The Good Social Business

February 16, 2012 • Blog, Business, nonprofit, Philanthropy & Giving • by
0 Comments

Earlier this week I wrote the post, Why I Don’t Like Your Social Business. It turned into one of my most shared and read posts of the last year, in part because I think it struck a nerve with many social entrepreneurs. Many know and can sense that the field has been inundated with bad social businesses, which I rant against in the post.

Today though I’d like to talk about the good social business and the parts necessary for creating one.

1) The best social business is a business!

This might seem odd but I think many social entrepreneurs are people who would have generally joined or started nonprofits but they see this trend and the potential for a continuous and sustainable revenue source, so they start a business. This, in my opinion, is backwards. I think the best social businesses are actually started by people who start businesses but they stumble upon a business model with positive social benefits.

2) The best social business doesn’t rely on charity.

You would think that would be covered by actually being a business, but a surprising number of businesses ask people for investment without giving them upside, return, or equity. This makes the investment a charitable gift without a tax deduction. This creates an environment where bad businesses last too long. In the normal market if you aren’t making money and have no hope of making money, you shut down. The charitable action in the social business world just prolongs the inevitable.

3) The best social business aligns social and financial returns.

This is the crux of the matter. Businesses that are built around giving a portion of their profit or each sale away are really just glorified corporate giving strategies. I think a social business is one that has found a way to align the social and financial returns. If your investors aren’t crying for you to increase social returns so they see an increase in financial ones then I don’t think you have created a social business. If you feel a tension between the financial bottom line and the social bottom line then you have not truly aligned the two.

If you are able to accomplish these three goals I think you’ve probably created a pretty awesome social enterprise. It will be sustainable, impactful, and lasting. If you are meeting a consumer need while addressing a social ill you have truly created something revolutionary. I am sure that many people will disagree with my definition here but I think that if you have not accomplished these three things you are probably just a nonprofit in disguise and you should embrace it already and give your donors the benefit of a tax deduction. You can still sell things as a nonprofit and operate in much the same way as a business.

I think social businesses can be powerful agents of social change but they cannot address every problem and it has become too large of a fad and people are being taken advantage of and good is not truly being accomplished. As I always say, bring a skeptical eye to the social business world and ask yourself are they really a business and are they really accomplishing anything good?

Utilizing Data

February 1, 2012 • Blog, Measurement & Evaluation • by
0 Comments

Many of the clients I work with come to me because they know that data is important but have no idea where to begin or how to utilize it. Last week on the Harvard Business Review blog there was a post entitled Make Data Work Throughout Your Organization that I thought presented a great case for data and a framework for implementation.

The post began,

Data-driven managers, departments, and organizations have always enjoyed distinct advantages. The data-driven have crafted the best strategies, uncovered wholly new markets, and kept operational costs low. Today, advances in predictive analytics and the potential for big data portend even greater opportunity. Count us among the biggest enthusiasts for continual progress in these and related areas.

Indeed, we think every organization must develop and execute an aggressive plan to put data to work. But the vast majority readily acknowledge themselves as “data rich and information poor.” In these organizations, too few people are involved, too much data can’t be trusted, and too much data lies fallow in vast, unexamined warehouses.

The authors then go on to provide four steps for increasing the insights gained from data; improve data quality, build “data to discovery to dollars” processes, invest in people, and strive to empower with data. I think this is great framework for thinking about how to increase the insights gained from the data you have access too.

That I think is the most important thing in the data field. Its not about numbers, its about what the numbers tell you. Data is just a tool to better understand your organization, compete in your industry, and prepare for the future. I truly do believe that data offers a competitive advantage, which is why I’m so invested in it myself.

If your organization would like to learn more about how it can address its most difficult problems with data, don’t hesitate to contact me.

