Entrepreneurship and the Third
Sector
Jillian Gordon
Hunter 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.
Different
perceptions
of innovation
Scarce
resources,
funding
restrictions &
perceived lack
of autonomy.
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
entrepreneurially
Give 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