Oct 142014
 

Through the Do Good Challenge Booster Fund you can apply for up to $500 to jump-start your “do good” ideas! But what exactly can you do with $100-$500? Here are five ways teams used the booster fund last year.

1) Promote Your Project or Venture

Team: Procity
Cause: Establish a network to reward individuals who do-good in their community.

“We used the funds to create three animation videos and solve some of our technical needs regarding the website” Procity video

Team: Glow for the Girls
Cause: promote awareness about Human Trafficking.

“Because of the booster fund, we were able to immediately make purchases that improved advertising and outreach on campus. We purchased over $100 of glowsticks and materials for the Social Enterprise Symposium, where we won ‘best presentation’ and fast-track to the Do Good Challenge semi-finals. “ Glow for the Girls

2) Pilot your idea

Team: Terps Against Hunger
Cause: Provide healthy, nutritious meals to families experiencing hunger in the D.C. Metro area.

“The grant funds were use to hold a small-scale food packaging event, designed to pitch the larger event to DFSL [Department of Fraternity & Sorority Life]” Terps Against Hunger

Team: Unican
Cause: increase the recycling rate at the University of Maryland.

“We were able to purchase our first six bins, art supplies for decorating the bins, and gas for a few trips to and from the recycling center. This money allowed us to begin to collect aluminum from five fraternities, recycling around fifty pounds.” Unican

3) Cover Your Startup Costs

Team: Building Tomorrow
Cause: Raise money to build schools in impoverished areas of Uganda

“We used our funding to book the mall and pay for the facilities employees to move the bikes. We also used it to get our tank tops…The tank tops we had were a huge selling point, as many people stopped just for a cool shirt.” Building Tomorrow

Team: Community Pipeline
Cause: Connect after school programs with college student volunteers.

“The Grant Funds were crucial to our success… We used the grant funds to pay for advertising across campus for our project, as well as for the first big cost we faced: background checks.” Community Pipeline

4) Host an Event

Team: Start Up Shell
Cause: Increase women involvement in tech.

“We used the grant funds on t-shirts, business cards, and pizza for Female Founders events. These items enabled us to market professionally to students as well as attract students to our events.” Start Up Shell

Team: Grow Your Impact
Cause: raise awareness about the benefit of living a sustainable lifestyle.

“The money we requested from the Booster Fund was budgeted to acquire gardening materials like soil, seeds, pots, etc. for our main event, the Sustainable Potting Party.” Grow Your Impact

5) Expand your impact

Team: Justlikeyou.org
Cause: Building a social network for people going through the coming out process.

“Booster Funds went to the two trainings we had in March that trained 27 volunteers for the justlikeyou.org site. The volunteers will be online pen pals for those coming out.” JYL1

Team: Terps for Happiness
Cause: Break the social norm of drinking and driving.

“We used a fraction of the funds to order more Happiness Apparel to sell for our promotional table events. We have saved $300, for future events and ventures” Terps for Happiness

The Do Good Challenge Booster Fund can dramatically increase your impact during the Do Good Challenge. Of the six Do Good Challenge finalists last year, four were Booster Fund recipients. The best way to get funding for your idea is to be clear about what you’re going to use it for and how that will help you prepare for the Do Good Challenge in the Spring. Use last year’s recipients as inspiration and get to work on the Booster Fund application!

Sep 162014
 

Desk Plant

The new standard of corporate sustainability goes way beyond recycling and energy efficiency. Today’s business leaders embed social and environmental impact into an organization’s value chain to drive performance and competitive advantage. Here are three cutting edge trends Corporate Sustainability Managers are thinking about that YOU need to know:

  1. The “Do No Harm” era of corporate sustainability is over. Corporate sustainability in the late 90s and early 2000s was led by large industrial companies like Dow and DuPont. The focus was on superior environmental health and safety standards such as reductions in pollution and waste. Now, companies like Unilever and Patagonia are eclipsing these efforts in a new era of corporate sustainability that attempts to transform core products and services, and the extensive value chains that deliver them. These strategies are more complex, but also have more impact. Read more here.
  2. A new focus on empowerment and “acculturation”. Sustainability professionals have laundry lists of sustainability actions in need of being implemented. They know what needs to be done, but often lack control over the tools to make it happen — budget, staffing, incentives, etc. The new goal is to incite functional managers and line employees to identify their own opportunities to improve corporate social and environmental performance with their sphere of influence. This effort moves sustainability initiatives through lower levels of the organization, thereby embedding it in culture and organizational process (“acculturation”). The idea is that this relatively simple change in approach can alter the way business is done in every function and unit of the company. Note 40% of companies are already engaging their employees directly in sustainability (up 10% since 2012).  Read more here.
  3. Companies must expand the definition of success beyond growth. Even if we make incremental changes to our business operations, the end goal of all major businesses – growth – is inherently unsustainable when we’re operating on a planet with limited resources. It’s time for businesses to expand success to encapsulate other goals such as quality of life and well-being. This is where business model innovations like cooperatives, circular economies, and benefit corporations could have a major impact. Read more here.

