Externalizing government costs is an economic crime

In the past, anti-corporate pressure groups and trade unions have highlighted the unethical way in which many multinational companies have ‘externalized’ responsibilities and costs – keeping their profits but passing many of the costs of the way in which they do business to innocent third parties, writes Philip Whiteley. Other agencies have to clear up the pollution they emit, or deal with the social problems caused by low pay.

But are centre-left governments the new corporate villains? Across the western world, in a bid to maintain free social and health care for their populations (an understandable objective), and maintain a short-term appearance of economic growth (far more questionable) they have been borrowing, and borrowing big. The harsh reality, however, is an externalization of costs to future generations to pay for benefits today. The people most negatively affected by these decisions have not been able to vote for them, because they are not old enough yet.

Meanwhile, we discover that externalizing costs by corporations may not even make business sense, as this study shows. Corporations are smartening up their act, recognizing that responsible stewardship over the longer term encourages disciplines that help efficient operations and good customer service, helping profits.

It ought to trouble the left that it now has a worse record on ethical stewardship than the likes of Walmart, Coca-Cola and even some of the oil giants. But I don’t expect recognition of this any time soon

A fuller version of this blog is here.

Sheer horror at Lonmin
Sheer horror at Lonmin

In modern times there has rarely a more graphic case of the business risks of poor employee engagement than the horrific recent events at Lonmin’s platinum mine in Marikana, South Africa.

On 16th August, police fired live ammunition into a crowd of protesting strikers, killing 34 of them. It appears that many protestors were armed, that there had been fights between rival unions, and that the police are claiming self-defence after two from their own ranks were killed. But ultimately the responsibility for the conditions in which such a poisonous atmosphere developed lies with management. Mining is always difficult, dirty and dangerous. Lonmin’s miners endure their conditions for no more than around $350 a month.

The tipping point in the protest came when managers threatened the strikers with returning to work or facing the sack. With breathtaking insensitivity, this threat was repeated after the massacre, though management have softened their stance since.

Doubtless, the company’s bean counters this year will have advised against a significant raise to the meagre pay, citing costs and lower platinum prices. But doubtless no one factored in the cost of not making the raise. The company now faces damaged confidence, a potential rights issue and may breach its banking covenants at the end of September.

These business consequences are dwarfed by the human tragedy of last week, but serve as further proof that the idea that the workers’ interests are inherently opposed to the interests of managers and owners is a myth: a myth that has caused generations of workers around the world to suffer perfectly avoidable misery.

The sheer futility of treating your own workforce as the enemy is clear. It leads to a war; a war in which both sides lose. The Lonmin management has to stop making threats, apologise to all its workers, and offer a new deal based on much higher wages. That makes business as well as human sense.

fastcompany:

Under intense scrutiny from the Fair Labor Association, Apple’s Chinese supplier has revised its labor policies, including changes to its internship program “to ensure that the job relates to the intern’s field of study” and that interns’ “skills before and after” are measured “to document the benefits of the training.” And the company is also said to have taken measures to ensure fair wages and prevent 40-plus-hour work weeks. Now one of the paragons of bad labor practices is treating interns better than most U.S. companies.
Are Foxconn Internships Now Better Than American Internships?

fastcompany:

Under intense scrutiny from the Fair Labor Association, Apple’s Chinese supplier has revised its labor policies, including changes to its internship program “to ensure that the job relates to the intern’s field of study” and that interns’ “skills before and after” are measured “to document the benefits of the training.” And the company is also said to have taken measures to ensure fair wages and prevent 40-plus-hour work weeks. Now one of the paragons of bad labor practices is treating interns better than most U.S. companies.

Are Foxconn Internships Now Better Than American Internships?

plantedcity:

Clean Energy Future: ‘Artificial Waterfall Could Make 2016 The Greenest Olympic Games We’ve Seen Yet’From The Creators Project:

‘As Brazil readies itself for the upcoming 2014 World Cup, the honor and burden of hosting an even larger global sporting event still sits on the country’s shoulders. In conjunction with the 2016 Olympics in Rio de Janeiro, several new structures will be erected in Rio’s cityscape. One of the many projects creating huge buzz is the Solar City Tower, an artificial waterfall designed to generate clean, renewable energy.
…
The vertical structure’s design is conducive to multiple functions: its primary purpose is to capture and distribute solar power to the Olympic Village and to the city, but it doubles as an observation tower. The 345-foot structure will have solar panels around its base, used to store energy during the day, releasing it through turbines for use at night. For special occasions, the turbine will pump seawater into the tower and then shoot it back out to sea, creating a waterfall effect in the middle of the ocean.