The Data Revolution

January 20, 2012 • Blog, Research • by
0 Comments

Everyday you interact with algorithms. They help you decide what movie to rent or book to buy. They keep traffic flowing on the highway. They cause economies to crash and thrive. Algorithms are everywhere. This rise in algorithmic use is due to data inundation. Today we can obtain, track, and store more data than at any other point in human history. I can buy a terabyte of data storage for around $100 which stores billions of pieces of data.

Our future will be determined by our ability to mine this data.

It’s already shown itself to be profitable in organizations as disparate as Google and the Oakland A’s. You look at today’s most successful organizations and all are trying to “mine” data to gain insights regarding how to better serve customers, increase the rate of giving in donor campaigns, even predict the likelihood of a North Korean nuclear attack.

I hold the belief that hidden somewhere in the data are secret insights. I believe that we can build better businesses, design more impactful nonprofits, and create a better government with those data driven insights. I believe that data saves lives and improves futures. It just needs to be tapped.

Last week I finally got around to watching Moneyball, the movie about an econometrician turned baseball team manager. It’s a classic example of how data can transform an organization. I’m currently reading Steve Levy’s In The Plex about the development of Google and, at its core, Google is about using data to transform our world.

One interesting website, Kaggle, is a venue for organizations to get help analyzing their data by posting problems and data sets and offering prizes. The website has hosted competitions from NASA, Microsoft, and Ford among others.

I believe that data can offer solutions to some of our most complex and intractable solutions. I work with organizations that want to get at complex questions of impact, efficiency, and operations. If you are interested in learning more about how data driven insights can shape your organization, contact me.

The data revolution is not going away. There are battles to be fought around the ethics of data collection, how much of our lives should be automated by algorithms, and we will push the limits of our current understandings of econometrics and statistics. At the end of the day though, if you want to succeed in tomorrow’s world, you need to harness today’s data.

Generation Sell!

January 19, 2012 • Blog, Business, Ideas • by
0 Comments

You see them everywhere. They plug hunt in coffee shops. They spam your Facebook wall with their wares. When you ask them what they do they rattle off 3 job titles that you’ve never heard of. Curator. Nerd. Visioneer.

Welcome to generation sell.

I’ve done a lot of thinking these last few months about this new phenomenon. Many of my peers, myself included, have started our own businesses. We view ourselves as the product and sell it off in pieces as comfortably as the whole. We see no need to join hierarchical organizations where managers spend a career to get to the top when we know that by the time we get to the top we could be irrelevant in our fast-paced, digital technology driven world.We comfortably slide in and out of organizations as needed. We seem to have an entrepreneurial drive unmatched by previous generations. The technology that made it possible for us to create more than ever before was followed by systems to sell our creations. So you have the barista/consultant/Etsy designer. The mobile app entrepreneur/chef/stay-at-home mom. The design freelancer/nonprofit Executive Director.

It’s been interesting to find myself a part of this new movement. I definitely view myself as a product that I sell to organizations. Sometimes as a consultant, sometimes an employee. I am the organization that I need to manage and so I focus on gaining new skills and continuing my education. It’s not that I am opposed to full-time work at all, if an interesting opportunity came along I would jump at it, but I am just as comfortable in an entrepreneurial venture as an established company. That is what I find unique about my peers. Entrepreneurialism is hard-wired into us and we’ll sell everything from our photographs to our time to our careers.

Welcome to generation sell.

*I’m indebted to William Deresiewicz who first used the term generation sell first, as far as I can tell, in his November 13, 2011 op-ed. Also check out Design Your Own Profession on the Harvard Business Review blog for further reading.

What I Learned from Foie Gras

January 6, 2012 • Blog, Business, Ideas, Leadership • by
0 Comments

It’s been said that foie gras, the liver of a goose that is fattened up by having a tube stuffed down its throat, is the most abusive food to produce. Yet for many chefs, it is the most iconic and sought after delicacy in the world. Quite a predicament.

That was until Eduardo Sousa came along claiming to have found a way to produce foie gras naturally. No tubes. No abuse.

