Stand-Up

Everyone knows the classic joke about the man who complains, “Doctor, it hurts when I do this,” and the doctor says, “Well don’t do that.”

Think about it for a second – why is that funny to us?

The doctor’s advice is actually completely practical. But we all understand the doctor is ignoring the actual problem, and that makes it funny.

So – have you heard the one about the poor villager and the cause marketing business? The villager says, “We have no opportunity.” The business says, “Here, have these shoes.”

This time, it’s not funny. Not only is the problem being ignored, the prescription is creating side effects.

The reason people are without shoes is because they are in poverty. Shoelessness is, “Doctor, it hurts when I do this.” Dumping shoes on the problem is, “Don’t do that.” A real doctor – and a real social entrepreneur – will spend time to understand the root cause, and work with the patient to cure the condition.

Social entrepreneurs have a natural impulse to help others. But when you take large-scale actions, it’s important to look at the side effects of your activity.

What are the side effects when you give away masses of shoes in a poor area?

– What happens to the people who make shoes in the region? What about the people who make the leather or fabric for them? The people who bring them to the village to sell?

– What happens to a child when she wears shoes for six months and then outgrows them, and there is no replacement?

– If only half the children in a village receive free shoes, what is the impact on the other half?

Real, sustainable solutions to poverty focus on empowerment – which in practice means information and access to basic resources. If a social entrepreneur wants to make a healthy impact, she focuses on sustainable ways to increase access to water, nutrition, education, healthcare, capital, employment, and legal rights – the necessary foundations for sustainable prosperity. A family with access to these foundations will buy their own shoes – the right shoes for them, at the right time for them.

It’s important to follow our impulse to help others. It’s also important to be wise about how we go about providing that help. To address the right problems. To use tools of empowerment, so that those in the grip of poverty can stand up their own lives and their own communities. No joke.

Heroes

Professor Muhammad Yunus

Most entrepreneurs, myself included, are independent spirits.

The “independent” part has always been a big piece of my personality. I’ve never aspired to be “like” someone, and when those stock interview questions show up I’ve always cringed at the one that asks “Who is your hero?”

That is, until 3 years ago.

Three years ago, I found myself with heroes, and someone I want to be like.

In 2010, I heard Professor Muhammad Yunus speak about humanity. He spoke extemporaneously for 45 minutes, sharing first hand stories of mothers and daughters whose lives had been transformed through education and opportunity; a vision for the end of the man-made condition of poverty; a call to action to all people to end the unacceptable suffering in our worldwide community.

It was the first time I ever had the thought, “I want to be like him.”

Yohaustria Pena, Hero

That same year, I went to the Dominican Republic and to Chiapas to see the work of poverty-ending microfinance institutions in the field. I saw for myself the bravery of women standing up against cultural oppression; taking steps that no woman in the history of her family had ever taken before so that her children could go to school; finding the right balance between personal initiative and working as a community; taking risks and succeeding with so little capital and time that they put entrepreneurs like me to shame. I found my heroes.

When I first started Soap Hope, my intention was to create a strong example of social entrepreneurship so that we could make a huge impact in ending poverty, both with our own company and through others adopting the model and learnings that came out of Soap Hope. And while Soap Hope did grow again for the third year in a row, and we did fund over 10,000 days of microlending for women entrepreneurs this year, most days my vision for Soap Hope still seems distant and fragile to me.

As if on cue, this week a friend sent me a video about social entrepreneurs, and when I clicked play I heard the unmistakable compassionate voice of Professor Yunus – there once again to motivate and inspire. Every time I hear his voice, I hear my calling. And when I go inside and ask what I’m to do, Soap Hope always is the answer I see.

When someone buys one bar of soap from us, it funds one day of microlending for a woman. So I say, “A bar of soap is a day of hope.” This spring, I’m starting a new initiative at Soap Hope called “One Million Days of Hope” – to fund one million days of microlending through sales and partnerships with other companies and organizations.

Everywhere Professor Yunus goes, he looks for ways to create partnerships with people, companies, and institutions small and large, to further his vision of ending poverty in our world. Yes, I want to be like him. So I will do the same.

One million days of hope would mean 100 times the impact we had last year. It would provide tools and opportunity to thousands of the women who have become my heroes. That’s not something I can do alone. You’ll surely hear me ask you for ideas and action, partnership and participation.

Watch for #onemilliondays. Think about how we can partner together. Expect a call from an independent spirit.

