22 Dec Tech-based Social Enterprise: Is it an oxymoron?
This is a summary of and reflections based on talk given on 16th December 2020 by Ms. Kavita Vemuri, Assistant Prof, Ph.D, IIIT Hyderabad on #Emergingtechnologies and #Socialenterprises at the 3rd Social Café, the monthly event of the Telangana Social Startups Network, a city-wide initiative for the Social Impact Ecosystem being created under the Telangana State Innovation Cell (TSIC) and anchored by AIC-IIITH.
Social Enterprises are hybrid entities which seek to deploy innovation and entrepreneurial energy to solve social problems through a for-profit model and thus make social impact. A subset of this seeks to deploy the massive potential of Emerging Technologies like Natural Language Processing,IOT, etc. to solve really difficult problems and make a difference. Yet, as one of the core problems faced by social enterprises is the fact that they face difficulty in having access to capital and Emerging Technologies are in general very capital intensive..
In her talk,Prof. Vemuri postulated that while emerging technologies have massive potential for enabling social impact, it is a mistake to position solutions based on such technologies as Social Enterprises, especially in the Indian context.
“I would want to propose let’s not even talk on any of your company as Social Enterprises. Let’s not even say the word social.”
-Ms Kavita Vemuri, Assistant Prof, Ph.D, IIIT Hyderabad
Investors talk in terms of ROIs and if a startup positioned itself as a Social Enterprise then ROI expectation are difficult to meet. A part of the reason for this, which she touched on, is that there is lack of both Social Impact Investors and patient capital in India. This is a well know problem. As Gagandeep Bakshi and Sameer Gaud from Intellecap point out, “Lack of adequate patient capital leaves these impact industries high and dry.”¹ This is especially true for emerging technology startups, which tend to have longer incubation period.
Progress of science and technology and its adoption as a usable solution is never linear or straight forward. As we laid out in an earlier article ‘Logistics of Technology – Lessons from Wars and Pandemic’, success of Technology is often determined by external Factors.² In fact that is one of the “Laws of Technology” as laid out by Professor Melvin Kranzberg. His fourth law states – Although technology might be a prime element in many public issues, nontechnical factors take precedence in technology-policy decisions.³ Prof. Vemuri too alluded to a similar insight when, based on her experience, she points out that emerging technology heavy solution can price themselves out of market. Instead, a simple more frugal approach to the use of Emerging Technologies make the final product more viable in the market. She cited an example of how an Eyecare solution developed with 3 years research and using AR/VR + AI/ML + Games was very good but too expensive for the existing market. On other hand a marriage matchmaking VR app developed in one month by one of her students, using minimal, non-IP, off the shelf ML tech has investors lined up as it did the job adequately enough. Similarly, IOT and Drones-based Argitech solution while being effective, don’t yet have paying customer from farming community. As a result, many tech solutions remain in the lab and don’t translate to market.
Based on her experience in India and in countries like Morocco and Tunisia, Prof. Vemuri also, pointed out the cultural aspect to Social Entrepreneurship. Its acceptance varies from country to country. Parents in India are not really open to youngsters becoming Social Entrepreneurs. To add to this, one must point out that India does not even have a legal framework for Social Entrepreneurship.
Based on these Prof. Vemuri proposed the following approaches:
- Government as Customer
For Social Entrepreneurs using emerging tech in fields like environment, the capital cost of technology and risks are high, but profits are low. They need Government support and hence are Government entrepreneurship. They should position themselves as such and seek Government as primary customer and price solutions accordingly. - Grass root innovation as wrong approach to brand:
At times simple tech products like cycle De-weeder and paddle-based washing machine from the National Innovation Foundation, were rejected by farmers and Corporates as they positioned themselves as Grass roots innovator and were not seen as advanced enough. But the same innovation (paddle washing machine) when positioned as simple product sold really well.
She points out that there are areas where Emerging Technology can be even essential to make social impact like the use of robotics to clean waste drains and stop manual scavenging. However, the entrepreneurs need to take a look at technology pragmatically to see if it is possible to create a profitable venture. This is essential to create sustainable impact. She even made a radical suggestion to drop the word ‘Social’ from Social Entrepreneurship.
So, what’s the way forward?
Whether one agrees or disagrees with Prof. Vemuri’s suggestion, one has to admit that she does highlight some important hurdles in pursuing the dream of Social Entrepreneurship. While there is space and need for Social Entrepreneurship, even tech-based Social Entrepreneurship to exist and contribute to Sustainable Development Goals, a more realistic approach is needed. We must see technology as a human phenomenon embedded in society and be vary of romanticising Technology as the panacea for every problem. As Prof Kranzberg would say, “Technology is a very human activity…”.⁴
What works in the marketplace, solves problems and makes impact is not Technology, but a solution. A solution is something which works in context of the social, economic and political conditions. For Social Enterprises to exist and make impact, they must always keep this at in the top of their minds and in their plans.