Social Entrepreneurship: Leading From the Front

Change for the better is happening in the business world, with more and more companies becoming more aware of their social responsibilities. But you can’t turn big ships around in a hurry – it takes time. Meanwhile, it’s up to social entrepreneurs to pave the way forward. Social entrepreneurs tend to work locally, be deeply engrained with the social impact they’re trying to make, and come up with innovative ways to make a difference. Many are small and nimble and can afford to fail. Plus, they’re fun and inspiring. Little by little, they’re raising awareness and helping to change the way the world does business.

The Need for Social Entrepreneurship

I was greatly heartened when a large number of corporations recently signed a document stating that there needed to be more objectives than just financial gain, that the overall social impact needed to be taken into account. You can read about it.

It is a bold statement, and inspiring. But the truth is, such change takes time. I remember working in a large business, sitting at their business meeting, reviewing their portfolio of retail stores. The topic of business negotiations came up, and it was explained to me that they followed a certain pattern because the business was responsible to their shareholders to maximize their profits.

Business leaders could be sued for not maximizing profits – even at the expense of the social good. That’s what it means to be a public company. You don’t have the control to discern when to choose for the greater good. Generally, if you don’t perform at the top level, you get fired. So it’s also your job on the line. And your bonus.

Now, there is a B-Corp legal status that passed in many states. This gives companies with B-Corp status legal protection, which means they are allowed to pursue gains that make a social impact and not only maximize profits. This is great, although not all states have adopted this protection… Ohio is one of them. (The legislation is stalled because they don’t like the word “environment” in the list of potential things which a company can choose to focus on… strange, right?)

But even the adoption of B-Corp status is slow. At top levels, people are often motivated by money, and taking away something which they already have is hard. Especially if you’re the one making the decisions, and it’s your money on the line. This is not to say that no one sacrifices profit for a purpose (see, for example, the majority of the non-profit sector), but not everyone is about the social good.

The story at the end of the day is that the big corporations recognize the need for change, but realizing it will take a long time. In the meantime, it’s up to social entrepreneurs to pave the way forward. This is especially true now when government funding is being pulled back from social services, magnifying the problem in many rural areas.

Social entrepreneurs tend to work locally and be deeply engrained with the social impact they’re trying to make. They understand local issues and often come up with innovative ways to make a difference. Many are small and nimble and can afford to fail. Plus, they’re fun and inspiring, so they attract attention and spread awareness very effectively. (It’s believable too. People are a little weary of greenwashing, so if a company markets one message, and doesn’t live up to it, it can do more harm than good.)

I think if social entrepreneurship discovers new ways to solve problems, and to be profitable at the same time, then large corporations will adopt these successes, and help propel the social impact forward.

We’ve seen some truth to that, such as when the yogurt giant Danone purchased organic B-Corp WhiteWave (the company producing healthy milk alternatives such as Silk, Horizon Organic and Earthbound Farm). Danone thus became the largest B-Corp in the world, and not just in name – they’re putting in the work to maintain the certification across the corporation because they understand the value behind it.

Dragging Change to the Forefront

I once heard that if you try to push a rope, you’ll drive yourself nuts in short order. It was in the context of leadership, making that point that if you’re pushing people to do certain tasks, it just gets frustrating and often leads to failure. Instead, let your leadership pull with a grand vision, and your success becomes much more likely.

I am excited by the rise of social entrepreneurship. In the last 10 years, this concept has become part of the vocabulary of many young entrepreneurs who are mixing their social mission with their business idea. It’s inspiring.

But it’s still not mainstream. When I talk to people on the street, not many of them understand the concept. Joe DeLoss founded the social enterprise Hot Chicken Takeover. It’s the practice of hiring those with barriers to employment and providing a workforce environment that fosters community and support, is a model for others to follow. Joe once said that people would come to try their chicken just because of their social mission once or twice… but the only way to build the business was to make sure that people came for the chicken. The social impact is a bonus, not a driver of behavior.

The advantage is that social enterprises have a built-in vision. I mean, what sounds more exciting: a company that “makes the best handbag ever”, or one that “lifts humanity out of poverty”?

The vision with which social entrepreneurs embolden their companies is inspiring. It focuses their thinking, giving rise to ingenious ideas that radically transform. It leads to higher engagement with employees, and greater clarity around decision making. And it gives context for marketing messaging and the stories these ventures tell. These stories are what spread and pull more people into understanding what can be collectively accomplished by mixing social impact with sound business practice.

You still need to have a solid business.

Where life gets tricky is when a social enterprise puts its social impact before their profit. In hiring models or buy-1-give-1 models, extra effort is needed to make your business function. It may sound like your social impact will provide great marketing message that benefits you, but in reality, it’s more like a handicap that other profit-focused businesses don’t have.

This makes sense if you think about it. If a purely profit-focused company could focus on making a social impact and have it improve the bottom line, they probably would have done it. Announcing that you’re a social enterprise doesn’t radically increase your customer base.

But sometimes having constraints on your business helps you to think creatively. The Aravind Eye hospital, a grandfather of social enterprises, cut costs dramatically to fulfil their mission of eradicating needless blindness in India. They provide high-quality vision care to a large population… for free. In 2013 they were performing 60% as many procedures as the UK’s national healthcare services… at 1/1000th the cost… and with a higher success rate. Yes, you read that right. Talk about determination and focus!

But at the end of the day, you can’t force social entrepreneurship on a company. It needs to be there, at the core of the company’s vision. A crystal-clear vision for a better planet can drive the mission and set the business on a clear path forward. It’s the vision that will change the planet, not pushing change on others.

Realizing Change

At the end of the day, the global economy is massive. On Quora, someone estimated that there are 45 thousand companies listed on exchanges, and probably around 100 – 200 million companies in total, worldwide. In 2017, the global GDP was about 80 trillion US dollars.

It’s unlikely that big global corporations or public stock exchanges are going away anytime soon… meaning the focus on profits for most companies isn’t going away. Uncertainty with governments, and the rise of populism, has a tendency to lend uncertainty to government funding. The huge lobbying budgets of corporations will continue to shape policy to their benefit, to the detriment of the rest of us. (Ohio, in the US, is passing legislation which many people have never heard of, to build outdated plants that will create a lot of toxic waste. It’s being pushed by the companies that will profit by it, at the expense of the population as a whole. Corporate lobbying should be illegal, because it generally serves the few who can pay over the good for the whole.)

I believe that as major threats to our survival — such as the drastic effects of climate change that we’re beginning to see — become harder to ignore, there will be more attention given to social issues. This attention helps a lot in the way of raising money, competitions, and rewards for new ideas that address these issues.

One of the best things we can do is to highlight what social enterprises are doing and make it easy for people to participate. Give people a choice and make it easier and less expensive than the alternative. This may not be easy. But it is worthwhile. And it can create sustainable change that isn’t dependent on government or grant-funded dollars.

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