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What a great and informative post, Christina.

Your description helps to frame the potential role of Sohodojo in your evolving social business ecosystem. We hope you will think of us as your "outsourced" applied R&D lab. There are software technologies – Internet-based as well as for personal computers, PDAs and cell phones, etc. – that LiA Network participants will need that simply will never be supplied by the Big Is Good World.

Software technologies for the Small Is Good World fall roughly into two categories: back-end supply chain systems to enable decentralized and distributed microenterprise and small business networks; and a story-driven and game-oriented eCommerce engine that empowers alternative markets based on "Who, How, and Why" consumer purchase dynamics.

That's where Sohodojo comes into play as LiA's collaborative partner. It will be our task to fully understand and develop the Open Source software technologies you need to reach unimagined levels of sustainable performance. Together we'll achieve such success by changing the rules of the game, not by directly competing on the unlevel playing field of the Big Is Good World.

In July we finally got Sohodojo's determination as a 501(C)(3) applied research and development lab. This took us over 2.5 years of working with our IRS caseworker so he could understand social business ecosystems and Sohodojo's role within such ecosystems. He was then able to write a precedent-setting opinion that was successfully peer reviewed and accepted. So like you, Christina, we've been reeving up the engines and are now ready to do some exciting work.

It looks like things could get really interesting starting this year and moving forward. The Small Is Good World is real and will play a very significant role in helping to lengthen the flight of Spaceship Earth.

We are looking forward to opportunities to work with you in support of your innovative and vital work. Let's hope we have a chance to meet at the Forum and get together with Pam McLean, the Beresfords and other kindred spirits interested in launching the Small Is Good World Working Group!

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Hi Pamela! Thank you for your support. If we are fortunate enough to be selected as Social Edge delegates to the Forum, we will indeed look forward to meeting you and having your involvement in the Small Is Good World Working Group.

We very much see CawdNet – especially as you've recently described its evolution into a hybrid organization as CawdSocial and CawdEnterprise – as yet another example of an evolving social business ecosystem.

We also especially appreciate the thought provoking role you played in the recent Oxford's Exploration of Venture Philanthropy event/discussion. We are sure that your contributions to this conversation will help the Skoll Center students at Oxford to shape their VP fund.

As you mentioned in the Oxford VP thread, the funding amounts that many of us need are modest by most investment/support standards. But it is remarkable how tough it can be to get this support when you are not an 'A List' player.

Getting a seat at the table is one of the valuable aspects of the conversations that happen here on the Edge. The Skoll Foundation is able to get some remarkable and influential people to host or be special guests at Social Edge on-line events.

Many of these 'A List' folks are so used to and busy being in the 'A List World' that they lose touch with folks like us, and therefore they don't always know what we want or need. That's where you, Pam, and folks like us come into play. On the Edge we get to take a seat at the table where we ordinarily would be a voice at the window. You did it this past month in the Oxford event, we did it last year at the Building Blended Value event.

While these opportunities don't often turn into immediate tangible returns, they do add up to incremental progress. Over time we'll infect 'A List' folks with fresh ideas and insights that will make it easier for social entrepreneurs to band together in dynamic networks of collaborative individuals and small/virtual organizations. It will get easier for us to create social business ecosystems where we can work together on innovative solutions to our most pressing community problems.

So, thank you again for your kind words and your vote of support. Let's hope that we get to meet face-to-face at the Forum and can work together with kindred spirits to launch the Small Is Good World Working Group.

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Dave, thank you so much for your kind words. If we are fortunate enough to be selected to attend the World Forum, we will do our absolute best to make you proud to be in our corner in support of the Small Is Good World.

We are so amazed to see that this is your first public post on the Edge!!! We checked our email archive and confirmed that it was May 25th of last year when we got your note of introduction sent by way of the private message member communication system here on the Edge.

For those who don't know Dave, we would like to fill you in a bit. First and foremost, as a "retired" (we use this word with tongue firmly in cheek) venture capitalist in Silicon Valley, Dave is an active strategic thinker and a voracious reader. So while many may find our posts a bit too long and sometimes a bit deep in the weeds, Dave plowed through them and engaged us in most enjoyable conversations by email and on the phone throughout the past year. Together we have wrestled with ideas about sustainable business models for the Small Is Good World.

You'll find a nice biographical profile and photo of Dave on the Strategic News Service member gallery.

As Dave mentioned, he is a strategic advisor to the ManyOne Network and its associated Foundation. And if anything these days is Dave's "baby," it is the Digital Universe Network where you will find some additional bio info.

In addition to his environmentalist interests, Dave is very interested in sustainable, earth-friendly, and community-supportive business models. That is why Dave is interested in Sohodojo and the Small Is Good World.

If things evolve as they might, our mutual interest is to eventually see a Small Is Good World Portal of the Digital Universe Project as part of the ManyOne Network. Now that sounds like a long-shot, and maybe it is. But it is also yet another example of an 'influenced not managed' and 'shared not owned' social business ecosystem in its embryonic stages.

Thank you again, Dave, for your kind words and friendship.

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Christina, we are so excited to see your application in the running for a seat to the Skoll World Forum. Since joining Social Edge in September of 2003, we have been great admirers of your tireless energy to evolve the Life in Africa Network. Through your work, we immediately felt that we were kindred spirits in the Small Is Good World.

Folks mistakenly assume that Small Is Good is about size. But it is really about a collection of organizing principles that empower individuals by reducing our dependence on conventional organizations. It is, in other words, about networks or more specifically about social business ecosystems. Your Life in Africa Network is a shining example of this emerging approach to social entrepreneurism.

When folks with organization-centric mind-sets look at you and your work, they will think to themselves, "My gawd! This wacky woman is all over the map!!! Take some Ritalin. Get focused. Do one thing right, and don't try to do everything at once." Of course these reactions are framed by One Right Way thinking that revolves around the assumption that conventional organizations are the way things get done, and that scaling is done by getting bigger and more specialized. That is, they bring a command and control mindset to a world that is all about self-organizing network dynamics where you influence rather than manage, and collaborate rather than own.

So folks might better understand the how Small Is Good World social business ecosystems work, we'd like to use you with the Life in Africa Network, ourselves with Sohodojo, and the Beresford's with MicroAid as a living example.

Your role with the LiA Network is in the direct service domain. You are in the field identifying service opportunities related to business and community development. Toby and Richard Beresford are in the network-enabling support service provider domain. Their MicroAid Neighborhood Network Center platform is an Internet service for identifying, funding and tracking fine-grained (micro) business and community development projects. Sohodojo's role is as an outsourced R&D lab doing applied research to create Open Source and Open Content materials to support the whole ecosystem such that you/LiA and the Beresfords/MicroAid together with the myriad of projects and small businesses you folks spawn can work together in a sustainable socio-economic network.

Our wish is that you and Sohodojo will be fortunate enough to be selected to attend the Forum so we can hook up with the Beresfords and other kindred spirits to officially launch the Small Is Good World Working Group.

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Caroline, thank you for your kind words and support. We have long appreciated your thoughtful contributions to Edge discussions and on-line events. As community members we also value and thank Alliance magazine for its founding partner commitment in support of the Social Edge community.

