miércoles, enero 13, 2010

Demand for ethical routes to profits

Diana Middleton

DURING his MBA studies at the University of California, Berkeley, Jeff Denby told everyone his ultimate career goal: to start an underwear company.

Soon, professors and classmates at the Haas School of Business began to call him "the underwear guy".

But Denby, who had previously worked in industrial design and went to business school interested in supply-chain management, decided early in his program that he wanted to create a company that was about more than just boxers or briefs. In his view, it was critical to create a product that was environmentally friendly and sustainable, and whose sales could help support good causes.

This type of social entrepreneurship is becoming increasingly attractive to would-be business founders. The idea is to make money while directly benefiting consumers with its services or funnelling a portion of profits to charities. Often, these companies employ people or source resources from economically depressed areas of the world that then also benefit from the charitable donations from the profits.

With an increased interest in socially responsible money-making, business schools have been pushed to create courses and study tracks to help MBA students sort out the best way to pull it off. The University of Oxford, Cornell University in New York and Dartmouth College in New Hampshire have all experienced increased demand for instruction in social entrepreneurship. Some administrators say it's a generational progression of business school students who have grown up more socially aware.

Others say a lack of traditional jobs has spurred an interest in entrepreneurial ventures and the focus on societal effect is partly a matter of trying to escape the stigma of the "greedy MBA".

"I think the interest in entrepreneurial ventures with social value [is about] more than the fact that people can't get jobs as easily," says Colin Mayer, dean of Oxford's Said Business School. "There's also a sort of underlying sense of guilt about what happened during the crisis."

For his part, Denby, who graduated in May last year, has long wanted to use his business skills for good. Before he co-launched PACT Organic Underwear as an online-only company in August, he researched all aspects of manufacturing and distribution to make sure his products would be legitimately sustainable, from the labour he employed to the inks used in the garment dye. Then he decided to pair each intricate pattern used on the underwear with a themed charity.

For example, 10 per cent of the proceeds from one blue pattern inspired by a Japanese woodcut go to a marine conservation group.

Denby says his entrepreneurial spirit was fostered by Berkeley's curriculum.

At the Said Business School, students use the Skoll Centre for Social Entrepreneurship to insert socially responsible concepts into their business plans. Recent projects include building water purifying systems in Africa and developing internet banking systems in regions without significant technology infrastructure.

The school also provides a venture fund that students can tap to fund worthy projects. In those cases, the school has a stake in the company and its success, Mayer says, adding that the increased focus among students stems from the dearth of traditional jobs in finance and accounting, as well as the malaise surrounding the economic collapse.

"There is a real sense that doing good business can promote real change in economically depressed regions," he says.

What's more, a for-profit enterprise with a socially responsible backbone is more attractive to nervous investors during economic turbulence than traditional business plans, argues Gregg Fairbrothers, director of Dartmouth College's Entrepreneurial Network at the Tuck School of Business. "Financing is tough for start-ups," he says. "For investors to take a risk with you, it helps to have tangible social good coming from it."

Mac Dougherty, a June Dartmouth grad, joined forces with two computer science and neuroscience professors to market the services provided by a microprocessor that powers computer servers. The technology uses significantly less energy than its competitors. Not only would the technology be greener, he says, it could also be useful for countries where energy shortages are the norm.

Dougherty credits Dartmouth with providing ample resources to pursue social entrepreneurship. He homed in on the concept during his first-year project course, made good use of the resources at the Dartmouth Entrepreneurial Network and landed a fellowship with the Allwin Initiative for Corporate Citizenship, a centre that aims to instil ethics and a social conscience in students.

The technology company, called Cognitive Electronics, is still in its planning phase but will eventually be marketed to government firms and defence agencies. It is conducting research for the US Navy, which is partially funding the operation. The technology uses only 1 per cent of the energy that comparable products use but performs as well. But that won't be its only impact. Dougherty also wants to take the company and its products to sub-Saharan Africa where mobile technology exists but is not being fully used.

"We could get all this technology into the hands of people, and unlock a lot of potential," Dougherty says.

Business school administrators say such start-ups can do more than just help alumni launch sustainable businesses, they can also help rebuild businesspeople's credibility on a larger scale, says Joe Thomas, dean of Cornell's Johnson School, home of a Centre for Sustainable Enterprise.

Last year, Cornell began offering a four-credit course that focuses on the best practices for social change for its MBAs.

"A few years ago, students came to business school thinking they would get rich right away," Dartmouth's Fairbrothers says. "But now I think students are trying to focus on doing reasonably well while doing some good."


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