Sally Osberg, President/CEO, Skoll Foundation: Building the Field of Social Entrepreneurship

September 6, 2006
Sally Osberg, President/CEO, Skoll Foundation: Building the Field of Social Entrepreneurship

As international labor expert Susan Davis notes, we live in an age of entrepreneurship. From Palo Alto to Austin, Bangalore to Boston, the rapidly changing, technology-intensive economy of the twenty-first century is generating innovation — and wealth — at a breathtaking pace. Unfortunately, far too many people have yet to enjoy the benefits of this entrepreneurial revolution. Mired in poverty, hampered by outmoded gender and generational attitudes, lacking access to meaningful work, tens of millions struggle to survive on the equivalent of a dollar or two a day.

In response to that grim reality, we are seeing a "revolution in the organization of human society," argues Bill Drayton, president and founder of the social change organization Ashoka. Characterized by the emergence, in country after country, of "the same sort of open, competitive-yet-collaborative relationships that marked the birth of the modern competitive business sector three centuries ago," this social entrepreneurial revolution has gone little noticed by politicians or the press. Nevertheless, says Drayton, "when the history of these times is written, no other change will compete with it in terms of importance."

Earlier this year, Philanthropy News Digest spoke with Sally Osberg, president and CEO of the Palo Alto-based Skoll Foundation, about the emerging field of social entrepreneurship and the foundation's efforts to advance systemic change by investing in, connecting, and celebrating innovative nonprofit organizations and social entrepreneurs around the globe.

Osberg, who joined the foundation as its first president and CEO in 2001, has more than twenty years of social sector leadership experience, with special expertise in organizational development, strategic positioning, and innovative public programming. Prior to joining the foundation, she was executive director of the Children's Discovery Museum of San Jose, which she guided from its inception to national recognition as a leader in the museum field and the broader arena of informal learning. The museum received the National Award for Museum Service from the White House in 2001. In addition, she has held adjunct faculty positions at Hamilton College and Utica College, where she was co-director of the Writing Center.

Osberg has served as a member of the board and president of the Association of Youth Museums, as well as on the board of the American Association of Museums and on both the Silicon Valley chapter and national boards of the American Leadership Forum. Currently, she sits on the boards of the Oracle Education Foundation and the Children's Discovery Museum, and on the advisory board of the John Gardner Center for Youth and Their Communities.

Osberg earned her M.A. in literature from the Claremont Graduate School and her B.A. in English from Scripps College, where she was elected to Phi Beta Kappa. In 1998, she received the John Gardner Leadership Award from the American Leadership Forum, and in 1999 the San Jose Mercury News named her as to its "Millennium 100," recognizing her as one of the key individuals who have shaped and led Silicon Valley. Earlier this year, she was inducted into the Junior Achievement Business Hall of Fame.

Philanthropy News Digest: What is a social entrepreneur? And why has the Skoll Foundation decided to invest its resources in building the field of social entrepreneurship?

Sally Osberg: For us and for our founder, Jeff Skoll — a true social entrepreneur himself — social entrepreneurs are the frontline drivers of positive social change globally. We see them as pioneers, as the folks out there on the forefront who are innovating and providing the models to bring about the kind of change needed in the twenty-first century. They're like business entrepreneurs, in that they have the ability to identify an equilibrium that is unsatisfactory. But true social entrepreneurs don't stop there. They take the next step by putting in motion a strategy or creating a better model to achieve a new, more satisfying equilibrium — one that benefits those whose opportunities are limited by existing systems or whose needs are neglected by market gaps or failures.

PND: What do you mean by "equilibrium"?

The social entrepreneur sees the limitations of an existing equilibrium... and offers a new solution with the potential to benefit those not served by the existing model....

SO: At the Skoll Foundation, we're systems thinkers: for us, equilibrium describes a stable state, generally economic or social, controlled by and benefiting established entities. It's a neutral term in itself, but for the social entrepreneur it represents both challenge and opportunity. The social entrepreneur sees the limitations of an existing equilibrium — the pharmaceutical industry's focus on drugs for developed country markets would be a good example — and offers a new solution with the potential to benefit those not served by the existing model.

