This is a guest blog post by Suneet Bhatt, founder of two social enterprises: Social Symmetry, a social impact consulting company, and Dream Village, a start-up that uses picture books and the web to teach kids about global issues.  Suneet has also written several reviews on ChubbyBrain.

I saw the ChubbyBrain post linking to the Acumen Fund Fellows blog, and thought I might offer my own perspectives on the post titled “Is the Term Social Entrepreneur Overused” by Joanna Harries. I think Joanna did a great job of framing the debate, but I think we failed her in driving resolution. Hopefully this post advances the debate without generating too much backlash and animosity for yours truly-though backlash is welcome.

Social Entrepreneurs are So High Maintenance

Is it really hard to define “social entrepreneur” or are we just being high maintenance? An entrepreneur, in virtually every definition I have seen, is an individual who undertakes a business venture and bears most or a significant proportion of the risk. I don’t recall seeing a definition of entrepreneurship that set a threshold for consideration. I’ve never heard anything like the following: “Right now I’m a product innovator, but if I can sell another 100,000 collar stays, I’ll be an entrepreneur!” or “I used to be an entrepreneur until the recession, but now we don’t sell enough Pee-pee Teepees for me to qualify-I should have updated business cards by Friday.”

“Social entrepreneur” is derived from “entrepreneur”, and the definitions must be similarly linked. I lean in favor of the definition provided by Gregory Dees, Faculty Director for the Center for the Advancement of Social Entrepreneurship at Duke University’s Fuqua School of Business (and a professor I was lucky enough to have), who says that social entrepreneurs “are entrepreneurs with a social mission. However, because of this mission, they face some distinctive challenges and any definition ought to reflect this. For social entrepreneurs, the social mission is explicit and central.”

It’s so simple: the social mission is clear and obvious. But we managed to screw it up, and I blame it on three things:

1. Poor classification;
2. Our own hubris; and
3. Misplaced priorities.

Poor Classification: It’s the Taxonomy, Stupid

One of the reasons this debate exists is because the experts who categorize and present business information are not clear on where “social enterprise” fits within the broader business hierarchy and taxonomy. For example, ChubbyBrain (sorry guys) asks a company to place itself in one of the following categories: Green, Health, Mobile, Nano, Social Entrepreneur, Social Web, Off the Wall, and SaaS.

Classification systems like this reflect general confusion around the term (and that’s our fault), and are fundamentally problematic. Can’t a “green” company also be a “social enterprise”? Can’t a “social enterprise” also be in the mobile space? Are “Social Web” and a social mission mutually exclusive?

A simple change could put this issue to rest (at least on ChubbyBrain). Ask each company to declare its central mission by stating whether it is structured for financial gain (for profit) or for social gain (social enterprise). Make this the first question, or make this the last question-but take this out of the current “Category” drop-down. It doesn’t belong there. It is important to note that this question does not relate to a company’s financial structure, because a “social enterprise” can be structured as a nonprofit, a for-profit, and even, a hybrid that blends the best elements of each. A for-profit can engage in socially responsible activities, but I would categorize that more as CSR (corporate social responsibility) or corporate philanthropy than I would social enterprise since they are primarily driven by a profit motive.

Why? Because companies that fall under Green, Health, Mobile, Nano, Social Web, Off the Wall, or SaaS can have a profit motive or a social motive. (Green is uniquely problematic, but we’ll leave it in this conversation for now). Right now, ChubbyBrain is forcing the company to choose one option from a host of variables that are not mutually exclusive and in some cases are actually interdependent! Would the Aravind Eye Care Center record itself as a health company or a social enterprise? The real question is why do they even have to choose?

The underlying point is that social entrepreneurs are being defined as a standalone industry, when we are actually an alternative approach to business for companies in existing industries. As social entrepreneurs, we need to add our voice to the discussion so we can clarify the questions being asked-and I thank ChubbyBrain for giving me that opportunity. This post and the fact that ChubbyBrain is even asking these sorts of questions is a testament to their commitment to entrepreneurs, social entrepreneurs, and all of their customers.

