The backlash against the deficiencies of capitalism has led
people to rethink the purpose of businesses. Governments are advocating the
development of social enterprises as a viable alternative to public service delivery.
Impact investing has emerged as a new asset class. There are stock exchanges
established specifically for social enterprises. Business schools are setting
up social entrepreneurship programmes one after another.
Amidst all the interest and enthusiasm, there is still no shared
consensus on the essential nature of a social enterprise. Many people think
that social enterprises exist to help the underprivileged by building up their
capacities and creating opportunities for them. Some believe that social
enterprises must be non-profits.
Wikipedia defines a social enterprise, based on the book
“Understanding Social Enterprise: Theory and Practice” (Ridley-Duff and Bull,
2011), as "an organisation that applies commercial strategies to maximize
improvements in human and environmental well-being, rather than maximising
profits for external shareholders." A social enterprise can be structured
a for-profit or a non-profit. This is a
very broad definition, and certainly encompasses more than just organisations
with a charitable purpose.
If we
take a look back at history, the function of business was to provide the goods
and services that a society needed. It is largely in the last 100 years that
the meaning of "business" has been distorted. Instead of satisfying
needs, companies now “thrive on” creating wants and desires and value creation
has become synonymous with returns on shareholder value on a quarterly basis.
The
relentless pursuit of profit has wreaked havoc on our economy, society and
environment. It is also unsustainable for businesses themselves. The average life expectancy of a Fortune 500 company is
between 40 and 50 years. The pace of corporate funerals is set to
accelerate, according to a Yale study.
Studies
have shown that the companies that perform best over time are purpose-driven organisations.
These companies make money but profit is not their raison d'être. They
improve the lives of people, address environmental issues, provide meaning for their
employees and build sustainable businesses in the interests of all
stakeholders.
My favourite example of such a purpose-driven
organisation is Zappos. Tony Hsieh, CEO of the
online retailer, says Zappos is all about “making customers and employees
happy.” By demonstrating the crucial link between the purpose of an
organization and sustainable growth, the Zappos culture is influencing
companies around the world in a big way. Nonetheless, most people would not
equate Zappos with a social enterprise.
Instead of singling out social enterprises as a desirable
category of business, there is a strong case to be made that every business
should integrate a social purpose into its core. Instead of teaching social
enterprises as an elective, business schools should inculcate in every student
the imperative of building for-purpose organisations. We need to
encourage all aspiring entrepreneurs to think about in what ways they can make
a difference to society. It is with this objective in mind that we launched the
Make a Difference (MaD) Venture Fellows Programme in Hong Kong last year. The Programme celebrates and supports young,
innovative, doing-good and doing-well entrepreneurs. 16 MaD Venture Fellows
from Hong Kong and 9 countries participated in an intensive 4-day programme,
meeting with mentors, potential investors and business partners, as well as inspiring
other entrepreneurs.
The three 2013 MaD Venture Stars, selected through an expert
judging and crowd-voting process, demonstrate the myriad possibilities for a
business to create a better world through innovation:
· Insight Robotics, Hong Kong (www.insightrobotics.com) applies robotics technology to protecting critical infrastructures
and key resources around the world. It detects and visualises remote incidents
such as forest fires, oil leaks, water pollution, floods, droughts and security
breaches for management authorities and assists them in devising the most
efficient disaster recovery and contingency plans.
· Wibbitz ,Israel (www.wibbitz.com) has created text-to-video technology that automatically turns
any text-based article, post or feed on the Web into a video within 20
seconds. It helps reduce costs and production time for SME publishers and
content providers, breaks down language barriers and has tremendous application
potential in education.
· Wifinity Tech, India (www.wifinitytech.com) applies simple and cost-effective wireless technology and artificial
intelligence to help enterprises and buildings monitor, manage and economise on
energy and water consumption. Enterprises and
public institutions can reduce energy bills by 20% and water wastage by 15%,
with ROI in less than 12 months.
None of these MaD ventures identify themselves as social enterprises,
but their founders definitely have the vision to change the world for the
better. It is cool to talk about social enterprises
these days. We hope that this will just be a passing fad, as one day all
businesses should have a social purpose. It is time to get back to the basics.
Posts
