In a recent article I read, the author, Yotam Ariel, tries to offer a social entrepreneur working in solar lamp distribution an opportunity to cut his costs by half by arranging for bulk-buying with other solar entrepreneurs to reduce the unit cost for each manufacturer. The entrepreneur refuses, citing that he would rather not help his competitors to “free-ride” off of his (bigger) purchasing power.
Hence, the author wonders why it is that people with similar social missions are still hesitating or outright refusing to share resources. What fears or concerns motivates them to do so? What speaks in favor or against collaborating with other social entrepreneurs? How much competition do we need among social businesses?
Good questions in my book! I wonder what you think after indulging my thoughts for a moment…
I was intrigued by Yotam Ariel’s example to say the least. It begs a set of bigger questions, in my opinion. First, how does the nature of competition differ in social entrepreneurship to that of traditional businesses? Second, how much collaboration should exist between like-minded social entrepreneurs with the same mission? In other words, what are the legitimate concerns against collaboration in the sense of sharing resources?
On the first question, it would seem that the main difference between traditional and social entrepreneurship is that in the latter the ultimate goal is not to maximize financial profits but to achieve certain socially or environmentally beneficial outcomes. All those academic papers on “coopetition” aside, fundamentally the assumption in traditional business is that my competitors’ gain in market share or profits comes to my immediate loss. But in social entrepreneurship, if the real goal of a firm’s existence is to reduce poverty in a given region, for example, then it would seem that another firm’s “gain”, such as a larger number of customers, should not be seen as “my loss”. How could it be my loss, if I want the same goal to give them more access to solar lamps? If my social motives were genuine, shouldn’t I be mostly indifferent if my end customer carries mine or my competitors’ solar lamps, as long as they carry one and can throw away that poisonous kerosene lamp?
My immediate suspicion for someone seeing this circumstance as their “loss” is an unhealthy ego (see a previous post on this topic). In other words: why would I want to share the glory of social entrepreneurship with some pesky meddling competitor if I can put on my glossy annual report the larger number of people “helped”? Also, the issue of control becomes important in this case. Someone else may not do things exactly like I would like them to be done in terms of branding, design, features, etc. so it would be better that MY products go to the village instead of my competitors’.
Another reason for not cooperating would be lack of trust in the competitor abusing or misusing information about my organization. What if we share contacts and leads and she simply takes them on as her own? What if we share technological insights and she takes my IP? So this leads to the second question about how much collaboration is healthy vs. unhealthy.
Allow me to side-step theoretical critique here and get straight to my point, which goes like this: the question of competition vs. collaboration should honestly only be interesting to those social entrepreneurs who don’t have the social outcome as their primary goal. In our endless debate about what social entrepreneurship means, this would refer to those on the spectrum who are more in it for promoting themselves (and the money of their investors) than the well-being of their constituents and beneficiaries.
Seen this way, would it be too radical to posit that collaboration, or openness to collaboration, is central to anyone who wants to find the best (i.e., lowest cost and most effective) method to serve their mission? Many social problems by definition are too big and each company too small nowadays to make a real difference by itself. Do we honestly have time for people who are more concerned about the credit and looking better than others?
But here I want to also entertain the objections to collaboration. Seen from the traditional view of business, the lifeblood of a company is of course revenue and any activity that threatens to reduce revenue could be seen as not in the best interest of the owners/investors. Thus, collaboration, if it results in other companies taking advantage of my connections, leads or distribution channels, may also result in them placing ultimately more sales than me among the same pool of end customers. This hurts my business in the end. The worst outcome of this would be that I go out of business where others succeed at my expense.
Back to the example of the solar social entrepreneur in this article: is this also an example of such a risk? The author mentioned that he offered a solution that would benefit all competitors, including the firm under consideration, by reducing costs and therefore increasing profits for each company. There was no mention of sharing distribution partners or exchanging contacts or IP. Based on this evidence, it seems ludicrous to me why that entrepreneur would object to the suggestion on grounds of just not wanting to benefit the others.
A fundamental question that each business entrepreneur asks is: “How can I remain in business as long as possible and make as much profit as possible?” A social entrepreneur, however, should rather ask: “How long SHOULD I remain in business?” The answer: as long as the social mission is not achieved, as long as there is demand for my services, as long as the social problem or injustice exists. Or perhaps: as long as there are insufficient alternative providers of my social services. But what should my reaction be when I see the villagers I used to work with now hold the lamps of a competitor? Anger? Envy? Disappointment?
How about: feeling glad? Because that’s what the mission of my organization was about in the first place. In the case of the solar business, bringing people light through affordable, healthier (or less pernicious) technology. If that is exactly what competitors can provide, why be mad at them for succeeding? Is there no room for generosity of spirit in the world of social enterprises?
In the end, perhaps what am I suggesting is that a genuine social entrepreneur should be willing to do whatever it takes to reach his social mission in the most effective and efficient way. If it means to collaborate with “competitors” then that should be unquestionably part of the solution. Should it imply that I may be driven out of business if someone outsells or outperforms me in the market? Arguably, yes. The key is to make sure to have the right investors on board (impact investors anyone?) who care about the mission more than the money, and are happy taking it back from the closing business to be redeployed elsewhere.
Let me finish this post with the following questions, which some of you may call heretical or plain out silly: Why can’t we leave the term “competitors” in the world of traditional for-profit business and instead call the same people “comrades in arms” or “peers” in the world of social businesses? Why can’t we leave behind the need to beat others when the goal is to help people who frankly don’t care about such struggles? Does anyone have strong arguments against collaboration? If so, I would love to hear about them!
Thank you for taking us deeper into this topic, Thien.
It is also written very nicely.