We were especially pleased to see that the link that you provided is to a page announcing that 'Social entrepreneurship - its promise and its challenges' is the focus of the March 2005 issue of Alliance magazine. Given your informative personal blog posts from the first Skoll World Forum, we can only imagine what a great issue you will have in store for readers.

If we are fortunate enough to be selected as Social Edge delegates to the Forum, we look forward to meeting you and discussing issues in social entrepreneurship. We would especially like to discuss trends in social investment and their impact on the practice of social entrepreneurism.

The social sector is currently going through a profound transformation that is akin to the "network-ization" of the Hollywood film industry in the mid 20th century. Social investors need to become as skilled and active in funding the equivalent of "making movies" as they are comfortable in "investing in the film industry."

We need social investors to become as interested and skilled in funding the dynamic projects of social entrepreneurial networks as they are passionate about investing and supporting the conventional organizations of the social sector. This is not an either/or situation. We need a healthy attention to both of these playing fields if we want to see truly breakthrough social innovations in the coming years.

We believe Alliance magazine is in a significant position to raise and sustain the awareness of the social investment community to the implications of the social sector's role in the emerging Network Society.

Thank you again for your interest and support. We hope we will be able to meet and talk with you at the Forum.

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Dr. Dutta, if we understand you correctly, you believe we have some thought provoking ideas but question whether these ideas apply to solving our most pressing social problems.

We believe that the ideas we are pursuing at Sohodojo are central to the sustainability of our global shared future.

The current social sector is founded on two often unchallenged assumptions: 1) The private sector of our economy will continuously produce enough surplus capital to fund the social sector through philanthropic channels, and 2) The private sector will produce enough surplus labor to meet the needs for volunteerism in the social sector. In other words, "business as usual" – perhaps with a social entrepreneurial wrinkle or two – will be the engine to sustain our efforts to build a better world.

At Sohodojo, we believe both these assumptions will be uncompromisingly challenged by the increased efficiencies of capitalism's globalized markets. As the Big Is Good World's markets become more efficient and its organizations consume more of the time and energies of its workers, where will we get the surplus capital and surplus labor needed to solve social problems?

We believe the answer to this vexing question lies in the transformation of the practice of capitalism at a systemic level. Not that the Big Is Good World and its excesses will collapse and go away, but rather that a complementary form of global capitalism will help to moderate the excesses of today's world. At Sohodojo, we call this new form of global capitalism, the Small Is Good World. The distinguished Harvard business professor Shoshana Zuboff and her successful executive husband James Maxmin, call this transformation of capitalism the Support Economy.

The Small Is Good World and its Support Economy are about creating new forms of self-support network organizations, and new markets driven by appeals to new and latent consumer purchase dynamics emphasizing "Who, How and Why" rather than "How much and Where." The Small Is Good World and its Support Economy are about empowering individuals by reducing our dependence on conventional organizations and the tyranny of impersonal markets.

To achieve this revolutionary transformation of the practice of capitalism, provocative thoughts must precede provocative action. Sohodojo's mission is to be a thought leader in this emerging new world, and to be an effective collaborative partner to implement new solutions to existing and emerging social problems.

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To the venturesome SBS students (Hi, Keely!) hosting this event, we'd like to draw your attention to a concurrent conversation, ' Funders on The Edge: Draper Richards Foundation'. One thread within this parallel discussion will be familiar to those who participated in, or read the archive of, the 'Building Blended Value' mega-event last year. That is, there is an informal community of Social Edge members whose social entrepreneurial missions/visions share a common theme. We are imagining and pursuing development of what might best be described as social business ecosystems or social business extended network enterprises.

Social business ecosystem/networks are an indication of the social sector's movement into what Manuel Castells has characterized as the Network Society and its associated Network Economy. His classic trilogy, The Information Age, richly documents the impact of networks on our individual and organizational lives. Social business ecosystem/networks are influenced not managed, and their participants' behaviors are constrained by sustainable mutual advantage rather than command and control. Not unexpectedly, these ecosystem/networks have very different capitalization requirements than conventional organization-centric ventures. Different capitalization requirements necessitate different due diligence processes and performance measurement methods for prospective investors and donors.

As your student group works on the structure and processes of your fund, we encourage you to remember two of the historic roles of the university; to prepare its students for the future, and to provide leadership in identifying and helping to shape that future. With this in mind, we strongly encourage you to add a social business ecosystem/network scenario to the range of 'How will we handle' scenarios that you use to shape the SBS venture philanthropy fund. Without such a scenario to help guide your design efforts, you run the risk of creating an efficient and effective fund that helps to keep re-creating the solutions and organizational forms of the past at a time when breakthrough innovations are most needed and possible.

To help seed this scenario development, we encourage you to consider this input/output diagram and associated sources and distribution of funds diagram for a social business ecosystem/network together with this post, 'Funding Networks: Have It Your Way...', from the Building Blended Value event. By incorporating a social business ecosystem/network scenario into your design evaluation process, we are confident that you will both help prepare Skoll Center SBS students for the future and help shape our society's dynamic networked future.

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Jenny, thank you for your reply, 'Due diligence on hybrids'. Your comment is a perfect context for the point we want to re-iterate here; that the typical hybrid organization (that is, a joint operation of a paired non-profit and a for-profit with a shared mission and management) can be too limiting a model for social innovation in the emerging world of the Network Society and its associated Network Economy.

And Rupert, thank you for contributing to this discussion. We'd love to know more about your Center for the Development of Social Finance and its mission is to increase funding to social enterprises. Your comments in 'Financial Literacy in the Social Enterprise Milieu' are particularly appropriate and relevant to the thread of discussion here regarding the challenges of envisioning and capitalizing extended social business networks/ecosystems.

In our prior post, 'Hybrids are Tip of Challenging Iceberg for Social Investment', we provided a bullet list of relevant posts from the Building Blended Value event. We realize everyone is very busy and that this was way too much to expect folks to read. But embedded within these context-setting posts were references to a two-page linked document that we'd like to bring front and center at this point in our conversation. (A large thumbnail of the first page of this PDF format document is presented at right.)

When you look at the mission/vision of an emerging community of social entrepreneurs, you will find that they are attempting to 'herd the cats' of a multi-facetted social business ecosystem rather than a typical (paired) hybrid organization. Ecosystems are influenced rather than managed. Collaboration through mutual interdependence and collective advantage are the forces at work rather than command and control. You will see this ecosystem or extended network structure at the heart of social entrepreneur's visions such as Christina Kirabo Jordan's Life In Africa work, within Toby and Richard Beresford's MicroAid social venture bringing the domain of international aid into the person-to-person network realm, and in Sohodojo's vision for the Small Is Good World Marketplace.

Some may think that these mission/visions are overly ambitious and too complex for practical implementation. But the scope of such ecosystem-like extended network enterprises are found as the source of flexibility and competitive advantage of such private sector successes as Cisco Systems in the computer industry, Toshiba in the automotive industry, and the wholesale network-based transformation of the Hollywood movie industry.

Of particular concern for us are the issues suggested by page two, 'A Closer Look at Capital Sources and Distribution in a Microenterprise and Small Business Network Ecosystem', of the diagram accessible by the clickable image above. While this diagram is specific to the mission/vision of Sohodojo's Small Is Good World Marketplace, only slight variations would be needed to cover the mission/vision's of such Social Edge members as Christina Kirabo Jordan, the Beresford's, and Jim Fruchterman, etc.

