Entrepreneurship and the Third Sector

Jillian GordonHunter Centre for Entrepreneurship

So what is entrepreneurship and why does it matter to the third sector?

Overview

Definitions of Entrepreneurship and Social Entrepreneurship

Creativity & Innovation

Opportunity identification

Resources

How does this relate to the Third Sector?• Social Entrepreneurs and Social Enterprise• Social Innovation- how to deliver services and meet the social needs

of end beneficiary• Need as Opportunity• Identifying and Accessing Resources – The challenge

Contemporary definitions

Distinguish between ‘enterprise’ and ‘entrepreneurship’– Enterprise: using skills such as

initiative, independence, creativity, problem-solving, identifying and working on opportunities, leadership and acting resourcefully to apply creative ideas and innovations to practical situations to effect change

continued

• Classic view of entrepreneurship: acting in an enterprising way to identify and exploit an opportunity by assembling the resources to start a new organisation.

• Contemporary views of entrepreneurship emphasise opportunity and action – entrepreneurship is a process that involves the application of creative thinking and enterprising skills to identify opportunities and to develop new ideas and concepts (innovative products and services) and exploit them through new venture creation.

What Do Entrepreneurs Do?

– “Create and build something from practically nothing. It is initiating, doing, achieving and building an enterprise or organisation, rather than just watching, analysing or describing one. It is the knack of sensing an opportunity where others see chaos, contradiction and confusion.” (J Timmons)

The Social Entrepreneur

. Social entrepreneur

– Creating Social Value is at the centre of being a social entrepreneur.

– “The use of entrepreneurial behaviour for social rather than profit objectives.” (Burns)

– “A business that is established for a social purpose not, primarily, to maximise financial returns to their investors” (Bridge et al)

Various methods of operation

• Direct provision of services: e.g. childcare, personal care, education and training.

• Production and sale of goods – which strive to meet unmet needs• Employment provision, training and skill development: seeking to

enhance employability and skills either directly or indirectly through their commercial activities: • (i) social firms – employment for people excluded from the

workforce; • (ii) intermediate labour organisation – a bridge for social

excluded people to get into the labour market

.

Importance of social entrepreneurs

• “… the distribution of wealth has been steadily polarising over the last couple of generations. The impact of this process is that poorer segments of society need a major infusion of new talent and new initiatives. The old strategies are no longer sufficient. Nations need social entrepreneurs as much as they need new captains of industry and dynamic civil servants” (Legge and Hindle)

• A shrinking state sector requires an increasing social economy to deal with social issues.

Challenges

• Environment is complex

• Challenge of achieving financial sustainability whilst remaining true to the social orientation of your organisation.

• Most third sector organisation have a portfolio of funding

• It is competitive funding environment.

How do you stand apart from the other organisations who are active within your area and who are chasing the same funding?

Entrepreneurial Qualities

• Dynamism

• Efficiency

• Innovativeness

• High Performance

• Leadership

• Economic Sustainability

Creativity

Being open minded to new ideas is essential in any venture whether it is commercial or social.

BUT

Generating ideas does not necessitate that there is an opportunity worth exploiting in an economic or social sense.

However, creativity and being open minded allows you to explore and consider alternative ways of working and / or delivering a service or product that meets a need.

Innovation

Creativity can lead to Innovation.

• Innovation is the practical application of creativity.• Innovation can lead to technological change and new product

development• Innovation often involves doing new things or doing established

things in a new way- process innovation.• Innovation is rarely about invention

An Example

Sinclair C5 Inventive, not innovative!

Ford : innovative not inventive!

Why Innovate?

Organisations (& therefore economies) with the ability to innovation have a distinct advantage in local, regional, national & global competitiveness.

A lack of innovation can lead to stagnation, and challenge the ultimate survival of the business: if you don’t innovate someone else will!

Innovation & the 3rd Sector

Dispelling the Myth

Innovation is not new to the 3rd sector.

Robert Owen, Carnegie, The Red Cross

Charity Champions pre-paid Maestro card, RePaint Scotland

On-line methods of fundraising: justgiving.com & rogavi.com

EcoEvents (carbon-neutral event management service) & the Natural Burial Company (carbon-neutral funerals)

Most recently, many examples of successful: on-line campaigning, protests & event planning (also a challenge for many ‘traditional’ 3rd sector organisations).

Why is Innovation currently so relevant for the ‘sector’?

Increasing competition

Indications that innovative activity in

the ‘sector’ has declined by 50% in

last decade.

Scarce resources,

funding restrictions &

perceived lack of autonomy.

Different perceptions of innovation

Of course, all within the context of a challenging

global, economy.

It’s not all doom and gloom

Harness emerging innovations: Web 2.0

Sustainability, environmentalism & ‘eco-guilt’.

Changing consumers: emergence of the ‘tribe’.

Public & private interest in and support for the ‘3rd sector’.

Emerging culture of democracy & Collaboration (impact of the web?)

Positive impact of recession: changing values, expectations & outlook?

Some Interesting Trends

Opportunity Identification

Commercial Entrepreneurship Social Entrepreneurship

Breakthroughs Serving a long standing social need more effectively through innovative approaches

New Needs Recognised social need, demand or market failure

Large or growing market size

How has opportunity identification impact on the third sector?

• Experimentation with revenue generating enterprises.• Introducing fee for service income• Establishing social purpose ventures- that are also economic

enterprises

The scope for pursuing opportunities is wide Organisations in the social sector can:

• Pursue ventures that are economically viable• Pursue ventures that requires subsidy

• Social needs (opportunities) often outstrip the resources available to address them.

• One challenge is that often the end beneficiary is unable or unwilling to pay for the costs of the good or service.

Resources- sometimes the biggest challenge • Acting on opportunities often requires the investment of scare

resources – this is just as relevant in commercial entrepreneurship.

• However, third sector organisations are also focusing on how to maximise the social return, how to create social value, how your organisation can meet the social need.

BUT

Maybe it is of value to think more entrepreneuriallyGive consideration to:

• Customers• Suppliers• Entry Barriers• Substitutes• Rivalry• Making it add up

Resources- what are your assets?

• Intellectual Capital- Knowledge (domain), skills (management

& leadership) and expertise ( track record of high performance and efficiency)

• Social Capital - Contacts and Networks

• Symbolic Capital- The reputation of your organisation, your status in the community.

• Economic capital- £££ what income generating activities can you engage in, what institutions can you approach to access money

Resources- your assets continued

People are important!• Developing a network of supporters .

– How can you do this ?

• Being able to communicate you’re the impact of your organisation, your social mission and how you achieve this.

• Can you become skilled at managing relationships?

Leveraging Resources

Becomes more and more important in organisations ability to:

• Be creative but be innovative!• Maximise opportunities• Maximise Resources• Maximise social return• Create a sustainable business model.

• Continue to create social value and making that difference…

Finally…..

Entrepreneurship Matters