Many in the culinary world found this impossible to believe and yet when chefs tasted what his geese produced they found themselves completely surprised to find the most tasting goose livers they had ever eaten.

Eduardo Sousa raises his geese in the countryside of Spain. Here they live in a goose’s paradise with plenty of tasty and fattening things to eat. What Sousa realized is that as the weather turns cold, geese will stuff themselves, making there no need to stuff a tube down their throat. However, they will only do this if they feel they are wild. As soon as a goose felt domesticated they would not indulge in this behavior.

To that end there are no fences on Sousa’s farm. All the geese are free to leave at any point. Very few utilize this freedom though. Since Sousa has created such a paradise for them they choose to stay until their death.

What’s most amazing though, is that as flocks of geese fly over Sousa’s farm, his geese call up to them, apparently sharing how wonderful the farm is, and these completely free geese join his flock on his farm!

Let that sink in for a minute. He has created such an enticing environment that his geese that are heading to the slaughter are calling completely free geese to join their ranks.

Think about this from the perspective of an organization. Do you have the kind of organization where those working feel no desire to leave and in fact invite others to join the team? While we all know the stories of tech companies like Google that create lavish work environments, I don’t think that the average organization has taken this lesson to heart.

In today’s economic environment it is even increasingly tempting to sacrifice environment and organizational culture at the altar of austerity. Managers and executives might say to themselves, “There is a line of people outside who are more than willing to take anyone’s place who chooses to leave.”

This is certainly one model, but how much more productive would your organization be if everyone who works for you felt appreciated, served, and in an environment conducive to productivity? Your organization would attract and retain top talent far better than your competitors and even in today’s world, talent is the ultimate productivity.

So how can you follow Sousa’s lead and create a goose’s paradise?

Design Your Year

January 4, 2012 • Blog, Thoughts • by
0 Comments

This time of year is always conducive to self-reflection. We tend to set goals for ourselves, evaluate the past year, and prepare for the year ahead. It is a time when we step back and take the 30,000 foot perspective of where we are, and where we were going.

This year I did something a bit different as I stepped back and looked at my life. Far more than in previous years, I feel in control of my time, productivity, and income. Given that freedom, I wanted to take advantage of it and really look at designing a year that I would love to live.

So what I did was look at my past and identify the things that gave me the greatest pleasure. I then created four “buckets” that captured the essence of things I enjoyed. For me, I found I most enjoyed activities that were either Beautiful, Intellectually Rigorous, Lucrative, or Entrepreneurial. No one activity would fall into all four buckets, but for me to really feel alive I want to be doing at least something in each of these four areas.

I then listed out the activities I would be embarking on over this upcoming year. This included expanding my consulting practice, joining a brand new consulting practice with some people I know I can learn a ton from, making a documentary, and more. I then put these into the column of a spreadsheet with four columns for the buckets, putting an X when an activity fell into that bucket.

This allowed me to see where my year was going to look like. It allowed me to see I might want to do something else that is creative and not join any other entrepreneurial ventures. It was a helpful way of designing my year.

What things are you doing to prepare to take advantage of 2012?

A Tale of Two Tacos

January 2, 2012 • Blog, Economics, Research • by
0 Comments

Down the street from my apartment is not one but two 24 hour taco places. They literally share a building and yet are not affiliated in any other way. How could it possibly be good for business to have two 24 hour taco places right next door to one another?

It doesn’t make intuitive sense. One would imagine that it would be best for similar businesses to put some space between themselves and yet, like with the two 24 hour taco joints, we see this kind of behavior all the time. Two (three or even four) gas stations share an intersection. Home Depot and Lowes build right next door to one another. Target is often across the street from Walmart.

A guy named Harold Hotelling noticed this kind of behavior among firms back in the 1920s and created a model to describe what was happening. Picture a town with one main street down the middle where two guys want to open identical 24 hour taco places. The people of the town don’t have a preference among the restaurants and will go to whichever one is closest.