Check out more pictures and the rest of the article here.

plantedcity:

Clean Energy Future: ‘Artificial Waterfall Could Make 2016 The Greenest Olympic Games We’ve Seen Yet’

From The Creators Project:

‘As Brazil readies itself for the upcoming 2014 World Cup, the honor and burden of hosting an even larger global sporting event still sits on the country’s shoulders. In conjunction with the 2016 Olympics in Rio de Janeiro, several new structures will be erected in Rio’s cityscape. One of the many projects creating huge buzz is the Solar City Tower, an artificial waterfall designed to generate clean, renewable energy.

The vertical structure’s design is conducive to multiple functions: its primary purpose is to capture and distribute solar power to the Olympic Village and to the city, but it doubles as an observation tower. The 345-foot structure will have solar panels around its base, used to store energy during the day, releasing it through turbines for use at night. For special occasions, the turbine will pump seawater into the tower and then shoot it back out to sea, creating a waterfall effect in the middle of the ocean.

Check out more pictures and the rest of the article here.

greenfuturist:

Inequality in America - great piece by Mother Jones via http://www.motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph

jtotheizzoe:

Winds of Change for U.S. Electricity

This is what an innovative energy policy looks like. Wind energy was second only to natural gas in new energy projects in 2011. This is just fantastic news for green energy and shows real progress in moving toward clean electricity and trying to reduce our impact on the climate.

Be sure to check out the full report from the Department of Energy, with lots more infographic goodness.

Are Americans working too much?
Guest post by Andrew Crane and Dirk Matten.
With many people currently enjoying or looking forward to their summer holidays it is sobering to consider some of the differences in expectation that workers in different countries will have about how much paid time off they can enjoy. Statutory minimum leave varies enormously by country, from zero days in the US, through to 5 working days in China, 10 working days in Canada, and all the way up to 25 working days plus public holidays in countries like Denmark and Norway. Of course, variations in legislated minimums give plenty of scope for more explicit CSR type policies in low-regulation countries such as the US, but even looking at the average leave taken across countries, Scandinavia and most of Europe far outpace North America. Sure, a lot of the talk now is about Americans not having enough jobs, but another way of looking at it is maybe some Americans are simply working too much.
We have been interested in debates about working hours, flexible work arrangements, forced overtime and the like for some time. In the first two editions of our Business Ethics textbook we included cases on young professionals and excessive working hours.  In the most recent 3rd edition, this changed to a case about forced labor, which is a related but quite different issue. These are complicated problems, especially when much of the excessive hours worked by professionals is, in principle, voluntary. Even in sweatshops, some argue that workers choose to work long hours for low pay, because it is better than the alternative – which is no job and no pay.
Anyway, arriving in the inbox today was a nice infographic from onlinemba.com, the fruits of whose labors we’ve featured before in our survey of the best and worst corporate responsibility infographics. It tells an interesting, and well documented, story of the problems of excessive working hours in the US. We’re not sure the call for a return of a 40 hour week will be heeded in the current climate, but it certainly helps start an important conversation. And with many in the CSR world apparently uninterested in working hours in the developed world as a relevant topic, it provides a decent business case for changing that perspective.

Are Americans working too much?

Guest post by Andrew Crane and Dirk Matten.

With many people currently enjoying or looking forward to their summer holidays it is sobering to consider some of the differences in expectation that workers in different countries will have about how much paid time off they can enjoy. Statutory minimum leave varies enormously by country, from zero days in the US, through to 5 working days in China, 10 working days in Canada, and all the way up to 25 working days plus public holidays in countries like Denmark and Norway. Of course, variations in legislated minimums give plenty of scope for more explicit CSR type policies in low-regulation countries such as the US, but even looking at the average leave taken across countries, Scandinavia and most of Europe far outpace North America. Sure, a lot of the talk now is about Americans not having enough jobs, but another way of looking at it is maybe some Americans are simply working too much.

We have been interested in debates about working hours, flexible work arrangements, forced overtime and the like for some time. In the first two editions of our Business Ethics textbook we included cases on young professionals and excessive working hours.  In the most recent 3rd edition, this changed to a case about forced labor, which is a related but quite different issue. These are complicated problems, especially when much of the excessive hours worked by professionals is, in principle, voluntary. Even in sweatshops, some argue that workers choose to work long hours for low pay, because it is better than the alternative – which is no job and no pay.

