Tuesday, December 4, 2007

Tough Talk About Social Enterprise

John Bird, founder of Big Issue magazine, had some tough talk for social entrepreneurs reported in The Telegraph.

"I have lots of people coming to me with ideas for new cars, trains, types of soap, and I always say look at the bottom line. Where is the revenue stream? I am a person that has started things with dodgy revenue streams and you learn from getting a good kick in the head," he said.

Toughness should be welcomed by social entrepreneurs -- if their efforts are dependent on foundations and others being "charitable," they aren't really enterprises, are they? But there must be fair ground rules for arriving at the expectations for the return, the timeline for achieving it, etc. Many ventures today are started with the idea of harvesting value through an IPO or sale of the business yet many social enterprises are started to be run for the long haul.

Many also are disruptive innovations -- new approaches serving new markets. These are opportunities that are hard to quantify and forecasts are guesswork at best. Yes, the business plan should represent a reasonable approach to the enterprise -- but there may be a leap of faith involved. The trick is to ensure that the plan allows for fast failure and adaptation when the original assumptions prove less than 100% correct.

It's not that it isn't about return but it is about return over the long term rather than the short.