If you’re as excited about these trends as we are, join us and Jeff Senne, Director of Corporate Responsibility at PwC, in exploring these topics and more at our Sustainability Roundtable: Lunch and Learn Series. Light lunch will be served and rich discussion is expected. The first session is scheduled for September 23rd from Noon to 1pm and will accommodate an intimate group of 6-10 people. The Series will be crafted based on the interest areas of participants (not just the three listed above!), so come prepared with questions and ready to articulate what you hope to gain from the series!

If you’re interested in joining, send an RSVP to Kim R. Glinka: krobertella@rhsmith.umd.edu. Each session will be limited to the first eight registrants. (Faculty and students welcome!)

Sep 092014
 

 

Accountability Lab Team

The Accountability Lab student team and client. From left to right: Blair Glencorse, Mae McIver, Wenxiao Lu, Chelsea Wallace

Last Spring, Chelsea Wallace served as a Strategy Consultant for Accountability Lab – a DC-based nonprofit determined to bolster accountability in countries such as Nepal and Liberia. She and four other graduate students from the Robert H. Smith School of Business at the University of Maryland helped Accountability Lab prepare their model to be replicated in new countries.

Accountability Lab bolsters accountability by partnering with government representatives in order to incorporate trust and cooperation into their decision-making and relationships. Through a ChangeTheWorld.org Nonprofit consulting project, Chelsea and her team analyzed Accountability Lab’s operating model, standardized their processes and compiled it into an easy-to-use document. “We were all able to pull from past experiences and think outside of the box to give Accountability Lab a final product that they will be able to incorporate into their business plan.” said Chelsea.

The end deliverable was a handbook that Accountability Lab staff can use on the ground in new countries. Wallace and her team also analyzed Accountability Lab’s revenue model to help them develop creative and sustainable revenue streams as they expand.

Chelsea found the whole experience extremely rewarding. Her team worked closely with Accountability Lab’s Associate Director in Nepal, and had access to several consulting resources. The Center for Social Value Creation also provided a great deal of support, serving as a connector for Wallace and her team and hosting the ChangeTheWorld.org Symposium which gave the team an opportunity receive constructive feedback on their project.

After the final deliverable was presented, Anne Sophie Lambert, Associate Director at Accountability Lab, noted, “The student consultants exceeded our expectations in their ability to tackle some of our biggest organizational challenges with competence and professionalism.”

Reflecting on the experience, Chelsea said, “It was definitely a test of my organization skills and really pushed me to take my leadership to the next level.  More importantly, it was also extremely satisfying to see, first-hand, the impact of our product.  The success of the project depended greatly on the success of our teamwork and I could not have asked for a better team*.”

About ChangeTheWorld.org Nonprofit Consulting
ChangeTheWorld.org Nonprofit Consulting Program matches talented undergraduate and graduate students with semester-long business consulting projects for nonprofit organizations in need of consulting assistance with strategic projects. This program is open to all students at the University of Maryland. Apply to be a ChangeTheWorld.org student consultant or contact Program Manager Pammi Bhullar (pbhullar@rhsmith.umd.edu) with any questions.  Applications to be a Fall, 2014 ChangeTheWorld.org Consultant are due September 15th, 2014!

*Smith Graduate Team included Chelsea Wallace, Rahul Shah, Mae McIver, Wenxiao Lu, and Jeanne Powell

 

Aug 282014
 

Pammi at the ChangeTheWorld Symposium

You want to gain consulting experience.

You want to apply your skills to a cause you’re passionate about.

You want a program open to any major as well as full-time and part-time students.

You find out about ChangeTheWorld.org Nonprofit Consulting Practicum and think, “This is perfect!”

But then you realize there’s a competitive application process. Don’t let that deter you from this life changing consulting experience! We at the Center for Social Value Creation want to place as many of you as possible with a great nonprofit consulting project. That means finding the project where you’ll be the best fit and the most successful.

So, Pammi Bhullar, our Manager for Experiential Learning, has put together 7 pro tips on how to rock your ChangeTheWorld.org Application and get matched with a nonprofit you’ll love:

  1. Apply early! Even though the application deadline is September 15th, 2014 I’m filling projects on a rolling basis. If you’re a strong fit for a project, then I will not hesitate to place you early.  Bottom line: Get your applications in early to ensure you get your favorite project.
  2. Be Clear about what you prefer and why. I ask for your top three choices in the application. Pick three that align with your passion(s) and experience and then tell me why I should choose you.
  3. List specific skills that make you a good fit. I cannot place every applicant, so make sure you tell me explicitly and specifically what you can do and what experiences you have that align with the projects you’re interested in.
  4. Let your passion show. Don’t have many skills that relate to the project you’re in love with? Use the “additional information” section to really make your case. I love hearing the stories of people truly committed to a cause.
  5. Align the projects to your career aspirations. The point of ChangeTheWorld.org is to give you relevant, real-world experience. I want to give you an experience that helps you get where you want to go, so make sure I know about it!
  6. Apply with a team in mind if you can. New this year, I’m letting you recommend and nominate teammates on the application. I’ve found that teams who’ve worked together before and can meet together often perform better. Showing that you already have strong team dynamics can definitely give you an edge.
  7. Be ready to get your hands dirty! Okay, so this doesn’t directly pertain to the application, but still very important. This is a real-world experience, which means it’s going to be very rewarding and very frustrating. Things aren’t going to go as planned and you’re going to have to be innovative. I’d love if you could show me you’re ready for that in your application.