So, Rupert, as our community collectively seeks to chart the dark waters of 'Financial Literacy in the Social Enterprise Milieu', we need your experience and insights to help us understand the challenges and opportunities ahead as many of us seek to evolve and influence these social business ecosystems. And Jenny, we really need your foundation's cooperation to serve as a prospective due diligence 'crucible' to refine and package our mission/visions for salable social investment. Even if what we are doing at present seems like the fringe of 'risky long-shots', we can't help but feel that we are the tip of the future iceberg. It is quite possible that the seeds of the greatest social innovations will be sown and nurtured in extended network/ecosystems, not in the organization forms of days gone by.

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Hi Daniel,

We are glad to see you join this conversation because we believe you are a shining example of the social entrepreneurs who form an unofficial sub-community here on Social Edge. Your Tutor/Mentor and Cabrini Connection programs, associated web sites, and related program services collectively are a great example of a social business ecosystem implemented as an extended network enterprise which we wrote about in a prior post.

In addition to ourselves with Sohodojo, and you with Tutor/Mentor, this sub-community includes such Edge members as Ashoka Fellow Christina Kirabo Jordan working on her Life In Africa network, and Toby and Richard Beresford evolving MicroAid and its network of community development centers. Though better funded and already scaled more than any of us, Jim Fruchterman is an Edge member whose Benetech is designed around the ecosystem/network model. We're all working strategies to leverage the Internet and emerging trends in virtual or 'lightweight' organization that are designed to make the most of collaborative networks of stakeholders, service providers, volunteers, and our constituents.

While we each have very different missions and/or target constituents, we do share one thing that makes our work more challenging. That is, what we are doing has associated financial needs that require our backers (investors/donors) to think more in terms of funding "making movies" rather than "investing in the movie industry." We need financial partners willing and able to play the all-important "executive producer" role within the "moviemaking"-like activity of our social business ecosystems.

Much of the social investment community is moving toward organization-centric, performance measurement-focused investment strategies that value scale more than innovation. We get, in other words, social investors skilled at "investing in the movie industry." We run the risk, therefore, of getting a social sector that is efficient but lacks the risk-taking and mentoring needed to foster breakthrough social innovation.

Given the limited number of investments that it can make each year, our only wish is that there would be a dozen more Draper Richards Foundations!

Jenny, it would be interesting to know which of your current Draper Richards Fellows' social ventures are using, or plan to grow by way of, a network enterprise or ecosystem approach. Also following up on your earlier post, what challenges do you see in doing your foundation's due diligence of the 'hybrid' organizations you are considering? Those of us working on social business ecosystem/networks could really benefit from knowing better how we can document and present ourselves to prospective financial partners.

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It is interesting that the profit/non-profit and resulting 'hybrid' organization issue has come to light so early in this conversation. Incorporation regulations, tax law, and organizational model impacts on social investment strategy have been discussed many times here at Social Edge.

One of the liveliest forums showcasing these topics was the "Building Blended Value" mega-event that included a sub-discussion on "The Capital Challenge". Anyone in this discussion interested in furthering the evolution of the on-going conversation on these issues would do well to re-visit the conversations found at the blended value links above.

To summarize our contribution to this past conversation, we noted that 'hybrid' organizations are essentially a limited/simplified case of the emergence of social business ecosystems that take the organizational form of extended network enterprises.

The implications of the 'network-ization' of organizations and, more generally, of the global economy (ecosystem) in which network organizations live is best described in the work of Manuel Castells' 'The Rise of the Network Society'.

In the thread of prior posts that we have made on this subject, we'd like to reference the following:

• Network Composition, Not Hybrid Organizations


• Think Social Business Ecosystems Not Social Business Ventures


• Funding Networks: Have It Your Way...


• Hollywood and the Social Capital Market Network


• Drayton on Social Finance: Servicing Social Entrepreneurs' Needs

With these referenced posts as context, Jenny, we'd be very interested in hearing your ideas about what role you see foundations playing in the capitalization and nurturing of social business ecosystems?

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Jenny,

Thank you for joining the Social Edge community conversation.

To address the discussion point of the relationship between social entrepreneur and foundation, we'd like to use this forum's context-setting opening statement as a case in point.

There are precious few funding organizations out there that understand and support true entrepreneurial social innovation. Many have mission statements that suggest they do, but too often the follow-through to practice is not there. By contrast, the Draper Richards Foundation description above stands out as exception to this trend.

We appreciate your bullet point statements in the 'We fund' section, the first and most prominent being that the Draper Richards Foundation funds the entrepreneur or entrepreneurial team. This is a clear indication that your foundation understands that supporting entrepreneurship is person-centric not organization-centric. The entrepreneur's entrepreneurial energy often finds expression in organizations, but it is the entrepreneur's passion and vision that are the lifeblood of the body that is the organization embodying these entrepreneurial missions.

Hand-in-hand with your foundation's support of the entrepreneur, it is refreshing to see that your foundation envisions its role as being 'the first in the pool' at the organization's earliest stage of development. For social entrepreneurs, this is probably the toughest challenge we face.

In the private sector, the 'first in - most to gain' dynamic is in play. While risky for the initial backer, the extraordinary potential reward in the event of a well-placed bet can overcome risk aversion and uncertainty. With social entrepreneurs, particularly when non-profit organizations are involved, the risk is still there but the lure of big rewards to the funder is missing. Thus, we get the trend toward mezzanine and second-round funding for social enterprises.

We are looking forward to the evolution of this timely and important discussion.

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Congratulations, Vaz and the SE tech team, on the many improvements to the Social Edge site. It will be interesting to see how these new site features impact the opportunity for sub-community building. We have been advocates of sub-communities for a long time as this is one of the best ways that folks can develop true self-support value from an on-line community. Such peer support and camaraderie is difficult to accomplish in a 'one size fits all' mega/mono-culture site.

One thing we are sorry to see fall by the wayside, however, is the number of posts metric under the member's picture on each post. There are fewer data points to 'read into' a conversation on-line as compared to face-to-face interactions. The number of posts, in this case, is a useful indicator of a member's commitment and activity within an on-line community.

The 'Founding Member' designator, however, is not missed. This seemed to be a 'Who showed up early' indicator rather than, as its name implied, an indicator of deep interest/support and active participation to help launch the Social Edge community. There were lots of Founding Members with one or two posts, while there were a number of high-post, active members that we enjoy and respect who did not have Founding Member status.

So, bottom line, we'd like to see number of post brought back and farewell to the Founding Member designator.

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First, we want to say that this is an overwhelmingly good idea. The entire Social Enterprise domain is in danger of becoming a 'Usual Suspects Club' of the same folks who are well-positioned at the hubs of this global social network, and who have the means to travel and participate in such events as the World Forum. The challenge for Social Edge as an on-line community is to figure out how to help us 'outliers' to take a seat at the table and have our voices heard.

That said, there is the danger that, given the laundry list of high expectations that are listed as work requirements, this honor could turn into a 'win the battle, lose the war' situation for the persons selected as delegates.

Being an effective reporter is hard work. It also puts you in the position of 'observer' rather than 'participant'. Our strong motivations for wanting to go to the Forum have to do with the incredible opportunity to network with kindred spirits who could evolve into collaborators and potential funders. We couldn't imagine doing a good job of comprehensive Community Reporter as well as take advantage of the unique opportunity to attend as participatory delegates where you have the opportunity to advance your own passionate mission.