Where should the two entrepreneurs open up their business?

Assume they both set up shop on opposite ends of the town, at the far ends of Main street. Since they are equally far apart half of the town goes to Taco Place A and half to Taco Place B. This seems fair but Taco Place A could do better by moving slightly more towards the middle, picking up more customers who are now closer to Taco Place A than Taco Place B.

Imagine this happens again and again. With the stores constantly moving closer and closer towards the middle of town. Eventually they will end up like the two taco places in my neighborhood, right next door to one another in the middle of town.

This result doesn’t just occur in business, it has very important applications for politics. In fact Hotelling’s model has been one of the most important for modern political science.

This theory tells us that in a two-party political system we should see candidates converging towards the middle. Of course our primary system messes with that some but in this recent election we saw more and more independent and third-party candidates running and influencing the debate. We saw this most prominently with tea-party candidates who were making sure that their Republican nominees wouldn’t move too much towards the center of town.

While the center of town might be the most lucrative place, its not where movements happen. The tea partyers on the outskirts of town have fundamentally shaped conservative politics. Those occupying wall street, while still struggling to exert their power don’t spend much time shopping in the middle of town.

If your only goal is to win, then move to the middle of town. There really is no better place (and there’s math to back that up). But if you want to shape the debate, exert your influence, and change the world the outskirts might fit you better.

How Mobile Money is Changing the World

December 14, 2011 • Blog, nonprofit, Public Policy, Research • by
0 Comments

An M-Pesa Client

Mobile money is one of those revolutions that not many people in the U.S. are familiar with but which is having profound implications in much of the rest of the world. The Stanford Social Innovation Review highlights the most successful mobile money system in the world, the M-Pesa in Kenya. The article, entitled Mobile Money: A Game Changer for Financial Inclusion, is a great introduction to the mobile money movement and its implications.

The basic idea is that in rural, poor countries, access to financial institutions is essentially non-existent. Yet in many of these places, large portions of the population use cell phones. By moving currencies from physical bills to virtual money on their phones, financial institutions can be opened up to entire communities without ever opening up a bank branch.

Financial inclusion is one of those things that has grabbed my heart lately. I know its a weird thing to say that I’m passionate about financial inclusion, but I am. Financial institutions move economies forward. They make people’s lives better. They move capital around in (hopefully) efficient ways. Communities without access to financial services are significantly worse off because of it. Whether on the south side of Chicago or in rural Kenya, individuals’ lives are made better when they can open up a savings account, easily move their money around, and begin to access markets first-hand.

Read the SSIR article here to learn more.

The Power of an Idea

November 8, 2011 • Blog, Ideas • by
1 Comment

Today I got to spend several hours researching how ideas have been spread throughout history; from the Roman Forum to London Debating Societies. I’m truly fascinated by ideas. Ideas are these things that are created by the firing of synapses, are turned into something, and that something can change the world. Whether its the idea of the iPhone or democracy.

Matt Ridley, author of The Rational Optimist, talks about ideas a lot. He believes that what separates humans from other species is the ability for our ideas to become cumulative. Essentially, we are able to share ideas with one another and the more sharing, or “sex” as he calls it, the better society becomes. He writes,

“Let me explain. Sex is what makes biological evolution cumulative, because it brings together the genes of different individuals…And so it is with culture. If culture consisted simply of learning habits from others, it would soon stagnate. For culture to turn cumulative, ideas needed to meet and mate.”

I think this is a big reason why I like the city. I love the ability to experience new ideas and share new ideas and for thousands of years it has happened in cities more than anywhere else. Its happened in English coffeehouses in the 18th century, in the theaters of the Greek city of Athens, at the Mosque of Uqba in Iran.

Ideas are beautiful and are core to our humanity. So lets all go out and share beautiful ideas.

Microsofts Vision of the Near Future

October 28, 2011 • Blog, Ideas, video • by
2 Comments

Cool little video produced by Microsoft on productivity in the near future.