By: Newt Fowler
Pink Floyd comes to mind... Such focus on money, so little time... There are moments when we may question whether "entrepreneurism" can be something more: can we make money and make a difference? So I turned to an old friend, Jim Kucher, to sort out how entrepreneurism is being reshaped, with a focus on the "soul within." A conversation on social entrepreneurism unfolded.
The Skinny. Jim Kucher is one of those rare academics who continue to "walk the talk." He recently left his position heading up the Entrepreneurship Program at UB, to tackle a "simple" problem: to solve the health care crisis facing the working poor. Using the recent Federal health care reform legislation as a platform, Jim and a group led by Dr. Peter Beilenson have set out to redefine how healthcare is delivered in Maryland - a rather ambitious goal, right?
Marrying Mission and Money. If being an entrepreneur is "acting as the leading agent of change," then for Jim, "marrying a social mission to that ‘agency,'" from Jim's perspective, fundamentally elevates "'leading' to ‘serving,'" and the difference for society is profound. Jim is also quick to point out that it's energizing from a personal perspective. While much of what this column has explored revolves around classic constructs of entrepreneurism, Jim focuses on that amazing subset of individuals, what he terms as "the brave folks," those who "find new models that enable others to benefit" from innovation. So our conversation took on a Zen like motif as we explored "entrepreneurship primed, or squared"... you pick.
First Level: Payroll means Something. Jim starts with an internal view, quite different from the way most of us think about entrepreneurism. Where most focus on externalities such as market, competition or growth, Jim underscores that "the first level is [reached] when you realize that you have grown a venture that provides income and stability to families beyond your own." Simply stated: you make a difference to your employees. This paradigm is a fundamentally different measure of the fact that entrepreneurs "consistently create new jobs and economic growth." It's no small feat to make a difference in the lives of those you employ.
Story Time: Purposeful Work. In Baltimore City, there is a moving and storage company called Harbor City Services. According to Jim, they compete on price with the big players and win. "What makes them unusual is their employees; just about every worker has a psychiatric disability." When a worker has a bad day, Harbor City tells them to get help and come back when they can. What makes their work particularly powerful, from Jim's perspective, is that Harbor City "funds this support from the money they earn, not from grants and gifts." Don't lose sight of the First Level: Harbor City provides a living wage to a workforce on the margin and competes in a market with the Mayflowers of the world... For the employees of Harbor City, payroll means something and their work has a purpose.
Second Level: Innovate Something. This level almost arrives rhetorically, "recognize all material things we take for granted come from the mind and through the hands of an innovator." For Jim, Innovation and entrepreneurism are the chicken and egg of growth. For those who have met great innovators who are lousy business people and for those who similarly know good managers who lack creative vision, it is impossible to decide which element leads - innovation or entrepreneurism. The yin and yang of growth. As an example, Jim, turns to another story.
Story Time II: Where Enterprise and Mission Meet. Jim recounted the story of Marty Schwartz and his Halethorpe business - Vehicles for Change. VFC provides low-income families with reliable donated and reconditioned cars. As Jim explains, "The social need is obvious: with a car, you find a better job where public transport and time don't help." He continues, "so Marty and his crew take a donated vehicle, rehab it, and provide the new owner with a warranty and low-interest loan." The interesting part is that they sometimes get a higher value vehicle donated. Those cars are sold on their used car-lot, and the revenue generated helps to fund the rest of the program. "Every sold car means one less fundraising drive, one less grant to run his operation." Guess who comprises his workforce - those on the margin with limited skills. Monetizing a business model ethically; one that makes a profit.
Third Level: Something more than Money. "Maximizing profits is only part of capitalism." Really? Out come Jim's "academic proclivities." Jim shares that before Adam Smith wrote The Wealth of Nations, he published The Theory of Moral Sentiments. "This little known effort lays out the ethical and philosophical framework" that his better known book is based on. Jim hasn't lost sight that the cornerstone of capitalism is ethics and morality. While the original work is overlooked today, for Jim, The Wealth of Nations is unimaginable without The Theory of Moral Sentiments as its ethical foundation. "Ethics come first, and not as an afterthought." No confusion over the chicken and the egg here.
Fourth Level: One Coin - Two Sides. We still haven't neatly placed the "social" next to "entrepreneurism." When I pressed him, Jim said that nothing defines "social entrepreneurism" better than recognizing "that ‘problem' and ‘opportunity' are two sides of the same thing." The "inner entrepreneur," according to Jim, "wants to know how we can improve the human condition." While Jim won't say it, I suspect that the difference between a "non-profit" and a "social enterprise" is the realization that to effect meaningful change, one needs a viable business model. Isn't that the operative definition of an entrepreneur, I ask Jim. "Sure, a social entrepreneur recognizes and acts on the realization that the business model and the social change model are one and the same." If I understand where this thinking heads, where a non-profit sees problems, the social entrepreneur sees opportunities. You pick which side of the coin.
Fifth Level: The Ladder. So the social entrepreneur, the one who supports social change while also building a business, must focus on both business and mission. How is that accomplished? Here is Jim's ladder:
- Focus on those aspects of commerce that support the core social ideal or mission
- Is that commerce sustainable? Can it earn at least as much money as it spends?
- Is the revenue model clearly defined?
- Does it meet a need or offer a value proposition that others will pay for?
- Does the business deliver a solution that is repeatable and scalable?
- Is the right team in place to execute the strategy?
- Can it attract patient capital that understands not only the mission but the business?
- Will such capital be sufficient to allow the venture to grow not just survive?
Jim muses with a smile, "Sounds like core principles of entrepreneurism, right?"
The Take Away. I earlier mentioned the "Zen motif" context of my conversation with Jim. As we wrapped up our conversation, he shared with me the yoga concept of "drishti," the point of concentration. For entrepreneurs, this is the point of vision or focus, a moment of clarity and certainty. For social entrepreneurs, "drishti" arrives through seemingly contradictory experiences: can a business make money and a difference? Our conversation ended, leaving me reflecting on whether a contradiction really lies in social entrepreneurism - is there a tension between money and purpose - or does success lie in their balance?
Jim can be reached at: jim.kucher@evergreenmd.org
For comments about this article or thoughts on future conversations, let me know at: nfowler@rosenbergmartin.com
With more than 25 years experience in law and business, Newt Fowler advises many of the Greater Baltimore region's entrepreneurs and technology companies, guiding them through all aspects of business planning, technology commercialization, and M&A and financing transactions.
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