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The term “societal wealth creation via experimental entrepreneurship” is the sort of expression that might send jargon-haters screaming from the room.
Yet for one of its originators – Ian MacMillan, professor of innovation and entrepreneurship at the Wharton school at the University of Pennsylvania – the thesis is straightforward and significant. How do you create a circle that simultaneously attacks a social problem and creates wealth for society?
South African in origin and plain-speaking by inclination, Prof MacMillan has helped launch a raft of programmes in Africa that potentially do just that. Dismissive of the aid infrastructure – which he refers to as “damn do-gooders” – Prof MacMillan is tackling issues as vital as the treatment of Aids, education and the development of food sources.
Prof MacMillan’s methodology is simple. “You don’t just go in with your cowboy boots and spurs,” he says. Instead, he and his students from across the university develop ideas they think will combine the dual function of creating businesses while addressing social problems, then put the initial idea into practice with seed funding and appoint a local entrepreneur to run the business.
Almost invariably these entrepreneurs are women. Somewhat cynically Prof MacMillan says this is because women will not drink or gamble away the profits. “If they make money they will reinvest it or educate their kids.”
Two successful examples of Prof MacMillan’s methods are a chicken-feed plant in Zambia and a private Aids clinic in Botswana. To set up the former, Prof MacMillan and his team worked with academics from the veterinary school at the University of Pennsylvania who were specialists in animal-feed technology. Together, they developed a way of manufacturing high-quality chicken feed. “What we were able to do is take first-world technology and put it into third-world countries.”
Today the Zambian plant produces 700 tons of chicken feed a month – which translates into 350 tons of chicken meat. But the process does more than just feed the local population. “What we learnt from this process is that what really happened is that it spurred the introduction of chicken farming. There are now 500 farmers there who were not there before,” he says. “We realised that we should be starting businesses that generate businesses, not businesses that generate profits.”
Because the Wharton unit has only a trickle of funds – about $500,000 a year – it can only fund businesses through the start-up phase so generating an income from the projects is central. In Botswana, which has one of the highest known rates of HIV/Aids infection, Prof MacMillan’s centre is working with the Penn Medical School and a private clinic in the capital Gaborone to develop a computerised decision support system that will incorporate expert systems to aid diagnosis.
Because trained medical staff are in short supply, this latest computer technology will enable nurses to make initial diagnoses and prescribe drugs so that the doctors can concentrate on more complicated cases.
How to finance the project long-term is critical, but Prof MacMillan has a plan. He is hoping his team will be able to develop a research tool that will enable the clinic to sell the data they collect to pharmaceuticals groups.
Helping Prof MacMillan develop these projects are teams of students both from the business school and other departments in the university. “The students love this stuff,” he says.
Hand-in hand with these schemes, Prof MacMillan has developed a tool called Discovery Driven Planning to help calculate where the weak spots are in each of the projects as well as in entrepreneurial projects more widely. Those developing each scheme can feed in the data they hope to achieve in the future and the computer programme will show where the scheme is vulnerable; the cost of packaging or distribution might be too high or sales volumes too low for a sustainable company.
One scheme to develop a chain of peanut farms across Africa was shelved, for example, because of potential thefts; it was discovered that if just 5 per cent of the peanuts were stolen, the venture would fail.
To date most of Prof MacMillan’s projects have been successful to at least some degree in the hands of their local entrepreneurs. If the entrepreneurs fail, then his philosophy on handouts is truly put to the test, and his team simply walk away.
This is the first of a four-part series on the latest business ideas in academia