If we could redesign this program, here's how we'd do it:

• Send funded delegates as delegate, not as reporters
  


• Solicit college journalism/media programs for self-nominations from folks who would want to document and report on the success (or lack of it) of the funded delegates who attend this forum with the intent to advance their passion/mission.
  

The most important advantages to this approach are that: 1) we encourage social entrepreneurs to be entrepreneurial not reporters, and 2) we encourage the development of journalists interested in covering social enterprise. These are two different and much needed objectives.

As Toby reflected in some of his comments in response to the lessons learned in the recent GlobalGiving Marketplace contest, let's take a page from the Reality TV genre. Let's pick a small group of delegates (why two, let's shake thinks up with 6-8 diverse participants) to send to the Forum where their assignment is to promote and develop their social mission, not be reporters.

If we won a slot to attend the Forum and we knew it was going to be under the watchful eye of our peer on-line community, you can bet we would be highly motivated to take the best possible advantage of the opportunity. If we weren't selected, we can sure imagine the vicarious excitement of helping to select, then witness the Real World Challenge of a group of us non-insiders doing our best to network at the World Forum and to evolve our social missions given this significant opportunity.

In this regard, we think the selection of delegates should done half by peer vote and half by unilateral sponsor selection. Say we can send eight folks to the Forum. Let four be selected by the Social Edge community through a self-nomination and a simple-but-fair voting process. But let the other four delegates be selected by Jeff Skoll and/or the Skoll Foundation executive team. By having both processes at work, we ensure that there will be both community buy-in as well as 'underdog' selections that are deserving but are not likely to have broad popularity or attraction in the popular election.

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EBaly,

Before we relocated for a two-year stint to remote northcentral Montana, we were working with folks at the Earthaven Permaculture ecovillage in western North Carolina. One particularly creative group, the Armstrong-Allison family, developed a construction design and method to create affordable housing from unwanted shipping pallets.

We started a web site, 3RBuilders.Net to spread the word and solicit prospective partners. Our effort hasn't gone much further, but it is an initiative either waiting for the right folks to work together, or you can mine it for ideas.

The National Science Foundation's PATH program, Partnerships for Advancing Technologies in Housing, is a good candidate for research and development funding for U.S. projects.

You can find links to PATH, more info and lots of pictures of the pallet house at the 3RBuilders.Net web site, and additional background and more in this Sohodojo article, 'Lay Your Pallet Down, Don't Burn It!'

Good luck with your project.

--Sohodojo Jim and Timlynn--

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Keely,

Congratulations and the best of all good luck and happiness to you on your grand two-part adventure. The Peru transition project should be both fun and satisfying. But, WOW! What a great time to go to Oxford!!!

While we are in every way happy for you personally and wish you great success, we cannot help but be saddened at your leaving Social Edge. Your tireless work to evolve the community was obvious and appreciated by all.

But we feel a special sense of loss as you were genuinely caring and supportive of folks like us (being organizationally Sohodojo and personally Jim and Timlynn). We are among an emerging community of social entrepreneurs working primarily as "free agent innovators" collaborating in peer-networks rather than being organization-builders.

The Small Is Good approach to social entrepreneurism is in its infancy. Keely, you didn't let our "fly on the wall" nature keep you from taking us seriously. You encouraged our participation in the community, and always had words of support as we struggle to advance our vision for social change. Thank you many times over for your caring support.

We wish you all the happiness and success that you deserve.

Hip hip horray for Keely!

--Sohodojo Timlynn and Jim--

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Michael, congratulations on a brilliant and provocative first post to the Social Edge community!

Thank you for reminding us of the fundamental importance of federalism. While your comments are unfortunately too true with regard to the undermining of U.S. federalism at the state and national level, we'd like to remind folks that federalism is not limited to this political domain. Federalism is a collection of organizing principles that can most generally be described as focusing on the balancing of power among peers. Federal organizations are decentralized, with distributed power, rather than being hierarchical command and control organizations. Federalism can be usefully applied in many contexts, community-based organizations and microenterprise (and small business) networks to name just two.

We know of no more relevant and provocative social commentator and management theorist than Charles Handy to mention in this context. (Find useful links here.) All his latest books contain insightful content about the potential role of federalism in our individual and social lives. The most applicable of these works is The Age of Paradox (ISBN: 0875844251). We recommend this book to anyone who finds Michael's post interesting.

Moving on to the next two of your post's themes, Non-Profits vs. For-Profits and Capital Formation, again we concur with and applaud your insights.

Folks bring too much of a value-laden and emotional mindset to their thinking about profit and non-profit organizations. This "deep structure" of how folks think about profit vs. non-profit has more to do with their ideas about personal vs. social good, and how they feel about the means and ends of wealth creation. In reality, profit vs. non-profit is nothing more telling than a management and accounting decision that is all about choosing among organizing principles. It is not the basis of a Morality Play partitioning Black Hat Greed vs. White Hat Common Good. All our many role-based "hats," like all our organizations, are blended value shades of grey.

Due largely to the "tangled web" we have with regard to incorporation laws and tax code, these unfortunate "black and white" mindsets color the domain of social investment and capital formation for social entrepreneurs. You may have been alluding to some of the posts we contributed during the Capital Challenge segment of this Blended Value mega-event. In particular, we suggested that social investment financial intermediaries could perhaps try thinking more about "making movies" (a capital-intensive, dynamic networking domain) rather than continue to think about "investing in the movie-making industry." (For context, this post has links to other of our inter-related posts about the challenges of funding social/business network enterprises.)

People's unchallenged mindsets – together with the tangled web of social policies and legal frameworks developed largely as a result of these mindsets – unlevel the playing field for many social entrepreneurs. Our growing frustration at having to cope with this tangled mess makes folks like us ready volunteers for your Boston Tea Party in Securities Law. Perhaps the Training and Development Corporation would like to be a sponsoring convener of the First Continental Congress for the Small Is Good World!? :-)

Congratulations, again, on making such a thoughtful first post. We look forward to your continued contributions. And welcome to the ranks of the Friends of the Small Is Good World, a federated contingent of the Social Edge community!

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Hi Craig. Welcome to the Social Edge community, and thank you for citing our prior posts to The Capital Challenge forum. As this dialog begins to wrap up and the group prepares to shift its attention to the next conversation about measurement and performance metrics, we want to take a moment to reflect on what we had hoped to accomplish by being part of this conversation.

Although we felt decidedly out of place in joining this conversation, we saw a unique opportunity to give voice to a 'new kid on the block' breed of social entrepreneurs who are struggling to make our place in the world. Folks like tutormentor, 'Piecetrain' Christina, MicroAid's Toby and Richard Beresford, and Sohodojo Jim and Timlynn - we're an emerging and unserved customer base for the social finance industry. Many of us are social entrepreneurial 'free agents' or we work from lightweight, often virtual, organizations. Our methods are dynamic and collaborative. Our organizations are network enterprises, not traditional profit or non-profit corporations. We are evolving social/business network ecosystems.

We used the well-documented 'networkization' of Hollywood as a business case to suggest that this new breed of social entrepreneurs need help 'making movies', and that this help would not come from those 'investing in the movie industry'. We suggested that we need a new breed of social finance intermediaries who think like Hollywood executive producers, not like investment counselors.

