Even optimistic leaders can be daunted by today's challenges.
EVEN optimistic leaders can be daunted by today’s challenges. Many have begun to recognise that free market capitalism not only doesn’t provide solutions to poverty, environmental pollution, terrorism and climate change but may have contributed to them and that a new type of business approach is necessary in the 21st century.
Social entrepreneurship is a new type of business that develops workable solutions to the world’s most pressing problems.
Muhammad Yunus is one of the best-known social entrepreneurs. He began giving small loans to women in Bangladesh and built Grameen, a very successful bank that helps people in developing countries start their own small business.
Social enterprise is a new concept in Australia that is being clarified and defined as it evolves. It is a broad term that encompasses organisations that offer goods and services to benefit society.
There are three social enterprise models described by John Elkington and Pamela Hartigan.
• Leveraged non-profit ventures are non-profit organisations that use community resources and external partners to provide a public good. An example is Barefoot College, founded by Bunker Roy.
• Hybrid non-profit ventures are entities that make a trading surplus, but not a large one. Partnership with private organisations can be central to this model. GoodStart Early Learning is an example.
• Social business ventures are for-profit entities focused on social missions, doing good for society, such as Sekem Group.
Social entrepreneurs challenge and want to change systems. They use market solutions to tackle social problems and opportunities. They build an innovative enterprise, create markets of the future and lead sustainable change that grows into a substantial business. They are strongly motivated to do good; they absolutely believe in what they do, and are guided by doing good for society.
They overcome obstacles and difficulties because they believe so strongly that they are creating a positive future.
The greatest impact of social enterprise comes from combining positive social forces with commercial acumen. Social entrepreneurs have a major challenge in attracting funds and resources since their business cases are not purely commercial. The vision of the social entrepreneur usually spans several decades.
Social entrepreneurs share one or more of the following characteristics:
• they identify and apply practical solutions to social problems;
• they develop a new type of business model and ideology;
• they have an unwavering belief in everyone’s innate capacity, regardless of education, to contribute meaningfully to economic and social development; and
• they focus first and foremost on social value and are willing to share their innovations.
A growing number of companies have found that offering the opportunity to work alongside accomplished entrepreneurs results in staff retention. This indicates a new trend among generation Y employees (those born after 1982) who want to do meaningful work and be well paid for it. Companies that step into the social business arena are able to attract and retain top talent.
Major companies are finding that these models can significantly extend the reach of products and services into communities that were unable to pay for them and, in the process, create new markets. Danone developed a low-cost yogurt in cooperation with Grameen, which it has successfully marketed to the masses of Bangladesh.
By addressing three issues – access, price and quality – together, social entrepreneurs are seeding and growing significant new markets where none existed before.
Social enterprise shows that it is possible to compete with the advantages of economies of scale of purely profit-oriented businesses with quality-focused social business models. There are a growing number of organisations in Australia stepping into the social business field.
In 10 years’ time there may be no distinction between a ‘social venture’ and many major businesses. It will become the standard way for a business to operate in the future – to be commercially, socially and environmentally successful.
The world is becoming much more interdependent and interrelated – what is anyone’s problem is our problem. Social entrepreneurs are an exciting new group of business professionals developing imaginative solutions to the social and economic challenges we face.
Ron Cacioppe is managing director of Integral Development. He is also adjunct professor at Curtin’s Australian Sustainable Development Institute.
Brad McManus is director organisational capability at Integral Development. He is also vice-chairman of the Integral Leadership Institute and a Council Member at ECU.
Contact Ron and Brad on 9242 8122 | firstname.lastname@example.org | www.integral.org.au