Book Review

The Power of Unreasonable People: How Social Entrepreneurs Create Markets that Change the World. Written by: John Elkington and Pamela Hartigan (2008, New York, NY: Harper Collins Business)
Reviewed by: Arthur Peterson, December 2008

John Elkington and Pamela Hartigan define unreasonable people as those who refuse to change themselves to suit the dominant worldview, but instead insist on changing the world to suit their view.  Applying this idea to socially progressive entrepreneurs, in The Power of Unreasonable People the authors show what unreasonable people are doing to solve the world’s seemingly intractable problems.  Both social entrepreneurs themselves, Elkington and Hartigan provide several frameworks for understanding ways that social entrepreneurs apply themselves to problems, in addition to overviews of the types of intractable problems that social entrepreneurs have been working on.  Finally, the authors hypothesize about how to take the small-scale social entrepreneurship and scale it up to the larger scale of making social entrepreneurship a crucial part of society’s ability to deal with problems.

Although the authors show that society’s problems are solvable, and provide many examples of social entrepreneurs working on solving those problems, they could have been more effective at showing how social entrepreneurs actually go about solving problems.  Nevertheless, The Power of Unreasonable People provides an uplifting and practical look at the phenomenon of social entrepreneurship and its ability to change the world.

Summary
The book is organized into three parts.  The first analyzes the types of social ventures that entrepreneurs can use to solve social problems and the funding types available to them.  The second part identifies the market opportunities and issues that social entrepreneurs tend to work on.  The third part focuses on creating access to these solutions, and scaling the social ventures on an almost viral level – so that the unreasonable people and their ideas actually do change the landscape of society so that they are no longer considered unreasonable.

Section 1: Building Enterprises: Types of social ventures:

There are essentially three types of ventures that social entrepreneurs set up to accomplish their goals: leveraged non-profits, hybrid non-profits, and social businesses.  Each has its own unique strengths and weaknesses which social entrepreneurs need to consider when choosing how to solve a specific problem.

1. Leveraged non-profits: This type of social venture is entirely dependent on outside sources of funding for support.  Because it does not attempt to make any money through its operations, it is most adapted to working on non-market needs.  The authors point out that the plethora of foundations and grants available in the US (the US government gives more per capita than any other country, and US citizens donate a larger percentage of their income than citizens of any other country) make it easy for social entrepreneurs to rely on this type of funding.  Abroad, however, entrepreneurs are forced to come up with more creative, revenue generating ways to support their operations.  The authors imply that this necessity has led to more innovation in social venture models in other countries.  However, it is also clear that non-market problems, such as access to education, probably should not be seen as potentially revenue generating.  So even abroad, many education-based ventures operate as traditional non-profits that rely on outside funding.

2. Hybrid non-profits:
This type of venture combines typical financing techniques for non-profits, such as reliance on philanthropy, with a revenue model that helps to sustain the organization.  Elkington and Hartigan present this type as the most experimental of the three social venture types.

3. Social Business:
This type of venture is profit making and therefore self-reliant.  It is not, however, profit maximizing, and in fact this type of venture’s goal is really to maximize its social return, but make enough money to sustain itself.  But that’s not to say that profits should be thought of negatively.  Instead, these ventures view revenues as validation of what they’re doing, so maximizing revenues in some sense means maximizing social mission.

The funding of these types of ventures are all varied, and although certain types of ventures are obviously better suited to certain types of funding, the overall message is that most social ventures are currently reliant on philanthropy, but want to decrease that dependency.  The best way that Elkington and Hartigan describe this trend is that these ventures are trying to get away from “fossil” funding sources, and towards more “renewable” sources.

Section 2: Creating the Markets of the Future:
Once Elkington and Hartigan create their framework for understanding different types of social ventures, they shift their focus to examples of social entrepreneurs and the issues that they work on.  The authors’ thought is that the greatest market opportunity lies in what society sees as the greatest challenges, mainly the UN’s Millennium Development Goals.  While it is clear that these social entrepreneurs do not have the answers to these problems, they are motivated to find solutions to some of them on a small scale.  But Elkington and Hartigan’s main point here is that a social entrepreneur’s willingness to see these problems, such as poverty, disease, and nutrition, as opportunities for their ventures is what separates them from traditional businesspeople.

Furthermore, because these issues represent possibly the greatest market failures in the world, they are prime areas for alternative types of social ventures other than profit-maximizing businesses.  These issues are typically the ones that motivate social entrepreneurs to come up with seemingly radical new ventures that create solutions.  Because they are motivated by these solutions, and because they are not necessarily tied directly to profit, they are suited to work and thrive in this space of seemingly intractable problems.

Section 3: Leading Sustainable and Scalable Change:
Once the structure of social ventures and their goals have been defined, and examples of success have been discussed, the authors turn to the problem of scaling-up these solutions in a sustainable way.  If the overall goal is to create a more sustainable and socially just world, then clearly the solutions that these social entrepreneurs have come up with on a small scale need to be magnified or applied to a world scale.

Unfortunately, there does not seem to be a clear way of doing this, and Elkington and Hartigan mostly provide case studies of different ways that solutions have been successfully scaled up, but they are unable to generalize.  The assumption here is that even though there is no clear answer for how to scale up these ventures, the social entrepreneurs are the innovators, and hopefully can find ways to succeed on a larger scale.

One of the crucial ideas that the authors discuss is whether traditional business is a necessary part of this scale-up solution, since it is already working on a scale necessary to affect global change relatively quickly.  The answer that the authors give is that business might be necessary, especially if greater transparency and accountability are enforced at corporations.  Creating mechanisms of transparency and accountability, in addition to other innovations in techniques of valuation, certification, emissions trading, and land reform, are all areas that the authors believe social entrepreneurs could be particularly impactful.

Elkington and Hartigan’s main point in this book is to point out that there has been a void in businesses’ ability or willingness to meet social and non-market demands, and that social entrepreneurs are capable of filling this void.

The Power of Unreasonable People successfully provides information on various social entrepreneurs and a structured way for thinking about social ventures in general.  Because of this, the book should be helpful for people who are looking into various social entrepreneurship areas, either as potential entrepreneurs or just researchers.  It also serves as a good starting point for understanding various types of social ventures, and looking for case studies

However, the book could have done a better job of profiling the “unreasonable” people who create these social ventures.  Even though the book is riddled with short examples about what social entrepreneurs do and solutions that they have come up with, there is never an analysis that is in-depth enough, or that provides enough understanding of the social entrepreneurs to really understand their decision making process.

But the authors’ response to this claim would most likely be that it is impossible to fully characterize or predict the behavior of social entrepreneurs, and that it is their innovation that defines them.  Therefore, over-analyzing certain decisions that they make only diminishes the overall understanding of the valuable solutions and ventures that these unreasonable people create.

But regardless of whether the book successfully portrays or describes social entrepreneurs, what it does do well is highlight the ability of creative people to come up with ideas that can solve the world’s problems.  Traditionally, people have said that what business does best is innovate to meet human demands.  The Power of Unreasonable People gives hope that business and entrepreneurship will continue to be able to perform this role, whether or not the ideas and people behind the innovations we need are unreasonable, passionate, or just plain stubborn.

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