Having the opportunity to work with technology entrepreneurs in the Fit Startup Factory and now social entrepreneurs via Social Change Labs has afforded me a unique perspective into the startup journey of each segment, and the unique challenges that they face. Although we preach the same methodology and approach to both parties (Business Model Generation, Customer Development, Lean Startup, etc.), there are obvious differences. In the next few posts I want to take a moment to explore some of those differences and would love to hear your thoughts as well.
In my first post, I discussed the differences regarding the starting point of entrepreneurial ideas, technology vs. social, and how that impacts the development of the business model. In my second post, we explored the challenge faced by social startups in serving multiple customer segments. Now we’ll look at how social startups need to truly explore the depths of the problem.
What is Really the Problem?
For social startups, unlike for many technology startups, the problems are usually quite obvious. Social entrepreneurs are fighting to solve critical issues of human rights, environmental protection, social governance, etc. These problems are well-known, but because of their low or non-existent economic potential, are often ignored.
For example, consider Grameen Bank and the micro-finance model which provides the poor with access to financial services. The poor can’t go to a bank for a loan and are forced into the hands of unofficial moneylenders and loan sharks with outrageous interest rates and heavy-handed repayment methods. The problem is obvious; but until Mohammad Yunus, given the inherent belief that the poor were untrustworthy along with the high costs of dealing in small loans, no one bothered to try and solve it. On the other hand, think about Twitter: the problem or the need wasn’t as apparent at the beginning; it wasn’t only until people started using it, and shaping it to their own needs that its true function and value became apparent.
However, the preconceived clarity of the problem can often be misleading for the social entrepreneur. For while the social problem is quite obvious, the actual roots of the problem, along with external influences upon that problem are often undiscovered. And this can push social entrepreneurs too quickly beyond the stage of understanding the problem into crafting a solution, only to realize the error of their efforts later.
In Abhijit V. Banerjee and Esther Duflo fascinating book on global poverty, Poor Economics, the authors delve into some of these roots and external influences on poverty, and why many current solutions have come up short. Without trying to paraphrase the entire book, I’ll illustrate just one example, hunger. One of the most basic human needs, and a clear sign of poverty is hunger.
Undernourishment leads to a variety of chronic health issues and impacts a person’s productivity, which lowers their overall earnings, thereby leading to less purchasing power for food, etc., i.e. a typical poverty cycle. So thus we should just distribute food to the poor, or at least make basic staples cheaper then, right? In their studies, Banerjee and Duflo show that such government food programs have not led to increased nourishment and thereby higher levels of productivity for the poor. Why not? With cheaper basic food, one would expect the poor to buy and consume more of the same, helping them emerge from this cycle of poverty, right?
In fact, with more disposable income, the poor have been shown to buy richer or more expensive food, rather than larger quantities of basic food. The core issue is not simply hunger; there is the need for simply joys in life, i.e. eating foods that you like or being able to spice up your day with different tastes. In a life bereft of much joys, it is the small things, like a nice meal, that makes all the difference. It is for this reason that in the slums of the developing world, the most common electronic purchase is often the television, often before a refrigerator, with families saving up for years to procure one. It is the small things to make life a little more bearable.
Without understanding actual behavior and getting to the root of the problem it would be impossible to make a dent in the issue of global hunger, not to mention a lot of wasted resources.
Exploring the Problem: an example
Ben1Gönüllüyüm (I am a Volunteer), a Social Change Labs semi-finalist, has taken the long road in the path of customer and problem discovery. The social problem they are dealing with is quite obvious: Turkey has one of the lowest rates of volunteerism in the world, estimated at only around 3-4% of the total population. But the question “why” and the correct solution to solve that question is a bit more elusive.
In the beginning, the assumed “why” for Ben1Gönüllüyüm was a disconnect between potential volunteers and non-profits; they just needed a platform to meet and exchange information. If potential volunteers could just learn about and explore different volunteering opportunities from non-profits themselves, they would jump right in and this problem would be solved, right?
Not so fast. It didn’t work. People were not interested.
Following, the team decided to step back from this idea and take time to learn and explore the volunteering culture in Turkey a bit more intimately. They got involved in different non-profit organizations and projects. They built a small-scale platform to encourage and enable volunteerism amongst students at their school, Özyeğin University. They spent time getting to know organizations and volunteers in order to better understand their motivations and challenges. They found that in volunteers were a niche market, i.e. dedicated, passionate people who were brave enough to step outside the norm, and it wasn’t until they get involved in non-profit organizations did they find people like themselves. They learned that most volunteering opportunities are spread through word-of-mouth, or specifically a committed friend convincing and dragging them along. Specifically, they began to understand the “pain” of the volunteer: outcast, uncool, involved in worthless efforts.
And it is based on those key insights that the team started to build a new model, a new solution. The crux of their project now centers on a crowdsourced map of volunteerism, getting volunteers to “check-in” as they volunteer and enabling them to connect with each other across a larger community. And thus, via this map, volunteers can show how they are part of a larger change happening across the country and help convince their friends and family to take part as well.
Lesson learned: before they could think about solutions, they needed to understand the problem better first.
Fundamentally, for social entrepreneurs, the key danger is assuming they understand the problem, because everyone knows the problem. People write about the problem all the time in the media, complain about while riding on the bus, and discuss them in political debates. But that is only the surface of the problem, the symptoms that everyone knows. However, it is the social entrepreneur’s ability to truly understand the problem, deeper than anyone else, which enables them to derive truly workable solutions that actually solve real “pains” and create sustainable, lasting change.
Summary: social entrepreneurs have to make sure they are not misled by the obviousness of the symptoms, but rather spend time delving into the roots and external influences on the social problem they want to solve.