According to Julie Battilana and Matthew Lee of the Harvard Business School, more and more social entrepreneurs are turning to “hybrid business models,” which means that they are increasingly turning away from traditional charity and non-profit models for development, and instead are seeking to combine the traditional profit-making business models of capitalism with their social innovation efforts. They write,
The most striking pattern we found in the data is the recent growth of “hybrid” organizations that integrate aspects of business to address long-standing social problems. These hybrids pursue a social mission while engaging in commercial activities that generate revenues that help them sustain their operations. Take, for example, the issue of economic development. For decades, the dominant model was based on charitable gifts of cash and infrastructure through non-profit and governmental aid organizations.
Because hybrid organizations generate their own revenue, many believe that they will grow to a large scale more easily than traditional non-profits that rely solely on donations. However, our research reveals that hybrid entrepreneurs are fighting an uphill battle to launch and scale their ventures. This month we wrote about the challenges they face in In Search of the Hybrid Ideal in the Stanford Social Innovation Review. The problem, in short, is that although we often think of entrepreneurship as an individual, heroic endeavor, it takes a village to raise an entrepreneur. For mainstream for-profit entrepreneurship, and to a lesser extent for pure non-profit social entrepreneurship that relies mostly on donations and subsidies, a relatively high-functioning “village” of funders, potential employees, and customers or beneficiaries already exists, waiting for the next great idea to come along.
This is much like Bill Gates’ idea of Creative Capitalism, which I was reading about just this morning, where he talks about a system wherein capitalism could be expanded into new areas and be used to solve problems that were previously assigned to charity or to the government. Gates also talks about the need for such social endeavors to include the government, civil society, nonprofits, as well as private enterprises, since a collaborative approach would be the most effective.
Read the rest of the HBR article: It Takes a Village to Raise an Entrepreneur