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On social enterprise: the social imperative in business

January 10, 2012

In a world of social enterprise, businesses big and small, old and new are quickly discovering the need to have a soul – that is, to show their human side in dealings with customers, stakeholders and the community at large.

Predictably, it’s not driven just by the human imperative, but also from a boomingly competitive world. Increasingly, consumers have choice. As much of the 3rd world comes of age and improves living standards and conditions, this does naught but breed more competition, and more collective intelligence (via the enmasse addition of university qualified students).

The crush of competition coupled with the current state of technological advancement means that anyone, anywhere can start a business concept and test what has most appeal. Quite tellingly, the business models that are quickly gaining in appeal are social businesses and enterprise level philanthropy.

Social businesses are profitable business models that seek to reinvest their profits back into a worthy cause. The owners often take a fixed salary and commit the rest back to the people, communities and social entities that made the business what it is in the first place. A former colleague of mine in fact runs Altitud3, a social business incubator in Melbourne, which looks for and nurtures social enterprises from the ground up. There’s always some great stories by people willing to take the plunge – and seemingly, more and more people are ditching corporate careers to do something meaningful via a social business.

I’m particularly a fan of organisations like the Grameen Bank, started by Muhammad Yunus in the 1980s to pioneer micro-finance loans to people who could take a small amount of money and make it go a long way. Kiva and Plan are also prominent micro-finance organisations, of which there are many more (happy to take suggestions / recommendations in the comments below!). None of these organisations operate to make significant profits – but to run viable businesses that continually give back to the community.

On the other end of the scale are large enterprises that ‘need to be seen’ to be giving money back to the community. For a long time the Ronald McDonald house has been run extremely well by Mcdonald’s and done fantastic work under the watchful eye of the McDonald’s corporate beast. Naturally, one would expect that annual events like McHappy day generate such an increase in sales volume that even with the donations they make at such events – that the promotions are still profitable. SalesForce.com is renknowned for it Salesforce Foundation, which reinvests a certain proportion of profits back into projects that provide accessibility to online services for organisations that otherwise may not have been able to afford it. Being a big Bono and U2 fan, I of course watched Project Red with a watchful eye, as numerous brands worldwide signed up to contribute proceeds of certain product sales to the provision of much needed medicines to African communities that needed it to live. The list of course goes on and on.

Despite being motivated by the corporate imperative to build shareholder returns, enterprise level philanthropy is still a good thing as long as people have choices. Choice and competition means that customers will vote with their money – business that don’t give back to the community, or make choices contrary to public opinion, will slowly but surely be ’crowd-sourced’ out of the way as brighter, fresher, more innovative and more socially supportive business models come to the fore.

I’m an advocate of making money out of business – yes, I’m a capitalist I’m afraid. But I don’t believe in people doing well through selfish acts while others suffer through noble intentions – it’s an increasingly crowded 3rd rock we live on, and a failure to generously support customers, communities and the world at large will ultimately see their downfall. It’s a great time to be building disruptive technology and the big corporates of the world have tough decisions ahead of them.

Deliriant Isti Romani – These romans, they really are crazy!

 

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