You hit the point.
Many times, we declare that we want to solve the social issue,
for instance – end energy poverty.
Though, it is not an unconditional love.
We want to reach that goal,
and – make a buck,
and – get credit for doing it,
and – be the one who did it best…
So if I risk one of those “sub” goals,
will I make some decisions that conflict with goal number 1?
I’d like share another thought.
Actually it is possible to get cooperation and practices that aren’t
natural for businesses by making an offer they can’t refuse.
For example, few companies would like to share their financial details.
But, tell them they’ll be on the stock market, and they’ll disclose it with
a smile (well, almost a smile..).
Thanks again, Thien,
Yotam
Thanks to you Yotam for getting us started and for sharing the additional thought!
As to the stock market, well there’s a reason I’ve been rooting for folks trying to create the equivalent for social enterprises around the world.
And at the end of the day, the key issue I suppose remains that we cannot sustainably change people who come with the traditional business mindset but happen to like the cachet of calling themselves “social”.
For collaboration to thrive, we are more likely to see quick wins when we work with the people who have a social mindset but happen to be running a “business”.
Good luck with Bennu Solar going forward!
Thien
Thanks, Thien.
Let’s keep each other updated,
Yotam
By the way, check out this interesting response from Scott Anderson of NextBillion in reaction to this article. He disagrees with the conclusion.
http://www.nextbillion.net/blogpost.aspx?blogid=2719
And of course, I had to respond
it makes me come up with what’s goin on religious field, i mean in specific protestant churches around the world.
church is all the same(within the certain limit of boundary) everybody believes same God in various churches, and the outcome would be same. get saved!
however, unlike other religions like catholics and buddhism which are under one centralized power and all the benefits and one’s goers are integrated and controlled, churches are totally individualized which result in competing with each others.
they try not to lose their people from other churches, even though somebody moves to other areas they encourage them to spend some time and do not leave the church, saying that THIS church and THAT church are different.
all the churches have same mission and same kind of service, so why are they trying not to lose their people? wherever church people go, afterlife all will meet in the same place!
i guess collaboration in the world of church and social enterprises are somewhat similar. so that reasons for no collaborations would be similar too.
which is individualism.
churchgoers also know that whatever church they go to, they will be saved however they try to choose the chuch that can best fit themselves, and churches are using this traits of their people by differentiating oneself from others, so that they will not lose their impact on people and not losing offerings which ultimately feed them.
social enterpreneurs will think similarly too, they themselves and consumers all know that the mission and the outcome will not be a big difference however they do not want to lose their power and impact or influenece on the society, and they individualize themselves making themselves look unique and special!
don’t know how to end the comment.. seems like my thing is going back and forth… however, i just wanted to say that this phenomenon makes me think of similar thing that is happening in the field of christianity!
Changsub, thanks for the interesting thought extending the discussion to the behavior of churches! Your hint about the difference between the same product (the religion) and the various businesses “making” or “distributing” it (the churches) is quite poignant.
I had not thought about this before but now that you mention it, I also like your point that we all end up in the same place in the after-life anyway (or maybe the different churches would have you believe it depends on what faith you had while alive).
Not being a regular churchgoer unfortunately leaves me with limited understanding as to what churches exactly try to tell their parish to keep them around (their “value proposition” in business terms). Why they would do this seems more clear: more attendants, more donations, more money to make for nicer churches.
I’d be curious to hear more about how churches “position” themselves around “individual preferences” to appear “unique and special” as you put it.
Question to you then: What makes YOU stay with one church vs. another other than proximity to your home or your family’s historical relationship with the priest?
Question to other church-goers: do you agree with this? Do we need more collaboration (or more accurately, the “ability to let go of individuals”) among churches?
One reason — perhaps the only one — to eschew collaboration is if the person who wants to collaborate with you is incompetent or untrustworthy and, by association, your reputation will be harmed. For example, organizations that associate with SKS are sullied by that company’s greed and harm to its customers. One doesn’t want to share resources with an organization’s whose stated goal is the same as yours but whose methods make your skin crawl.
Molly, thanks for the thought! Couldn’t agree more, collaboration does not imply charity or blind, warm and fuzzy friendship. Standards of conduct, trust and competence apply arguably even more with social enterprises than traditional businesses. The first two may even be the main source of capital of the social firm!
This is a very polite conversation about a subject that often entails impolite competition and worse. Ego is a huge driver in social entrepreneurship, replacing private profit as the motivator in many cases. It is vastly unacknowledged in the field, but its importance cannot be overstated in understanding the behaviours of individuals. The pursuit of social change is frequently a secondary consideration, and the empowerment of others will often fall even lower down the list of priorities. Social entrepreneurs need to be much braver and more honest in acknowledging these realities.
Vern, thanks for the (polite) comment.
You may be interested in my previous discussion about ego in social entrepreneurship, where I tend to make a point about what you said and call into question certain behaviors that we arguably can attribute to ego depending on the situation. It also talks about when this is a bad thing or an “ok” thing.
Me, Myself and I – The Role of Ego in Social Entrepreneurship
(Part 1) http://wp.me/p24jhN-jG
(Part 2) http://wp.me/p24jhN-kl
Feel free to chime in on that discussion as well and by the way, no need to be polite on this blog, I can handle it!
Best,
Thien
[...] recently I read Thien Nguyen-Trung’s Good Generation blog post on the question of competition or collaboration in the social enterprise sector. The article [...]
I love your article, I have been into the line of business for
many years and recently I took a daring step to go beyond the
way I used to do work before. We started with managing people
and their needs first, rather than considering maximizing our
profits. We have seen a massive growth in our business compared
to my previous business venture which gave us a relatively slow results.