Most people think of Muhammad Yunus, the founder of Grameen Bank, as the quintessential social entrepreneur — and he is, having demonstrated, almost single-handedly at the outset, the credit-worthiness of poor people in the developing world, which then drove him to launch the microcredit revolution. I'd like to suggest, however, that someone like Robert Redford — whose name doesn't usually surface in conversations about this field — is also a great example of a social entrepreneur. It was Redford, back in the 1970s, who identified Hollywood's limitations, seeing it as an equilibrium controlled by the studios and not at all suited to finance or nurture the emergent independent filmmaker. That realization, in turn, led him to a series of innovations that ushered in and helped build the independent film industry. It's thanks to his vision and creativity in establishing the Sundance Institute and Festival that today documentaries like Bowling for Columbine or An Inconvenient Truth — produced, proud disclaimer here!, by Jeff's media company, Participant Productions — can be successful at the box office and also have an extraordinary impact in terms of the public debate.

Let me give you another example, this one from our portfolio. Andrea and John Coleman were traveling in Africa in the 1990s when they were suddenly struck by the number of rusting trucks and vehicles on the side of almost every road they traveled. Well, it didn't take long for them to realize that, given the state of Africa's roads, motorcycles were a far more practical and efficient means of delivering services, especially healthcare services, in rural areas. So they set up an organization called Riders for Health to do just that. But they didn't stop there. They also understood that teaching local people how to sell and repair motorcycles, establishing the equivalent of micro-businesses, needed to be part of their strategy. It's that kind of systemic approach, that desire to establish a new equilibrium, a more efficient way of getting benefits to populations that traditionally have been marginalized, that we look for in the social entrepreneurs we support.

PND: Do you and your colleagues consider social entrepreneurship to be a field unto itself, or is it just one tool in the larger philanthropic toolbox?

SO: We view it as a field of practice that is still young but on its way to becoming a field of knowledge. In the same way that entrepreneurs tend to be the drivers of innovation in business, creating new business models that can turn into successful industries, social entrepreneurs are the frontline innovators who create new, more successful ways of bringing about positive social change. At the same time, we think it's important to develop knowledge around the innovations and successful paradigms that social entrepreneurs create, so that the media and researchers and policy makers have access to the data needed to convince people that these new models are primed for the level of investment required to bring about large-scale social change. Remember, a century ago there was no field of business per se, while today there are business schools at universities around the world, as well as recognized sub-fields in areas such as accounting and finance and strategy and entrepreneurship. We think social entrepreneurship is at a similar stage. That's why we created the Skoll Center for Social Entrepreneurship at Oxford University, to bring together knowledge and best practices in the field of social entrepreneurship and provide resources for those interested in and committed to bringing about positive social change.

That's also why we "connect" and "celebrate" social entrepreneurs in addition to investing in them and their organizations. Jeff's core belief is that the widening gap between the "haves" and "have-nots" in the world is the root cause of most of the world's big problems — environmental degradation, disease, conflict — and that it's in the enlightened self-interest of those "haves" to become engaged, lots more engaged, in making a positive difference. So for us, the "celebrate" piece of our work is key, with media the tool we use to activate their interest. The New Heroes, a four-hour series profiling thirteen social entrepreneurs that we underwrote and that was broadcast last summer on PBS, was our first big initiative in this area.

PND: The world is a big place, with lots of problems and lots of people working to solve those problems. How does the Skoll Foundation identify social entrepreneurs in which to invest? And have you found that there are commonalities among your grantees, irrespective of nationality or the particular focus of their work?

We try to operate as efficiently as possible, which means we take a networked approach to identifying social entrepreneurs....

SO: We try to operate as efficiently as possible, which means we take a networked approach to identifying social entrepreneurs. Consequently, we work with partners all over the world — the AVINA Foundation in Latin America and the Asia Foundation for the Far East, as well as with Ashoka, the Schwab Foundation, and others — to identify folks who fit the profile we're looking for. We're also in touch with issue-area experts. Just this morning, in fact, Ruth Norris, who oversees our Skoll Award for Social Entrepreneurship, Lance Henderson, our VP of Program and Impact, and I were on the phone with folks at the Carter Center discussing innovators in the peace and human rights fields.

Second, we have an annual competition, the Skoll Awards, that is open to all comers — although we do apply rigorous criteria in selecting the winners. For starters, we're looking for people with a demonstrated track record who have developed or identified an innovative solution to an important social problem and are poised to expand their impact significantly with the kind of investment and services the Skoll Foundation can provide. We also consider issue areas — in fact, we've identified six that are spawning tremendous social innovation: human rights, health, environmental sustainability, peace and security, institutional responsibility, and economic and social equity. More than the right issue, however, we want to see the right issue in the right place. Ann Cotton, the founder of the Campaign for Female Education (CAMFED), has worked brilliantly and with great passion and impact for more than a decade to bring education to young girls in Africa. That's the right issue in the right place.