Now that you’ve got the inside scoop, it’s time to get rolling. Apply for ChangeTheWorld.org Nonprofit Consulting Practicum.  We’re looking forward to connecting you with an amazing project! If you have any further questions, feel free to reach out to Pammi at pbhullar@rhsmith.umd.edu

Jul 242014
 

By Pammi Bhullar, Manager for Experiential Learning, Center for Social Value Creation

Smith Sri Lanka Team

 

 

 

 

 

 

 

 

 

 

 

 

As part of a multi-disciplinary, international consulting practicum offered by the Robert H. Smith School of Business at the University of Maryland, ten graduate students ventured to Sri Lanka in May 2014 to spend three weeks consulting with small business owners and government agencies.  Students in this practicum, called Facilitating Economic Growth in Sri Lanka, were funded by the Center for International Business Education and Research (CIBER) while working as consultants on USAID-funded projects.  The International Executive Service Corps (IESC) provided pre-departure training, project support, and in-country assistance while Biz+ Vega, a USAID grantee, led on-the-ground operations including cultivating and managing client relationships.  Students were also supported by the Office of Global Initiatives (OGI) and the Center for Social Value Creation (CSVC).  Contributing to the students’ cultural education, Ambassador Jaliya Wickramasuriya and his Board of Ministers hosted the students at the Embassy in Washington, D.C.

Under the direction of Professor Kislaya Prasad, Director of CIBER at Smith, students underwent a competitive application and interview process to be accepted into the program.  The selected group of ten represented three academic degree programs, Master of Business Administration (MBA), Master of Public Policy (MPP), and Master of Science in Information Systems (MSIS), and hailed from five different countries, including Japan, Thailand, India, the Czech Republic, and the USA.

While in Sri Lanka, students worked on high impact projects with key stakeholders in the local communities.  Hirokazu Masuoka (MBA ’14) worked with the Eastern Provincial Ministry of Agriculture, Animal Production and Development, Rural Industries Development, Fisheries, and Tourism Projects to develop a proposal for establishing a cooperative rural banking facility as part of the multipurpose co-operative in the Eastern Province.  On-the-ground observations made all the difference for Masuoka, he noted, “Now I learned what I need to take into account, what works, and what doesn’t work when I engage with financial markets in developing countries. There is a huge difference between working with my laptop in the U.S. and working on the real site.”

One team composed of MPP, MBA, and MSIS students provided recommendations on strengthening the National Policy on Local Government.  Through site visits and interviews, the team developed recommendations regarding Budget and Revenue Generation, Human Resource Management and Workforce Training, Transparency, and Information Systems and Technology.   At the culmination of the practicum, students presented their recommendations to their clients, representatives from the local community, USAID, IESC, Biz+ Vega, and Smith School of Business.

Not only were students immersed in improving business processes, but also in the cultural nuances of the Sri Lankan people.  Maurice Nick (MBA ’15), having not traveled to Sri Lanka before, was floored by similarities that he discovered between Sri Lankans and himself.  Nick elaborated on one of the distinctions that actually made him feel closer to the Sri Lankan culture than to his own American culture in an article posted in the Washington Times and the Smith blog.  Nick wrote, “Even though I was sent there [to Sri Lanka] to teach business owners how to maintain their financial records, in the end, it was the Sri Lankan people who taught me to always hold steadfast to my faith regardless of where I am in the world.”

Smith School of Business students have benefited from the opportunity to take part in the CIBER-supported Facilitating Economic Development in Sri Lanka practicum since 2011.  Smith has sent five different cohorts, including 34 graduate students from the MBA, MPP, and MSIS programs.  This has given students from the U.S., Europe, Southeast Asia, Japan, and China the opportunity to work with and positively influence Sri Lankan enterprises throughout Sri Lanka.

Jul 012014
 

Community Wealth Building Presenters

 

 

 

 

 

 

 

 

 

 

What does it mean to have a job that builds wealth? Beyond a living wage – defined as wage that is high enough to maintain a quality of life standard – wealth building is about accumulating assets and surplus capital that lead to an elevated standard of life. For thousands of low-income households across the nation building wealth is not an option. With limited access to jobs that pay even a living wage, these families struggle to make ends meet, let alone to invest in the future.  These low wage jobs trap low-income families in institutional poverty, making them especially vulnerable to economic shocks. How can we create opportunities to help low-income households maintain and improve their current situations?

This question inspired a collaborative effort between the Center for Social Value Creation (CSVC) at the Robert H. Smith School of Business and the Maryland School of Social Work to pilot an experiential learning course called West Baltimore Community Wealth Building Practicum.