Anyway, arriving in the inbox today was a nice infographic from onlinemba.com, the fruits of whose labors we’ve featured before in our survey of the best and worst corporate responsibility infographics. It tells an interesting, and well documented, story of the problems of excessive working hours in the US. We’re not sure the call for a return of a 40 hour week will be heeded in the current climate, but it certainly helps start an important conversation. And with many in the CSR world apparently uninterested in working hours in the developed world as a relevant topic, it provides a decent business case for changing that perspective.

Bring Back the 40 Hour Work Week Infographic

Who really should resign for the Barclays interest rate scandal?
Guest post by Andrew Crane and Dirk Matten.
The banking sector needs another scandal like a hole in the head. Or maybe that’s the wrong metaphor. Because a quick death from a headshot might be more preferable to the excruciating, but likely never fatal, torture of interminable crises that we seem to be constantly enduring.The latest bout of banking misery comes from the UK, where Barclays, the retail and investment banking giant has fallen foul of regulators for manipulating the interbank interest rate over a number of years during the mid 2000s.  It’s a huge scandal that looks set to engulf not just Barclays, but potentially also a slew of other banks, and even maybe the Bank of England and the UK Government.
One of the more interesting facets has been the reaction from Barclays. What a week it has been. First a number of senior executives including the CEO Bob Diamond reacted to the media criticism by announcing they would forgo their bonuses. Then, as the scandal escalated, the Barclays Chairman, Marcus Agius announced his resignation. In a dramatic turnaround, the following day Agius was reinstated and CEO Diamond announced his resignation, along with his right hand man, Jerry del Missier.  Today Diamond faces
So the big question is: who really should go in a scandal like this? The Chairman, the CEO, or someone else? The answer, of course, depends on the type of scandal, the level of knowledge of the activity that the senior leadership had (or should of had) as the events unfolded, the likely best route to reform, and of course the likely reaction of stakeholders. With Barclays it seems right that Agius, the Chairman, has (on second thoughts) decided to stay. The Board is unlikely to know about an activity such as the interest rate rigging, and so cannot be held culpable in their overseeing function. It is different from, say, the role of the Board in something like Enron’s accounting fraud, which is directly related to the Board’s role, and relates to accounts that they must have seen and approved.
With Barclays, you would expect the Board and its Chairman to take a central role in dealing with the problem once it has been revealed to them, which apparently was only days ago. As one member of the House of Lords scathingly remarked upon Agius’s resignation: ”The board is so hopeless they’ve just shot the head of the firing squad and missed the prisoner.” By resigning Agius was signalling that the Board was unfit to be a “firing squad” and instigate the kind of change necessary at the bank.
Turning to Diamond, one of the main reasons forwarded for his resignation has been the “lightening rod” argument, as in the UK newspaper, The Guardian’s analysis: “Diamond, under pressure from the banking regulator and the governor of the Bank of England, Sir Mervyn King, quit after he decided he would be the lightning rod for the scandal at the hearing”. 

Who really should resign for the Barclays interest rate scandal?

Guest post by Andrew Crane and Dirk Matten.

The banking sector needs another scandal like a hole in the head. Or maybe that’s the wrong metaphor. Because a quick death from a headshot might be more preferable to the excruciating, but likely never fatal, torture of interminable crises that we seem to be constantly enduring.
The latest bout of banking misery comes from the UK, where Barclays, the retail and investment banking giant has fallen foul of regulators for manipulating the interbank interest rate over a number of years during the mid 2000s.  It’s a huge scandal that looks set to engulf not just Barclays, but potentially also a slew of other banks, and even maybe the Bank of England and the UK Government.

One of the more interesting facets has been the reaction from Barclays. What a week it has been. First a number of senior executives including the CEO Bob Diamond reacted to the media criticism by announcing they would forgo their bonuses. Then, as the scandal escalated, the Barclays Chairman, Marcus Agius announced his resignation. In a dramatic turnaround, the following day Agius was reinstated and CEO Diamond announced his resignation, along with his right hand man, Jerry del Missier.  Today Diamond faces

So the big question is: who really should go in a scandal like this? The Chairman, the CEO, or someone else? The answer, of course, depends on the type of scandal, the level of knowledge of the activity that the senior leadership had (or should of had) as the events unfolded, the likely best route to reform, and of course the likely reaction of stakeholders. With Barclays it seems right that Agius, the Chairman, has (on second thoughts) decided to stay. The Board is unlikely to know about an activity such as the interest rate rigging, and so cannot be held culpable in their overseeing function. It is different from, say, the role of the Board in something like Enron’s accounting fraud, which is directly related to the Board’s role, and relates to accounts that they must have seen and approved.

