Ranked #1 in the World
By Peter Eliassen ‘06
In the past month, I was fortunate to have met with many thought leaders and practitioners in the field of social enterprise both at the Ross School of Business (University of Michigan) and at the Skoll World Forum at the Said Business School (University of Oxford, England). VisionSpring’s Founder and Chairman, Dr. Jordan Kassalow, was recognized as one of nine social entrepreneurs to receive the Skoll Award for Social Entrepreneurship; a big moment in our organization’s history. I wanted to highlight some key takeaways and thoughts that I had from these recent experience. I am eager to hear your perspectives.
• One key theme of the conference and in speaking with thought leaders from the University of Michigan suggests that job creation should be the ultimate goal of any social enterprise and/or NGO. Many believe that the trickle-down benefit from creating jobs will further enable individuals to make wiser purchasing decisions on nutrition, healthcare, and create a higher level of self-confidence that is passed down to at least one generation (children).
• Another major theme was that the two primary agents to scale any project are through the government and for-profit enterprises. Where there is no end-game strategy on eventually covering costs and attaining financial sustainability, organizations are mis-using philanthropic capital which could be used more efficiently elsewhere.
• One danger that was mentioned is the concern that NGOs and Social Enterprises have already written-off the government. The government has a monopoly on resources, so needs to be fully involved. Sure, if social enterprises or NGOs succeed in a small pocket of a country, that’s great, but they are constrained by their ability to raise capital…so, if they aren’t adapting their model to be for-profit, they will not be the appropriate agent to scale.
• A critique and limitation of the microfinance and microfranchise development model is the word “micro”. Those that have created the deepest utilization or penetration of Microfinance remain poor: Bangladesh, Bolivia, Mexico, etc. On the other hand, Vietnam has created a more factory-friendly environment, providing jobs with dependable salaries (not the most interesting or safest types of jobs, but providing stable economic development).
• By remaining ‘micro’, and having people focus on their own small businesses, the opportunity cost of MFI capital is on the investment in a small enterprise that has a chance to become a medium enterprise, thus expanding their labor need and other trickle-down impacts.
• Another key message is that not everyone has entrepreneurial skills, so instead of creating many micro-entrepreneurs, we should focus on putting our capital behind the most capable entrepreneurs, thus creating employment for those who desire a more dependable salary.
The critiques of the “micro” focus are legitimate, and since the fields of social enterprise and microfinance are only in their infancy and adolescence, respectively, there is limited research available on assessing the true opportunity cost of investing to build medium enterprises to create jobs versus providing microfinance to every qualified individual who needs the capital. There are always two sides to the story.
I spent some time working for the United Nations (UNCTAD), developing “high potential’ entrepreneurs in developing economies through a 2-week program called Empretec. In two cases that I can clearly remember in Zimbabwe and Botswana, I saw high potential entrepreneurs build enterprises that created numerous job opportunities for locals.
I also spent two weeks working with a group of entrepreneurs in the West Bank of the Palestinian Territories. Although these entrepreneurs may not grow to a scale where they could employ more than their family members, their business provided a livelihood and hope. In the case of VisionSpring, although most Vision Entrepreneurs will make at most $25 per month, they earn respect and credibility in the community while sustaining their livelihoods on their own schedule.
So, although “micro” may come with a high opportunity cost of philanthropic capital, “micro” also creates an entrepreneurial spirit which leads to tangible (financial) and intangible (self-esteem) benefits for the entire community.
Peter Eliassen is a 2006 graduate of Thunderbird. He has spent half of his career in the private sector with Capital One and Unilever, and the other half in development with the Peace Corps in Benin and the United Nations in Geneva. Peter is currently the Vice President of Sales and Operations for VisionSpring, a social enterprise that strives to reduce poverty and generate opportunity in the developing world through the provision of affordable reading glasses. Peter is based in New York, N.Y. Read Peter’s introduction on the Thunderbird Global Citizenship blog.
Leave a Reply