The course is based on the initial research of Stephanie Geller, clinical instructor and coordinator of Southwest Baltimore initiatives for the Social Work Community Outreach Service at the Maryland School of Social Work, which explores how to create more wealth building jobs for underserved communities in Baltimore, MD.

Stephanie was fascinated by the model of Evergreen Cooperatives which launched in 2008 in Cleveland, Ohio and came up with an interesting proposed solution to wealth building job creation:

  1. Target the major institutions that have no intention of leaving (hospitals, universities, government organizations, etc.)
  2. Find products and services these institutions need
  3. Build local businesses to meet those demands.
  4. Design the businesses as worker-owned cooperatives to ensure that each “worker / owner” builds wealth within the business.

Stephanie conducted research on how this model could work in Baltimore, identifying several major institutions and developing forty possible business ideas tied to these institutions.

Recognizing the transformative potential of Stephanie’s initial research, CSVC and the School of Social Work teamed up MBA and Masters of Social Work students to investigate the social value and financial viability of twelve of these business ideas. These cross-functional teams conducted interviews with potential stakeholders and partner institutions, analyzed the specific financial and social impact of their ideas on West Baltimore communities, and developed preliminary recommendations for launching these concepts into full-fledged worker-owned cooperatives.

In a final presentation to local funders, community members, and representatives of major Baltimore institutions, the student teams elaborated on four of the highest-potential ideas.  The ideas included property demolition, furniture recycling and refurbishing, compost collection, and an urban greenhouse. There are several common elements to these ideas that make them both attractive investments and appealing social impact opportunities, including:

  • Forecasted profitability within four years
  • Forecasted employment of at least 50 people within 8 years
  • Accessible to unskilled workers
  • Positioned to add value to major local institutions

During the Q&A and reception that followed the presentations many stakeholder expressed words of support saying things like, “I’m so glad you’re researching this,” or, “We definitely need something like this in our City.” The reception was also filled with the buzz of potential partners and funders digging deeper into ideas that caught their attention.

Whether a worker-owned cooperative is created as a direct outcome of this work, or is referenced at a later time by a group committed to aligning economic prosperity and local institutions, The West Baltimore Community Wealth Building Practicum has laid the groundwork for models that go beyond living wages and truly build wealth in Baltimore.

Jun 052014
 

If you haven’t heard the story of Brooks Gabel and his social venture justlikeyou.org then you haven’t been paying much attention to University of Maryland media. In the last year, Brooks has been featured in places like Terp Magazine, the Diamondback, and TerpVision, just to name a few.

JYL1

Brooks and a team of 21 students and professionals have built a free and anonymous social network for those looking to talk about coming out called justlikeyou.org. Leading up to the site launch on April 13th 2014, Brooks competed in the 3rd annual Do Good Challenge (DGC). DGC is an 8 week competition held each spring at the University of Maryland; it empowers students to form teams and “do good” for a cause they care about, or to launch a social venture.

Just prior to the 2014 Do Good Challenge, Brooks and his team were in the planning stages of justlikeyou.org. With tremendous support from The Dingman Center of Entrepreneurship’s Fearless Founders Program, they developed a beta site, grew their social media presence, and, most importantly, tested to make sure that the entire experience would meet the needs of their users. They also raised capital and trained volunteers who would serve as pen pals and resources for users. At about the same time, Brooks learned about the Booster Fund that provides $500 in seed capital to student teams who plan to participate in the Do Good Challenge.

“It was really serendipitous how the [Do Good] Challenge aligned with our own goals.” explained Brooks. “The Challenge provided us a vehicle to channel our efforts.”

Brooks applied for and won the $500 from the Booster fund, and used the money to develop justlikeyou.org’s volunteer training program. When the Do Good Challenge kicked off in early spring Justlikeyou.org launched a crowdfunding campaign with the lofty goal of raising $50,000, and training 100 volunteers during the 8 week Challenge.

At the end of the eight weeks, which entailed mobilizing incredible online support and making A LOT of appearances, justlikeyou.org raised $38,338.00 in donations and in-kind support, and trained 27 volunteers. “We didn’t exactly reach our goals, but we also didn’t know what to expect,” said Brooks. “We did all the leg-work up front, but there’s a big difference between planning and what actually happens.  And not all of what happened was bad. We expected an average donation of $20 and it ended up being around $75.”

DGC14_22Justlikeyou.org’s efforts elevated them to the Do Good Challenge Finals where Brooks pitched live to hundreds of people and a panel of judges including Boomer Esiason, CBS Sports Analyst and former NFL quarterback, David Falk, one of the sports industry’s greatest talent agents, and Robert Seaberg, Board member of the Morgan Stanley Global Impact Funding Trust. All of the judges were moved by the story of justlikeyou.org and were left speechless when Boomer Esiason asked, “what’s your motivation for doing this?” and Brooks immediately responded, “It’s the resource I never had.”

JustLikeyou.org won the ventures track at the Do Good Challenge Finals on April 29, 2014 and took home a grand prize of $6,000. The winnings will be used to train more volunteers and increase the site’s capacity to have even more meaningful conversations.