With Barclays, you would expect the Board and its Chairman to take a central role in dealing with the problem once it has been revealed to them, which apparently was only days ago. As one member of the House of Lords scathingly remarked upon Agius’s resignation: ”The board is so hopeless they’ve just shot the head of the firing squad and missed the prisoner.” By resigning Agius was signalling that the Board was unfit to be a “firing squad” and instigate the kind of change necessary at the bank.

Turning to Diamond, one of the main reasons forwarded for his resignation has been the “lightening rod” argument, as in the UK newspaper, The Guardian’s analysis: “Diamond, under pressure from the banking regulator and the governor of the Bank of England, Sir Mervyn King, quit after he decided he would be the lightning rod for the scandal at the hearing”. 

The Dirty Little Secret About Measurement
The latest guest post by Jason Saul!
For the last 15 years I have been focused on a single knotty question: how do you measure social impact?   Across the sector, billions have been spent on evaluations, millions have been spent on capacity building, thousands of studies have been published and hundreds of conference sessions have been held.  Yet no one seems to have come up with the answer.  How is it that we can measure the temperature on Mars, but we can’t measure what happens within the orbit of a nonprofit organization?  Why is measurement so confounding?After years of consulting with thousands of nonprofits on this issue, it finally struck me: we’re focusing on the wrong problem.  This isn’t actually a measurement problem – it’s a strategy problem.  The reason why it’s so hard to quantify impact is because, far too often, nonprofits are trying to measure outcomes their programs are not designed to produce.  Simply put, we’re trying to cheat our way to the answer.  When programs are specifically engineered to produce a particular outcome, they’re pretty easy to measure.  Think about how easy it is to measure whether a job training program reduces unemployment or whether a tutoring program increases grade advancement.  Simple – both were designed to produce those outcomes.  There’s no need for data prestidigitation.  Even the “tough” measurement cases such as the Arts can be measured through proxies when the outcomes are clear (think: reaching new audiences or exposing new talent).Where we get in trouble is when we try to “stretch” our statements of impact beyond the outcomes that are reasonably proximate to our work.   Take the case of an after school sports club that we recently advised: in an effort to attract “Gates money”, the executive director wanted to demonstrate that her program was impacting high school graduation rates.  The only problem was that the program primarily involved playing basketball with kids after school.  While there was a study program, few attended it and those that did basically just worked on their homework.   So I guess we could bemoan the measurement challenge of estimating the program’s impact on high school graduation, or we could just be intellectually honest.  There are many bone fide (and valued) outcomes that this program produces: reducing risky behaviors, increasing student interest in school, encouraging healthy lifestyles, etc.  While those outcomes may not be as “sexy” as improving graduation rates, they are quite important predicates.Intellectual honesty is one way to solve the measurement problem.  That doesn’t mean we need to prove everything to a statistical certainty: randomized control studies are always nice, but often practically infeasible.  It means that we need to demonstrate a substantial contribution to the outcome.  If you’re an advocacy organization looking to pass a law, substantial contributionmeans you led the coalition, lobbied the legislature and helped craft the legislation. If you’re running a direct service program, substantial contribution to an outcome is a function of dosage, frequency and duration.  I recall a corporate citizenship executive once asking me how to measure the impact of a one-day volunteering event on employee retention.  The answer was simple: there is no impact!Of course, the other way to solve the measurement problem is to just improve our programs.  If we want to be able to say more, we need to actually do more.  I recall meeting with an arts group whose primary goal was to engage younger artists and support them in their careers.  The organization spent 80% of its budget on a weekly newspaper for artists. When I asked whether young artists ever read the paper, the executive director replied: “no, they’re all online!” Yet the organization kept publishing the newspaper because that’s what it always did.  Measuring this organization’s impact on young artists would have been extremely difficult – but not because of measurement, because the strategy was never designed to produce that impact.  Put simply, we are using yesterday’s strategies to produce today’s outcomes. If we want to really make a difference, we need a new generation of social strategies, not a new generation of social metrics.We can do this.  Take the United Way.  For years, many of the financial self-sufficiency programs it funded were piecemeal: a busing program here, a computer job bank there.  But the organization stated an intention to impact financial self-sufficiency for the working poor.  So United Way decided to design a new program – a “prosperity center” where a coordinated set of services would be offered under one roof (job training, counseling, asset building, etc.) to make asubstantial contribution to the outcome of economic independence.  United Way can now track the number of participants who became “economically stable” as a proxy for repaired credit, gainful employment and training. Measurement is easy when the program is designed to drive it.  See more about the United Way of Oakland’s prosperity center, which is called “SparkPoint,” here.Funders have a role to play too.  Instead of goading nonprofits to prove the impossible, let’s set reasonable expectations for results.  Funders should ask organizations to state their intended outcomes upfront, and make the case for how they will make a substantial contribution toward achieving those outcomes.  Instead of requiring 10% of the grant be used to hire an evaluator, foundations should require that 10% of the grant be used to design the program for greater impact.At the end of the day, we have two choices: we can be less ambitious with our measurement or more ambitious with our programs.  I say we do both!

