So where to start... I have never blogged before, so please forgive me if I ramble. Maybe I will start with creating value. In classic economics, the exchange of goods are considered value creating if one side values it less and therfore sells it to someone else to whom there is a greater value. This allocation of resources increases net wealth per se. So the question for entrepreneurs becomes how can I create value for my customers. There are many ways to do this, but essentially those who value something will be willing to pay a premium for something. But two interesting facets are not taken into consideration- that of ability to pay and that of externalities. When considering a social venture these are two central aspects.

With regards to ability to pay, my understanding is that classically if someone is unable to pay they are considered not to value the resource enough to create value. I think this is obviously untrue. The story of Rockefeller's cat getting milk when babies go hungry comes to mind. How can the entrepreneur create marginal increases in value, or better yet create a product that allows a customer to bank value, therefore using such value to invest further. This would hopefully create further investment, having a "snowball" effect.

The other item to consider is externalities. In a two party process, how are third parties effected? Negative exernalities, such as pollution, can cause a degredation of the environment that people operating in. While the two parties may be better off, everyone in aggregate is worse off. There are positive externalities - ones that social entrepreneurs should focus on. I would focus on community empowerment. When those around you are thriving, you are generally more likely to thrive. Creating value this way is reinforcing and, I believe, an aspect of social entrepreneurship that is not only beneficial on a human level, but beneficially economically.

This naturally leads to the question of how social entrepreneurs can create value for their customers, while still considering ability to pay, avoiding negative externalities, and creating positive externalities. I believe that a focus should be on increasing productivity. While many other ideas are value creating, in an area of traditional focus, i.e. underserved populations, increasing process efficiency not only creates value for varying income levels and payment abilities, but generally it should create positive externalities. The ideas of moble banking or efficient water extraction and usage comes to mind. This not only can add incremental value for less affluent customers, but create positive economic externalities. This build community wealth and therefore is sustainable for entire populations. Promotion of products and services in this area are attractive for scare resources, but allow the resource pie to grow. This growth is the ultimate factor in creating rising living standards. No wonder the politicos are always talking about increasing growth. Everyone strives to increase the value at their disposal, so maybe ideas that allow them to do so should be first and foremost in the mind of a social entrepreneur. Just some thoughts...