Friday Interview: The Solution Revolution In Action | Eastern North Carolina Now

    Publisher's note: The author of this post is CJ Staff, who print columnists for the Carolina Journal, John Hood Publisher.

Author Eggers Details Work Of Business, Government, Social Enterprises

    Raleigh — Whether you turn first toward the family, friends, government, nonprofit groups, or business to solve society's largest problems, you might find some interest in the latest work from William Eggers. Global research director for the public sector practice at Deloitte, Eggers has co-authored The Solution Revolution: How Business, Government, and Social Enterprises Are Teaming Up to Solve Society's Toughest Problems. Eggers discussed key themes from that book with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

    Kokai: In what way are we actually seeing a revolution in coming up with solutions to problems?

    Eggers: We're seeing, essentially, a major paradigm shift in how we go about solving society's toughest problems. You know, for quite a long time it was basically the job of business to serve shareholders and make a profit, and the job of government was to solve problems and nonprofits in there, too. Yet, what we're seeing is a big change in that respect. We're seeing the whole new class of social entrepreneurs arising. They're coming out of business schools and others, and they're saying they want to both make a profit and solve problems.

    There are millions of them now globally, and they didn't exist before. We're seeing businesses that are saying, "You know what? We can serve a double and triple bottom line where we can basically help to solve a problem like reducing diarrhea in India" — and diarrhea is one of the second-biggest killers of children — "and at the same time, make a profit by doing so by selling soap and shampoo and figuring out how to employ 45,000 women," and so forth.

    And so this is a big shift because it used to be really solely government incented to this, and now what we're looking at is this whole new growth of other problem solvers, which is good because, you know, governments need a lot of help to do this. Let's face it.

    Kokai: Some people might hear this and say, "OK, that sounds good. What sort of difference does it make having these different types of entrepreneurs and business people involved and not just government?"

    Eggers: Let's look at an issue like traffic congestion. OK. So how did we try to solve traffic congestion before? Well, we would either build more roads or build more public transit or have more public buses or so forth. Those all cost a lot of taxpayer money. And what would happen? Well, the roads would just fill up with more people. There wouldn't be enough people on public transit and so forth.

    Well, what's happening now is a lot of entrepreneurs are going in and saying, "You know what? We're going to use mobile apps, and we've got other ways of trying to solve those problems. We're going to offer ridesharing services because the biggest waste in the transportation system is 85 percent of people driving to work by themselves. And that's wasted resource in those things."

    So how do you connect people who need a ride with those who need a car? Well, you can use GPS and your mobile device. And now there are companies like Lyft and Sidecar and RelayRides and Uber, which are basically providing ridesharing services.

    You've got other companies that are providing services — mobile parking helping you understand where is there a parking spot in a place like this. And so you add all of these up and traffic information services, and you could potentially reduce traffic congestion as much as you could essentially from a lot of traditional means. And what does it cost government? Almost nothing, right? Because they're basically increasing throughput. And so for every major problem we're seeing this whole group of kind of social entrepreneurs and other companies coming in and saying, "Other people see that as a problem. We see that as an opportunity to fix."

    Kokai: I was listening to what you were just saying and thinking to myself, "Well, in some respects this sounds like the private sector doing what it has always done." How is this a little bit different? Is it just that there are more people thinking about things that in the past nonprofits and governments have mainly focused on?

    Eggers: Certainly, you know, other entities still have a role. But, I mean, the big difference is essentially for many of these areas that we're seeing markets developing are where it's essentially people had said previously there was either a market failure or government failure. Right?

    So let's take an issue of serving what's called the base of the pyramid. Those are essentially the poorest billion people in the world, or 2 billion people. And essentially most companies did not view them as actual markets, right, because they didn't make enough money. So there was actually no one trying to sell them goods, so they weren't being served as consumers.

    Now companies are saying, "You know what? If we can get the cost down enough, they can actually be consumers right now. And they will actually pay for good education and health care if we get the cost down enough."

    So there's a company that we talk about: Bridge International Academy is a social enterprise. They're providing education to the poorest of the poor in Kenya, private schools that they've scaled up from one in 2009 to over 200 today, serving 53,000 kids, and they're doing it for about $5 a month. You know, about the price of a Happy Meal. How? They're doing a franchise model. They're taking a page from McDonald's and FedEx and UPS, and they're franchising the development of these schools.

    So what we're seeing is people are taking business models and then they are looking at these areas that traditionally have been in the province of government, and they're saying, "How do we create a market to actually serve these individuals?"

    Kokai: This sounds like it is all to the good. How do we ensure that more of this happens?

    Eggers: First of all, government has a role to play in this. You know, government needs to set standards. Government can overregulate and drive a lot of these out of the marketplace, as we've seen with some cities around ridesharing services or even, like, Airbnb and HomeAway and others, which are providing sharing economy elements. So, first of all, government needs to make sure that they help these movements, not try to overregulate them or compete against them.

    The other thing you can do is governments can offer prizes and challenges around "Here are some big problems, and we're going to open this up to the world to try to solve." NASA right now has done over 75 challenges for their toughest scientific problems. Instead of just saying, "We're going to do them in-house," they've opened them up, and some of them have been won by people halfway across the world.

    And at the same time, I think when you look at business schools right now, well, every business school now has classes on social enterprise. They have classes on impact investing and a variety of other things, so what we're doing is starting to create that kind of education for this to happen. And when you have the best and brightest talent moving into this area, I think that's something that you say it's only going to get better over time and just starting to create capital infrastructure around it. Right now, there are literally billions of dollars of investment every year that are going into trying to create social impact.

    Kokai: It sounds as if, in some respects, this is an application in a new way of something we've heard about years ago from Adam Smith: that the brewer and the baker serve you because they're trying to promote their own self-interest. This is just a new way to do the same thing.

    Eggers: What I would point to is The Theory of Moral Sentiments from Adam Smith. And what Adam Smith really got right was kind of that, kind of the moral basis, right, for capitalism and serving that. And what, I think, is happening is we're coming full circle and understanding that for major companies, you know, a lot of consumers, they don't want to buy a product or invest in a company that has kind of social positions that they find reprehensible. And so it becomes actually important in terms of your brand and your place in the market that you're trying to do good.

    So if you look at some of the companies that are the leading edge of this — Whole Foods, Unilever, Procter & Gamble, Coca-Cola, PepsiCo, and Toms Shoes — a lot of people, you know, are invested in those because they like the social causes that they're doing, and they like the fact that they're trying to solve problems. And when they buy from them, they're actually ... you know, you buy a can of Coke, and you're actually helping to contribute to clean water in Africa because that's one of their issues. And I think this is going to only increase in the future.