Sustainability: The New Frontier of Entrepreneurship
From the age of colonialism through the 19th century, when the players were countries and the metric of success was power, to the era of free market competition ( capitalism) of the late 19th and 20th centuries when corporations became the players, and profit was the ultimate goal, global business has evolved dramatically over the past 500 hundred years.
Today, we have entered an era of entrepreneurship in which citizens are the major players and it is significance or purpose that defines success. And yet, the world currently faces many challenges: environmental, social, political, and economic issues dominate headlines around the globe.
While large public and private organizations can definitely have an entrepreneurial spirit that can help address these challenges, in many ways it is the true entrepreneurs of the world who are best placed to solve the world’s problems. By creating new sustainable business models, entrepreneurs can provide the vision and efficient solutions to a host of issues.
In a recent article, The Sustainable Side of Entrepreneurship, Associate Professor Maria Victoria Tiboon from De La Salle University in the Philippines writes: “Entrepreneurship can remedy many worldwide challenges by driving economies, generating employment, encouraging product development, and engaging the vulnerable sectors of society, including women and youth. By offering environmentally and socially superior products, entrepreneurs can serve the mass market and society at large by contributing to the sustainable development of the economy.”
Indeed, a new report by Global Entrepreneurship Monitor ( GEM) shows that social entrepreneurship, defined broadly as “any kind of activity, organization or initiative that has a particularly social, environmental or community objective,” has become a significant portion of entrepreneurial activity in every region around the world. The United States and Australia lead the way with 11% percent of entrepreneurial activity classified as “social entrepreneurship”, while Southeast Asia, at just 3.8%, has significant potential for growth.
And last year, Forbes magazine published an article by Richard Brubaker that proclaimed sustainability as “the next big thing for entrepreneurs”, and that “business leaders are looking at social issues as new markets, and successful social- minded enterprises as potential investments.”
He also notes that market trends are shifting to support sustainable startups. More and more, consumers in markets around the world are willing to pay a premium to purchase high- value products, employees are looking to work for companies that are “making a difference,” and governments are now investing resources in entrepreneurial ecosystems to help entrepreneurs.
Sustainability is not about “giving back;” it’s not an add- on “charity activity” outside an organization’s core competence, and it’s not just about environmental impact.
According to the International Institute for Sustainable Development, the definition of sustainability is: “For the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future.”
In other words, building a sustainable business takes a long- term view of growth by optimizing profits, and strives to maximize positive impact on people and the community, without destroying the future.
Sasin established the Sasin Center for Sustainability Management ( SCSM) in 2011.
Combining the principles of sustainable development, corporate social responsibility, and His Majesty King Bhumibol Adulyadej’s Sufficiency Economy Philosophy, the Center’s concept of sustainability management addresses the importance of all stakeholders to the long- term success of a business.
Our team, under the leadership of Nick Pisalyaput, stresses values, leadership, and building up a company’s intangibles, such as human capital, intellectual resources and relationships. Most of a company’s value is in these intangibles, so developing them helps to minimize the risk that the company faces.
The international community has also formally defined sustainability through the United Nations Sustainable Development Goals ( UNSDG), which were implemented starting on January 1, 2016. They encompass 17 goals with 169 targets that address the most important social, economic, environmental, and governance challenges for the next 15 years. They affect business strategies and priorities in new product development, supply chain management, marketing, human resources, and recruiting, all of which are among the core disciplines in our programs at Sasin.
ENTREPRENEURSHIP IN SOUTHEAST ASIA
While entrepreneurship ( the number of American adults who own a business) is on the decline in the U. S., and has been since the 1990s ( according to a 2015 report by the Kauffman Foundation), entrepreneurship in Southeast Asia is booming. Another GEM report shows that the region is “among the most entrepreneurial in the world” with 66% of people in the region viewing entrepreneurship as a “positive career choice”.
