Sunday, October 21, 2012

ALL Entrepreneurship Is Social

My turbulent adolescence occurred in the late 60s, with my figurative (and very briefly, actual) residence being the Haight / Ashbury District, the epicenter of the hippie culture. Then and there we insisted that all "businessmen" (not yet "business people" nor "entrepreneurs") were bloodsucking ticks and leeches upon what might otherwise be our perfect society,... the villains who ate other people's babies. But with time and experiences have come new insights and conclusions.

One of our many expressions at Bridge2Rwanda is: "All entrepreneurship is social." I can already hear "Stop! Do you really contend that heroin smuggling, human trafficking, trading in blood diamonds, and child sweatshops are social entrepreneurship?"... which only establishes the obvious fact that within every instructive maxim, there are always extreme, fringe exceptions which some find so distracting that they risk missing the central point.

During these past five years residing in Rwanda (considerably beyond Haight / Ashbury), it has been my privilege to hang with great entrepreneurs, fascinating business titans who have amassed great wealth (sometimes counted in hundreds of millions of dollars). I have been fascinated to discover common characteristics among these entrepreneurs, most notably that great financial reward is not, and never was, their objective (except as was/is necessary to sustain and grow their enterprises). To my great surprise, these entrepreneurs have all been extraordinarily "artistic" in a sense, certainly very, very creative "problem solvers." Some seem a bit geeky, others a bit egotistical, but each is holding (or has held) a Rubiks cube with an obsession to solve the puzzle,... to get it right,... better than anyone else. In doing so, they created great social value and many jobs. Society and the marketplace compensated them generously for what they created and delivered by their innovation and diligence.

And what are these entrepreneurs doing in Rwanda? They are looking for opportunities to give of their great wealth and talent the way they know best: To solve social problems and needs by entrepreneurial solutions that ultimately create sustainables business and jobs. Will they be rewarded for their efforts? Hopefully. If not, then they will not have solved the sustainability puzzle and the enterprise and its jobs will ultimately vaporize along with the entrepreneur. If they are successful and rewarded, they intend to simply "do it again" from the fruits of their success. The entrepreneurs with whom I have been privileged to work measure their success by solving extraordinarily complicated and difficult puzzles. Shallow critics who have accomplished nothing by comparison focus on the financial rewards awarded to the entrepreneur, rather than the value received from the entrepreneur. 

Although I must not attempt to develop the vast topic here, a study of History, Economics, Business, Political Science, and related subjects establishes that the greatest lasting social progress has been delivered by entrepreneurs. True, only government could have brought us the Manhattan Project (not so constructive) or put a man on the moon (not so sustainable). Entrepreneurs brought us the steam engine, the electric light bulb, the automobile, antibiotics, and this MacBook Pro by which I dictate these words by voice recognition software. Facebook and Google, too, the platforms upon which the human race apparently now rests. Almost by definition, the problem-solving enterprises of entrepreneurs are much more effective, efficient, economical, and sustainable than similar efforts by government. Moreover, entrepreneurship and reasonably free markets are more democratic than even great democracies. Entrepreneurs must take their cues from "the people": What do you most care about? What are your greatest needs? To which of the possible solutions would you most readily respond? Entrepreneurs continually offer their solutions in the marketplace, and the people vote daily in their local currency. The process is extremely dynamic, robust, and efficient. The same cannot be said of government.

Tom Phillips is a mechanical engineer and a great entrepreneur (and a great friend). He and his wife, Beth (the CEO of the team), founded Diversified Conveyors International (DCI), a US company that builds extraordinarily sophisticated multimillion dollar conveyor systems for FedEx, international airports, etc. Tom fell in love with Rwanda during a visit - the usual consequence of visiting Rwanda - and he wanted to do something significant here. Tom observed a critical protein deficiency at the base of the pyramid, particularly among young children. Research revealed an easily preserved and distributable protein that came pre-packaged by nature in convenient single servings: the egg. Tom and Beth might have decided to give away millions of eggs to the children of Rwanda. That would have been easy, and for most people, "felt really good." But Tom and Beth were not looking for "easy," nor were they looking to "feel good." They were determined to make a lasting difference and that required the hard work of building a sustainable social enterprise that would produce and deliver eggs to children long beyond the Phillips' personal participation. Not knowing the difference between a chicken and a pig, they wisely sought the technical expertise of Tyson Foods, and proceeded to build Ikiraro Poultry Farm, a 10,000 hen egg farm near Musanze, with plans for expansion.
Tom Phillips, Entrepreneur

