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to begin with uh I I wonder if we can
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talk a little bit about the work that
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both of you have been doing with social
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entrepreneurs for the past 13 years and
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how that led to the writing of this book
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so Mac maybe you could start us off on
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that so the origin was uh we felt that
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there's so much need out there for
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people to uh to be helped and so much
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funding kind of being used Without
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Really accomplishing too much in the way
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of uh uh impact uh not because people
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weren't well meaning but because we
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needed a more managerial way to look at
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uh how how to provide provide this
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assistance to people and uh since we're
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in the entrepreneurship program uh one
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of the things that came to mind as we
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were talking about this is can we use
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entrepreneurship as a weapon to tackle
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social
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problems
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uh both of us feel that there needs to
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be practical things to tell people to do
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or suggest they do and uh we decided
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that one of the ways to really come up
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with practical stuff was to go actually
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go out and try to do it ourselves and uh
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and learn our way into what the
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methodologies would be to create
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sustainable uh organizations that don't
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create
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self dependence but rather create
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self-sufficiency and that was the basic
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theme and uh Jim uh was the first guy in
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to to to go out there and actually begin
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to try to do it uh working with an
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entrepreneur who uh wanted to develop uh
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a feeds program to raise
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chickens did you have anything to
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add yes I think
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the one of the key distinctions of the
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approach we took was the use of field
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research and
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uh social entrepreneurship back then
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wasn't what it is today so when we
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started out the conventional path there
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wasn't a lot to go and research in the
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form of you know casework and and uh
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other material and to Max Point uh one
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of the key outcomes of the research that
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we were looking for um was a framework a
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tool you know how do you go and do this
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and do it in such a way that uh
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that you increase your chances of
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success and and
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minimize uh the resources used in
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attempting to do what you're trying to
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do so uh we used field research to learn
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our way into the space and of course the
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book is the fruit of uh the last decade
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plus of field research right now one of
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the ideas that you really emphasized in
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the book is the idea of uh pressure
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testing uh the the the core idea of the
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social Enterprise why is it important
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for a social Enterprise uh to subject
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itself to this kind of a pressure
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test M you want to take this one first
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the theme if you think about it is that
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if there were an easy entrepreneurial
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solution to the problem it would have
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been developed
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already and so these are very very tough
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intractable problems and uh the
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characteristic feature of these types of
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Enterprises is huge amounts of
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uncertainty and so uh it's so easy to go
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charging down the road spending other
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people's
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resources uh only to find out that your
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idea wasn't well baked in the first
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place so the theme of the book is to
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give the wouldbe social
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entrepreneur a series of questions they
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need to ask themselves after going
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through what we call a a number of due
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diligence phases and if at the end of
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that particular due diligence phase you
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can't answer yes to most of those
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questions you fail the pressure test and
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you should abandon get out early and
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cheap and conserve those resources for
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something it might might
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work I think uh adding to what Max just
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said um the distinction we make by using
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the term pressure
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test is that we suggest in in in certain
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instances particularly where there's
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really high uncertainty or what we call
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neonian
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uncertainty that rather than going in
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trying to prove you're
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right it is sometimes smarter to go in
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and try and prove you're
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wrong provided you've structured your
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activity in the right Manner and that's
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the pressure testing of this so it's
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doing the due diligence up front and not
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trying to force your case into a highly
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uncertain environment but rather trying
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to find ways to show where you're wrong
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so that you can learn adapt redirect and
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build your Enterprise right now to go
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back m to the point that you raised a
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little earlier uh all startups face
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risks but you said that social
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Enterprises face a much greater degree
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of uncertainty uh than normal startups
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why why is that the case and what can be
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done about it well we use the term
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uncertainty in the context of an
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economist named Frank Wright and Frank
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Knight sorry and and what Frank said was
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uh that uh when you have a distribution
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of possible outcomes
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that's risk when you don't even know
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what the distribution is that's
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uncertainty and this is one of the
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problems with the startup you don't know
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whether there's going to be appropriate
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governance you don't know whether
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there's a market you don't know whether
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there's customers you don't know the
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prices you don't know what materials are
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going to cost and so on so there's just
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huge amounts of
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uncertainty and U truly uncertain you
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know you can't do anything because you
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just don't know what's going to happen
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and that's why we coin the phrase NE
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nighty and uncertainty where the levels
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of uncertainty are enormous let me
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uh suggest you that one of the features
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of what we're trying to do here is by