But looking back on the threads of discussion, we can't help but feel - as we described in our opening post - that we remain at the "window as outsiders and see an organization-centric mindset that marginalizes our needs and values."

As we read the most recent threads of this discussion, we cannot help but worry that all this well-meaning effort will result in little more than developing a "Free Market" United Way, where a limited number of socially- and politically-correct organizations will be anointed with visibility resulting in a cascade of financial and infrastructure support. Sure, this will build a few mega-organizational successes that will further convince donors, investors and those of the social finance community that they have built a worthy and much-need institution to promote the social good.

But what about the tens of thousands of individuals and small organizations that remain at the window as outsiders to what will become an increasingly insular and self-referencing world?

Truly significant, yes even disruptive, innovation rarely is born in hallowed halls. It is born in the attics, garages, and run-down storefronts of 'outsider' entrepreneurs passionately committed to changing the world through innovation. If these breakthrough innovations can be characterized as social entrepreneurs' "making movies," then who within the social financial community will be our executive producers? Which social financial organizations will become the pioneer 'production houses' that boldly lead the way in the 'networkization' of social enterprise?

Will we work together to create a new world of social investment open and accessible to all social entrepreneurs? Or will we simply put a new spin on business as usual? If you aspire to open up a new world, then these working groups that you folks are talking about convening need to include some 'new kids on the block' and not just the 'usual suspects'.

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Bill Drayton's article, 'Needed: a new social financial services industry' in the March issue of Alliance magazine, brings into clear perspective the challenges under discussion in this forum. His words remind us of the huge potential loss to society if the social investment community fails to understand and respond to the true needs of social entrepreneurs.

Drayton reminds us that both business and social entrepreneurs are changemakers whose 'job' or calling is to shatter the patterns of 'life as usual'. Regardless of sector, the entrepreneur is a creative destructive influence that helps society reorganize itself to address its existing problems and future opportunities.

In 'The social investing shortfall' section of this article, Drayton describes the diversity and flexibility of financial services, organizations, and instruments available to business entrepreneurs to address their private sector needs. He then laments the lack of diversity and creativity in the social investing marketplace:

"The resulting gap, which is growing wider as accelerating change on the operating side outpaces innovations in social investment, is probably the biggest single threat to the successful maturation of the citizen sector."

Our emphasis on the phrase accelerating change on the operating side refers to the discussion here about the emergence of social business network ecosystems. Using the analogy to Hollywood and the film industry, we've championed the need for the social investment community to address "making movies" rather than "investing in the movie-making industry." Understanding this distinction between network process enabling and organization investment is key to understanding Drayton's challenge to the social investment community to service the true needs of social entrepreneurs.

In 'What social entrepreneurs need', Drayton enumerates the current disconnect between foundations and social entrepreneurs. His points are directly relevant to Tim's post asking the question, "What should be the role of foundations in addressing the capital challenge?" - if we understand this challenge to include addressing the real needs of social entrepreneurs as well as the needs of a new generation of social investors and donors.

In Drayton's concluding section, 'How this can come about', we see some interesting parallels to the topics and content of this discussion. Drayton summarizes a three-point agenda in which Ashoka and others are engaged to address the social investing shortfall:

1. Identify, support and link leading social finance entrepreneurs.
   
   
2. Encourage leading for-profit financial institutions to enter the market.
   
   
3. Build new business/social bridges.
   
   

This event, its threads of conversation, and signs of networking among event participants are ample evidence of the social investment community's activity in line with point one above.

In point two above, we see Mr. Drayton, the Coach, motivating us with reality check reminders that if we can't do the job, there's always somebody waiting on the sidelines who wants our spot on the bench. If the game were fully defined and inflexible, we might take this kindly reminder as a threat to our remaining on the team. But since the game is still in its formative stages, Drayton is reminding us to challenge ourselves by 'expanding the league' to further stimulate the innovation that will result from more competitive play.

But it is in point three that we see the most encouraging connection between the conversations of this event and Drayton's prescription for a new social financial services industry. In describing Ashoka's strategy to attack the problem of urban slums, Drayton describes a collaboration between two leading building-products companies and large citizen groups to create a "hybrid business/social value added chain." Let's be clear here. Drayton is not talking about the need for a 'hybrid organization' to tackle the vexing social challenges of urban slums; he's describing a collaboration among profit and non-profit players to create a 'hybrid value-added chain'.

A "hybrid business/social value added chain" is the business process enacted by a social business network ecosystem (AKA, an extended network enterprise, see also) as has been under discussion here.

If we were to sit down with Mr. Drayton to discuss the challenges and opportunities that Ashoka is facing as it addresses the urban slum problem, we believe he would talk more about the need to fund and support the work of building affordable houses than he would talk about the challenges and opportunities of investing in the affordable housing construction industry. This is a real world example of our "making movies" vs. "investing in the movie industry" analogy.

So Tim and other first-moving innovators in the field of social finance, we hope that the conversation here - to the extent that it is representative of the emerging needs of your social entrepreneurial customers - will help to frame the discussion and influence the action plan you develop to launch the Social Capital Market Network.

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Tim, we hear you and agree. As you said, "On 'stock market' vs 'network' - these concepts are, I believe, complimentary - even critically intertwined." Complimentary and intertwined, yes, yet fundamentally 'horses' of different colors.

The two most critical issues folks like us face as social entrepreneurs working on 'bleeding edge' innovation are: access to early-stage risk capital, and access to mentor/intermediary networks and related support infrastructure. We believe the "making movies vs. investing in the movie industry" analogy is deeply representative of this challenge and distinction. We truly hope that all the attention and effort does not go to the 'business as usual' and organization-centric side of the things.

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Fantastic post, Tim! When Calvert throws open the doors of its Social Capital Market Network, we will be among the first to cross its threshold. Alternatively, when the Nonprofit Stock Market floor begins trading, it will be a distant blip on our radar. Why so? Because one is network-aware and has everything to do with innovation, and the other is organization-centric and has little, if anything, to do with innovation. We'll explain by way of an analogy to the 'networkization' of Hollywood and the movie industry.

If you want to invest in the movie industry through traditional financial markets, there are a handful of options. You get the annual reports and analysts' assessments of top-performing media conglomerates and one or two of the remaining large independent studios. Based on this quantized analysis, you put some money into the movie biz. Of course this investment has little to do with actually making movies, and it has virtually nothing to do with the qualitative decisions that go into funding innovations in the movie industry. Making movies and spawning innovation is done in the movie industry's extended network enterprise far removed from, and distantly related to, the public capital market for media industry investment.

Hollywood was founded by visionary entrepreneurs. With the growth of the first vertically integrated studios - remember, studios even owned the theatres that showed their pictures - we had an organization-centric industry with an elite of entrepreneurial executives and a vast army of moviemaking workers. Actors, writers, stagehands, even directors were contract employees of the studios. The eventual networkization of Hollywood is a classic case of creative destruction. As moviemaking evolved from its roots in factory-based product manufacturing to the infinitely creative art form that it has become, the studios disintegrated into a network enterprise. The result was an explosion of entrepreneurial creativity at every level of the moviemaking process.

