Spring 2013 Chull-Young Lee 1

Founder & Chairman, Social Enterprise Network(SEN) Visiting Professor(SE), Sookmyung Women’s University Adjunct Professor(SE), Ewha Womans University Chairman, ARK Private Fund (Value Investing + SRI) Co-Chairman, Bausch & Lomb Korea Seoul National University Business College(BA) Columbia Business School (MBA) 2

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Contents I.Emergence of Social Entrepreneur II.Social Entrepreneurship III.Strategy and Practice IV.Summary Appendix: Social Enterprise Enlarged Social Entrepreneur: 5 Cases Social Entrepreneurship 5

I. Emergence of Social Entrepreneur Public Sector and Private Sector - Industrial Revolution: 18 – 19C Private Sector (Business Sector) Public Sector -Social Problems: Concentration of wealth, Suppressed Human Rights, Destruction of Environments 6

-Gov’t and market neglect or fail to cure social problems -Emergence of NGO/NPO: in mid 19C -Explosion of NGO, NPO numbers: from 1970 Emergence of Social Sector and NGO/ NPO Public Sector Private Sector (Business Sector) Social Sector (Civil Society) NGO, NPO NGO, NPO: Indonesia 2,000, Bangladesh 20,000 India 2,000,000, Europe 1,000,000, U.S. 1,000,000, Korea 20,000 7

○ Social Service Provider: Social Enterprise -Charity-based approach -Ex: Rainbow Cookie: Employs 40 mentally retarded youths. Produces cookie. ○ Cooperative, Community Business: Social Enterprise -Employee and Community ownership -Ex: Mondragon Cooperative Corporation(MCC), Late 1950’s, Spain Coin Street Community Builders(CSCB), 1984, South Bank, London ○ Social Innovator: Social Entrepreneur, Social Enterprise - Market-based approach - Bill Drayton, Ashoka: Founded Fostered 2,700 social entrepreneurs in sixty countries. Emergence of Social Entrepreneur 8

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Social Enterprise Institution Social Entrepreneurship –Ashoka Innovator for the Public(1980) –Schwab Foundation for Social Entrepreneurship(1999) –Skoll Center for Social Entrepreneurship, Oxford University(2003) Social Enterprise Program –Social Enterprise Initiative (1993) Harvard Business School –Social Enterprise Program (1998) Columbia Business School Skoll World Forum 10

II. Social Entrepreneurship Social Entrepreneur: 5 Cases Case 1 : Muhammad Yunus -Started 1976 with USD 27 loan to each of 42 women in Bangladesh. Bank founded Micro loan of USD 6.6 Billion (5.9 Billion paid-back) to 8.1 million poor women by 2,100 branches in Bangladesh Grameen’s business model(micro loan) exported to 40 countries. Helped 100 million poor women in the world get out of poverty. 11

Case 2 : Paul Polak, IDE -IDE founded in 1981, with $30,000 seed money. -Helped 19 million poorest farmers get out of poverty in Africa and Asia. -Appropriate Technology -Grant of USD 41 million from Bill & Melinda Gates Foundation 12

Case 3 : Robert Redford, -Disappointed with money, violence & sex overly dominating Hollywood. -Founded 1980: Movie “Butch Cassidy and the Sundance Kid” Indie film movement: Sundance Film Festival 13

Case 4: Mary Gordon, -Started in a class room, Toronto, Canada, Empathy teaching program for children: Children observe interactions between a baby(“teacher”) and a mother. Develops social skills. -For 10 years since 1996, bullying was reduced by 90% in Canada. -Program affected 325,000 children and spreaded to U.S., New Zealand, Ireland, Scotland and Germany. -Ashoka Fellow 2002, Invited by OECD and WHO. 14