Tom Phillips and Donnie Smith, CEO of Tyson Foods,
at my building site in Sunzu, near Ikiraro Poultry Farm

Load 'em up!
Tom Phillips delivers eggs to one of the many preschools
 that he and Beth established as part of their business model
to get protein into the diets of Rwandan children
First things first (part of the Phillips' program):
Let's wash our hands with soap
This boiled egg was so loved I feared it would hatch!

Difficult  to say "It's just business." It's very difficult (and impactful) entrepreneurship.
Tom Phillips resides with me during his frequent trips to Rwanda and I personally observe him obsess over his Rubiks cube, determined to "get it right" (translate: "sustainable"; and translate "sustainable": "profitable"). The puzzle is extremely difficult and complicated, and I have watched Tom stay up late into the night and miss meals to work on it. He has no desire to repatriate the anticipated profits, but rather intends to plow profits into another social enterprise to further benefit the people of Rwanda. There will be no profits, nor can he declare "success" (nor can he rest), until he has solved the puzzle. Failure is not an option. I am quite confident Tom and Beth will succeed as they continue to fine-tune their business model by which they deliver eggs and lifeskill lessons (including handwashing) to thousands of preschoolers in Rwanda.

Sticking with the subjects of handwashing, entrepreneurship, and doing good while doing well, let's move on to that which triggered these thoughts and this blogpost. The following article was written by an African,... a woman,... a PhD,... a progressive brought up to care about "the poorest of the poor,"... and a team member at one of the world's largest "for profit" multinational corporations (all rolled into one impressive package). No, this progressive woman of color did not "sell out." She explains that which took me so many years to comprehend and emerge from my adolescent, condemning view of "doing business." Entrepreneurs and for-profit corporations can do good while doing well, and we should want them to do well because we want them, their production (both current and the products yet to be developed), and the jobs they create, to be sustainable. This is generally much more difficult and much more impactful work than a corporate charitable intervention (that is sometimes first and foremost a boastful corporate photo op).

