WHAT CHARACTERISTICS do these social and environmental entrepreneurs share?

Capturing the common characteristics of such extraordinary, diverse people is tough, but here are some especially noteworthy qualities.

Among other things, these entrepreneurs:

•    Try to shrug off the constraints of ideology or discipline
•    Identify and apply practical solutions to social problems, combining innovation, resourcefulness, and opportunity
•    Innovate by finding a new product, a new service, or a new approach to a social problem
•    Focus—first and foremost—on social value creation and, in that spirit, are willing to share their innovations and insights for others to replicate
•    Jump in before ensuring they are fully resourced
•    Have an unwavering belief in everyone’s innate capacity, often regardless of education, to contribute meaningfully to economic and social development
•    Show a dogged determination that pushes them to take risks that others wouldn’t dare
•    Balance their passion for change with a zeal to measure and monitor their impact
•    Have a great deal to teach change makers in other sectors
•    Display a healthy impatience (e.g., they don’t do well in bureaucracies, which can raise succession issues as their organizations grow—and almost inevitably become more bureaucratic)

But as interest grows in trying to solve the world’s great social, environmental, and governance challenges, the definitions —and the boundaries between fields— blur. In the process, the field of social entrepreneurship has become “a truly immense tent into which all manner of socially beneficial activities may fit,” as two board members of the Skoll Foundation —Roger Martin, dean of the Rotman School of Management, and Sally Osberg, the foundation’s president and CEO— put it.

One result, inevitably, is confusion.

So, they argue, the real measure of social entrepreneurship should be “direct action that generates a paradigm shift in the way a societal need is met.” What such people do, in effect, is to identify and attack an “unsatisfactory equilibrium.” Their endeavors are transformative, not palliative, with the power to catalyze and shape the future. And, once you know where to look, you find them at work almost everywhere, as described in the appendix of our book.

There is no standard-issue entrepreneur, but there is a consensus on what entrepreneurs do. Through the practical exploitation of new ideas, they establish new ventures to deliver goods and services not currently supplied by existing markets. Social and environmental entrepreneurs share the same characteristics as all entrepreneurs—namely, they are innovative, resourceful, practical, and opportunistic.

They delight in coming up with new products or services, or new approaches to delivering products or services to existing or previously undiscovered markets. What motivates many of these people is not doing the “deal” but achieving the “ideal.” And because the ideal takes a lot longer to realize, these entrepreneurs tend to be in the game for the long haul, not just until they can sell their venture to the highest bidder.

Social and environmental entrepreneurs operate across a spectrum of enterprises, from the purely charitable to the purely commercial. But because many of the markets they address are immature, they tend to skew toward the nonprofit end.

On the purely charitable side, “customers” pay little or nothing, capital comes in the form of donations and grants, the workforce is largely made up of volunteers, and suppliers make in-kind donations. At the purely commercial end of the spectrum, by contrast, most transactions are at market rates. Many of the most interesting experiments take place in the middle ground, however, where hybrid organizations pursue new forms of blended value and where better-off customers sometimes subsidize less well-off customers. Blended value is what results when businesses—whether for-profit or nonprofit—create value in multiple dimensions—economic, social and environmental. So a key challenge for twenty-firstcentury investors and managers will be to boost the attractiveness to all key stakeholders of the value blends they create.

One burning question that invariably comes up, particularly when successful business entrepreneurs meet successful social entrepreneurs, is “What motivates you?” The implication behind the question is “If you have been so clever in achieving what you have accomplished, why haven’t you applied your talents to making money?” In response to that question, David Green, one of the world’s outstanding examples of entrepreneurial brilliance applied to creating financial models that deliver quality health technologies to the world’s poorest, quipped: “My reasons are purely selfish. I figure I have been put on this earth for a very short period of time. I could apply my talents to making lots of money, but where would I be at the end of my lifetime? I would much rather be remembered for having made a significant contribution to improving the world into which I came than for having made millions.”

Against this motivational backdrop, social entrepreneurs develop and operate new ventures that prioritize social returns on investment. For example, they aim to improve the quality of life for marginalized populations in terms of poverty, health, or education and attempt to achieve higher leverage than conventional philanthropy and nongovernmental organizations. “Ten Characteristics of Social Entrepreneurs” lists other characteristics they tend to have in common.

Many consider environmental entrepreneurship to be a subset of social entrepreneurship, but the environmental entrepreneurs generally see themselves as a distinct group. For one thing, they tend to operate on the for-profit end of the enterprise spectrum. Beginning in 2002, the sector has gravitated toward a major rebranding as the clean technology, or “cleantech,” industry, driven by the eponymous Cleantech Group.

Being unreasonable is not just a state of mind. It is also a process by which older, outdated forms of reasoning are jettisoned and new ones conceived and evolved. As the process unfolds, those mired in the older, obsolete paradigms can become threatened by—and aggressive toward—the innovators, particularly if those innovators move into the mainstream worlds of business, finance, and politics. But like it or not, the world is in the early stages of powerful, deep-running, and pervasive changes that, for better or worse, will transform its economies, its cultures, and people’s understanding of who they are and what they stand for.

Our intention in what follows is simple: to introduce a new generation of social and environmental entrepreneurs and to investigate the relevance of their thinking about value creation, their business models, and their leadership styles for mainstream decision makers. We include many predictions and observations from the entrepreneurs themselves, culled from hundreds of hours of interviews, personal conversations, and direct collaboration over decades of intensive work in related areas.

These social and environmental entrepreneurs lead by example. They attack intractable problems, take huge risks, and force the rest of us to look beyond the edge of what seems possible. They seek outlandish goals, such as economic and environmental sustainability and social equity, often aiming to transform the systems whose dysfunctions help create or aggravate major socioeconomic, environmental, or political problems. In so doing, they uncover new ways to disrupt established industries while creating new paths for the future.

Global corporations are now scouting for high-impact social and environmental entrepreneurs. Why? They give three main reasons. First, market intelligence (these entrepreneurs are seen as highly sensitive barometers for detecting market risks and opportunities). Second, retention and development of talent (a growing number of companies, like Accenture, say that offering the opportunity to work alongside accomplished entrepreneurs factors into staff retention, as well as professional development). And, third, as one CEO at a recent Davos summit candidly put it, “It is nice to be seen with people who are loved.”

All this should come with a clear caveat, however: as in any field of entrepreneurship, many of these people will fail, and some will fail repeatedly as they tackle tough challenges. But periods of great change are built on intense experimentation and, often, high failure rates. Our reading of the evidence suggests that the work of these innovators and entrepreneurs heralds a new phase in the evolution of business, markets, and capitalism itself. The mainstream players who heed the lessons from these innovators’ experience will find new opportunities to fulfill unmet needs in the vast underserved markets of the twenty-first century.

Think of it this way: whatever they may intend, these entrepreneurs are doing early market research on some of the biggest opportunities of the coming decades. In attempting to bridge the great divides between privileged populations and the poor, they address the critical challenges where traditional markets fail. But, as we shall see, they cannot tackle market failures on their own. Instead, their efforts need to be supported by all levels of government, by business, by the financial markets, and by civil society’s organizations and ordinary citizens—that is, by each and every one of us. We outline some necessary actions for key sectors in the conclusion.