Does it make sense for a social entrepreneur to be as concerned with making money as with improving society or the environment? Similarly, can a commercial entrepreneur be as concerned with improving society or the environment as with making money?
“The answer to both questions is ‘yes’”, says Paul Kewene-Hite, Managing Partner of the consulting group Six42 in Paris and an entrepreneur-in-residence at INSEAD, advising students who are setting up enterprises while pursuing their MBA.
With more than 20 years’ business experience in high-tech start-ups and major technology companies, Kewene-Hite has also worked with at-risk youth for 26 years and for the last 14 years has helped lead TRUE Africa, a non-governmental organisation helping orphans in Uganda.
“Many entrepreneurs believe that if their goal is to benefit society then they can't think about their venture or run it like a business,” he says. “Or they believe that if their goal is to make money then they can't think of it in environmental or socially-beneficial terms. It's powerful to think of it both ways.”
In an interview with INSEAD Knowledge following the fourth annual INSEAD Social Entrepreneurship Conference and Alumni Reunion in June where he was a guest speaker, Kewene-Hite said that social entrepreneurs who run their companies like commercial ventures will be better able to fulfil their mission for society.
“One of the things that I've heard from social entrepreneurs is that if they think about the bottom line then they will compromise their ability to serve their cause,” he says. “It is true that efficiencies can sometimes stand in the way of effectiveness, but if a social enterprise is not financially healthy, that will compromise its ability to serve.”
By thinking and operating like commercial entrepreneurs, social entrepreneurs will run their ventures more efficiently, improve the effectiveness of programmes and efficiencies of cash flow, and this will strengthen the initiative’s ability to serve the environment or society.
“If you believe that you can't think like a business, you're going to handicap your ability to serve society or the environment because you will not be able to run it as efficiently and effectively as you could or should,” he explains.
For someone setting up a social enterprise, Kewene-Hite advises that they focus on the creation of a venture that can generate both good for society and good for the bottom line.
“For example, if you're going to deal with recycling or cleaning up streets or waterways, don’t just think in terms of pulling refuse out of the waterways and disposing of it, but puzzle through how you can turn that refuse into something commercially viable,” he says. “If you're pulling out metals or plastics, recycle them in a way that's good for the environment and for the venture.”
The social enterprise can become self-sustaining by providing a service to society that also provides something for the venture that can be turned into capital that then fuels the venture’s ability to grow or do the next clean-up in another community.
For commercial entrepreneurs who also want to do good for society or the environment, Kewene-Hite recommends taking a percentage of the profits from the commercial venture and returning it to society in a way that is complementary to the commercial venture.
“If you sell a product made from crops grown in Africa, you could return a percentage of the profits to the people who grow the crops to clean up the water they drink, provide clean sanitation, invest in schools, and do things that are necessary to build a healthy environment for their community,” he says.
By doing this, the commercial venture not only performs a social good but will realise benefits that will contribute to the success of the enterprise. For example, when making a pitch to an investor or a board of directors, the entrepreneur can show that concern for society and the environment has a direct impact on commercial success.
“Part of the incentive for the commercial entrepreneur to be successful will be that once they are commercially successful they will be able to fulfil their social ambitions,” Kewene-Hite says. “Employees and partners who believe in social giving will want to be more successful, more effective and more efficient, so that they will be able to give something back to society.”
Ultimately, he says, entrepreneurs of either mindset have much to gain from each other – as does the rest of the world.