Solving The Puzzle

Jenny is VP of marketing at a $150 million company. Each year for the last three years, her CEO has given the senior team a set of measurable goals. They get a huge bonus when they meet the goals. Every year they’ve met them.

Some of this year’s key goals:

– $30 million in new revenue.
– Double the number of small-business customers.
– Do this without impacting profitability.

Jenny is confident she will meet the goals this year.

And that’s how I know the people in Jenny’s company are passing up a huge opportunity to improve our world.

Huh?

That’s right. Follow me:

Jenny’s company has a simple but powerful formula for financial success that works every year:

– The CEO sets goals that are easy to measure (all numbers).
– He fully empowers his team.
– He pays them a big bonus when they succeed.

The goals are like a puzzle – they only fit together in certain ways, and when the team solves the puzzle they get a big reward. They bring all the creativity and hard work necessary to solve the puzzle.

Last year’s puzzle included, “Do this without impacting profitability.” It would be easy for Jenny to generate the new revenue by lowering prices, or running a massive ad campaign. But the puzzle is harder than that: she has to find ways to reach new customers without spending too much or lowering margins.

Remember, Jenny told me she is confident she will reach her goal. She’s done it three times before. The team has already come up with multiple creative ways to go after new customers.

Now, here’s where Jenny and everyone else in her company is missing an enormous human opportunity.

Jenny’s company will make no measurable impact on any of the biggest challenges in our world: poverty, clean water, clean energy, conflict, education, disease. The company has no social focus at all.

Why? Because there’s no social impact goal tied to their bonus. It’s not a part of the puzzle. Jenny won’t spend any time on it. None of the team’s creative potential will go toward it.

My critic says, “But Salah, it’s not the role of a business to solve social problems. Whatever energy they would use to solve social problems could be used to make more money, which is the purpose of the business. You’re just making the business less effective by injecting extraneous requirements.”

That’s a fallacy that is preventing us from using the vast human capacity in businesses from making big strides toward solving our world’s greatest challenges.

Let me show you how:

Give Jenny this extra goal: “Reduce the number of children who are hungry every day next year by 1,000.” The last part of the CEO’s puzzle is still, “do this without impacting profitability.” Jenny can’t just donate a million dollars to meet the childhood hunger goal, any more than she could just lower prices to meet the sales goal.

The worst possible way to meet this goal is to figure out how to earn more money as a company and then donate the money to organizations that feed children. That will cost over a million dollars. If that were the only way to solve the problem, I would have to agree with my critic.

But that’s not how Jenny is going to solve this puzzle.

Jenny is going to develop creative solutions that integrate the goals – just as you would approach traditional company goals. She will use the social goal as a tool to help meet the financial goals, and use the financial goals as leverage points to meet the social goal.

She might use the requirement about childhood hunger to create new opportunities and tactics for marketing and selling. She might bring opportunity to customers and vendors around the childhood hunger goal that result in a financial benefit. If Jenny is effective, her team will develop a strategy that doesn’t treat the social goal as separate, something outside the main plan, something to figure out at the end. She will use the social goal to help solve the total puzzle.

If Jenny’s CEO will create a social goal that is measurable and clear, and make the team’s bonus dependent on it, he will find what I and other social entrepreneurs have found in our own business experience:

– Brilliant new creative marketing ideas arise from the team.
– New partnership opportunities emerge.
– New dimensions for business appear with customers and vendors.
– A new kind of passion and creativity ignites inside the organization as employees start to see that their work every day is human, not just financial.

Every day millions of people go to work to solve the puzzles presented to them by their company leaders. And almost none of those puzzles include working on the most important problems in our world, because leaders have made the mistake of thinking that the social goal will diminish the business results. That’s an error, and it’s leaving an enormous amount of positive social change on the table.

I challenge every company leader to try this experiment. At your next goal-setting time, add one measurable social goal to your puzzle. Give it teeth: make it as important to the bonus as everything else. Make it impactful: work on the most critical social problem you can. Help your team understand that this goal isn’t a tactic – it’s not a corporate sponsorship donation or a volunteer day. It’s to be integrated into the plan and leveraged, just like the financial and operational goals are.

See the results for yourself. You will never go back, and your whole business will become a part of solving the real puzzle: how our society will cooperate to address the greatest challenges in our world.

Stop Talking About The Poor

• “I’m looking at the best models out there for using business to solve social problems.”
• “This is so hard – I’ve been looking for the right organization to work with for almost a year. I don’t want to waste my time working on something that won’t really make a difference.”
• “One day, I hope to get involved in ending poverty, so I’m studying as much as I can today.”