The Private Sector Needs to Come Clean About Doing Good
by Myriam Sidibe | 1:20 PM October 15, 2012
In 2006, I was fortunate enough to land a job that enabled me to put my academic research into practice. Not that unusual maybe, but it seemed so at the time, given that I had conducted much of my research (for a doctorate in public health) camped in public latrines in Senegal and East Timor observing people's behavior as they used public sanitary facilities, and the job I landed was with a multinational corporation which at the time had a market capitalization of 60 billion euros.
My job is Global Social Mission Director for Lifebuoy soap, part of Unilever. And my task, along with many other colleagues and partners, is to work with a social mission to drive business growth.
Every year, two million children do not live to celebrate their fifth birthdays because of diarrhea and pneumonia. The simple act of handwashing with soap can save lives. In fact, handwashing with soap is one of the most effective and low cost ways to reduce what are two of the biggest causes of child mortality.
We have created a very clear link between tackling this critical issue and our business ambitions. The social issue is clear: too many children die before their fifth birthday, something Millennium Development Goal 4 targets to reduce. The business opportunity for us is equally clear: the ideal consumption for regular handwashing (to reduce illness and mortality) is around 20 bars of soap per year, yet 1.5 billion people around the world consume eight bars or fewer per year. This opportunity is even more marked because of the very rapid pace of change in these emerging markets.
Businesses often find it difficult to mention these two objectives in the same breath: how can you possibly equate stopping children dying with increasing sales and profits? Our experience tells us that you have to do that. When I was starting on my journey with Unilever, we spoke to the Financial Times about the work we were doing to change handwashing behaviors in Uganda. The article positioned what we were doing in a very balanced way, but under the headline "Unilever Looks to Clean Up in Africa." At the time this made me feel very uncomfortable, coming as I did from a strong social public sector background (a UN child raised to look out for the interests of the poorest of the poor) and as an African. The idea that this large multinational was coming to clean up Africa felt almost colonial. But in reality, using local brands that people know and trust can actually be one of the most comfortable and easily accepted approaches to educate them about a topic like hygiene.
Looking back, being painfully transparent about our vested commercial interest in tackling a social issue was essential for two reasons.
First, it built credibility for us externally. Any journalist worth her salt would question whether a business would really behave purely philanthropically, and the governments and NGOs we wanted to partner with were reassured we would be in it for the long haul because of our business motivation, not because we'd just spotted a partnership as another opportunity for publicity.
Secondly, it released positive energy and momentum inside our business. Many people in the company wanted (and continue to want) to get involved in our mission because they have a genuine desire to give something back and make the world a better place and to feel pride in the company they work for. Many others simply want to do their job successfully and sell more soap. Our clear message and transparency ensured everyone was motivated and mobilized behind us.
This purpose and the opportunity it represents has meant shifting the focus of our market development towards a model that integrates hygiene into the lifestyles of some of the world's poorest and most remote populations. We've committed to help one billion people improve their health and hygiene habits by 2015, and we're investing millions of euros and some of our best marketing talent to achieve this. We have developed our own behavior change program to reach people (mothers and children) for whom the habit of handwashing can be a life-saver, tackling the barriers to regular handwashing with soap at key occasions, like before eating or after using the toilet. We partner with NGOs and charities through our Unilever Foundation including PSI (a global health organization), the Millennium Village Project and UNICEF along with governments across the world to deliver and scale-up effective programs.
And today, October 15th, is Global Handwashing Day, a day Unilever co-founded five years ago with our competitors and the Public Private Partnership for Handwashing (PPPHW). The day is recognized by the United Nations and celebrated at events across the world as a focal point to spread this healthy habit. It's also a moment for us to reflect on what's been achieved already. It's still early days, but we've already seen a tangible correlation between business success and social change. The brand has grown from a €300 million brand to a €500 million+ brand today, while the number of childhood deaths from diarrhea has dropped significantly from 2.2 million to 0.75 million in the same time frame. Of course we would never claim responsibility for such a significant drop in child mortality, but it's clearly moving in the right direction. 
The heritage of our business did give us inspiration for our mission. William Lever, who founded Lever Brothers, one of the forerunners of Unilever, launched Lifebuoy soap in the northwest of England in 1894. He wanted to produce an affordable soap that people living in the overcrowded slums of Liverpool (which had experienced a rapid population influx as the second city of the British Empire) could use to protect themselves from the spread of cholera. He saw a business opportunity in a social issue.
This heritage was a nice-to-have for us, but it's not a prerequisite. Any business can find a social purpose that can drive growth, and there are some lessons that we have learned that apply more broadly:
  • Right from the outset, align social mission activities with the business strategy, and be honest ('painfully transparent') about how the business will benefit. Ensure this is built into everything from marketing and communications to procurement and of course discussions around partnerships.
  • Build world-class expertise across multiple disciplines to deliver world-class intervention programs at scale. Apply common business sense, but don't expect to drive intervention programs through business alone. To be cost-effective at scale, you need be innovative with the channels that you use and the partnerships that you create. Take note of what additional expertise and resources will be needed and then bring together the best skills you can find in both the business and social sectors. For example, engage with experts to build multidisciplinary skills across behavioral sciences to complement marketing expertise.
  • Secure support and endorsement from your parent company. Where possible, align with your umbrella company's overarching sustainability and, even more importantly, business plan. This is the only way to ensure tangible commitment and long-term success.