Lecture 15

1. Lecture 15 Ethics and Social Responsibility Mar 1, 2012

2. How to account for Ethics and Social Value?

3. Social Entrepreneurship • Synergies and benefits when business principles are unified with social ventures. • But we are working to build a for profit company. Is there any social value to this entity that should concern us?

4. Social Entrepreneurship A social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles . . . to make social change..

5. Is there necessarily a big division between a profit making and a non-profit company?

6. Is there necessarily a big division between a profit making and a non-profit company?The Big Difference

7. Is the gap that big? • Consider Profit making companies • Avoid doing evil (Google) • Environment (BP excepted) • Treating People well • Employees • Customers • Suppliers • Partners • Community • Financial • Obey the law • Provide a service • Solve a customer problem at a price the customer is willing to pay

8. Is the gap that big? • Consider Profit-making companies • Provide jobs • Pay taxes • Stimulate economy • Produce a useful product • Consider social good of a smart phone

9. Profit-making Companies • Of course there are exceptions! • Companies which kill people • Tobacco • Companies which lie, cheat and steal • But consider, business can only function through trust

10. Now Consider non-profits • Have to meet their budgets • Income has to match expense • Have to audit their financials • Have to raise money • Sales Function • Who is the customer? • Donor? • Recipient? • Have competition

11. Consider non-profits • Is it any surprise then that • Non profits use the methodologies, tools, thought processes etc., that have developed from profit making companies?

12. For Profit-making Company Existential Question Who Am I?

13. “Greed is Good” Doing Well “Kumbaya” Doing Good

14. “Greed is Good” Doing Well “Kumbaya” Doing Good Where are you?

15. Some personal examples • Social Entrepreneurship • LA Regional Foodbank • Intelligent Mobility International

16. LA Regional Foodbank Mission - to mobilize resources to fight hunger in our community. • acquire food • distribute to needy people • through charitable agencies • directly through programs • Energize the community to get involved and support hunger relief • Conduct hunger education and awareness campaigns and advocate for public policies that alleviate hunger. 
 Our vision - no one goes hungry in Los Angeles County.

17. How it works Government Programs Supermarkets Recipients Agencies Private Donations

18. LA Regional Foodbank Reached 1M people in 2009 54M pounds of food 560 member agencies Fresh Fruits and Vegetables 20% of total 19000 volunteers Kid’s café Backpack programs Done with admin and fundraising costs of 3.4% Public contributions of $8.4M

19. LA Regional Foodbank Business Principles • Strategic plan • Employee performance assessment and training programs • “Dashboard" measurements to track progress • Logistics • just in time deliveries and • Fast inventory turns average (2 1/2 weeks) • "customer" (both agencies and food recipients) service feedback

20. LA Regional Foodbank • Rapidly adapts to new circumstance • Great recession • Government vagaries • Manage Complexity • Suppliers • Variations in Agencies • Other networks • Regulations • Fuel costs A very well run “business”

21. E/ME 105 Product Design for the Developing World The concept of international product development teams Collaboration between Caltech and Art Center (Pasadena) with Raphael Landivar University (Guatemala City)

22. Class learnings • Engineering Design • Radical cheapness • Market Research • Developing World challenges • Anthropology • Importance of culture • Business Driver • Tough to give things away • Create local businesses • Motivation • Scalability

23. Intelligent Mobility International (IMI) • Students designed a wheelchair in Class • They wanted to continue to develop their product- a cheap-but rugged, easily-repairable wheelchair made from carved-up bicycles • Graduation and getting jobs did not stop them • The formed a non-profit which they work on (unpaid) as a second job.

24. Intelligent Mobility International

25. Challenge • 20 million need wheelchairs worldwide • Hospital chairs • Durability • Replacement parts

26. A Brief History • Started in E/ME 105 • Continued as Thesis project • Incorporated as 501c(3) Non-Profit • Continued R&D with Transitions, a local NGO

27. Metamorphosis

28. Metamorphosis(cont.)

29. Metamorphosis (cont.)

30. Currently • Producing and Distributing in Guatemala • Over 80 Chairs

31. Difference

32. Accomplishments • Distributing wheelchairs to people in need in Guatemala • Popular Mechanics Breakthrough Award • for advances in science and engineering that will change the world.

33. Future • India • $50 appropriate chair • Barrier Mitigation • Connect the dots to Employment • World Expansion

34. Caltech Y ACT Fellowship Worked with a partner disability organization, Transitions Foundation, based out of Antigua Guatemala.

35. Caltech Y ACT Fellowship Conducted user interviews and user trials.

36. Caltech Y ACT Fellowship Interviews with handicapped.

37. Caltech Y ACT Fellowship Established suppliers in Guatemala for all new materials. Performed engineering tests on wheelchair.

38. Caltech Y ACT Fellowship • Taught Transitions workers new welding and construction methods. • Learned much more than we taught! Old Welding Process New Welding Process

39. Caltech Y ACT Fellowship Kicked off Guatemalan Production

40. Caltech Y ACT Fellowship

41. IMI - A Student’s Perspective • Real-life application of product design and how it leads to high social impact • Introduction and development of the business and entrepreneurial implications of product design • Necessity of continued outreach to attain project sustainability

42. For the final, include the Ethics and Social Responsibility guidelines for your company.

43. Organization • We’ll send out model papers and presentations • Final March 9 • Invite your friends or anyone interested in Entrepreneurship. • OK for guests to drop in or out of Final • Arrange to present to your Professors afterwards. • At minimum send out Finals • I’ll call afterwards to get reaction • Questions???

44. Introduction • Have you ever been in an ethically ambiguous situation? • How did you resolve it?

45. Ethics and Social Responsibility • What is an Ethically and Socially Responsible Company? • How do you create an Ethically and Socially Responsible company? • How do you know you have accomplished this? • Are there tools to help you?

46. Ethics and Social Responsibility • What is an Ethically Responsible company? • Give an example • Google • Microsoft • Paul newman • Ben and jerry • Whole foods • Trader joes • In and out

47. Ethics and Social Responsibility • What is an evil company? • Monsanto • Goldman sachs • Chevron • Apple • Northrup grumman • Debeers Very profitable, abusing market market, monopoly, abusing employees, pollute,negative externalities

48. Ethics and Social Responsibility • What is a Socially Responsible company? • Give an example

49. Ethics and Social Responsibility • How do you create an such a company? • Don’t be evil • Build community • Invest locally • Treat your employees/customers fairly • Positive product • Pollution

50. Ethics and Social Responsibility • How do you create an such a company? • Vision statement • Hire ethical people fire unethical • Specify behaviors with vendors top to bottom • Product • Safe • Full disclosure of issues • Market it without lies • When and how will the product work • Code of Conduct • Get good legal assistance