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putting the wouldbe social entrepreneur
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through their Paces by giving them what
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we call these tough love questions to to
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ask is that we driving the risk out so
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the uncertainty doesn't go away but if
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you're able to configure your your
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Enterprise in such a way that you you uh
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uh
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have driven out the risk then you can
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afford to take on un certain
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projects Jim uh whom was this book for
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uh it sounds like uh I mean you've
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written it for social entrepreneurs but
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would it be relevant to other people
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including conventional entrepreneurs
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absolutely M I think uh one we're we're
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reticent to make very very Broad and
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general claims of applicability but as
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we've as we've put the drafts of the
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book out to various uh communities we've
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got overwhelmingly positive responses
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with of course some some good
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commentary uh from other areas for
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example our school of social policy and
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practice the nonprofit students uh are
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finding ways to use this material so the
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nonprofit sector of course
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uh we believe to be
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uh a
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Market that or a sector of the economy
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as big as it is that might find this
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very useful so that's the one you know
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people in nonprofits trying to do more
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with less uh this book will help them do
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that the second Community are the the
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funding agencies foundations
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philanthropists uh the one of the big
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cries out there today is transparency so
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how do we know when these activities are
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doing what they claim they're doing
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uh how do we compare them one against
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another uh and you know let's face it
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nonprofits face the equivalent levels of
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comp competition for funding that a
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regular firm does and we think that this
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book will give them tools to communicate
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to their funding communities uh fairly
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strongly how it is they're doing what
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they're doing and how they're measuring
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the social impact that they're having so
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that's the second the third are
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corporations many many companies around
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the world today um are looking at social
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impact indices are getting measures on
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you know measured on Corporate social
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responsibility programs and a lot of the
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folks we spoken with in these companies
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said look this is not what we've
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typically done how do we do it
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responsibly you know they have
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stockholders they have stakeholders in
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The Firm out of the firm and we think
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this this will give them a set of tools
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to begin to think about what they're
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doing and do it in a manner that gives
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them uh greater impact with the
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resources that they dedicate to these
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programs um Mac how how does your model
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help social entrepreneurs move from
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uncertainty to risk or in other words
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from what is plausible to what is
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plannable the basic idea is to give them
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a series of exercises to go through and
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you start off really thoroughly uh
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identifying what the real problem is and
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how it's
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dispersed uh so for instance is is this
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problem something that's unique to a
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small territory or is that something
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that's you know across a whole
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continent uh make some decisions about
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who the initial Target segment would be
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that's going to benefit so you go for
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the segment that will benefit the most
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but will also adopt your offering the
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easiest then uh the next step is to
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start to think pragmatically about uh
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what is the act the competition today
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for you know the solution to this
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problem and often times that's simply
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doing nothing so people have existed in
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many cases for you know dozens if not
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hundreds of years uh suffering from
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malnutrition or hunger or lack of
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education and it's something that they
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used to so we have them have a look at
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what are you competing against Because
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unless you can come up with something
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that from the beneficiary's point of
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view is better than the nearest Al
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alternative you're wasting your time so
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we have a look at the market
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characteristics and we look at the
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competition we have a look at the
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finding the segment where you'll get the
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most traction as soon as possible and
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then begin to think a little bit about
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the uh uh politics of going into the
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space and uh what you need to do to make
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sure that you don't fall foul of the
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politics uh and so what you have is a
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systematic unfolding of more and more
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insight and what it's going to take to
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really do this and make this happen
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great uh Jim uh since you mentioned
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fieldwork uh was a big part of the way
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in which you worked on this book uh uh
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could you tell me a little bit about
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what some of what are some of the most
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common mistakes that you found social
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entrepreneurs make by not following the
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process that Mac just
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outlined it's a good question
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M um I
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think
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possibly at the top of that list
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is the formulation of a plan by a group
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of individuals with the best of
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intentions to go somewhere else in the
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world that they don't know a lot about
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they perhaps know a lot about the
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subject that they're attending to in the
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the part of the world they come from
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conceiving this plan you know on another
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continent for example going raising
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resources sometimes you know significant
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amounts of resources to go and do what
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they believe to be you know a wonderful
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uh uh
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activity and getting there and realizing
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that the way they envisaged it to work
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was never going to work and yet they've
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committed themselves to this unilateral
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course of action a business plan if you
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will