The Dirty Little Secret About Measurement

The latest guest post by Jason Saul!

For the last 15 years I have been focused on a single knotty question: how do you measure social impact?   Across the sector, billions have been spent on evaluations, millions have been spent on capacity building, thousands of studies have been published and hundreds of conference sessions have been held.  Yet no one seems to have come up with the answer.  How is it that we can measure the temperature on Mars, but we can’t measure what happens within the orbit of a nonprofit organization?  Why is measurement so confounding?
After years of consulting with thousands of nonprofits on this issue, it finally struck me: we’re focusing on the wrong problem.  This isn’t actually a measurement problem – it’s a strategy problem.  The reason why it’s so hard to quantify impact is because, far too often, nonprofits are trying to measure outcomes their programs are not designed to produce.  Simply put, we’re trying to cheat our way to the answer.  When programs are specifically engineered to produce a particular outcome, they’re pretty easy to measure.  Think about how easy it is to measure whether a job training program reduces unemployment or whether a tutoring program increases grade advancement.  Simple – both were designed to produce those outcomes.  There’s no need for data prestidigitation.  Even the “tough” measurement cases such as the Arts can be measured through proxies when the outcomes are clear (think: reaching new audiences or exposing new talent).
Where we get in trouble is when we try to “stretch” our statements of impact beyond the outcomes that are reasonably proximate to our work.   Take the case of an after school sports club that we recently advised: in an effort to attract “Gates money”, the executive director wanted to demonstrate that her program was impacting high school graduation rates.  The only problem was that the program primarily involved playing basketball with kids after school.  While there was a study program, few attended it and those that did basically just worked on their homework.   So I guess we could bemoan the measurement challenge of estimating the program’s impact on high school graduation, or we could just be intellectually honest.  There are many bone fide (and valued) outcomes that this program produces: reducing risky behaviors, increasing student interest in school, encouraging healthy lifestyles, etc.  While those outcomes may not be as “sexy” as improving graduation rates, they are quite important predicates.
Intellectual honesty is one way to solve the measurement problem.  That doesn’t mean we need to prove everything to a statistical certainty: randomized control studies are always nice, but often practically infeasible.  It means that we need to demonstrate a substantial contribution to the outcome.  If you’re an advocacy organization looking to pass a law, substantial contributionmeans you led the coalition, lobbied the legislature and helped craft the legislation. If you’re running a direct service program, substantial contribution to an outcome is a function of dosage, frequency and duration.  I recall a corporate citizenship executive once asking me how to measure the impact of a one-day volunteering event on employee retention.  The answer was simple: there is no impact!
Of course, the other way to solve the measurement problem is to just improve our programs.  If we want to be able to say more, we need to actually do more.  I recall meeting with an arts group whose primary goal was to engage younger artists and support them in their careers.  The organization spent 80% of its budget on a weekly newspaper for artists. When I asked whether young artists ever read the paper, the executive director replied: “no, they’re all online!” Yet the organization kept publishing the newspaper because that’s what it always did.  Measuring this organization’s impact on young artists would have been extremely difficult – but not because of measurement, because the strategy was never designed to produce that impact.  Put simply, we are using yesterday’s strategies to produce today’s outcomes. If we want to really make a difference, we need a new generation of social strategies, not a new generation of social metrics.
We can do this.  Take the United Way.  For years, many of the financial self-sufficiency programs it funded were piecemeal: a busing program here, a computer job bank there.  But the organization stated an intention to impact financial self-sufficiency for the working poor.  So United Way decided to design a new program – a “prosperity center” where a coordinated set of services would be offered under one roof (job training, counseling, asset building, etc.) to make asubstantial contribution to the outcome of economic independence.  United Way can now track the number of participants who became “economically stable” as a proxy for repaired credit, gainful employment and training. Measurement is easy when the program is designed to drive it.  See more about the United Way of Oakland’s prosperity center, which is called “SparkPoint,” here.
Funders have a role to play too.  Instead of goading nonprofits to prove the impossible, let’s set reasonable expectations for results.  Funders should ask organizations to state their intended outcomes upfront, and make the case for how they will make a substantial contribution toward achieving those outcomes.  Instead of requiring 10% of the grant be used to hire an evaluator, foundations should require that 10% of the grant be used to design the program for greater impact.
At the end of the day, we have two choices: we can be less ambitious with our measurement or more ambitious with our programs.  I say we do both!