-Founded 2001 by Jagueline Novogratz (Stanford MBA: worked at World Bank, Rockefeller Foundation). -Seed capital from Rockfeller Foundation, Cisco Systems Foundation and three individuals. -Patient capital(equity or loan) invested in small & growing businesses for Water, Health, Housing, Energy, Agriculture: 26 enterprises, 36 million people in India, Pakistan and Africa -Fund Size : USD 40 million, Investment per project: USD 250,000-3 million, Pay-back: 5-7 years. 15

-Social Entrepreneur’s characters & doings -See social problems as opportunities. -Use business skills to solve social problems: Market-based Approach -Start-up business (For-Profit, Non-Profit) and change the world: Social Innovation -Pursue Social(Environmental) and Financial values simultaneously: Blended Values Social Entrepreneurship 16

III. Strategy and Practice Social Mission (Social Value Proposition): Primacy Social Innovation Max Social Impact (Social benefits created) Purpose 17

Scalability -Replication -Economy of Scale Sustainability -Systemize∙Organize -Financial performance Max Social Impact Social Innovation: Replication or Economy of Scale, Mass-Market Adoption, Imitation, Ecosystem 18

Social Service Provider vs Social Entrepreneur “Social entrepreneurs are not content to give a fish, or teach how to fish. They will not rest until they have revolutionized the fishing industry.”, Bill Drayton * Alleviation of the pain vs Solution to the pain 19

“Almost all governments seek to work with social entrepreneurs and their organizations. Basically they(governments) confuse them(social entrepreneurs) with service delivery providers to be subcontracted, much the same way they relate to charities and NGOs to carry out the work the state cannot do or does not choose to.”, Pamela Hartigan * Social Enterprise Promotion Act, July 2007, Korea 20

“Social service provisions never break out of their limited frame: Their impact remains constrained and their service area stays confined to a local population ∙∙∙. Millions of such organizations exist around the world – well intended, noble in purpose, and frequently exemplary in execution – but they should not be confused with social entrepreneurship.”, Roger Martin 21

Application to market -Technologies -Ideas Mobilize market power -Target market -Different interest groups *Appropriate technologies *Use feet Market Application 22

Start small See large issue (opportunity) *Use feet Practic e 23

Market Survey -Existing cases -Potential competitors *Use feet 24

Alliance and Partnership PPP Model: Gunpo English Language School Hybrid Value Chain (HVC) Partnership: Corporation + Social Enterprise *Use feet 25

Entry Barrier: Competitive Advantage -Build -Open 26

Chemical Integration - Social value + Financial value 27

Replication, Economy of Scale -Cooperative -Community development -Global perspective 28

Hybrid Model Social Service + Social Activism + Social Entrepreneurship Ex: Florence Nightingale Standard Setting or Certification (Social Activism)+Social Entrepreneurship Ex: Fair Trade USA, Cafedirect UK Social Activism + Social Entrepreneurship Ex: DiD(Dialogue in the Dark) 29

Social Impact - Quantify & Monetize - Impact Value Chain - Social Return on Investment: SROI - Qualitative assessment 30

Impact Value Chain Inputs Activities Outcomes Outputs SROI : Social Indicators : Social Impacts (Social benefits created) : Social Return on Investment Social Mission 31

- Make breads to employ? - Teach how to catch fish? - Distribute profit to giving-back? - Higher Social, Lower Financial Values? - Social Entrepreneurs are born? - Social Venture is a growth without employment? Misunderstandings & Truths 32

Key Words Social Mission Social Innovation Scalability & Sustainability Market Application “Doing Good, Doing Well” 33

“Put Horse before Cart” IV. Summary “Doing Good, Doing Well” 34

Appendix: Social Enterprise Enlarged Strategic Philanthropy Non-Profit Management & Governance, ACE* Social Entrepreneurship Corporate Social Responsibility Global Poverty, Emerging Markets & Int’l Development Environmental Sustainability Social Capital Market & Impact Investing Social Blended Value Spectrum Financial Sustainable Development Socially Responsible Investment Cooperative Community Business 35