Our own Hubris: “Doctor” “Doctor” “Doctor” “Doctor”

Some of this is our own fault. It bothers me that some of my peers want to make “social entrepreneur” an exclusive term, but I can’t fault them for their hubris (it exists, and it’s pervasive). I believe that some want to make their discipline exclusive so they can either prevent it from being diluted or tainted (an innocent, altruistic perspective), or protect their own efforts and make themselves even more indispensible (a cynical, but not unrealistic perspective). As an MBA who has worked substantively in the private, nonprofit, and public sectors, I have seen these tactics before (I still have scars from my time at FEMA). It’s natural for people from the “inside” to say things like: “You don’t understand what we do here” or my personal favorite, “It’s different here”.
Regardless of intent, there is a group of people that wants the term “social entrepreneur” to be used at their discretion, either to crown themselves or anoint others of their choosing. Thankfully, that’s not how this game is typically played. You are an entrepreneur, whether you sell arts and crafts out of your basement or launch a phone number consolidation service that’s acquired by Google. In Hollywood you are called an actor, whether your name is Joey Lawrence or Jack Nicholson. And to restate a joke I think works nicely here:

Question: What do you call the person who graduates at the bottom of his med school class?

Answer: Doctor

It’s not about who gets in, it’s about who stands out.

Proctology and Dentistry

Ultimately, I think we are focusing on the wrong part of this issue. I don’t care if more people are becoming social entrepreneurs, or, according to someone’s definition, falsely labeling themselves as such. I want more participation because I want greater scrutiny. Greater scrutiny (from credible institutions on the inside and the outside) will lead to greater transparency and more effective evaluation of companies in the sector overall.

I do not, however, think this filter should be applied on the front-end by determining who can be called a social entrepreneur. We should encourage broader adoption of the term-the broadest possible adoption of the term, actually-and then focus on finding a way to classify and evaluate social entrepreneurs according to outcomes.

I’m less concerned by how many water pumps a social entrepreneur is able to install, and more concerned about how many people benefit from that water pump-and for how long. I’m less concerned about how many microloans are distributed by a particular site and more concerned by how many of those loans are repaid-and then paid forward once again. I am less concerned about what defines a social entrepreneur, and more concerned about what defines a good social entrepreneur-and a great social enterprise.

The term “social entrepreneur” should not be a target endpoint, but a starting point for further classification and evolution  By focusing on the definition of a social entrepreneur instead of what makes a social entrepreneur effective and successful, we are misdirecting our energy and focusing on the wrong part of the issue.

We’ve got a toothache, but we’re asking a proctologist to start the diagnosis.

In the end…who cares!

Some people have tried to add quantifiable standards to the definition. Besides the fact that this doesn’t apply to any other category, I think it puts us on a slippery slope. Take a look at the two scenarios below. Which meets your definition of a “social entrepreneur”?

• Individual A: Starts a company that generates $1,000,000 in earned income, donates 10% to charitable causes, and reinvests the remaining 90% in it s employees, R&D, and general growth/expansion; or
• Individual C: Starts a company that generates $100,000 in earned income, donates 90% to charitable causes, reinvests the remaining 10% in its employees, R&D, and general growth/expansion, and supplements earned income activities with donations and grants to ensure sustainability.

Use whatever numeric frameworks you can think of to determine who qualifies as a social entrepreneur. The more variables you introduce, the more nuances and debates you spur. If you want to create an infinite debate so you always have something to talk about, shoot the moon. Just realize that most people won’t like talking to you. J

I think Professor Dees put it nicely. A social entrepreneur puts a social mission front and center. You can crystallize this point by asking the self-proclaimed “social entrepreneur” a few questions: Are you driven by a profit motive or an impact motive? Is your success contingent upon making money or making a difference? When push comes to shove, will you compromise the social impact or the financial gain? Such questions place the mission in perspective and make the appropriate classification of the company, apparent.

To answer my own question, I don’t think there’s enough information to determine whether either individual is a social entrepreneur (trick question-per the definition above, they haven’t shared their mission so we don’t know!)

But frankly, who cares! We’ve got more important things to think about. Such as understanding what kind of difference those two people are actually making…and whether or not they’re hiring.