More than 250 years ago, Benjamin Franklin coined the phrase “do well by doing good”. Over the past two years, the world has faced significant upheaval, and this age-old adage has resurfaced with renewed vigor. Every organization must now take heed to this concept which is at the heart of social entrepreneurship.
We are living in an era of global churn: climate change, rising income disparity, social unrest, environmental degradation . . . the list goes on. All these factors merge, overlap, and combine with an undeniable interconnectedness: the need for social change. Underlined by the recent global pandemic, perspectives on life and work have dramatically shifted to center around impact. Today, businesses cannot and must not function in isolation, overlooking the consequences of their actions.
The stage for this was being set even before the pandemic. In 2018, Deloitte’s Global Human Capital Trends survey report pointed out that savvy businesses are entering a new paradigm for management, one which considers the business less as a “company” and more as an “institution,” integrated into the social fabric of society.
The term ‘social entrepreneurship’, while often used, is sometimes misconstrued to mean social service. In fact, the definition includes both for-profit and not-for-profit business models in which organizations develop and fund solutions aimed at creating positive social impact, even while accruing profit.
Let’s look at some of the aspects of this post-millennium business trend, fast becoming mandatory in the corporate setting.
Having a positive social impact is no longer an option but a must. Here’s why.
The emergence of the responsible entrepreneur
Functioning as part of a world riddled with inequality, bias, and resource scarcity, many entrepreneurs experience a deep need to express their individuality through a responsible role in society. The term ‘social entrepreneurship’ was said to be first popularized by Bill Drayton, the founder and current chair of Ashoka, an organization committed to fostering social entrepreneurs worldwide.
On a visit to India when he was 18 years old, Drayton realized that profitable business ventures were possible even while making systemic changes that could positively impact the lives of a large number of people. Within five years, Drayton had funded 4,000 game-changers in their chosen area of business: the environment, human rights, or building self-reliance projects.
The younger workforce values purpose over profit
Values of meaning, purpose, connectedness, and innovation have gained tremendous traction among millennial and Generation Z workers, far outweighing traditional goals of monetary awards, financial security, stability, or even brand loyalty. The younger workforce is now evaluating sustainability practices, conscious resource sourcing, and other human and environmental consequences in the businesses to which they contribute or align.
The 2021 ‘great resignation’ saw people quitting their jobs at record pace, further emphasizing the need for organizations to find ways to align with the values of their talent to improve retention.
As a concept, social entrepreneurship has multifaceted imperatives.
Countering systemic inequality
Social enterprises do not depend upon the funds and attention of the government and other support agencies to shape policy. They are therefore able to respond to social problems more quickly, without bias, and efficiently as well as provide solutions for programs geared towards promoting diversity, gender equity, and racial justice.
A case in point is Pipeline Angels, a venture capital and private equity firm based in New York. The firm’s objective is to create capital and investment opportunities for trans women, cis women, nonbinary, two-spirit, agender, and gender-nonconforming founders. They promote business along with equality. The firm runs a signature boot camp that educates investors, offers mentoring opportunities, and even hosts a pitch summit for entrepreneurs seeking funding. Since their launch in 2011, over 450 members have graduated from their angel investing program and have invested more than $7M USD in 90+ companies. All without the involvement of a government agency.
Developing scalable solutions to complex challenges
Government bodies and NGOs are often limited by funds, resources, or multiplicity of projects to be able to devote focused attention to developing exhaustive, sustainable, and practical solutions for critical problems. In comparison, social entrepreneurship companies must dedicate concerted attention, energy, and talent to devising innovative and cost-effective solutions because they have the added agenda of ensuring profitable operations so that they can re-deploy funds towards causes.
Also, social enterprises are more adaptive and responsive when mobilizing support and building relationships between similar social groups across geographies and economic networks. For example, The Body Shop runs a bespoke Community Fair Trade program under which it buys ethical, high-quality ingredients from thousands of producers, farmers, and artisans across the world, helping them gain market access and invest in social and environmental projects such as education, healthcare, and sanitation.
Challenging outdated business models
Since the traditional economic approach to business focuses only on profitable growth, the evaluation metrics for this type of venture are also primarily aimed at output and cost of production. As a result of this narrow definition, often businesses could make a profit only at the expense of creating social problems.