These are a few of the things I’ve been told by people in the last month who have e-mailed and called because they are passionate about social entrepreneurship and microfinance.

I hate to be the one to break it to them, but talking with other people about helping the poor does not help the poor. While you are talking, they are still hungry.

If you want to discover the best model for combining business and social problems, the very first thing you should do is start a business to solve social problems, or go work for one – right now. Then you will learn what is really involved in a social enterprise. I can tell you from experience, you will be throwing out almost all the ideas and opinions you have about the matter until you do it yourself.

If you want to find the best organization to work with, go work for any organization that is focused on changing any life besides your own – right now. During the year you have been carefully avoiding wasting your time, you have wasted a year.

If you are studying as much as you can today, you have forgotten that while you are studying the problem, a child has missed her opportunity to go to school, so the cycle of poverty is being extended an entire generation in her family. Why are you studying to work on the problem later? The problem is now – work on it right now, and you will learn more than any book could ever teach you.

I’m not saying we shouldn’t talk, reflect, or study. But I have noticed there are too many people who are mostly talking, reflecting and studying. Ask yourself now, am I spending more time talking about changing the world than I am actually working on it? If so, I suggest correcting that imbalance – now.

Stop looking for the perfect way to participate. Go do anything for those in extreme poverty, anywhere – not for you, for them. Not a conference – first provide a meal. Not a study – first send money for medicine. Not a meeting – first fund a water well.

Raise money for Grameen Foundation. Volunteer with Women For Women. Buy a scarf from WORN. Fund a Bank of Hope at Esperanza International. Donate services to CitySquare. Start a weekend business that funds microloans.

Stop talking about it, and do it.

Good Returns = Good Incentives

One of the special benefits of the Good Returns model is that it causes all the parties in the model to be incentivized for desirable outcomes.  A quick recap of Good Returns:

A business invests 100% of profits into sustainable non-profit organizations each year, for a rolling one year term, in the form of an interest-free loan.  The non-profit uses the cost-free capital to increase the reach of its sustainable mission (for example, providing more microloans to women in poverty, or issuing more low-cost student loans in Africa, or providing low-cost medical services in Guatemala, or … ).  At the end of the next year, the original funds are returned to the business and the process repeats itself.

Here are some of the interesting structural outcomes that Good Returns creates:

– Management is motivated to maximize profits. The company’s management team is motivated to drive the company’s bottom line, just as in any traditional capitalist business.  This incentive is a big advantage over non-profits, which often burn money and other resources because they are not required to generate profits to survive.

– Non-profit partners are motivated to become sustainable. The vast majority of non-profits are unsustainable – they must continually raise funds from donors in order to survive. In order for a company to invest in a non-profit and be assured of the return of capital, the non-profit must be sustainable, or at least have a segregated sustainable program. Good Returns will drive more non-profits to develop sustainable programs.

– “Mission-fudging” is eliminated. In many traditional for-profit social enterprises, the management team must be incredibly strong in its convictions about the mission, because every dollar spent on the mission is one less dollar in profit, which results in lower compensation for the management team.  It’s simply not realistic to count on large numbers of people to give up personal gain for mission on an ongoing basis.  Under Good Returns, every extra dollar of profit is an extra dollar toward mission, not taken from it.

– Investors will come. In its first year in business, Soap Hope had more than 45% month-over-month revenue growth on a fraction of the marketing budget that a traditional startup would require.  How did we achieve this growth? By the passion of our customers for our mission – they communicate virally to friends, family, and through online social networks. If a company can create significantly more leverage from its marketing budget, it can drive higher return on capital for its investors. We plan to prove this assertion through the financial results from Soap Hope and other early Good Returns companies.

I’m curious to see what else we will learn about the structural benefits and drawbacks of the Good Returns model over time.  Please share your thoughts and experiences with me.

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Many people have asked how they can help. I ask for and welcome your help:

• Purchase your all natural soap and body care products from Soap Hope – it’s less expensive than in the store, even with shipping
• Use Soap Hope for corporate gifting and personal gifts
• Connect me with national radio and tv personalities if you have those relationships
• Write about Soap Hope on your blog
• Share the Soap Hope fan page on your Facebook wall
• Tweet about us as often as you are willing

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Coming Soon:

Non-profits: I’ll be writing a post for you about many different types of programs that non-profits can implement that are all sustainable.

Investors: soon I will write a post about how down the road dividends will be insured against loss while they are doing their one year of service.

