Most social businesses share the ultimate goal of  solving global poverty by fixing various underlying development issues.   Each organization is a piece of the puzzle, but how do we know whether social businesses are having any success as a whole?  In his book “Small Change: Why business won’t save the world”, Michael Edwards argues that business is not the answer (as described on Social Edge here).  Though I believe that Edwards is wrong (Full disclosure: I haven’t read the book yet, but am eager to report back once I do), how can we demonstrate that social business is the answer to the problems of the world’s poorest?

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BOP markets break our traditional ways of thinking and acting. This might be their biggest allure and challenge alike. Unless we are willing to discard our biases, this opportunity will remain invisible and “unattractive”

- C.K. Prahalad
“The Fortune at the Bottom of the Pyramid”

I often find myself in the middle of one of the inspiring anecdotes that are found in Prahalad’s book (and every other Social Enterprise book) thinking “wait, this can’t be right.” How is it possible, for example, that we have a business model that provides products or services with (in some cases) higher quality, more intimate specifications, and a lower price, all the while working in a hostile environment? [Hostile environments, according to Prahalad, are markets with a "low quality of the infrastructure, such as electricity (e.g., wide fluctuations in voltage, blackouts, and brownouts) and water (e.g., particulate, bacterial, and viral pollution)."] Why haven’t we thought of such solutions already?

It’s the approach. It’s the approach that traditional business models use to analyze problems and develop solutions. It’s the approach that is used to assess companies and their value. Its even the approach that the casual person has when learning about companies.

The constraints imposed on finding a solution at the bottom of the pyramid are typically more restricting than those of a developed market. Traditionally, when facing a constraint with no clear solution nearby, the result is more often then not to pass a higher cost on to the customer. Yet this is rarely, if ever, a viable solution to problems at the bottom of the pyramid. This is when you really see the creative innovation that develops from problem solvers. The rules of the game are tossed out and you start with a clean slate. You can’t bring the same parameters into developing a better quality, lower priced, and sometimes more robust system. This zero-base approach has implications through to the metrics used to evaluate companies. The metrics that are currently used to assess companies don’t provide the same insight into social enterprise companies. Does it involve number of people helped? What, then, does “helped” really mean? How do you quantify it? Can you? This issue doesn’t yet have an agreed-upon solution, and is a hot topic within the social enterprise community.

One of the ways in which I’ve been taught to approach business and the associated emotional attachment that we sometimes get with our work is to view it as a game. Work hard, compete hard and try to win, but at the end of the day, it’s just a game and you can’t let it ruin your life if you have a bad day. I think the interesting area to focus on from this simile is that there exists an underlying “point” to the game. Words like profit, revenue, and stock price might come to mind when thinking of what the “point” or “objective” of a traditional business is. This is where social enterprise begins to break the mold. Profits and stock prices aren’t purely (if at all) the focus here. New metrics need to be able to assess how well organizations are carrying out their mission to serve the bottom of the pyramid.

These are just a couple of ways in which we see traditional business problem solving methods and evaluation metrics questioned. One of the most important takeaways I see to this ongoing discussion is that we must challenge our current mindset not to eliminate solutions simply because there are too many constraints. Continue to be innovative; don’t be afraid to create something new; throw away the framework that we use to assess a solution for one that is more robust and accurate. By accepting this open approach and allowing long-standing assumptions to be tested, it provides a vast number of opportunities in markets that are normally avoided simply because they don’t fit a model.

- Chris