Over time, with rising population, income disparity, and resource depletion, the traditional economic model has proven to be unsustainable, making way for a more value and purpose-based approach that serves the interests of all stakeholders, including the environment and the local communities within which it functioned. This, in turn, benefits the larger community.
A good example is the Kenyan coffee entrepreneur Vava Angwenyi who started with just one small coffee bar in her town. She soon expanded her area of operations by assisting farmers in improving the quality of their coffee produce, their brand awareness, and their sales. Today Angwenyi’s company, Vava Coffee, serves as an exporter, roaster, and consultative partner working with more than 30,000 smallholder farmers who earn 18% more by working with Vava. The company was so successful that it inspired Angwenyi to start Gente Del Futuro, a cross-cultural coffee training program in Tanzania, Kenya, and Columbia.
Expanding community reach
For a long time now, innovation as an approach has focused on growing deeper connections between technology and business, often excluding or ignoring the interests of certain groups. This has further encouraged a monopolistic model that, again, restricts the benefits of the innovation to a select few.
Many social entrepreneurship projects have emerged as a counter-response to this restrictive model by consciously expanding the access to resources and possibilities to specific disadvantaged communities.
A good example here is SeniorNet, an IT learning company that specifically provided computer and Internet education for adults age 50 and over, a section of the population with little or no literacy skills, and one that had been conventionally excluded from most channels of digital education. The initial project, which began with five learning centers for 20 seniors, soon expanded to more than 60 learning centers in the US and other countries, staffed by more than 3,000 volunteer instructors and mentors.
Serving as agents of change
By entering into industries unexplored by traditional corporations due to negligible profits or social acceptance, social entrepreneurship has spearheaded several change projects by drawing attention, deploying resources, and helping influence policy or legislative change. For example, TranSanta, a community-led venture, provides a platform for transgender youth to share their stories as well as their wish lists of items that are then fulfilled by interested community members either anonymously or directly. The entrepreneurial gain is a happy fallout.
Another example is Cracked It, a smartphone repair service in London that is staffed by at-risk and formerly incarcerated youth. The company teaches life skills in addition to providing employment and income opportunities to community members that are generally rejected or ignored by greater society. The result? The youth benefits, business grows, and all stakeholders flourish.
Aiding recovery from the impact of unforeseen events
The devastating economic and health impacts of the pandemic have exposed the flaws within several successful societies and economies, forcing organizations to explore new measures to safeguard the income levels and health of underprivileged populations.
The absence of a widely available clinical diagnostic method during COVID prompted THINKMD, US-based healthcare technology and data analytics company, to devise a simple-to-use diagnostic platform. The diagnostic tool helped healthcare workers in COVID-19 risk assessment, enabling immediate and conclusive diagnosis for fever-based diseases. The diagnostic tool was deployed in clinics and communities across eight countries in Africa.
In the education and training sector, Empower Pragati worked to overcome the disruption in the physical, classroom-based skills training caused by COVID. The India-based social enterprise that offers skill-based training to underprivileged youth quickly revamped their training infrastructure and the competencies of their faculty to deliver training in an online platform so it could maintain learning continuity for the students. It also helped increase the employability of more than 2 million young people from underprivileged communities by assisting them in résumé preparation, mentoring, and ensuring equal access to decent job opportunities.
Today, discerning business leaders are increasingly embracing social entrepreneurship. By doing so, they are playing a critical role in serving disadvantaged populations and re-interpreting the conventional metrics of success into a more inclusive and value-led model. Social entrepreneurship is no longer an option for growing businesses, it is a moral obligation and corporate mandate.
Bobby has more than 20 years of experience in advisory and operational roles. As an entrepreneur himself, he understands how to speak the language of founders. Throughout his career, Bobby has led or advised on equity and debt transactions ranging from $500k to $1B. Prior to AG, he worked within portfolio company strategy/operations at a Chicago-based private equity firm within PwC’s consulting practice and for a Fortune 100 organization. Bobby holds a bachelor’s degree from DePaul University, an MBA from the University of Notre Dame, and is an Adjunct Faculty Member at Northwestern University. He is also a Director on four corporate boards of companies ranging in size from $5MM - $50MM in revenue.