Does profit corrupt Social Entrepreneurship? Definite maybe
On Tuesday, we introduced our Ethics module with a guest lecturer - one of our former students, Aarish Rojiani. I met Aarish as a student in the class during his first year at Brown and we often met during office hours to discuss questions raised during the class. During these meetings, Aarish educated me about the prison industrial complex - and his cynicism for many of the investors in private prisons who were also lead investors in pay-for-success models designed to reduce recidivism. While I was excited about these new funding approaches, I was saddened by the irony.
At the end of Tuesday’s class, one of the students asked if the profit motive in hybrid organizations necessarily created conflict between the social goals of the organization and the profit / financial sustainability goals. I quickly jumped in with an advertisement for the module on business models - and promised that this question would be explored in greater detail during that module. Aarish pushed back because he interpreted the question through the lens of the individual’s motivations to enrich themselves - and he felt that mixing mission and personal profit motives is difficult to navigate and more so to justify.
As we walked back to the office, we continued the conversation - diving deeper into the motives, behavior, and outcomes. My conversations with Aarish challenge me - and often lead to new ways of thinking to help me understand and describe the dynamics of systems, communities and change.
D.light Designs was created from the Stanford d.school class “Design for Extreme Affordability” in 2006. Recent innovations in LED technology had made it possible to offer solar powered lanterns at lower cost than buying fuel for kerosene lanterns. The team saw an opportunity to solve many problems caused by fuel-powered lighting - health impact from smoke in the home; improved lighting for students to do their homework, and more disposable income by eliminating kerosene purchases.
In this case the economics of kerosene vs solar led lights keep the system in check. D.light does not need to lower prices to expand access - in fact, they should keep prices high enough to create sufficient profits to attract company to fuel their growth. Increased capital = increased growth = increased impact. And if the company (managers and owners) gets greedy, the customers will revert to kerosene.
(This argument does not consider impact on this solution from fluctuations - deliberate or not - in kerosene prices)
How would we think about a different situation where the social goals and financial goals need to be kept in balance?
In our class we will explore this question in depth - with cases like Tom’s Shoes, Warby Parker and Embrace. In each of these we need to consider the intentions of the founder & and the org/company created to realize their vision vs the lenses to consider ethics of social entrepreneurship (power & privilege, transparency, participation and labor relations) and the structure and governance of the entity with regards to accountability to shareholders via stakeholders.
I love hard questions from my students. They keep this topic alive - and validate the pedagogy we've used within the class of constant alternating between our theory / frameworks and the messiness of their implementations in the word.