Khoslanomics – Using Capitalism to Solve Poverty

Latest guest post by Jason Saul
Great NYT article on Vinod Khosla and his plans to start a venture capital fund to invest in companies that solve poverty in India, Africa and elsewhere by providing services like health, energy and education.
Here’s what I like about it: Mr. Khosla is what I call a “social arbitrageur.”  He understands that there is tremendous economic potential in solving social problems.  Not just in the ethereal, abstract, long-term sense.  Like, in the tomorrow sense.  Khosla recently earned $117 million – pocket change for a billionaire – on the recent IPO of SKS Microfinance, one of the largest micro-lenders in India.  Khosla, who founded Sun Microsystems, also raised a $1.1 billion for a “green” VC fund last year.
According to Khosla: “There needs to be more experiments in building sustainable businesses going after the market for the poor. It has to be done in a sustainable way. There is not enough money to be given away in the world to make the poor well off.”  According to the NYT, “Mr. Khosla’s advocacy of the bootstrap powers of capitalism is part of an increasingly popular school of thought: businesses, not governments or nonprofit groups, should lead the effort to eradicate global poverty.”
That is the embodiment of social innovation.  It’s also the new development manifesto of the Obama Administration.  According to a recent White House statement on global development policy,  the U.S. government will “[f]oster the next generation of emerging markets by enhancing our focus on broad-based economic growth and democratic governance. Economic growth is the only sustainable way to accelerate development and eradicate poverty.”
The future of social change depends on how we engage business in becoming part of the solution.  Khosla’s efforts are just the beginning – but like most good venture capitalists, Khosla is onto the next big thing…

Khoslanomics – Using Capitalism to Solve Poverty

Latest guest post by Jason Saul

Great NYT article on Vinod Khosla and his plans to start a venture capital fund to invest in companies that solve poverty in India, Africa and elsewhere by providing services like health, energy and education.

Here’s what I like about it: Mr. Khosla is what I call a “social arbitrageur.”  He understands that there is tremendous economic potential in solving social problems.  Not just in the ethereal, abstract, long-term sense.  Like, in the tomorrow sense.  Khosla recently earned $117 million – pocket change for a billionaire – on the recent IPO of SKS Microfinance, one of the largest micro-lenders in India.  Khosla, who founded Sun Microsystems, also raised a $1.1 billion for a “green” VC fund last year.

According to Khosla: “There needs to be more experiments in building sustainable businesses going after the market for the poor. It has to be done in a sustainable way. There is not enough money to be given away in the world to make the poor well off.”  According to the NYT, “Mr. Khosla’s advocacy of the bootstrap powers of capitalism is part of an increasingly popular school of thought: businesses, not governments or nonprofit groups, should lead the effort to eradicate global poverty.”

That is the embodiment of social innovation.  It’s also the new development manifesto of the Obama Administration.  According to a recent White House statement on global development policy,  the U.S. government will “[f]oster the next generation of emerging markets by enhancing our focus on broad-based economic growth and democratic governance. Economic growth is the only sustainable way to accelerate development and eradicate poverty.”

The future of social change depends on how we engage business in becoming part of the solution.  Khosla’s efforts are just the beginning – but like most good venture capitalists, Khosla is onto the next big thing…