Since the Challenge, Brooks temporarily shifted gears to focus on graduating college, but after walking the stage (and some much needed R & R), he plans to dive back in to Justlikeyou.org and fine tune the user experience on the site. Growth is important for Brooks, but only to the extent that it’s done effectively. That means more volunteer training and working out site kinks.

Reflecting on the experience Brooks said, “Through the Do Good Challenge, we joined a community of people giving back. It’s been so different from the business competition community we usually engage with. Everyone in the Challenge, including our competition, wanted us to succeed. That was motivating and exciting.”

Brooks is a shining example of the University of Maryland student social ventures and projects that the Do Good Challenge helps cultivate and amplify. Here’s to the success of Justlikeyou.org, other Do Good Challenge finalists, and to the future ventures that will be inspired by their example.

To learn more and to stay connected, visit JustLikeYou.org’s website and Facebook page, and be sure to check out the Do Good Challenge! The 2015 Challenge will get underway this Fall with the reintroduction of the Booster Fund to help Do Good Challenge aspirants hit the ground running.

Apr 152014
 

I’m planning to bring some big news to my upcoming All Hands staff meeting.  As President and CEO of The Newberry Group – an IT firm based in Columbia, MD & St. Louis, MO – I typically present on past performance, our forecast, and our plans for achieving those forecasted results.   But this time my plans are far from business as usual. I intend to propose that The Newberry Group align its vision more closely to that of a true social enterprise.

SES Human Capital

I was inspired to make this pitch after attending the Center for Social Value Creation’s Social Enterprise Symposium (SES). Honestly, I didn’t attend SES with the hope of being inspired. I showed up mainly out of personal interest, given the strong encouragement from my son, a staff member at the Smith School of Business. Though it didn’t take long to discover just how relevant much of the content was to strategic questions I faced within my own company.

In a panel titled “Models for Impact: Reforming Capitalism” I listened to Jeff Cherry, Executive Director of Conscious Venture Lab, discuss the importance of having a clear company mission – both as an internal guidepost and as an external indicator of company value. I considered how a stronger mission could be a rallying point for all of The Newberry Group stakeholders; this was thought provoking.

After the first round of sessions, I connected with Tom Decker, a leader in the cooperative business movement, and discussed the advantages of more democratic corporate structures. I realized that, as an employee-owned company, The Newberry Group was well positioned to embrace many of these advantages. That was disruptive.

Finally, I attended a boardroom discussion led by Cheryl Kiser, Executive Director of the Babson Social Innovation Lab, on “Managing Human Capital in Mission Driven Organizations”. I found my own management and development philosophies so aligned with Cheryl’s that I wanted to finish her sentences. I began to see the dots connecting between my own practices at The Newberry Group and the abstract definition of a mission driven organization. That was motivating.

Before I left for the day, I connected with my son, who was managing SES. I had so much to say, but, head spinning, all I got out was, “I have a lot to think about.”

Over the weeks that have followed SES, I’ve done a lot of thinking. I’ve begun to understand that much of the value The Newberry Group provides for its employees remains currently untapped and if captured, would have a profound collateral impact on Newberry’s clients. I foresee making greater investments in internal community building, representative of the employee’s interests of the company. I also plan to implement a more democratic management strategy. My new working mission for The Newberry Group is - to improve the quality of life of its employees every year. And the business case for all of this? Lower turnover; greater diversity of ideas; improved talent and client acquisition.

I have a long way to go and still a great deal to explore, but I’m more committed than ever to having the interests of my entire company at heart in whatever direction I go. In this way, the Social Enterprise Symposium has inspired me to develop a truly mission driven organization.

Chris Steinbach

Chris Steinbach, Chairman & CEO, provides overall direction for The Newberry Group and presides over the implementation of the corporate strategies, the implementation of best practices, and the profitable growth of the company. Prior to The Newberry Group, Mr. Steinbach worked at CSC where he started as a Senior Human Factors Engineer and eventually became the first Vice President of Operations for CSC’s $1.3 billion Enforcement, Security, and Intelligence Division. Successfully serving in this capacity, until he took the role of CSC’s Corporate Security Operations Executive wherein he served until his acceptance of The Newberry Group’s President & CEO position.

 

Jul 102013
 

Written by Aaron Czinn, BS 2013

On multiple occasions I’ve had conversations with those older and more experienced than I about the power that business has to create change in the world. And on multiple occasions I’ve been faced with the same critical response: “It’ll never happen. Businesses only care about the bottom line.”

Maybe I’ve spent too long on a university campus that prides itself on social entrepreneurship, but if there’s anything I’ve learned in business school it’s that profit and competition rule the business world. And while members of an older generation may point to those two concepts to refute the notion that business can create social change, in my eyes these concepts do nothing but strengthen the case.