As you watch the credits roll on a current Hollywood movie, you get a glimpse of the dynamic, creative network enterprise that came together for this project. Hundreds, often thousands of individuals' names roll by, each contributing a special talent or skill to the production. In addition to the list of individuals, the names of several support services companies scroll past, each representing a specialized team of creative folks needed to bring the movie you've just seen to life. Very few of these individuals and support companies are publicly traded and independently funded. Yet all these creative individuals and essential support service companies persist in a healthy, sustainable moviemaking industry.

The Hollywood network enterprise exists because it has evolved a highly specialized set of intermediaries. The producers and their production houses serve a vital function of raising the capital and negotiating the myriad of sensitive relationships that eventually result in the greenlight for a movie to go into production. Without these creative entrepreneurial producers, few movies would be made. Without creative, visionary producers, we'd be stuck with 'Rambo 23' and 'Grumpy Old Men 7' as studio beancounters decide who gets a greenlight.

So Tim, what you've described in your Social Capital Market Network post is a roadmap for the networkization of social entrepreneurship. Calvert stands to be among the first movers in the emergence of the intermediary-producers that help to spawn the kind of social business network ecosystems that we've described in an earlier post.

Sure, it is important to have a nonprofit stock market. Let those inspired by this vision vigorously pursue it. But if we truly want to stimulate breakthrough innovation in social enterprise, we need a visionary group to come together and work on the creation of the Social Capital Market Network. So, Tim, how can we and others work with you to take the next step?

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Jim, we always appreciate your posts as they are grounded in insightful entrepreneurial pragmatism. Your comments about the state of interest/feasibility in hybrid organizations suggests that there is some level of exploratory investigation being pursued but that, for the foreseeable future, folks might find that they can function as they want within existing IRS regulations. We concur for a few specific reasons that we will share in this post. In addition, we've had some recent IRS Form 1023 processing experience that will shed some light on the current state of the IRS's thinking about 501(c)(3) organizations. We'll share our recent IRS experience and insights in a follow-up post.

We believe that the effort to define and mainstream a 'hybrid' organization (being some middle ground between profit and non-profit) is unnecessary and impractical. We also believe that this interest is buttressed by the inertia of organization-centric thinking. Once folks understand and embrace the emerging network enterprise organization model and network dynamics, the need for a hybrid organization disappears. You can get exactly the hybrid combination of structure and function that you want by creatively composing a network enterprise. That is, we should be looking at network enterprise composition, not hybrid organization definition.

There is ample evidence that the private sector is adapting to the transition to a global informational economy through the transformation of vertically integrated corporations into network enterprises. The many reasons for, and competitive benefits of, adopting a network enterprise model are beyond the scope of this post. But as cited earlier, there is no more informative and comprehensive source on this topic than Manuel Castells' The Rise of the Network Society (ISBN: 0-631-22140-9).

So the first point in our argument against hybrid organizations is that they are unnecessary, as the network enterprise model can more flexibly satisfy any design requirements that you might have for a proposed hybrid organization. Our second point is that developing hybrid organizations is impractical.

Consider the laundry list of action items that would need to be accomplished in order to mainstream hybrid organizations, limiting ourselves to the scope of U.S. only and not tackling this on a global scale:

• One huge hurdle is that we'd need a diverse and amorphous community of interest to first decide on a necessary and sufficient definition of the structure and function of the proposed hybrid organization. This alone is daunting. Assuming we succeed at this first step, we'd then need to pursue the following.
  
  
• Engage both houses of Congress to successfully lobby for a significant change in the Federal tax code.
  
  
• On a state-by-state basis, we'd need to lobby legislatures to amend their incorporation laws. Once these laws are changed, we'd need the states to bring their tax codes in line with the new Federal laws.
  
  
• We'd need to engage and successfully influence the Financial Accounting Standards Board (FASB) to have them develop and endorse generally acceptable standards for the maintenance and presentation of financial records for this new class of organization.
  
  
• Assuming we get all this in place, we haven't even started to address the need to educate new and re-educate existing accountants, lawyers, and myriad other support services folks who will have to be on-board to allow this new breed of organization to emerge.
  
  
• And finally, we'd have to engage and successfully influence the existing community of capital sources to add this new organization type into the mix of their investment and donation strategies.
  
  

Needless to say, most of us would be dead and gone, or at least near retirement, before all this is likely to fall into place and substantively effect our world. This is why we keep championing network enterprises and social business ecosystems. We have all the piece-parts we need to compose a sustainable, humane world. All we need is the creative, collaborative can-do spirit to use what we've already got in our toolkit.

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Thanks, Sheila, for your summarizing posts. We'd like to contribute some perspective to this question:

What is the implication for funding the collaborative networks that Jim and Timlynn mention (see post #48, and more specifically post #54)?

Reflecting on this question will showcase the creativity that can be applied to the composition, funding, and participation in a social business network ecosystem. The following mini-scenarios are representative of the myriad ways that individuals and organizations can participant in such network enterprises.

These scenarios will reinforce the insight that Chistina Kirabo contributed in post #67. Christina's experience reminds us that there are many inputs, in addition to capital, that give life to a social business network.

The composition of a network enterprise affords such dynamic flexibility that we need not wait for the invention of a new breed of hybrid organization, nor do we need to sew a non-bifurcated pocket onto the pants of prospective investors or donors in order to move forward. Blended value is an natural feature of social business network enterprises. The partitioning of concern inherent in the network organization model means that virtually any individual or organization can find an interface or access point for participation without having to adopt a dramatic perspective change. Nor do participants need to go through a significant re-education process to understand and participate in such networks. An access point and interest-driven motivation are all that is needed.

As a visual aid to accompany the following mini-scenarios, click the thumbnail graphic at right or click this link to open a separate browser window on an input-output model of a representative Small Is Good Business Network Ecosystem. You can then refer to this diagram as you consider the following scenarios:

• An investor interested in 'green' ag-based value-added products purchases preferred stock in the Chandler Guild, a microenterprise and small business network of soybean wax candlemakers competing in the $3B/yr. U.S. candle industry. The terms of purchase include a guaranteed ROI and date- or condition-triggered buy-back.
  
  
• A U.S. philanthropist wanting to support the emergence of the entire class of Small Is Good Network enterprises makes a tax-deductible donation to Sohodojo, the 'outsourced' R&D lab developing Open Source software and Open Content education and business development materials in support of anyone who wants to start or participate in such network enterprises.
  
  
• A mission-driven consumer wanting to support microenterprise and community networks in Indonesia funds an 'idea' through MicroAid Family Charities while purchasing craft products for sale in MicroAid's e-commerce marketplace.
  
  
• A social investor interested in stimulating innovation in the construction of affordable and environmentally-friendly housing purchases a debenture offered by 3RBuilders.Net.
  
  
• A family of creative consumers interested in sustainable forestry and wildlife preservation purchases a holiday gift at Squirrelfeeders.com. They so much enjoy doing business with this network community that the kids take training and are now apprenticing as squirrelfeeder builders while the parents sell the network's products in their neighborhood and through their social network.
  
  
• A U.K. investor wanting to support new approaches to international aid makes an investment in MicroAid.net, then wanting to further leverage this investment makes a deductible contribution to the Sohodojo/MicroAid Project, a collaborative applied research initiative to develop a story-driven, game-oriented e-commerce engine to be used by MicroAid (and others) to help create alternative markets for Small Is Good Business Networks.
  
