Overview

Ashoka is a leading organization in the field of social entrepreneurship. Social entrepreneurs are practical visionaries who possess qualities traditionally associated with leading business entrepreneurs - vision, innovation, determination and long-term commitment - but are committed to systemic social change in their field. Ashoka has invested in innovators and entrepreneurs all over the world. Social entrepreneurs are identified and supported by Ashoka when they are still "emerging" – typically the broader community, the media and other sectors still have not heard of them. Once selected, Ashoka welcomes these "Ashoka Fellows" into an international network consisting of more than 1300 members from all over the world.

In addition to building a strong network of social entrepreneurs, Ashoka has found that enormous value is created when ideas, skills and resources are transferred between the social and business sectors. These sectors, however, need to interact more effectively to realize the greatest mutual benefit. To this end, Ashoka has developed centers and programs to facilitate and improve these connections. In this article I will write about some of Ashoka’s experiences in building bridges between the private and social sectors, and about another initiative led by Swiss business entrepreneur Stephan Schmidheiny. Stephan is one of Ashoka’s most strategic partners, whose support and collaboration was key to Ashoka’s expansion in Latin America, the United States and Canada.

The Business-Social Bridge

Bill Drayton, a former McKinsey & Company consultant and assistant administrator at the Environmental Protection Agency, founded Ashoka in 1981. Over the last two decades, Ashoka has come to realize that social entrepreneurs are identical to their business counterparts – filled with vision, creativity and determination – except they apply their talents to social challenges, such as hunger, poverty, the environment, health, and housing – virtually every dimension of human need. Now, in the 21st century, we are in the midst of a rare, fundamental shift in the architecture of a significant part of society – the social (or citizen) sector. Led by social entrepreneurs, the citizen sector is undergoing a massive transformation from relative squalor and ineffectiveness to entrepreneurship and competition. These are the same forces that have propelled the business sector toward greater innovation and productivity, and are the core catalysts of today’s most successful economies. Increasingly, the citizen sector is operating on the same principles as the business sector – an ongoing cycle of entrepreneurship, competition, and productivity. As the number of citizen groups multiplies in a given area, they become progressively interconnected and increasingly competitive. This is sparking many of the innovations needed to transform social needs into viable, thriving markets.

Strategic Cross-Sector Partnerships

Two of Ashoka’s most successful efforts in building bridges between the private and social sectors, are our strategic partnerships with McKinsey & Company, established in 1996 and our partnership with Hill & Knowlton, established in 2001. For Ashoka, certain key characteristics define strategic partnerships. These relationships must be long term, be with global organizations (or at least active in most countries where Ashoka is operating), and share common values. The partnership must be beneficial to both parties and to their various stakeholders. The McKinsey and Hill & Knowlton partnerships are replicated in various countries, and involve transference of knowledge and technical support in the areas of management, public relations and social entrepreneurship.

Developing Naturally Beneficial Relationships

Ashoka has partnered with McKinsey and Hill & Knowlton for the purpose of bringing management, communications and marketing skills to leverage the development of social entrepreneurs. In addition to this clear social benefit, McKinsey and Hill & Knowlton are also giving their consultants and collaborators the opportunity to engage in community activities and to develop new models, which, although specific to the social area, may also find application in their day-to-day activities with clients.

In the partnerships between companies and non-profit organizations, joint activities are essential to the health of the partnership. It is critical that planning, implementation and evaluation are carried out with the involvement of both parties. More importantly, each organization should take specific responsibility for part of these activities.

Ashoka has observed that these cross-sector partnerships take on a strategic role - with both companies working to incorporate socially responsible business practices into the fabric of the organization, and civil society organizations seeking to increase their social impact. Both parties must realize that the relationship offers mutual benefits – sharing of knowledge, methodologies and techniques, and maximizing impact in the social, human resources and financial arenas. Traditional, one-way corporate philanthropy is not adequate to sustain a true strategic partnership.

Joint Business-Social Ventures

The business and social sectors have much to learn from each other – and can best do so by finding effective ways to experiment and collaborate together. For example, working jointly, business and social organizations can find ways to deliver cheaper, better products and services to huge numbers of low-income people. Working together can also build collaborative values with a stronger and broader social impact. Reaching out to all consumers and producers requires that businesses and citizen groups develop a new vision for conceiving and organizing work. From designing products and services to processing raw materials, to transforming them into finished products and delivering them to consumers, innovation at each step of the value chain can create new and profitable market opportunities. Through joint ventures, business and social entrepreneurs must go to work to map out and implement hybrid value chains designed specifically to create new value for all partners and better serve all people.

Cemex: Developing "Assets Now"

The first of such joint ventures has been developed in Mexico with Cemex, a global cement and building products company, through identifying new ways to deliver housing products and services to the poor. When asked if most poor people in urban slums can afford to build a home, traditional housing sector businesses and financial institutions have responded with a resounding "no." However, many of the poor families find ways to build their homes, even if it takes decades to complete them. They pay top prices for building materials, tend to hire untrained masons who use poor building techniques, and more often than not have to pay cash for all of it. Just as commercial banks used to claim, prior to the micro-lending revolution, that the poor were not bankable, manufacturers and distributors of building materials behave as if this is a market not worth addressing. Cemex has emerged as an exception in the industry with an alternative view toward the viability of the low-income sector. Through its Assets Now program ("Patrimonio Hoy"), Cemex is working to develop and deliver affordable products and services to the poor living in the slums of Mexican cities.