Of course, an economically sustainable business cannot exist without turning a profit, but why can’t making a profit and making a difference go hand in hand? In today’s world of Clip Art Profitgreenwashing and excessive cause marketing it is hard to identify which companies are truly trying to create social change. However, it is clear that there are, in fact, a number of large companies who are genuinely interested in making a difference. Starbucks and Whole Foods are two companies that pride themselves on sourcing materials in an environmentally and ethically responsible manner. Both carry strong brand names and are perennially listed on the Fortune 500. Ben & Jerry’s and Method cleaning supplies are examples of other companies that were founded on the basis of doing good, yet maintain strong financial performance. I could go on and name more, but these companies have proved time and again that making money and making a difference can truly coexist.

Knowing that companies can be profitable while making social impact is the perfect ingredient to vouch for the impact of the second important component of business – competition. The beauty of competition is that it drives innovation. Just look at today’s smartphone market. Many experts in the field now believe that the Samsung Galaxy S4 is a far greater phone than the iPhone 5. But imagine a world in which Apple never created the iPhone. Would Samsung have ever even thought to create a phone with touchscreen technology, let alone one that would be as good as what the Galaxy is today?

Now imagine if the forces of competition were used for the sake of creating social change. Imagine if a car company created a car with zero fuel emissions causing a competitor to make an even better and more affordable one. Imagine if a real estate company found a way to build affordable housing for the homeless causing another company to find an even better way. Imagine the social impact that could be created through social innovations inspired by competition!

Fortunately, many of today’s most successful businesses are already taking a genuine interest in creating social impact. If my business education is correct the competition is sure to follow, and pretty soon we might be living in a much better world.

 

Aaron-headshot2Aaron Czinn graduated from the Robert H. Smith School of Business at the University of Maryland in May 2013. He hopes to blend his Marketing and Information Systems majors into developing digital marketing strategies for socially conscious businesses in the real world.

Apr 242013
 

Written by Professor David Kirsch
Mar 31, 2013

Over spring break, my family and I participated in a week-long service trip to Nicaragua run by the Yale Alumni Service Corps, a recent creation of the Association of Yale Alumni. I am not a Yale alumnus, and though my wife went to Yale Law School, she has had almost no connection to Yale in the 20+ years since she graduated. The principal criteria for choosing the trip were (1) it fit into our schedule, (2) it would allow our kids to spend a week with Spanish speakers who did not also speak English, (3) it would open our kids’ eyes to the realities of life in the developing world, and (4) it was time to spend spring break doing something other than sitting on a beach talking about doing something.

By all these criteria, the trip was a success, but it also succeeded in a very unexpected way. My own efforts as a member of the “business consulting” group involved meeting with and advising small business owners in the village of Troilo. While other subgroups staffed a medical clinic or put a new roof on the community center or taught in the local school (all activities with immediate, obvious and tangible benefits), I was initially concerned that our “service” was designed to occupy the few of us who were unable to contribute in any other (read: productive) way. But after a week of intensely personal conversations with a dozen local entrepreneurs, I came to see that our efforts may have been more valuable than I had expected. In particular, the experience stimulated me to contemplate some fundamental questions about the role of business in society that I elaborate upon below.

First, a word about the setting: The village of Troilo is located in the rich, volcanic lowlands west of Leon, about halfway between the city and the Pacific Ocean. Typical of many such villages, most of the men in Troilo work in the sugar cane fields where they earn approximately $4/day, 6 days/week. The work is backbreaking and is associated with chronic, unexplained kidney disease (CKDu). The sugar cane industry regularly tests employees’ kidney function and dismisses field workers at the slightest sign of the disease to avoid being held responsible when the men ultimately fall ill and die. As a result, adult men are scarce, and Troilo is a matriarchal society. Though signs of grinding poverty abound, upon closer inspection, we saw that Troilo had benefitted from several years of work with our group’s local development partner CEPAD. The village had a health post that was staffed during the week. Two deep-water wells for drinking had been installed by the NGO Living Water in 2010. And, of greatest importance from the business standpoint, the central market of Leon was only 8 miles away, reachable by daily bus or even an occasional taxicab. Each morning our group of 70 volunteers, translators, and local staff boarded our buses at our hotel in Leon and bumped along a dusty, rural road through cane plants that towered over our vehicles. In Troilo, our group of five “business consultants” gathered in our “office,” the open-air church in the center of the village. Each day presented new challenges, as villagers came to talk to us about their businesses, their challenges and their hopes.

Entrepreneurship and development. How important is entrepreneurship in the development context? While the medical team was saving lives (literally, in several cases), what were we business consultants doing to help the people in the village of Troilo? Our contribution began to come into focus after our first meeting with a young mother named Maria. She was a seamstress and had been making simple skirts using a sewing machine that had been handed down in her family. She bought fabric by the yard in Leon, made a skirt or two and sold them to a reseller in town. Carefully, we talked through the economics of her fledgling business. We discussed the cost of the fabric, the thread, the needles, the buses to and from Leon, and everything else we could think of. We totaled the costs on one side of a page of paper: after ironing out some lumpiness, it worked out to 115 Cordobas per skirt. And then we asked Maria how much the reseller was willing to pay for the finished product? Before she could even get the words out, tears began to well in her eyes as she realized the implications of our analysis: 110 C. The reseller would only pay 110 C for a finished skirt. She was losing money on each one! Over the course of the week, as we continued to work with Maria, we were able to help her identify higher value-added skirts that used more fashionable fabrics or newer designs. And to reduce costs, we encouraged Maria to try to buy fabric in larger quantities and take fewer but more productive trips into Leon. To do so, Maria would need a microloan totaling $75 that she would be able to repay in as little as 3 months. And so it was for many of the people with whom we met in Troilo. When we combined basic business analysis with access to very modest amounts of capital, almost all of the clients who came to meet with our team were able to identify profitable opportunities.

