Social Business, and the life of a charity dollar (or pound)
It’s 2014 and there are many things about life today that would have been unrecognisable even 10 years ago, then again there are so many things that have stayed constant. I am always amused by the way we still say ‘dial a number’, when keypads have been around for years.
Change is interesting and as an entrepreneur I am always interested in how business changes to fit new patterns, and how new behaviours and technologies in turn influence business. This leads me to where, by many accounts, we are headed: towards social business.
This way of doing business will see a shift from impersonal and historically top-down ways of interacting, towards collaboration and inclusivity. That can sound a bit like the sort of results marketers draw up given a whiteboard and a conference breakout session but I truly believe this is the future. How do you use ‘social business’ in context? Is it something you, or you business, becomes? Is it descriptive, or just an aspiration? Is it a new form of capitalism, or something more radical?
According to one of the first developers of the principle, we have a challenge in defining what social business is, so that is the starting point. Muhammad Yunus, a Bangladeshi entrepreneur (and Nobel Peace prize winner) is rightly known for expounding the principles of social business. Allow me to paraphrase, but according to him, some elements of social businesses are:
• designed to address a social problem, and set up specifically to address that
• should be a non-loss, non-dividend company
• profits are reinvested, with the aim of increasing social impact
How specifically is this different to a not-for-profit? To my mind the short answer is that a social business doesn’t need donations or grants to get by; it should be self-sustainable. This is interesting to me because of the direction I want to take our agency in; funds in a social business are re-invested. To quote Muhammad Yunus directly:
“A charity dollar has only one life; a Social Business dollar can be invested over and over again.” Please see footnote
So, something that started off in Bangladesh is now getting currency of a different kind, and it’s not too ambitions to say it could be part of the answer to solving some of the world’s problems.
I also think we are starting to see larger, global corporations fail because they have not changed quickly enough, or have failed to evolve at all. At the same time, despite austerity, social businesses are starting to gain ground. It’s an interesting time to be alive, and I think that ‘watch this space’ hardly starts to cover the potential for social business, but there is no doubt that change has already started to happen, and now it’s just a question of how to join in, or you will certainly be left behind.
Note: Here’s details, of course I would recommend asking at your local independent bookshop
Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs, by Muhammad Yunus
Publisher: PublicAffairs; Reprint edition (May 10, 2011)