Effectuation Stories

          Case studies, lessons and stories about Effectuation!

          Creator of Dollars and Change - The Story of Ashoka

          Stuart Read and Saras Sarasvathy report on the success of Ashoka, a global association of the world's leading social entrepreneurs.

          Imagine your dream is to change the world on a national or better still, global scale. And the bureaucracy at your employer, the United States Federal Government, severely constrains what you can accomplish. What would you do? Not many people would think of taking their own money and paying salaries to individuals in developing countries, even if these individuals might show promise in reforming their local environments. But that is exactly what Bill Drayton did when he launched Ashoka in 1980. It is not just the founding of Ashoka that makes Bill Drayton an entrepreneur โ€” but the 'way' he did it โ€” the process, the business model ? and the fact that Ashoka literally is changing the world through entrepreneurship. Let us examine Drayton's, and Ashoka's journey, using the same principles we have observed in the dozen for-profit ventures we have discussed over the past year in this magazine.

          Start with Available Means (Resources)
          From the start, Drayton knew that he alone could not solve the world's social problems. But he had travelled extensively in India and Indonesia, and he did know that people existed who were already generating practical solutions to individual problems at a local level. These people and their ideas would provide him resources โ€” they would give him a place to start and he would give them a chance to disseminate what they had learned.

          Build with Committed Partners
          When Drayton created Ashoka, he created the concept of an Ashoka Fellow. Defined as someone with a new idea that has the potential for significant social impact, an Ashoka Fellow is expected to prove her idea locally and present Ashoka with how it might be rolled out on a larger scale. In exchange, an Ashoka Fellow is rewarded with training, living stipends, and networking opportunities. Consider one of the first Fellows, Fรญรงbio Luiz de Oliveira Rosa. Saddened by the exodus of farmers to cities in his native Brazil, Rosa developed a cheap way to irrigate farmland. For an investment of about $400, rural farmers could install a single-phase water pump system to enhance productivity of their farmland, increase their incomes from $50-$80 to $200-$300 a month, and make farm life a financially and socially attractive alternative to the overpopulated city. Seeing the potential, Ashoka named Rosa a fellow, and helped him to persuade the Brazilian government to enable implementation, by loaning farmers the money for the upfront investment.

          Manage Risk through Affordable Loss
          Started with just $50,000, Ashoka has never risked failure on any single project. Quite to the contrary, the distributed approach of using many local Ashoka Fellows enables Drayton to spread the impact of the organization, and the risk, across 1800 Fellows from over 60 countries today. Consistent with how successful entrepreneurs manage risk, this approach lets individual failures become learning experiences, not venture termination points.

          Take Advantage of Contingencies
          During the 25+ years since Ashoka was founded, much has changed in the landscape of social enterprise. For example, the Grameen Bank has proven a model of distributed small-scale investing which generates both returns and impact. Instead of viewing Grameen as competition, Ashoka has adopted their approach of 'blueprint copying"รน ? transferring best practice to a new problem or region, and has also added micro-loans to the arsenal available to its Fellows. Each of the approaches described here have been observed in successful and entrepreneurial companies because they function equally well for profitable businesses as in the social sector. They have certainly worked for Ashoka. An early recipient of a MacArthur Fellowship (sometimes referred to as the "genius grant"รน), Drayton has received a National Public Service Award from The American Society of Public Administration and the National Academy of Public Administration and has also been recognized as one of America's Best 25 leaders by US News & World Report (2005). "Our job is not to give people fish; it's not to teach them how to fish; it's how to build a new and better fishing industry." - Bill Drayton, CEO Ashoka

          Written by Stuart Read, professor of marketing at IMD and Saras Sarasvathy, associate professor of business administration at the University of Virgina's Darden School.

          Publication: British Airways Business Life

          Stuart Read
          Saras D. Sarasvathy

          Relevant Principles:
          Bird-in-Hand (Means)
          Affordable Loss
          Lemonade (Leverage Contingencies)
          Crazy Quilt (Partnerships)
          Pilot-in-the-Plane (Control vs. Predict)

          PDF 50X50-1BABL Ashoka

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