Our third criterion has to do with finding social entrepreneurs at an inflection point. We're looking for people who have a compelling proof of concept and who are poised to move up the "S" curve and take their idea to scale, whether that means scaling deep within a particular region, moving from one region into multiple regions, expanding from one country into multiple countries, or influencing significant change within a system. We're looking for that inflection point and that readiness to move up the "S" curve in a significant way.

PND: What's an "S" curve?

SO: An "S" curve graphs the arc of an innovation's diffusion, from its modest acceleration at the outset as the model is proven and taken up by early adopters, through the more dramatic rise described by the neck of the "S" when the innovation is appropriated by whole markets, constituencies, communities, and then its tapering off — what we'd see as evidence of a new equilibrium — once peak adoption is achieved. In the social realm, of course, real systems change of the kind driven by innovators like Muhammad Yunus can take decades. It's because of the longer time horizon over which real social change takes place that I prefer the term "S" curve over the more common, and to my mind profligate, use of the phrase "going to scale."

PND: Sorry, I interrupted you. You were saying?

SO: That's okay. Anyway, as the applications come in, they're reviewed by two staff members and are scored against a rubric we've developed. Out of the initial group of applicants we come up with a semi-finalist pool and make a point of meeting all the semi-finalists personally — if not in the field, then in a location that's convenient for them. It's vital, we feel, to get to know the people behind the ideas and to establish a basis for trust from the outset. Jeff and the board are involved throughout the process — not in the heavy lifting of due diligence, of course, but in developing the criteria and staying abreast as the pool takes shape. But it's the board that makes the final decision on the finalists. While the process is not without its flaws, it's rigorous, it's thorough, and we feel as if we improve it every year.

PND: Have you learned anything about the personality of social entrepreneurs over the four or five years you've handed out Skoll Awards?

We've learned that social entrepreneurs are almost always what we call, in John Gardner's wonderful phrase, 'tough-minded optimists'....

SO: Well, we've learned that social entrepreneurs are almost always what we call, in John Gardner's wonderful phrase, "tough-minded optimists." These aren't folks who believe they can parachute into a situation and bring about instant change. They understand that making change takes time and is complicated, and they respond to that reality with a tenacity and level of commitment that is impressive. They also recognize the extraordinary potential in the billions of poor people who inhabit the planet and are absolutely committed to unlocking that potential and helping people realize their gifts. Lastly, they almost always possess extraordinary integrity. In terms of their honesty, personal ethics, and willingness to be transparent, these are people who are leaders in the truest sense of the word, and it's inspiring to be around them.

PND: Do social entrepreneurs have a responsibility, in your view, to be innovative? Or is it enough if they take a tried-and-true idea and tweak it to achieve better results?

SO: That's a good question. Innovation is identified with entrepreneurship, even if it means taking a proven idea and applying it in a new way or in a different context. Again, Ann Cotton's CAMFED is a perfect example. Ann realized that the primary barrier to female education in sub-Saharan Africa wasn't cultural, it was economic; it was the endemic poverty of the people in those countries. So she developed a scholarship program for girls, and in the dozen or so years since she it was founded, the organization has provided scholarship support to more than eighty thousand young women in Zimbabwe, Zambia, Ghana, and Tanzania. Now, scholarships are not a new idea, but the way Ann re-imagined the process — empowering committees at the district level to identify young women, girls really, who, but for this support, most likely would drop out of school and marry and whose talents and potential would be lost to their communities and countries as a result — was.

PND: Are your grantees expected to develop a plan to achieve sustainability?

SO: In the same way that there's no holy grail out there in terms of the sustainability of innovative business models, there's also no guarantee that a social entrepreneur working in the gray area between the marketplace and civil society will be able to develop a self-sustaining revenue model for his or her idea. On the other hand, for many startup organizations there is such a thing as a healthier revenue mix, a mix that is more aligned with the mission of the organization as it matures and/or paradigms change. That's where we try to fit in. At the outset of our engagement with an entrepreneur, we'll analyze the financial model he or she has developed and will work with them to refine the model so that it's more sustainable. For one organization that might mean more public-sector support, while for another it might mean a more robust earned-income stream or greater volunteer participation. Again, for us the question is not, "Is this model self-sustaining?" but rather, "How can this model be aligned with the mission of the organization to help ensure its sustainability over the time needed to make meaningful change?"

PND: What is your time horizon for investing in a venture? And how do you address the exit-strategy question?

SO:With the Skoll Awards, our initial commitment is for three years. From that portfolio, we will then identify social entrepreneurs who are really delivering outstanding results and whose innovations show systemic impact, and they become eligible for another three years of follow-on funding. Our assumption is that, at the end of that period, they will be on track with a more sustainable model than they had at the outset of their engagement with us. That doesn't preclude the possibility of additional or continued support from us — that depends on the performance of the organization in question and whether there really is an opportunity there to bring about equilibrium-shifting change.