Good Returns: My intention is to develop Good Returns as a stand-alone organization that provides certification for sustainable non-profits, financing programs to mediate timing differences between companies and non-profits, an insurance guarantee for invested funds, a brand that companies can use to attract and retain customers – I’ll discuss this and more in an upcoming post.

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Thank you for your loyalty and support!

Regards,

Salah Boukadoum
Co-Founder, Soap Hope

One Billion Dollars Toward Ending Poverty – Let’s Do It

A reporter asked me today what my goals are for Soap Hope, and I gave her the answer that most of my friends know by now: to teach 1,000 small businesses the Good Returns Model and thereby raise one billion dollars for anti-poverty microloan initiatives.

I’m pretty sure this reporter was shocked – she said, “How much?!,” and actually sounded a bit disappointed. I think she felt I was being naive. Others have told me to start with a more “realistic” goal.  I’d like to show you how I believe it is reasonable to raise a billion dollars for microfinance over ten years, with just a few key numbers:

50 small businesses just like Soap Hope
In each of 20 American cities
Each generating $100,000 in profits
Each lending their profits interest-free to a microfinance institution for just 1 year
Over a 10 year period.

50 businesses x 20 cities x $100,000 x 1 year interest-free loan x 10 years = 1 billion dollars.

Let me share some key milestones and goals with you:

• 2009 marks Soap Hope’s first full year in business
• I first discussed the Good Returns model in public in the summer of 2009, just a few months ago
• We’ve already had two small businesses in Dallas spontaneously ask us for help in implementing Good Returns in their own companies
• In 2009 we’ve formed partnerships with three non-profit microfinance institutions
• In 2010 we’ll be launching an organized effort to teach Good Returns to businesses
• Simultaneously we will define sustainability programs that help nonprofits become ready for Good Returns style investments
• In 2011 we’ll be working to form an insurance fund that guarantees the return of Good Returns investment capital to participating businesses, virtually eliminating participants’ risk

One billion dollars may sound like a big number – but when you break it down, it’s right within our grasp.  If you read my last post (We Need 166 More People To End Poverty Worldwide) you know that there are six million people in poverty in the Dominican Republic.  One billion dollars is just about what it would take to give each of them a microloan.

1,000 Good Returns businesses generating one billion dollars toward ending poverty through microfinance – I don’t think it’s naive at all. Let’s do it!

Regards,

Salah Boukadoum
Co-Founder, Soap Hope

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Please help us eradicate poverty: tell someone you know about Soap Hope right now.

shop: SoapHope.com
learn: Soap Hope Learning Center
facebook: facebook.com/soaphope
twitter: @soaphope

e-mail: info@soaphope.com
phone: 888-893-SOAP

Some Soap Hope Bar Soaps

Soap Hope

My last business was a 60-person technology firm.  It was “all business” and had no consciousness other than serving customers and providing its employees with a good place to work.  I sold it in 2005 to a publicly traded company. I decided then that I would change my focus to creating businesses that are aware of, and responsible to, our world community.

Soap Hope (www.soaphope.com) is my model company that shows how a business can have a fully-integrated social mission, be environmentally responsible, and also make a profit.  Soap Hope invests 100% of its profits every year into nonprofit organizations that provide microloans and business training to women in poverty, enabling them to create businesses that lift them and their communities into sustainability.  This is not a handout or a charity – all the funds are repaid (interest-free) after they have been leveraged for their social purpose for a year. Our shareholders delay their profits by one year, and the company is thereby able to transform the lives of women around the world.

Soap Hope sells top-quality goods online from boutique makers of all natural body care products.  We have among the best products and prices in our industry.  We carry only products that are 100% all natural, no artificial colors or aromas, no parabens, and always cruelty-free.  We continually evaluate and improve our environmental and social impacts.

We don’t have the marketing budget of a big “unconscious” corporation – we need help in getting the word out about Soap Hope.  If you feel that our mission is worthy of support, we would appreciate anything you can do to let people know about our products and our purpose.  If you have ideas for us about how to reach more people, I welcome your advice – please e-mail me!

I’ve asked you in this post for support, contacts, and advice. Let me also offer the same to you: if I can assist you with your mission and purpose, please let me know how I can be of support.  I thank you!

Regards,

Salah Boukadoum
Co-Founder, Soap Hope

———————
Please help us eradicate poverty: tell someone you know about Soap Hope right now.

shop: SoapHope.com
learn: Soap Hope Learning Center
facebook: facebook.com/soaphope
twitter: @soaphope

e-mail:  info@soaphope.com
phone:  888-893-SOAP

Some Soap Hope Bar Soaps