Is the work of identifying and developing these opportunities more important or more valuable than the work of the medical team? Surely not. As we know from Maslow’s “hierarchy of needs,” basic access to healthcare is more fundamental than putting a few hundred extra Cordobas in the pockets of a handful of Troilo families. But over the long run, as basic needs are (hopefully) met by a responsible government committed to establishing a basic social safety net, these aspiring entrepreneurs may prove to be the people upon whom the future of a new Nicaragua will most depend. The gradual enrichment of these families will both allow for greater Maslowian “self-actualization” and create demand for more complex and valuable goods and services and grow the tax base for future government programs.

Nature of opportunities. In my courses on entrepreneurship, I frequently try to convey the idea that opportunities are neither equally distributed nor equally perceived. Some people have access to better opportunities, while others are simply better at perceiving the opportunities available in a given setting. In Troilo, we saw both effects very clearly over the course of the week: the women who showed up to meet with us on Monday morning included a small shopkeeper and several women who were interested in various aspects of pig farming. Though the opportunities available to each of these women differed (some already owned pigs or had more or better experience with various aspects of the process), each had somehow perceived that our arrival represented an opportunity. As the week wore on, several additional people interested in pursuing the same kinds of opportunities also appeared. Perhaps these latecomers heard about us from the early birds, or perhaps they directly observed us offering advice and decided that they too should seek our help. Regardless, our team noticed that the latecomers were decidedly less energetic, less knowledgeable and, in our opinion, less likely to develop successful businesses than the first arrivals. How did the first group learn that we were coming? We did not survey our clients, so we cannot know, but through whatever multiple information channels exist in Troilo, the early birds both became aware of our arrival sooner and judged (hopefully correctly) that working with us represented an opportunity to improve the prospects of their businesses faster than did their late-coming neighbors. In Troilo, the early bird gets the pig.

Competition, growth and inequality. Because opportunities are unequally distributed and perceived, our team faced an ethical dilemma: How could we help the village of Troilo without hurting some of its villagers? This question came into focus as we compared the operations of several local pulperias, small shops that sell snacks, drinks and other supplies. The first shop was owned by Tomesita: She ran a tight ship, and by 11:00 a.m. Monday morning, she already had us buying cold drinks from her shop, which was a short walk from the center of the village. She described her twice-weekly runs into Leon for inventory, which markets there had the best prices, and how she decided upon what to buy and sell. She also showed us her well-kept record of receivables; she offered 15 day-money to those she knew and trusted. Later, we returned to analyze the gross margins on Tomesita’s various products. Just like at home, some products were low margin necessities that she needed to carry like toilet paper, while it turns out that buying eggs by the gross and selling them individually is quite profitable (on a percentage basis). She appreciated our help and quickly saw the benefit of thinking about relative profitability of different types of products.

Contrast this to our visit to Roger’s shop, located a little bit further from the center of the village: Knowing the prices that Tomesita paid for her inventory, we noticed that Roger’s cost of goods was higher across the board, and his prices were either the same or lower. Where Tomesita’s margins were healthy, Roger’s were anemic, at best. His lower profitability led to greater working capital tied up in inventory, smaller and more frequent trips to town, and, ultimately, to a sputtering business. Not surprisingly, Roger, like two other pulperia owners, didn’t show up to meet with us until Wednesday afternoon.

Could we help Tomesita’s competitors? Yes, and we tried to do so without divulging the proprietary information that Tomesita had shared with us. But what are the prospects for these businesses? The hard truth is that not only was Tomesita’s shop more efficient and productive than her competitors today, she was also better positioned to benefit from our advice and therefore to further extend her advantage. This inequality is one of the driving forces of entrepreneurial capitalism, and it operates in a village in Nicaragua just as surely as it does in any other market context. Up to a point, advantages and disadvantages both cumulate, and while we might be able to postpone Roger’s day of reckoning, eventually, the actions of the market would seal the fate of his pulperia.

And here arose the ethical question: because of Tomesita’s advantaged position, we were effectively helping her more than her competitors. Were we, therefore, accelerating the market pressures that had thus far spared the owners of the less competitive pulperias? Surely our purpose was not to hurt any of the business owners in Troilo, but by their very nature, entrepreneurial actions create disequilibrium, and by encouraging and sharpening these actions, we were increasing the rate at which these changes would be felt in the community.

Observations and insights. Finally, I will share three brief vignettes from our time in Troilo that capture unique aspects of the experience.