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and then spend 2 3 four 5 years
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floundering and learning uh why it's not
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going to work the way they they uh
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envisioned it would so that would be the
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top
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the the others that come to mind are
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uh cash flow management and we stress
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this in the book
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um as a result of a lot of these
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activities what we find is that there's
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even greater uncertain uncertainty with
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respect to cash flow uh in these types
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of environments this is not new to
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anybody in
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entrepreneurship but in these
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environments it can be even tougher to
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manage cash flows uh for all sorts of
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reasons
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regulatory uh availability of foreign
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exchange for example Etc so that would
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be the second one and then uh perhaps
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the third one to mention here and we
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have a list of them in the book of
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course is uh
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is the idea of
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redirection is how does one think about
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redirecting as you
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know the reality of of being on the
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ground
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unfolds and what we've tried to do in
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this book is attend to to that because
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we know it happens we've seen it in
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every single case we've been involved
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with is is this realization that your
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plan needs to change if you want to keep
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doing what you're doing but now you've
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got to redirect and that means getting
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all your stakeholders on board to
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redirect uh reconfiguring your your
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operations model sometimes reconfiguring
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your funding model so those would be the
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three that that are top of Mind thing to
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add I I'd rather than add rather sort of
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reinforce I think one of the big
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tragedies that is that people assemble a
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wonderful solution to a problem that
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they've not really studied hard enough
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for the for the context where it's going
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to be
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implemented uh and then they'll go over
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with all that money and all that energy
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and all that excitement and find that
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the so-called beneficiaries the
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recipients of this lares that they've
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put together is they just could care
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less or they're very very resistant and
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and so all that money which is
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desperately needed to help people who
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are in need just goes to waste because
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people have been
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thoughtless uh another big problem is
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that people go over and they set in
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motion this program and then find that
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they can't sustain it and then they have
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to walk away from what they set up in
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the first place and uh a specific
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example here was uh a case which was
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identified by one of the authors that we
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use and he went over to East
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Africa uh and while he was there he ran
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into a group of people who would were
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feeding children and what had happened
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is that mothers had stopped nursing
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their children and fed the FED these
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children with what they they called wet
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wet feed and uh they ran out of funds
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and and so what they did now is they
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just packed up their tents and went home
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and all those women who would have been
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able to continue feeding their children
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by
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breastfeeding uh now could no longer do
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it they were out of lactation and so all
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these kids are under enormous stress
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because the the money's not there the
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Project's not there nobody's really
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thought through what the uh what the
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outcome would be in the event of failure
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so you create dependence and then you
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fail and so one of the big learnings
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that we got out of this program in
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observing what was happening over in
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Africa and uh uh other countries is uh
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the whole idea that uh if you have to
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leave think about having to leave the
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project before you even start it think
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about how if you have to leave you you
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leave behind what we call a light
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footprint so that if you you have to go
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you've had minimal damage on the people
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who's who are supposed to be the
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beneficiaries of what you're doing and
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and so to end you know I I I
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wonder what would you like knowledge at
00:17:11
warton's readers and viewers to do uh to
00:17:14
participate in your project uh so that
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you you can move it on to the next
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phase Jim what do you want when did you
00:17:23
go
00:17:24
you firstly to read it um we
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we've taken a slightly different
00:17:30
approach in the publication of this book
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as you know um there's this
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ebook uh that's going out pre-launch of
00:17:38
the full book and what we're trying to
00:17:41
do is use it you know in the spirit of
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uh of of the approach of the book you
00:17:47
know start small uh and and change fast
00:17:52
is we'd like to get responses from
00:17:55
readers out there and we're going to use
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the those not every response but we're
00:18:00
going to use those
00:18:02
responses
00:18:04
to tweak if you will the balance of the
00:18:07
book uh pre final
00:18:10
publication um in uh October November
00:18:12
this year and the third thing is spread
00:18:15
the
00:18:16
word uh you know if if any of our
00:18:21
readers uh are in the space you know use
00:18:24
the book to spread the word and if any
00:18:25
of our readers know people in the space
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uh please get the book out there um we
00:18:31
think it'll be useful and everybody
00:18:33
we've tested it with has found it very
00:18:35
very useful in the field nonprofit or
00:18:38
for-profit so hopefully our readers can
00:18:41
help us do that Ma any final words yeah
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you know the basic strategy at the
00:18:46
moment is is our ebooks a free book we
00:18:50
want to we want to give anybody access
00:18:52
to it if they want to download the first
00:18:54
piece which is the due diligence piece
00:18:56
which will help people really think
00:18:58
through with want to do something that's
00:19:00
going to do some good out there and
00:19:01
increasingly people want to do that
00:19:03
particularly the younger
00:19:05
generation so uh the idea is that if you
00:19:09
if you know of anybody who might be
00:19:12
interested just send them the the uh the
00:19:14
address the the URL and they can
00:19:16
download it it's theirs we don't want to
00:19:19
make money out of this uh what we want
00:19:21
to do is is is have impact and
00:19:25
uh you know anybody who you know know
00:19:29
who's making charitable
00:19:31
contributions and may be a little
00:19:34
concerned about how well those
00:19:35
contributions are being spent and
00:19:38
dispersed uh send them the the ebook and
00:19:40
they can have a look at it because if
00:19:43
I'm I mean I make donations uh I want to
00:19:46
be able to think that my donations are
00:19:48
being spent well rather than you know
00:19:51
just spent uh squandered and uh the uh
00:19:56
the idea would be that anybody who's
00:19:58
making donations today might want to
00:19:59
have a look at it and then challenge the
00:20:02
people to whom they're making the
00:20:03
donations to see whether they're in fact
00:20:05
following the disciplines we suggest uh
00:20:07
to me this is not a popularity contest
00:20:10
you know we're not there to be popular
00:20:12
we're there to have
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impact Mac Jim thank you so much for
00:20:16
speaking with knowledge at Wharton no
00:20:18
thank
00:20:19
you it was good to chat to you
00:20:26
[Music]
