Module IV - Social Business Models

Creates business models around low-cost products and services to solve social problems, such as healthcare, education, and environmental sustainability.
It aims for 'more-than-profit', integrating revenue generation with the creation of social value, ensuring that business activities contribute positively to society.
Two kinds:
- Creating services for the poor, such as affordable housing, clean water, and sanitation facilities.
- Owned by the poor (e.g., MicroFinance Self Help Groups – SHGs), empowering them economically and socially.

It involves recognizing and resourcefully pursuing opportunities to create social value through innovative approaches that address critical social needs.
Social entrepreneurs are leaders of social-purpose organizations, demonstrating:
- Focus on impact: Prioritizing the achievement of measurable social outcomes.
- Primacy of mission: Ensuring that the social mission is central to the organization's purpose and activities.
- Private initiative: Taking proactive and independent action to address social problems.
- Willingness to blur sector boundaries: Collaborating with organizations across different sectors to achieve common goals.
- Opportunity orientation: Identifying and leveraging opportunities for social impact.
- Innovation: Developing new and creative solutions to social problems.
- Resourcefulness: Effectively utilizing available resources to maximize social impact.
A social entrepreneur pursues novel applications that potentially solve community-based problems, taking risks to create positive changes in society.

A social entrepreneur establishes a social enterprise, defined as an organization that operates independently of the state and invests surplus for social objectives (DTI, 2002).
These enterprises aim to achieve public good rather than maximize profit for shareholders (Scottish Social Enterprise Coalition, 2007).

From the social side:
- Community entrepreneurs with social capital: Utilizing local networks and relationships to mobilize resources.
- Found social organizations: Establishing organizations focused on addressing specific social issues.
- Generate social output: Creating tangible social benefits for communities.
On the entrepreneur side:
- Innovative, determined, ambitious, and charismatic: Possessing the qualities necessary to drive social change.
- Good at spotting unmet needs and mobilizing resources: Identifying gaps in services and effectively allocating resources to address them.

Ashoka Foundation (2015): Social entrepreneurs are individuals with innovative solutions to society’s most pressing social problems, such as poverty, inequality, and environmental degradation.
The Schwab Foundation (2015): Social entrepreneur pursues poverty alleviation goals with entrepreneurial zeal, business methods, and the courage to innovate and overcome traditional practices.

As a powerful means of service provision, especially for the poor, creating and providing previously unreachable services like healthcare, education, and financial services.
As a business model innovation that combines business tools to enable social transformation.

Social Activism: Martin Luther King utilizes his influence to encourage change through non-violent protests and advocacy.
Social Service Provision: Project Hope builds schools in rural China to provide basic education to poor children.
Social Entrepreneurship: Institute for One World Health works on developing and ensuring availability and accessibility of safe and effective new medicines for diseases disproportionately affecting those in poor and underdeveloped regions.

Pure charity: Focuses solely on philanthropic activities.
Socially responsible business: Integrates social and environmental concerns into its operations.
Socially enterprising commercial business: Uses business models to achieve social objectives.
Operational arm of a non-profit: Implements programs and services on behalf of a non-profit organization.
Social enterprising charity: Generates revenue through commercial activities to support its charitable mission.
Business giving a portion of profits to charity: Donates a percentage of its earnings to charitable causes.
Social Co-operatives: Businesses owned and operated by their members for mutual benefit focusing on social goals.

Muhammad Yunus and Grameen Bank win Nobel Peace Prize in 2006 for pioneering microcredit and its impact on poverty alleviation.

Banking and finance:
- Muhammad Yunus, Grameen Bank (Nobel Peace Prize 2006).
- Vikram Akula, SKS Microfinance (Social Entrepreneur of the Year Award 2006).
- Kiva (peer-to-peer micro-lending website).
Energy:
- Solar Electrification - Harish Hande, SELCO (Social Entrepreneur of the Year Award 2007).
Other examples:
- Education (Same Language Subtitling, Janarth - education solutions for children of migrant laborers).

Only business can create prosperity by generating wealth, jobs, and innovation.
Healthy businesses need a healthy community to thrive and sustain long-term growth.
Growing awareness of major societal challenges such as poverty, inequality, and climate change.
Government and NGOs lack sufficient resources to fully meet these challenges, necessitating the involvement of businesses.
More of the public sees business as prospering at the expense of society, leading to distrust and skepticism.
Despite growing corporate citizenship activities, the legitimacy of business has fallen, requiring greater accountability and transparency.

Many companies adopted a narrow model of economic value creation:
- Meeting conventional needs of conventional customers without addressing broader societal issues.
- Optimizing within narrow company boundaries, neglecting the impact on communities and the environment.
- Profit improvement through outsourcing and globalizing, leading to job losses and social disruption.
- Driving revenue through acquisitions instead of new business creation.
Societal issues are treated as outside the scope of the business, resulting in missed opportunities for innovation and growth.
Huge societal needs go unmet, perpetuating social problems and limiting economic potential.
Growth and innovation suffer due to the lack of attention to social and environmental factors.

Social deficits create economic costs, such as healthcare expenses, social welfare programs, and environmental damage.