PND: The vocabulary you and your colleagues use in talking about social entrepreneurs and social entrepreneurship borrows heavily from the venture capital world. What are the advantages of looking at social change through a business/venture capital lens?

SO: It's really less about business and more about discipline and results. As Jim Collins has pointed out — and here at Skoll we agree with him completely — greatness is not a function of whether you're a successful business or a successful nonprofit; it's defined by your discipline, your focus, and your results. We look for that kind of discipline, that kind of strategic perspective, and the efficiencies, commitment, and accountability that, in our view, are indicators of whether a social entrepreneur is likely to be successful or not.

In the same way that a public company has shareholders, social entrepreneurs have stakeholders....

Look at it this way. In the same way that a public company has shareholders, social entrepreneurs have stakeholders. In fact, in some ways social entrepreneurs work in a more complex milieu than your typical shareholder-owned public company. They don't have the benefit of a single criterion, the bottom line, against which they can measure their performance. The bottom line for a social entrepreneur is social benefit, which is much harder to quantify and measure. At the same time, social entrepreneurs have to be concerned about revenues and financial performance. They have to be concerned about accountability and transparency and governance. They need a solid organizational structure and have to worry, just like for-profits, about recruiting and retaining top-notch employees. At the end of the day, they have to worry about everything that a public company has to worry about — as well as social return.

PND: So to the extent that a social entrepreneur is able to demonstrate results, that's a good thing, right?

SO: Yes. But it's important for people to understand that real social change — the kind of equilibrium shift I've been talking about — and measuring that change is not easy. Yes, it's easy for an organization like CAMFED to measure the number of girls who have received scholarships, but then tracking those girls beyond their graduation, evaluating their productivity as citizens, their contributions to their communities and families and societies — that requires longitudinal measurement which, while tougher and more expensive to carry out, ultimately is more important. I like to cite the example of Andrew Carnegie's libraries in this context. You can count the number of libraries that were built with Carnegie money, you can count the number of bricks needed to build them, you can probably even track the circulation rates in those libraries. But it's much harder to measure the value of those libraries as an educational resource for a young democracy at a pivotal point in its social and economic development.

PND: Do you believe the traditional distinctions between the for-profit and nonprofit sectors are blurring? And if so, is that a good thing?

SO: Yes and yes. And I'll tell you why. In some cases, the single bottom line is no longer a sufficient measure of whether a public company is doing well or not. Take the reality of climate change and the environmental and economic risks inherent in continuing our reliance on fossil fuels. We're beginning to see more and more businesses and their management teams come to the realization that our dependency on oil comes with costs that eventually will impact their businesses, if not their bottom lines, and they're beginning to appreciate the importance of factoring those costs into their business models. In fact, there's a growing awareness in corporate America that companies need to have a triple bottom line — that they should be accountable for the social and environmental impacts of their activities, as well as their profits.

PND: What about the other side of the equation? Is there a danger that, as nonprofits and social entrepreneurs become more focused on results and demonstrating those results, they'll become more risk averse and less willing to innovate?

SO: That's where the entrepreneur will prevail. Whether they happen to be social entrepreneurs or business entrepreneurs, that desire to innovate, to take risks, is just too deeply embedded in the typical entrepreneur's DNA to be compromised by measurement for the sake of accountability. In fact, it's usually just the opposite. Entrepreneurs are driven to demonstrate results, they're driven to prove that their innovation is worthy of investment and can achieve the kind of impact they think it can. So, yes, maybe for a more traditional organization the increased emphasis on demonstrating results could dampen its desire to innovate. But not for the entrepreneur, and certainly not for the social entrepreneur.

PND: Earlier this summer, the world was taken aback — astonished might be a better word — when Warren Buffet announced that he had decided to give the lion's share of his fortune, about $37 billion, to the Bill and Melinda Gates Foundation and three smaller foundations run by his children. Are there implications in Buffet's decision for the field of social entrepreneurship?