Professor Douglas Abrams, a Visiting Professor at Sasin who teaches a course on venture capital ( VC) and is a venture capitalist himself, notes that “increased investments in startups in the region since 2007 are beginning to yield results.” ‘ Exit markets’ ( through trade sales or IPOS) in Southeast Asia are exploding, the region’s ‘ seed stage’ deal- flow pipeline is full, and the Southeast Asia enterprise ecosystem is at an inflection point. Investment capital worth billions of dollars is flowing into the region through VC funds like Sequoia Capital, Ardent Capital, 500 Startups, Inspire Ventures, and Prof. Abram’s own Expara Ventures. And in Thailand, the government has announced initiatives to “fuel the growth of enterprise ecosystems” in the Kingdom, and even Thai banks have entered the venture capital space.
Both the public and private sectors in Southeast Asia, and in Thailand in particular, have a unique opportunity to invest in innovation, build effective ecosystems to support all forms of entrepreneurial activity, and encourage social entrepreneurship.
ROLE OF BUSINESS SCHOOLS
Communities look to business schools today for leadership on a range of issues, not just business issues.
In a recent article, For Business Schools, Being Good is No Longer Good Enough, Dan Leclair, Chief Strategy and Innovation Officer for AACSB International, the world’s largest and oldest business school accreditation organization, writes that:
“Local communities want more from their high- performing business schools. They want new jobs to be created, and they want businesses to come and graduates to stay. In short, they want impact, not just performance, from the business schools they support.”
He goes on to point out that the new generation, the much- discussed “GenY” or “Millennials”, are interested in more than just money or profits. There is “mounting evidence that organizations articulating a social purpose are more appealing to the next generation of workers. Well, that next generation of workers are our current generation of learners and our future scholars.”
Business school students today are looking for what I call, “success with significance” and/ or “performance with purpose.” They want to be part of something new and authentic, to create new business models that are genuine and help promote change and innovation. And companies and organizations are looking for leaders that have “competence with compassion,” so business schools are in a unique position to shape and encourage this next generation of entrepreneurs and business leaders.
Sasin has been supporting entrepreneurship and startups through our mai Bangkok Business Challenge @ Sasin since 2002. Founded by Sasin MBA alumnus, Kongpan Pramoj Na Ayudhya, and chaired by Associate Professor Adith Cheosakul, Ph. D., it’s the only global new venture competition for postgraduate students in Thailand. Since 2011, all business plans submitted to the competition have been evaluated on their ability to address social and environmental concerns, and in 2014, we introduced the H. R. H. Princess Maha Chakri Sirindhorn’s Sustainability Award to highlight the importance of sustainability for all businesses. Siam Cement Group ( SCG) now leads the judging panel and provides the prize money for this prestigious award.
Teams in the competition also compete for over USD 54,000 in prize money, His Majesty the King’s Award, and Houston Technology Center Innovation Award. This year’s competition has attracted 70 teams from 17 countries on 5 con- tinents, including 10 teams from Thailand. Clearly, there is a strong desire and instinct for entrepreneurship among today’s business school students.
FUTURE OF ENTREPRENEURSHIP
Driven by technology, innovation, and instant communication platforms, entrepreneurship is riding a wave of growth this century. Today, anyone can establish a business based on an innovative idea. Some of today’s leading “startups” like Facebook, Uber, and Airbnb, have shown how to create better social networks through economic models that rely on new technologies and innovative, disruptive products. The founders of these startups used technology and innovation to create communities that connect people around the world with products and services that they need and value.
But of course, today’s entrepreneurs need to understand that they cannot ignore the impact of their businesses on people and the environment. Sustainability cannot be an afterthought, but must be an integral part of their core business model. And more and more, it will be the entrepreneurs who will find success as they try to solve the social, environmental, political and economic problems that the world faces.
Academic excellence, business relevance and social significance are at the heart of Sasin’s mission. We strive to be a bridge between entrepreneurs, scholars, business leaders, public sector organizations and the community. Now is the time for business schools to work with governments and the private sector to cultivate and support this next generation of entrepreneurs and to develop and encourage new sustainable business models.
Professor Dipak C. Jain is Director of Sasin Graduate Institute of Business Administration of Chulalongkorn University. He can be contacted at dipak. jain@ sasin. edu.
The semifinals and finals of the mai Bangkok Business Challenge @ Sasin will be held February 16- 18, 2017. For more information, go to bbc. sasin. edu