  
• An existing business offering product packaging and drop shipping services sees the 'win-win' in cutting a creative deal to provide its services to three microenterprise networks selling products that are just the kind of things the existing business knows how to process and handle.
  
  
• A big-box retailer smelling profits aplenty based on the consumer frenzy generated by the story-driven marketing of the top-performing Small Is Good Networks picks up soy wax candles, squirrel feeders and organic personal care products. Imagine their delight when they learn that they can earn a healthy dose of 'halo capital' while solving a vexing waste disposal problem by donating their shipping pallets to 3RBuilders.net for the construction of affordable housing everywhere their retail chain does business!
  
  
• A community-based organization wanting to stimulate self-employment and new business development sends a core team to Network Enablers Training and, based on local citizens needs and interests, spawns participation in three existing, and starts one new, Small Is Good Business Network.
  
  
• An entrepreneur who sees a service gap or supplier opportunity in an existing network enterprise takes the initiative to start a new business specifically to fill the gap or tap the opportunity.
  
  
• An unemployed worker dispirited from a fruitless job search attends a New Member Orientation meeting and within three weeks has opened a self-employment income stream and starts being able to sleep at night. After moving from provisional apprenticeship to full membership, this new member is on track earning performance-based equity in the network. Since this earned equity will help send the kids to college, this new 'networker' cross-trains to add skills and becomes certified for participation in four other networks.
  
  

These are just a handful of the many ways that individuals and organizations can participate in, or support the emergence of, the Small Is Good Business Network Ecosystem. As these mini-scenarios suggest, the ways to invest, donate, or transact business with this ecosystem are limited only by our imaginations. Chances are, given what you now know about the Small Is Good Business Network Ecosystem, you can already paint yourself or your organization into this picture. The beauty of such participation is that each bit of capital that flows into the nodes in the network will have both a direct local effect as well as a distributed 'ripple effect' on the overall health of the ecosystem.

Through cross-training and portfolio participation, these networks that make up the ecosystem will be resilient and adaptable. Network 'memory' through diffusion of knowledge and processes will ensure the ecosystem's sustainability while accommodating the birth and death of individual networks based on market opportunities and competitive dynamics.

So, for those displaced and disheartened, bring on the challenges of outsourcing and offshoring. For those convinced that there will never be a niche to establish a beachhead for participation in the emerging global economy, take heart. Transformations in the employment world and revolutions in markets are the result of the Big Is Good World's transformation into a global informational economy based on network enterprises. The best thing we can do right now is learn from the Big Is Good World's lead, and use this knowledge to create our own destiny as we creatively collaborate in the Small Is Good World to do our part to extend the flight of Spaceship Earth.

Like tutormentor says "If it is to be, it is up to me." In the Small Is Good World, the collective actions of many 'me's can become a powerful 'us' through our network enterprises.

Where are the holes in our thinking? From your perspectives, what are our risk points? What are our competitive strengths compared to plans and strategies that are currently crossing your desks? Is anybody here interested in pitching in to become a part of the 'us' helping to shape the emerging Small Is Good World?

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Vanessa, thank you for telling us about your plans and experience. You are a perfect example of the emerging Small Is Good World we are talking about here in the context of the challenges for funding and supporting grassroots organizations that serve a social purpose.

Just as we counseled Matt, and as tutormentor is very likely to agree, it's time to think about influencing and evolving a social business network ecosystem rather than manage and grow an organization. In this sense, Small Is Good. Small is not about organization size; it's about adopting a cluster of organizing principles that leverage networking relations rather than organization building to get things done.

A significant challenges you mention is dealing with the added dimension of shifting capital and other resources from your donor/investor region to your constituent/service region. This challenge is especially tricky when these regions are international. To date, the most effective means for shifting such resources were nations and large international aid organizations. Fortunately, there are social entrepreneurs already working to take international aid into the Small Is Good World.

One such creative social enterprise is the UK/Jakarta-based MicroAid.net, founded by father and son team Richard and Toby Beresford. MicroAid has developed an affordable Internet service whereby they provide the means for very 'fine-grained' funding and support of family-based and community-oriented aid programs. By fine-grained, we mean that aid programs are brought down to the level of one-to-one relationships. Funding requirements, project plans, and documented results are tracked at levels where individual donors or small groups of donors can identify, fund and track results of their support. An 'aid program' becomes 'an idea' thereby reducing the critical mass of what it takes to get something funded that leads to documented results.

The MicroAid service brings idea generators and idea funders together. For example, here are the currently published MicroAid ideas in the Learning to do Business activity space. Within this group, here is Idea #410, Practical production skills in making small snacks (Kerja Permukiman Rakyat (YKPR) - Indonesia.

So here's a case where a tiny social enterprise - MicroAid is essentially entrepreneurial Richard and Toby supported by a band of contingency workers in the UK and Jakarta - is playing a vital network enabling role that puts local NGO and individual families in Indonesia together with donor individuals and groups of donors around the world. This is the Small Is Good World in action.

So, Vanessa, you may be able to use this or a similar service to build your NGO as a nimble, network enterprise rather than as a 'managed organization'. Good luck, and keep us posted.

Postscript: Thanks to our meeting here at Social Edge, Sohodojo is evolving a collaboration with MicroAid. See our article, 'MicroAid - International Aid In the Small Is Good World' for more information. We've also announced our collaborative project on the Social Edge Funding Forum.

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Matt, your question is a timely inquiry following our post about the emergence of the Small Is Good World. Given the extent of our previous post, we will do our best to keep this reply to you as brief as possible.

First, with regard to your inquiry about For Benefit organizations as mentioned by Jed Emerson, the information on the Internet is pretty slim. To chase down Heerad Sabeti, go here. For additional information, check out Colin Mutchler's write up at ActiveFreeMedia. And if there is anything that can be considered the home of this agenda, check out The Fourth Sector web site. Many of the folks involved in this are North Carolina-based. Sohodojo was founded in North Carolina. Before leaving for our current extended applied action research activity in remote northcentral Montana, we met with Heerad to consider collaborations. Nothing came of it. Hope this info helps.

Now, on to a more general reply to your inquiry... As we implied in our 'Disruptive Entrepreneurism and the Blended Value Proposition' post, we would encourage you to move your thinking from that of managing and growing an organization to influencing and evolving an ecosystem. We strongly believe that entrepreneurs in the 21st Century, regardless of their domain of activity, will adopt the latter perspective rather than that of the former organization-centric mindset.

Fortunately, we don't have to elaborate on this further here as our post, Here Come Those Assumptions Again... addresses this topic in some detail.

Within the context of this discussion, however, we have included a thumbnail image that links to a PDF document capturing an input-output model of one form of the Small Is Good Microenterprise and Small Business Network ecosystems that we are describing.

The most salient point that we would like to make about this ecosystem model is to bring your attention to the upper left corner where we show a Commonwealth Trust associated with each of the decentralized and distributed Small Is Good network enterprises. Much is being written about co-ops as a form of leveler of the playing field for access to markets by small producers. While such a legal business incorporation form can address collaboration for market access, co-ops do little for their members in terms of allowing them to work their way into participation in capital markets at a personal investment level.