"Assets Now" in Action

Since it was founded four years ago, Patrimonio Hoy has given 20,000 families in Mexico a way to finance and build better housing in a timely manner. The average do-it-yourself homebuilder in Mexico spends US$1,527 and takes four years to build an average size room of 100-square-feet. But participants in Patrimonio Hoy can build the same size room, with better quality, in less time –1.5 years – and at two-thirds the cost (US$1,038, which includes the cost of materials, technical assistance from an engineer or an architect, and Patrimonio Hoy club fees).

As a result, customers of Patrimonio Hoy are able to build each new room at a faster pace with better quality and 20% lower costs than those using the traditional system. In only two years, Patrimonio Hoy is already serving 30,000 families. In contrast, the subsidized government program is delivering only 36,000 new homes annually. In a country of 100 million people, 40% of whom live in poverty, this represents a tiny fraction of the potential market for housing.

Business-Social Ventures: Onward and Upward

Ashoka is now working with Cemex in a partnership that aims initially to identify ways in which Cemex can leverage social distribution networks to accelerate the expansion of Patrimonio Hoy. In 2003, the partnership is focusing on implementing a pilot program in three different locations in Mexico City. From this experience, Patrimonio Hoy and Ashoka Social Entrepreneurs will be able to design, test and validate a set of models for low-income markets that in the coming years will create new value for hundreds of thousands of low-income clients in Mexico City alone.

Vision and Values: The Next Level of CSR

Although over the last two decades there have been advances in the establishment of bridges between business leaders and social entrepreneurs, and between companies and citizen sector organizations, the same cannot be said of social responsibility as the way to integrate the vision and values between these sectors. There is much more to discover, invent and test in the coming years. However, one concrete source of inspiration has been international business entrepreneur Stephan Schmidheiny, who has just developed a new way of thinking about and managing the integration of business and society. His relationship with Ashoka started almost ten years ago, on a flight over the Atlantic Ocean, when he read an article about how Ashoka invests in social entrepreneurs. He has since become a long-term strategic partner in various dimensions of Ashoka’s growth.

Grupo Nuevo: Bringing CSR to Life

Schmidheiny is the architect and creator of Grupo Nueva, a company that produces piping systems for drinking water and sewage, irrigation systems, housing construction materials and wood and agricultural products. The company employs 13,000 people, and has commercial operations in 25 countries and has a particular focus on Latin America. Corporate social responsibility and sustainable development are key elements of Grupo Nueva’s strategy.

For more than two decades, Schmidheiny has sought to implement a social and sustainable development approach in all that he does. The vision of Grupo Nueva includes this approach, in stating that they wish "to be recognized as a leading industrial group in Latin America, operating in a framework of ethics, eco-efficiency, and social responsibility, that generates economic value and improves our neighbors’ and our region’s quality of life."

Avina: Formulating Essential Partnerships

Learning of Ashoka’s existence 10 years ago inspired Schmidheiny to create his own organization, Avina, which invests in social entrepreneurs in Latin America and the Iberian Peninsula. Its objective is to create partnerships in Latin America with pioneering individuals from society and the business world, and to support them in their sustainable development efforts. Stephan Schmidheiny’s personal objective was to seek out initiatives committed to equality of opportunity, democratic processes, education, capacity-building programs, preservation of natural resources and eco-efficiency.

But his key innovation was yet to come, and finally arrived with a model that promises to revolutionize the way business is done. Like any other restless soul, Schmidheiny was not content with managing his businesses based on social responsibility and sustainable development, while creating his Foundation as a parallel but separate activity. It would be necessary to combine the two. His desire and action plan is to develop a close working relationship between business and social activities. To this end, he created a new group called VIVA – Vision and Values.

VIVA: Balancing Logical Objectives for the Future

VIVA pursues understanding and mutual respect between business logic, which tends to be vertical and linear with a fast temporal sequence, and social logic, which is horizontal and interrelated, with a long-term time frame. VIVA is already inspiring the two organizations – Grupo Nueva and the Avina Foundation – in their strategic orientation, at the same time that it supervises their behavior and efficiency and takes over responsibility as owner.

One of the more interesting pieces of Schmidheiny’s jigsaw puzzle is the fact that he will no longer be the beneficiary of Grupo Nueva’s dividends - VIVA will. VIVA will then turn its dividends over to Avina. In this way, Grupo Nueva’s profits will not only benefit shareholders, but also society, as dividends are reinvested in the social arena. This is clearly a new and concrete solution that should inspire business people who are seeking to align social responsibility with traditional business objectives.

Ashoka continues to collaborate with Stephan Schmidheiny and his companies, believes strongly in the union of vision and values through VIVA, and is confident that this represents a new model for building a bridge between the private and social sectors. Ashoka is committed to sharing this concept and practice with all of our partners who seek a socially responsible approach to business.

Conclusion

Examples like those highlighted here, show that it is not sufficient or sustainable for organizations to treat social responsibility as a discrete part of business strategy. The world and its consumers are now demanding a more sophisticated response, one where social responsibility is an integrated part of the business and unable to be separated from the realization of commercial objectives. It starts with an individual and personal decision that is made, one that is capable of inspiring the entire organization and all of its stakeholders. This long-term approach and commitment to creating a sustainable, responsible organization is quickly becoming the only solution for viable enterprises.