Saturday, December 25, 2010

A Social Entrepreneurship Strategy

Here's a mini-paper I wrote for a class on social entrepreneurship, November 5, 2009.  This was a course in the school of social work but was taught by a business school professor.

Assignment:  Present a scale strategy or an innovative assessment tool being implemented by a social enterprise you have researched or with which you are familiar.

As a bank, Grameen Bank grows itself through a branching strategy.  As an enterprise seeking to maximize its positive social impacts, however, Grameen grows itself through a dissemination strategy.  Thus its social impact has spread worldwide, even as its branches are largely limited to Bangladesh.

Grameen’s branching strategy combines centralized monitoring with decentralized managerial authority.  This strategy appears to be moving in the direction of branchless banking, at least in some contexts, as Grameen follows the lead of other branchless providers.

Such innovations notwithstanding, Grameen qua bank has emphatically not sought growth, typically conceived, as measured by either market share or enhanced (never mind maximized) profits from branch or branchless operations.  Hence, the Grameen approach to banking has provoked serious concerns about sustainability, both in its own original manifestation of its microfinance model and in subsequent adoptions of that model elsewhere.

Grameen’s fame comes, not from its profitability, but from its social impacts.  Treating its banking operation within Bangladesh as a proof-of-concept model with worldwide applicabil­ity, Grameen’s founder Muhammed Yunus cites its poverty-reduction efficacy as the much preferred alternative to the for-profit version of microlending epitomized by Banco Comparta­mos in Mexico.  For purposes of sustainability, though, Compartamos has the upper hand.

Yunus’s concern appears to be that the altruistic intent of his concept has been successfully employed for purposes of exploiting the very persons whom he sought to assist.  This is precisely what one might predict from the observation that a dissemination strategy yields little control over the ways in which a concept might be used.

It is possible, however, that the problem for Yunus lies, not in the distortion of the original “pure” Grameen concept, but rather in the ways in which Compartamos has addressed certain weaknesses in that concept.  In addition to the problem of sustainability (above), there is an obvious problem of rapidity, in the sense that an organization like Compartamos can produce nearly immediate results of some arguable merit while Grameen-style microlending seems to yield results very slowly.  From that perspective, there appears to have been, in effect, a trust-but-verify process, where the original, disseminated idea has prima facie plausibility and some demonstrated efficacy, but is subsequently refined (and perhaps simultaneously sullied) by a more control-oriented (and profit-verified) implementation that does depend upon a sustainable affiliation or branching scheme.