When Harvard Business School launched its Social Enterprise Initiative (SEI) in 1993-1994, few academic institutions were conducting serious research and teaching about how to create social value through the nonprofit, private, and public sectors.
Now, on the eve of SEI's 10th anniversary, we all have a better understanding of how both commercial and non-profit organizations can contribute to improving not only society but also the economy as a whole. According to the SEI, the nonprofit sector comprises 7 percent of U.S. gross domestic product, employs more than a million people, and mobilizes 7 million volunteers. Worldwide, the sector makes up almost 5 percent of the GDP.
In this e-mail Q&A, Professor James E. Austin, Chair of the HBS Social Enterprise Initiative, discusses the development of the program and its importance to Harvard Business School.
Manda Salls: What was the origin and mission of the Social Enterprise Initiative?
James Austin: When we began the Social Enterprise Initiative, the opportunity that motivated us was to mobilize the talent and capacity of HBS to enhance the leadership, managerial competency, and organizational capacity of social-purpose institutions and undertakings. The apparent level of student and faculty interest was relatively low, but our belief was that there was significant latent demand.
| The apparent level of student and faculty interest was relatively low, but our belief was that there was significant latent demand. |
The major challenges to pursuing that opportunity were, first, gaining credibility and commitment within HBS for such a new endeavor, and, second, demonstrating to the relevant external practitioner and academic stakeholders that we could create significant value added.
Q: What was response to the program and the significant challenges to overcome?
A: It was refreshing and encouraging to experience the strong positive response to the SEI from HBS students, alums, faculty, and staff. By providing support, encouragement, and intellectual legitimacy, the Initiative fostered the blossoming of Social Enterprise educational activities within the HBS community. Our vigorous research program pushed outward the knowledge frontiers and created a rich portfolio of courses and learning opportunities for MBA students and Executive Education practitioners.
Any significant entrepreneurial undertaking such as the SEI encounters countless barriers because organizational innovation implies changes in strategy, structure, systems, and attitudes. And if one continues to push on the edge of the envelope, as is our norm, then new barriers arise. Perseverance and continual learning are critical to overcoming these.
Q: What are the greatest challenges facing leaders of nonprofits today?
A: One of the greatest complexities in managing social-purpose organizations or social undertakings by for-profit companies is measuring success. It is much more difficult than in the commercial business world. At the core of this task is the organization's mission. Clarity of mission is the starting point and devising corresponding meaningful outcome measures requires considerable creativity and analytical capacity. Furthermore, the challenge is integrating those measures into a managerial performance system. This is an ongoing area of research and training in the SEI.
Q: In general, is interest in social enterprise topics increasing?
A: There has been a clear and significant rise in interest in social enterprise topics within HBS and other business schools. The magnitude and depth of student interest has increased dramatically, particularly over the last decade. Our alumni are delighted at this increased attention by the School because it corresponds to their experience of high engagement in social sector activities subsequent to graduation. They see the School's actions in the Social Enterprise arena as enabling HBS to realize its full potential as a developer of leaders who make a difference in the world.
The more the School supports and engages in social enterprise research, course development, student activities, and alumni engagement, the greater is the social value created, which in turn motivates broader and deeper engagement. It becomes a virtuous circle of social entrepreneurship.
Q: Can you tell us about some of your favorite SEI achievements in bringing social enterprise to the forefront of management education?
A: There have been innumerable actions and programs that have contributed to the leadership role and educational contributions of the SEI. It is precisely the totality of the effort that is impressive. What has been particularly satisfying to experience, and certainly critical to success, is the deep and broad commitment of the School's leadership, faculty colleagues, staff, students, and alums to this effort. That is where the core energy comes from and where sustainability resides.
Q: As you reflect on your experiences and prepare for the next ten years in social enterprise, what are the challenges and areas of focus?
A: Knowledge generation is at the heart of our process. Generating new intellectual capital and then developing it into transformational learning experiences for practitioners is how we will continue to add significant value to the world. Our collective process now is to generate that intellectual agenda. 
A Ten-Year Celebration at HBS
In April 2004, Harvard Business School will celebrate the 10th anniversary of the Social Enterprise Initiative, bringing together invited alumni, practitioners, faculty, and students who have contributed to the success and growth of social enterprise.
Following a retrospective on the innovation and impact of social enterprise, the event will look forward to the next ten years through a panel and case discussion facilitated by HBS faculty members. Speakers will include Harvard University President Lawrence Summers; HBS Dean Kim Clark; John Whitehead (HBS MBA '47), founding supporter of the Social Enterprise Initiative; and Social Enterprise faculty James E. Austin, Rosabeth Moss Kanter, and V. Kasturi Rangan.