The concept of social
enterprises has a long history, albeit manifested under different names and
orientations. The backlash against the deficiencies of capitalism in recent
years has accentuated the development of social enterprises around the world.
However, there is still not a shared consensus of what essentially a social
enterprise is.
Social enterprise has
philanthropic roots in the US and cooperative origins in the UK. More recently, some governments are also
trying to encourage the third sector to take a more market-driven approach in
providing social goods. Social
enterprises are therefore often narrowly seen as organisations seeking to
solve the problems of the bottom of the pyramid or challenges in developing
economies.
According to the wiki
definition, a social enterprise
is “an organisation that applies commercial strategies
to maximise improvements in human and environmental well
being, rather than maximising profits for external shareholders”. Social and environmental
challenges are obviously not confined to the have-nots. Developed economies
also have their challenges. Pollution, wastes, obesity, stress-related
diseases, aging population, education, housing, workplace relations and
work-life balance are but a few examples. Therefore it is conceptually
inappropriate to limit the scope of social enterprises.
The second fallacy is that social
enterprises must be non-profit organisations. To repute this argument, it is
essential to understand what non-profit and for-profit mean. A non-profit
organization is an organization that does not distribute its surplus funds to its
owners or shareholders; whereas a for-profit organization can do so. It is also
important to differentiate between the concepts of for-profit and profit maximization.
Whilst the latter should be condemned, there is nothing wrong for an
organization to provide incentives to its investors through the distribution of dividends. The
distribution of profits should not compromise the enterprises' social benefits.
Indeed if we want more private investors to be involved in the delivery of
social goods, instead of just relying on government funds and subsidies, there
is every justification that a social enterprise can be for-profit.
The social and environmental
challenges that we are facing today are enormous, and in order to solve these
problems, a social enterprise also has to be an innovative enterprise as
well. The innovation can be in the
technology, product, service, delivery process, customer experience or in how
the enterprise is managed. Scalability
is another issue, in order that the enterprise can attain maximum impact on the
society.
All in all, social
enterprises should be a lot more than non-profit organisations serving the
needs of or creating employment opportunities for the disadvantaged segments of
the society. And social enterprises
should definitely not be a euphemism for non-profit organisations struggling to
develop a viable business model with no or limited innovation.
Many of the enterprises that
do not name themselves as social enterprises are also creating enormous
benefits to our society. Many technology ventures are cases in point. My favorite example is LinkedIn. Most people will not associate LinkedIn as a
social enterprise. But it is certainly doing a lot of good in connecting
professionals around the world. Another example is Zappos. The happiness
culture advocated by Tony Hsieh is creating a lot of good to its employees and
customers. By demonstrating the crucial link between the purpose of an
organization and sustainable growth, the Zappos culture is also influencing
companies around the world in a big way. But I do not think Tony will ever call
himself a social entrepreneur.
Because of the confusion and
sometimes the unfortunately negative associations of a social enterprise, some
organisations and advocates in social innovation have stopped using the term. We
are seeing more and more people making references to “impact ventures” or “for
purpose” organisations instead.
As Juliet says, "What's in a name? That
which we call a rose
by any other name would smell as sweet." So long as the enterprise is
making a difference and creating positive value to the society, there is
actually no point in debating whether it is a social enterprise. This is the
approach we take in the Make a Difference (MaD) Venture Fellows Programme. We
are inviting young, innovative, do good and do well entrepreneurs to join the
Programme in Hong Kong on 24-27 Jan 2013. They can work in diverse sectors from
environment, energy, education, medical and health care to technology that
enhances productivity and connectivity and management practices that build
happy teams and customers. This Programme aims to celebrate and support entrepreneurs
who are making a difference to scale new heights by connecting them with
capital, networks and market knowledge in Asia. If you are MaD enough, please
apply via www.MaD.asia by 28 Oct 2012.
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