to opportunities that fail the hedgehog test. When we examined the Hedgehog Concepts of the good-to-great companies, we found they reflected deep understanding of three intersecting circles: 1) what you are deeply passionate about, 2) what you can be the best in the world at, and 3) what best drives your economic engine.

Social sector leaders found the Hedgehog Concept helpful, but many rebelled against the third circle, the economic engine. I found this puzzling. Sure, making money is not the point, but you still need to have an economic engine to fulfill your mission.

Then I had a conversation with John Morgan, a pastor with more than 30 years of experience in congregational work, then serving as a minister of a church in Reading, Pennsylvania. “We’re a congregation of misfits,” said Morgan, “and I found the idea of a unifying Hedgehog Concept to be very helpful. We’re passionate about trying to rebuild this community, and we can be the best in our region at creating a generation of transformational leaders that reflects the full diversity of the community. That is our Hedgehog Concept.”

And what about the economic engine?

“Oh, we had to change that circle,” he said. “It just doesn’t make sense in a church.”

“How can it not make sense,” I pressed. “Don’t you need to fund your work?”

“Well, there are two problems. First, we face a cultural problem of talking about money in a religious setting, coming from a tradition that says love of money is the root of all evil.”

“But money is also the root of paying the light and phone bills,” I said.

“True,” said Morgan, “but you’ve got to keep in mind the deep discomfort of talking explicitly about money in some church settings. And second, we rely upon much more than money to keep this place going. How do we get enough resources of all types—not just money to pay the bills, but also time, emotional commitment, hands, hearts, and minds?”

Morgan put his finger on a fundamental difference between the business and social sectors. The third circle of the Hedgehog Concept shifts from being an economic engine to a resource engine. The critical question is not “How much money do we make?” but “How can we develop a sustainable resource engine to deliver superior performance relative to our mission?”

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I do not mean to discount the systemic factors facing the social sectors. They are significant, and they must be addressed. Still, the fact remains, we can find pockets of greatness in nearly every difficult environment—whether it be the airline industry, education, healthcare, social ventures, or government-funded agencies. Every institution has its unique set of irrational and difficult constraints, yet some make a leap while others facing the same environmental challenges do not. This is perhaps the single most important point in all of Good to Great. Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.

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Business executives can more easily fire people and—equally important—they can use money to buy talent. Most social sector leaders, on the other hand, must rely on people underpaid relative to the private sector or, in the case of volunteers, paid not at all. Yet a finding from our research is instructive: the key variable is not how (or how much) you pay, but who you have on the bus. The comparison companies in our research—those that failed to become great—placed greater emphasis on using incentives to “motivate” otherwise unmotivated or undisciplined people. The great companies, in contrast, focused on getting and hanging on to the right people in the first place—those who are productively neurotic, those who are self-motivated and self-disciplined, those who wake up every day, compulsively driven to do the best they can because it is simply part of their DNA. In the social sectors, when big incentives (or compensation at all, in the case of volunteers) are simply not possible, the First Who principle becomes even more important. Lack of resources is no excuse for lack of rigor—it makes selectivity all the more vital.

Copyright © 2005 Jim Collins, All rights reserved.

 

In this interview with Forbes.com Executive Editor David A. Andelman, he talks about his vision of education and the role of family in his economic model as expressed in his new book– Creating a World Without Poverty: Social Business and the Future of Capitalism, Public Affairs, 2007, 261 pages, $26.

Muhammad Yunus: We are creating a whole new generation out of (big, illiterate) families. The poverty was cycled, recycled, again and again, over ages. The cycle of poverty stops here.

While we give the loans to the women of Bangladesh, we also make sure they are encouraged to send their children to school, because these are all illiterate women. And we succeeded. We succeeded in sending almost 100% of the children of Grameen families to school.

Today they are moving up the levels in schools. We give them a scholarship for better performance. Last year, we gave 51,000 scholarships to the successful, brilliant students in the class. Then we started giving student loans because we see they are qualified to go into colleges, universities and so on. Now we have 21,000 students in medical schools, engineering schools, universities.

From now on, the new generation will take over. They will create their own world in a completely different way. That’s the way to get out of poverty, because otherwise it is just a little bit of difference in the poverty situation. It cannot sustain very long. Because one disaster comes like a flood, like a cyclone. You are pushed right back into your poverty, far deep into poverty. Again, it takes a lot of years to get out of it. (So I said,) we want to create a generation, which will take the families way above the poverty line, so that even if there is a big push coming from a disaster, it will not be pushed back beyond the poverty line.

Muhammad Yunus – Education Primes Third World: short video
http://www.forbes.com/video/?video=fvn/education/da_yunus012408&partner=contextual

Muhammad Yunus – Business Visionary: a short video
http://www.forbes.com/video/?video=fvn/special/da_visionary021408&partner=contextual