What can the social innovation ecosystem learn from the tech sector in Lebanon? [Opinion]
Social entrepreneurship is increasingly seen as the key for sustainable development in diverse contexts worldwide. As developed countries seek to increase the positive social and environmental benefits of economically productive companies, developing countries seek to increase the economic benefits of socially and environmentally focused organizations.
Lebanon is a unique case in that it presents its share of socioeconomic and geopolitical challenges, yet contains many of the necessary ingredients for an entrepreneurial ecosystem: a thriving civil society, investors from the large and thriving expatriate community, public interest in investing in innovation, and international organizations supporting both the civic and public sectors.
In the past several years, we have seen increased interest in social entrepreneurship in Lebanon slowly leading to the formation of an ecosystem. However, in order to build a healthy one, stakeholders are advised to be mindful of the process that governs it, and be wary of the threats that may be looming on the horizon.
At the national level, we are seeing some efforts to develop a common framework to ‘regulate’ social innovation and entrepreneurship. This is a critical ingredient if we want social enterprises to thrive and to avoid being framed as corrupt as with the third sector. Social entrepreneurship is not a sector of activity, nor a type of enterprise. It goes far beyond a simple definition or a legal form, making it challenging to put in a frame/box. Regulations and potentially, a dedicated body to orchestrate the diverse stakeholders and moving parts could help. A dialogue around this has already begun. Building on the previous work done to grow the technology innovation sector in Lebanon, are there any lessons learned that could be applied to the social innovation sector?
Below we provide five observations and recommendations for pitfalls to be avoided.
The majority of initiatives to date have been led by stakeholders, including consultancy groups, international donors, local and international support organizations. Very few social entrepreneurs took part in the discussion. This top-down, inorganic approach is doomed to fail. As mentioned by Philip Auerswald, a prominent scholar, author and founder of the Global Entrepreneurship Research Network (GERN), policymakers should listen carefully to what entrepreneurs have to say about their challenges and needs. Social entrepreneurs must be at the heart of the discussion and be the instigators of this dialogue. This is a call to action for social entrepreneurs. Despite being too busy trying to secure funds, to serve their vulnerable target groups, and trying to innovate, scale, reduce cost, or increase impact, they must assume their responsibility and take the lead in such efforts. It is also a call for the other actors in the ecosystem to ensure that all the voices are heard and to make sure that the process is inclusive of all points of views.
This leads to the second pitfall that must be avoided. As discussion between the different stakeholders is advancing, we see two visions of social entrepreneurs unfolding. Civil society largely embraces and believes in the ‘social’ aspect of SE and is less excited about the ‘entrepreneurial’ mindset that SE entails, hence promoting a nonprofit social entrepreneurial model. On the other hand, for the support organizations such as incubators and accelerators who are traditionally accustomed to working with commercial entrepreneurs, the for-profit SE model is preferred. No one ideology should dominate. For an efficient healthy and diversified ecosystem to thrive, it must include the broad spectrum of social entrepreneurs, from the nonprofit SEs, for profit-SEs, social businesses in addition to other types of hybrid organizations. For an SE ecosystem to be hijacked by one ideology is a death sentence and everyone loses.
The third risk comes from individuals and organizations without a track record in contributing to measurable social outcomes that generate revenue. These are securing resources dedicated to building the SE sector, by just participating in the trend. Funders must be cautious when allocating limited resources, as it is too easily for a large percentage of resources to go to those who are simply looking to benefit from the current hype, but do not have a long term strategy or dedication to this field.
For social entrepreneurship endeavors to be sustainable in an embryonic ecosystem, some pieces of the puzzle, mainly pertaining to financing, are still missing. Most financial support targets nascent social entrepreneurs who are in the ideation or first stages of their endeavor. The bulk of this financial support comes from international organizations that channel projects through local partners and support organizations. Most commonly, this translates in SE competitions which cost hundreds of thousands of dollars, with very little money trickling down to the entrepreneur. Specifically, large funds are dedicated to a multitude of small prizes alongside a series of trainings, coaching, and workshops. This is important to include in a nascent SE ecosystem to increase awareness, attract new social entrepreneurs, and create a dynamic and innovative environment. However, those entrepreneurs who survive the idea stage are left struggling for support in the growth stage. This can lead to mission drift as the social component of the project is put aside to focus on financial survival. This problem largely occurs due to the shortsightedness of funders who want to quickly report results and who prioritize quantity over quality. More long-term support is needed for existing social entrepreneurs across the different stages of their life cycle. Venture philanthropy is one way to do this. It is defined as the application or the redirection of principles of traditional venture capital financing to achieve philanthropic endeavors. We also need to add to the investment supply chain with impact investing, corporate investing, angel networks, social impact bonds, and other innovations beyond the usual suspects.
On a related note, it is key not to replicate the third sector mistakes and become too dependent on international aid. Despite its relative abundance compared to other means of financing, it leads to dependency, and pushes us towards adopting external priorities instead of setting our own action plan and agenda. Moreover, it defies the prime concept of social entrepreneurship which is sustainability. Beyond the ‘traditional’ sources of financing that are available to social entrepreneurs, an alternative would be to implicate the Lebanese diaspora. The remittances from expatriates reached $7.6 billion (17 percent of the GDP) in 2016. This source of financing would be more organic. It also creates a sense of purpose and belonging to reconnect diaspora with their home country, while giving them investment opportunities with a positive social impact.
We are still at the start of the road when it comes to building a social innovation ecosystem in Lebanon. There is a lot to be learned from the mistakes – and the successes – of the commercial innovation ecosystem. At the core is the principle that the ecosystem must be designed around and driven by the entrepreneurs, not the other way around. If we turn up the volume and tune in to the true drivers of change, we will achieve much more substantive results with fewer resources wasted. After all, at the heart of social entrepreneurship is the desire to create positive social change. If we keep doing more of the same, how can we expect to achieve change?