The Solution Revolution: How business, government and social enterprises are teaming up to solve society’s toughest problems

November 27, 2013 4:15 pm

‘The Solution Revolution’, by William Eggers and Paul Macmillan

Review by Tanjil Rashid

The Solution Revolution: How business, government and social enterprises are teaming up to solve society’s toughest problems, by William Eggers and Paul Macmillan, Harvard Business Review Press $26/£17.99

Like many revolutionary manifestos, The Solution Revolution seeks the overthrow of government as we know it. But for authors William Eggers and Paul Macmillan – both of whom work for the public sector practice at Deloitte – this is a revolution very much in the interests of business, not against it.The book is a compendium of case studies of entrepreneurial individuals and organisations taking on some of the most intractable social problems. Its authors argue that “private enterprise for public gain no longer need be an oxymoron” and that social enterprises can “backfill public services”.

We meet “social entrepreneurs” and “venture philanthropists” such as Muhammad Yunus, the microlending pioneer, and Pierre Omidyar, the founder of eBay, who both adopt a businesslike ap­proach to social problems; Yunus’s Grameen Bank provides loans to poor Bangladeshis, while the Omid­yar Network (ON) invests in products such as d.light, a cheaper, solar-powered alternative to the carcinogenic kerosene lamp. By seeing the poor as a market rather than a receptacle for aid, Grameen and ON have built profitable enterprises that solve social problems.

These markets are worth a startling amount. Ashoka, the social enterprise network, values the market for healthcare that serves the poor at $202bn and for food at $3.6tn. In the education market, entrepreneurs have been wise to the savings from “disruptive technologies” such as the internet.

Khan Academy, for example, uses its analytics engine to tailor online learning to students that might otherwise be taught by unmotivated teachers in overcrowded classrooms with outdated textbooks. The profitability of these enterprises makes them sustainable and attractive to donors, but ultimately “they measure their bottom line in social value”.

The authors contend that this social value should be seen as a form of capital, with philanthropists investing in “the trillion dollar market for public good”.

Although the authors have given it a new name, “the solution economy”, the idea is hardly new. The annual Social Capital Markets Conference has been a fixture of the philanthropy scene for years.

Most of the examples in The Solution Revolution are well known from David Bornstein’s landmark study of social entrepreneurs, How To Change The World.Meanwhile, Matthew Bishop and Michael Green introduced the idea of the “venture philanthropist” – as engaged, target-driven and professional as any venture capitalist – in Philanthrocapitalism 

Eggers and Macmillan’s work succeeds, however, as a guide to new opportunities to profit from “socially impactful” activities once thought unprofitable. But there is no focus on whether these “solutions” are the best for the problems at hand. For example, government outsourcing in 25 of 34 OECD countries is trumpeted without scrutinising its merits, barely acknowledging the evidence that such outsourcing is the preserve of steady suppliers such as G4S, ruling out the competitiveness that drives innovation. Other solutions are limited. On poverty, for example, microcredit has little macro effect.

Eggers, an ex-fellow of the neoconservative Manhattan Institute, has written six books outlining his vision for diminished government. That vision grounds The Solution Revolution too: “All [government] has to do is get out of the way to let these solution markets work.”

But the authors show little awareness of the market failures that have led to the very problems for which they advocate market solutions. That they cite a problem-ridden, minimally governed country such as Bangladesh so frequently in this book is not so much a success story as a cautionary tale.