Social Entrepreneurship: Feeling Good for Profit
Investing in social entrepreneurship is not just for the public problem-solvers of Silicon Valley who want to do good while turning a profit. Sure, Uber gives rides to jurors in Michigan and Airbnb is working with Portland and San Francisco on streamlining disaster response in case of an earthquake or other emergency, but some argue that every business should be socially conscious.
Teaming up with public sector
This could done in lots of ways, from donating a product for each one sold, as Warby Parker and Toms had been doing, to investing in sustainable small businesses in developing countries, to partnering with the public sector to help solve socio-economic issues plaguing large urban areas.
Partnering with government has benefits, notes Anne-Marie Slaughter, president of New America, a think-tank, and contributing editor at Financial Times. She writes:
The public sector, however weak, provides vast scale. And, for all its flaws, it is a source of legitimacy. What is more, it turns out that private entrepreneurs can do more public good when they team up with government.
The larger point here is the emergence of an ecosystem for public problem-solving in which government is no longer the only or even necessarily the primary actor. It includes universities, public policy organisations, direct service and advocacy groups, social enterprise and far-sighted private enterprise. All must learn to work together more closely. If they do, the result will be a new model of effective, engaged and connected democracy.
Some examples of creating social value include bypassing bureaucracy, such as funding a charter school instead of a government-run school; or giving to for-profit organizations that lend directly to small businesses in developing countries.
We’re at capacity with Mother Earth
Social entrepreneurship, some argue, should be a must because of our strained global resources. Richard Maize reminds us in his article for HuffPost that we’re overusing our resources, and socially conscious business practices should be a requirement, and a moral choice.
Social entrepreneurship requires businesses to be socially conscious — and, if deemed so appropriately, these business will likely have corporate sustainability, or long-term value through a ‘green’ strategy supporting the natural environment and considering every dimension of how a business operates in the social, cultural, and economic environment.
Socially conscious business practices are no longer just a ‘perk’ or selling point for PR purposes… [A]s business owners we all need to make a commitment to making socially conscious practices a part of our business, in the same way we make accounting, marketing, or human resources a part of our businesses. Whether its using solar and wind power to run manufacturing; sourcing our products from vendors who respect the earth, people and animals; or providing our employees with the benefits they need to live well at and away from work, we need to commit to making these changes and be completely transparent in doing so.
Social responsibility can be profitable
Sustainability equals profitability, Maize argues. It makes sense from the business standpoint not to run out of resources — people or products — and save money in the process. “As far as appearances are concerned, from corporate to cultural measures and everything in between, we live in a world that cares about social entrepreneurship and corporate sustainability,” he writes. “It’s time we start consistently acting on that feeling.”
Making it work: Tips from the pros
As with any business success, excelling in social entrepreneurship requires not a small amount of luck, plus an open mind, willingness to take risks, appetite for adventure, and good instincts.
Here are some tips that apply specifically to doing good for profit from two wildly successful social entrepreneurs, Toms founder Blake Mycoskie and Tom Chappell, founder of Tom’s of Maine, the natural toothpaste company he has sold to Colgate Palmolive in 2006 for $100 million. Chappell’s new venture, Ramblers Way Farm, Inc., is producing sustainable apparel from pima cotton and merino wool:
- Define your company mission and articulate your vision to your team. Also, let your customers know what you stand for — a good marketing strategy
- Don’t expect your partners/suppliers to give you special treatment on margin structure just because you’re trying to solve the world’s problems
- Don’t make assumptions about your customer base — you never know who will pick up and carry your product, or will back you up
- Care deeply about the changes you want to make; be authentic
- Understand your abilities (both strengths and weaknesses) and use them to drive your business
- Seek advice from others to help strengthen the effectiveness of the strategy
Image by moshimochi/123RF Stock Photo.