Luis and Jeff. Jeff, one of our consulting team members, had recently retired from a senior position in a major, multi-national consumer products company where he had overseen sales for the entire Latin American market. Luis, one of our clients, was a craftsman who made bracelets, rings and other trinkets that he sold to resellers in Managua. He was referred to us by the health clinic where he had presented with mild depression and signs of possible repetitive strain injury. He seemed talented but was incapable of earning enough money to support the extended family for which he was responsible. Under the circumstances, who wouldn’t be at least a little depressed? Our team met with him over the course of several days, carefully teasing out the economics of his business. He needed $150 to buy a machine that would both ease the pain of his work and increase his productivity three-fold. The economics favored a micro-loan, but the amount was twice what we had been contemplating with the other villagers. Then, in a stroke of inspiration, Jeff invited Luis to offer his products to our group members after lunch. While Luis was getting ready, Jeff asked what various items would cost, and Luis quoted him the wholesale prices that he was used to receiving from his buyers in Managua. Jeff’s second insight saved the venture: You are selling to individuals so charge retail prices. Luis grossed over $100 in a single hour, committed to save $75 of it towards the purchase of his machine (the rest will be provided via microloan), and went home a much happier man.

Two observations struck me: First, I couldn’t help but marvel at the sight of Jeff helping Luis, the global sales executive with vast knowledge and experience acquired across decades and continents providing simple actionable advice to this struggling craftsman. I didn’t ask, but privately I estimated Jeff’s consulting fees at $15,000-$25,000 per day, yet here he was in Troilo helping Luis. Variations upon this moment were repeated time after time during the week, but in this instance it seemed especially poignant, and it spoke volumes to me about the members of this Yale Alumni Service Corps group of volunteers and about the broader merits of service.  Second, I noted that the critical source of revenue was our own groups’ pocketbooks. We all paid a little more than the market required (after all, Luis was prepared to sell at his wholesale price), but importantly, we did not simply collect $100 and hand it to Luis. I suspect that had we started handing out small bills, chaos would have ensued, much as it did when Abbie Hoffman famously threw a wad of bills from the observation deck at the New York Stock Exchange. But with Luis selling his goods, the act of exchange transferred wealth in an orderly process. The magic of the market created value for all involved.

Our better selves. Among the less competitive pulperias that we advised, two were located in or directly in front of the elementary school. As with all of the clients who came to talk to us, we first asked each of the proprietors to tell us about her customers and the products they buy. In these cases, both pulperias sold snacks and sodas to the school children. As we looked at all the “empty calories” available for the youngest kids to buy with an extra Cordoba or two and tried to imagine how to increase sales for these women’s shops, I thought about how long and hard-fought the battle had been to get sugary soft drinks removed from school cafeterias in the U.S. Could we possibly have encouraged the women to offer healthier choices? Could the kids have afforded alternatives to sugar and salt? On the one hand, citizens of both Nicaragua and the U.S. face the challenge of “food sovereignty,” the ability for a community to determine sustainable relationships to the production of food. But let’s face it: this challenge is much easier to address with resources than without them, and seeing hungry children spending scarce resources on processed, packaged snacks brought this point home.

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Micro-consignment. My final observation concerns the commodification of networks through social marketing. Community Enterprise Solutions (CES) is an NGO whose Nicaraguan field director (Tim) visited Troilo at our invitation. CES’s development model is an extension of microfinance whereby the NGO provides business training and fronts would-be entrepreneurs inventory of socially beneficial products. If the entrepreneur sells the reading glasses or the solar lamp or the safer cooking stove, she keeps a fraction of the purchase priced and pays CES for the products sold. If no sales occur, the entrepreneur can return the inventory and owe nothing. Unlike the typical microfinance arrangement, if the villager receiving the training fails to generate sales, she doesn’t owe anything more than the original, unsold inventory. Greg van Kirk, founder of CES, calls the model “micro-consignment,” and though I was initially a little skeptical, the women of Troilo were gaga for the idea. To a one, they loved the socially beneficial products that Tim described and wanted to both buy them for their own use and sell them to their neighbors. Even the usually reserved leader of Troilo was excited about micro-consignment. As I thought about social marketing programs in the U.S., from Tupperware to Avon to Herbalife, I also realized why this approach might reasonably appeal to the villagers of Troilo. While in the U.S., we worry about people commodifying too much social capital, in Troilo’s more traditional setting, villagers have more social capital than they need, with few opportunities to exploit it.

All told, spending a week in Troilo challenged some of my assumptions and reinforced others. Development is a lumpy, painful process that necessarily creates winners and losers. In the long run, the sum total of the businesses we helped will only provide small amounts of additional income to the struggling villagers of Troilo. But if these advantages cumulate, as they should, then over time, benefits should accrue to future members of the community, in turn creating greater opportunities for subsequent “business consultants” to help them exploit.

 

DavidKirshDr. David Kirsch is Associate Professor of Management and Entrepreneurship in the M&O Department at the University of Maryland’s Robert H. Smith School of Business. Dr. Kirsch is a friend and ally of CSVC and recently advised a team of MBA students enrolled in the Social Venture Consulting Practicum. Dr. Kirsch was also featured in the recent CSVC Winter newsletter.