By and large in the U.S., the co-op business model is limited by state laws in terms of wealth generation for its members. The co-op is little more than an organizing shell that is prohibited or limited in its ability to retain earning. Earning must be passed through to members in an active manner. This limits members to a 'piecework' level of participation in the co-op. Members, in other words, will be hard-pressed to accumulate any equity that will help them buy a house or put a kid through college.

This is why we are exploring non-co-op forms of microenterprise and small business networks. We'll need some form of commonwealth trust that is non-tradable on a secondary market, but that is liquid enough for members to cash out when the need or opportunity to do something with their earned value is there.

Like you, Matt, we are exploring this space. We are interested in others' experience and suggestions about how to structure and evolve such social business ecosystems.

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Speaking as entrepreneurs, we see little that is being talked about here that will impact our world in a significant and positive way. This is a well-meaning observation, not a criticism. We applaud the work you folks are doing, and we encourage your efforts. However, your work just doesn't seem to intersect our world. And in this respect, the BV community may be missing an opportunity to play a significant and much-needed role in helping to shape the transformation of capitalism. Let us explain.

Entrepreneurs are individuals passionately committed to changing the world through innovation. If society didn't have such relentlessly focused people, disruptive innovation would be exceedingly rare. Organizations would not pursue disruptive innovation; their foundations are often catastrophically shaken by such activity. In this sense, entrepreneurs are the 'mutant gene' that stimulates societal evolution in revolutionary leaps, rather than along a gradual slope of incremental change.

Organization, Scale and Impact

Entrepreneurs have traditionally been coupled with organizations. This tight coupling - largely the result of Industrial era entrepreneurs achieving impact through economies of scale - has led to a cluster of organizing principles that we call the Big Is Good World. We have been milking the fruits of the Industrial Revolution so long that we have internalized, and made nearly universal, the presumption that scale is a prerequisite to impact, and that organizations are the means to scale. Consider this from the Key Definitions section of the Blended Value Map monograph:

Scale: Going to scale refers to the challenge of replicating successful social programs and achieving greater size-and thus impact. For many, the for-profit sector analogue is franchising.

Certainly the decentralized and distributed organizational form of franchising is a 'kinder, gentler' form of growth when compared to the accretion of monolithic bureaucracies. But the two presumptions are evident nonetheless; the equation of size with impact, and that organizations are the intermediaries for the spread of impact.

While these presumptions could be comfortably made in the Industrial era, they are at risk of being out of step with the emerging nature and dynamics of today's world. Indeed, the very underlying motivations for the development of the Blended Value Proposition suggest the rationale for why these presumptions about impact and organizations may no longer apply.

Descent of Productivity or Ascent of Socio-Environmentalism?

In his prior post to this discussion, Steve Lydenberg hit the nail on the head with his insights about the measurement of societal wealth:

Old definition of societal wealth:
productivity gains (see Adam Smith)

Today's definition of societal wealth:
productivity + no externalized costs + enrich environment + increased value of stakeholder relations

As we transition from an industrial economy to an informational economy, the focus of productivity measurement has shifted from the countable production and distribution of manufactured things to the elusive and counter-intuitive production and distribution of information and knowledge. Elaborating the challenges of productivity and social wealth measurement are beyond the scope of this post. However, we cite the brilliant and detailed treatment of this topic in Manuel Castells' trilogy, 'The Information Age: Economy, Society and Culture, in particular Volume 1, 'The Rise of the Network Society' (ISBN: 0-631-22140-9).

Many see the Blended Value Proposition as a raising up of previously uncounted and uncountable dimensions of organizational performance. We might just as easily argue that productivity gains have fallen down into the previously unchartered waters of the uncounted and uncountable domains of measuring social and environmental impacts. Whether ascent or descent, we have an historic opportunity to elaborate the scope of organizational accountability to include social and environmental impacts as components in a renewed definition of societal wealth.

But are we setting the bar too low if all we envision is for the Blended Value Proposition to contribute to a refactoring of organizational performance measurement as an enabler of more broadly based capital markets and sector investments?

A New Game in Town

The transition from an industrial to informational economy has created a crisis that is similar to a professional sports league at a mature state of its lifecycle. Stadium seats are increasingly empty as fan interest wanes. Owner/player contract negotiations overshadow play on the field. Access to global sports information and event broadcasts further erodes the fan base.

The solution? Let's refurbish the stadium, and change or add a few rules to liven up the game in hope of engaging new and broader fan demographics. If we spruce things up enough and give fans a new twist on the old plays, the stadium will fill for the next Big Game!

True, we may get a few more seasons out of our aging league if we tweak the rules and update the stadium. But in the process, we may miss the fact that the Next Big Game is being played on a sandlot in the next town over. This new game is being played by un-uniformed and un-refereed amateurs with fans crowding the sidelines oblivious to the lack of amenities such as popcorn vendors and stadium seating.

Dawn of the Small Is Good World

Ironically, the very features that have caused crises in the organization-centric Big Is Good World are the enablers of the network-aware Small Is Good World. This new world is in its sandlot stage of league development. Informational and communications technologies that rock the foundations of existing markets and production methods are the life-blood of emerging alternative distribution and market channels. Products and services are being designed and delivered by a new breed of decentralized and distributed network business ecosystems. Profit or non-profit is an accounting decision made about a support organization that is little more than a resource pool and brand identity through which collaborative networks of creative entrepreneurial individuals and small businesses engage the world.

The human resources traditionally tied to, and formerly empowered by, affiliation with organizations are fleeing the Big Is Good World in increasing numbers. We are taking up residence as players, fans, and enablers of the emerging Small Is Good World. We aim to envision and build self-help and open participation systems that are simply unimaginable and un-buildable within the constructs and dynamics of the Big Is Good World. Our goal is nothing short of the radical transformation of capitalism. Not to destroy and replace the Big Is Good World but to 'right-size' it through the effective birth and growth of its complementary Small Is Good counterpoint.

To date, we don't hear a message from the Blended Value community indicating that you are aware of our existence. We look in the window as outsiders and see an organization-centric mindset that marginalizes our needs and values. If we're wrong, educate us about opportunities for collaboration. If there is even a slight ring of truth in our observations, we welcome the opportunity to engage in dialog so you can better understand the social entrepreneurs in residence in the Small Is Good World.

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Hey Steve!

As you might expect, we believe this topic is most important these days, but not for the typical reasons that you see it mentioned. For better or worse, we live in an Organization-focused world that tends to over-emphasize our collective action rather than our individual actions. That is, when we think in terms of clusters of organizing principles, it's a Big Is Good World more than it is a Small Is Good World. Sohodojo is among the champions/evangelists of the Small Is Good World.

There is a growing movement toward the creative, proactive Individual. We join organizations not to be anointed with an agenda of what to think and do, but rather to have a voice in participating in organizations. Often this motivation for joining organizations is to serve as change agents, to affect the trajectory of an organization, rather than to passively go along for the ride. In this sense, cross-sector partnering can be a change insurgency strategy used by members if the Small Is Good World to impact the Big Is Good World.

Here are two pointers to prior Social Edge posts that further describe this perspective: 'Sohodojo and the Small Is Good Parallel Universe' and the longer but more informative 'Here Come Those Assumptions Again...'.

We would love to hear from other Social Edge members who are 'solo' or 'free agent' social entrepreneurs using partnering/participation (social networking) to affect change in organizations, especially when such network participation has cross-sector applications.

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