SO: Well, I think there's a pretty big challenge for social entrepreneurs in that most of them aren't operating at a scale that can attract significant investment. Which doesn't mean that they can't begin to prepare for that kind of investment. For example, Victoria Hale, the founder, chief executive officer, and chairwoman of the Institute for OneWorld Health, the world's only nonprofit pharmaceutical company, is a grantee of the Gates Foundation and a social entrepreneur with whom we work. In fact, we're her second largest investor after Gates. Now, the Gates Foundation's investment in OneWorld has been in a specific drug that OneWorld is developing to combat visceral leishmaniasis, also known as black fever, which kills two hundred thousand people a year, primarily in India, and for which a readily available treatment, paromomycin, exists. The drug has made it through phase III clinical trials, and OneWorld has submitted an application for its approval to the Drug Controller General of India. While the Gates Foundation has been very focused on providing OneWorld with the resources to carry out the clinical trials, to negotiate with the Indian government, and to meet the regulatory hurdles — all requiring very-large scale investments — we've been providing additional support so that it can build its capacity to develop a pipeline of drugs targeting other neglected diseases in the developing world.

So again, to answer your question, there's an opportunity for organizations like the Skoll and Gates foundations to work together, on the impact side as well as in helping to ensure that organizations with effective programs and a proven model are able to scale those programs up to deliver maximum social benefit.

PND: In a recent thread on Social Edge, the online community created by the Skoll Foundation for social entrepreneurs, one participant suggested that the next ten years will prove to be the tipping-point decade — in a Gladwell-ian sense — for many of the urgent challenges confronting humanity. Do you agree?

SO: I'm glad you mentioned SocialEdge since I haven't really spoken to the "connect" piece of our strategy! As a small shop, we're not able to support all the great folks out there who see themselves as social entrepreneurs, but through SocialEdge we provide a platform that makes it possible for thousands and thousands of those change-makers to learn from one another, anytime, anywhere.

But to your specific question. I think we're seeing an enormous ground swell of civil society actors who believe that grassroots initiatives can help bring about positive social change in communities around the world. Literally millions and millions of nonprofit and nongovernmental organizations have been formed around the world in the last two decades. So in that sense, yes, the next ten years could be a tipping point for global civil society. But the sobering fact for all of those organizations is the scope of the problems — from economic inequality, to gender disparities, to global climate change — that need to be tackled. And in order to do that successfully, in order to really make an appreciable difference, NGOs and nonprofit organizations are going to have to be better networked, among themselves and with the public and private sector, and do a much better job of coordinating their efforts.

In order to make an appreciable difference, NGOs and nonprofit organizations are going to have to...do a much better job of coordinating their efforts....

At the root of all this, and maybe it's the challenge of challenges, is leadership. But social entrepreneurs really do offer a paradigm for a new kind of leader, one who melds the discipline of business with the perspective of those less fortunate, less advantaged, and brings that tough-minded optimism I described earlier to bear on the challenges confronting our communities, our countries, and the planet.

PND: And, of course, technology makes all of that much easier to accomplish.

SO:Absolutely. One of the social entrepreneurs with whom we've been working, Jim Fruchterman, the CEO of Benetech, argues that while it's possible to create technology solutions that serve humanity and empower ordinary people, the markets won't encourage or support those applications because they don't produce the desired level of profit. It's folks like Jim who are bringing these technologies to bear on problems such as landmine detection and human rights violations and, in the process, are changing the world for the better.

PND: Your boss, Jeff Skoll, quoting the journalist David Bornstein, likes to point out that, over the last twenty years, the world has produced many more social entrepreneurs than terrorists. That's not only validation of the work you and your colleagues do, it's a source of hope for the rest of us. Does one have to be an optimist to engage in this kind of work?

SO: Yes, but again, a tough-minded optimist, which is how I'd describe Jeff, too! It's okay to think you can change the world, but you won't unless you also combine that ambition with the rigor of business thinking and the discipline of being focused on the results you want to achieve. Optimism alone is not sufficient, but it's yin to the yang of our work — that focus and discipline — at the Skoll Foundation; it's what inspires and drives us.

Earlier this summer, I traveled to Africa, to Zambia and South Africa, where I had an extraordinary time in the field with Ann Cotton and Taddy Blecher, another of our Skoll Awardees, experiencing first-hand the impact of their work through CAMFED and CIDA City Campus. And, you know, what terms like "social entrepreneur" or "S-curve" or "equilibrium" can't describe is what hope looks like. Hope is what I saw, what I felt, what I realized was very much alive in those countries — hope in the faces and voices of thousands of young people, as well as in their teachers, their parents, their siblings, and their communities. Hope that their lives mattered, that they had the power to create better futures for themselves and their villages and their countries. That's the promise of social entrepreneurship. And that's what the Skoll Foundation will continue to invest in and celebrate.

PND: Well, thanks very much for your time this afternoon, Sally.

SO: You're welcome. Thanks for your interest.

Mitch Nauffts, PND's editorial director, spoke with Sally Osberg in July. For more information on the Newsmakers series, contact Mitch at mfn@foundationcenter.org.