Today at the pre-SocialGoodSummit Master Class I listened to the “Making a bet on Social Good” session where Peter Sims, author of ” Little Bets: How Breakthrough Ideas Emerge from Small Discoveries”, who was interviewed by Susan McPherson of Fenton Communications and felt highly identified with what was being said about social entrepreneurship as the new and better way of creating social value and solving society’s problems.
Out of this talk and the others at the Master Class, I took note of a few reasons why this is proving to be true:
The charity model has lost traction; the best and largest organizations based on it are still benefiting society but keep depending on the economic value generated by others. Furthermore, it has failed to solve the problems it tries to address, it hasn´t “driven itself out of business” after a long time and will keep its dependence on external support for an even longer one.
On the flip side, business principles allow social enterprises to be sustainable and not depend on the benevolence or exceeding profits of others. Social enterprise creates what Michael Porter calls “shared value” (http://hbr.org/2011/01/the-big-idea-creating-shared-value), the creation of economic value while creating value for society. Social or environmental value is a part of a social enterprise’s business model, it is what it does, not “patching holes” like CSR is, in my opinion.
Another aspect that makes social entrepreneurship a better model for the 21st century is the fact that it is based on grassroots initiatives and generates bottom-up effects. Social entrepreneurship empowers consumers and the market to solve social issues. It deviates the wastefulness of consumerism into action for social good, it makes people make informed and conscious decisions and lets them generate the usual economic value and an added social value. Spending money for a cause, not donating money for a cause, encourages people to collaborate with social causes even if they don’t have “money to spare”.
This integration into the market gives social enterprises a sense of urgency beyond the usual concern for a cause, social or environmental, that donation-dependent organizations have. If the goals are not reached, the enterprise fails, good old market Darwinism. This pressure is one of the main drivers of the capitalist market and can work in favor of social causes if these are well integrated into business models. This also motivates careful measurement of impact, which is sometimes left behind in traditional charity-based social organizations.
I have also realized this in my private life. The education in economics I received at the Universidad Peruana de Ciencias Aplicadas was very oriented towards the Milton Friedman model, which is centered around shareholder value creation and a “benevolent selfishness”, and sometimes even touched on Austrian economics, which border on anarchism, all-market economies and absolute privatization. My work after finishing my education was mostly centered around social issues, which showed me that many needs weren’t being solved by the shareholder-oriented market, and couldn’t be. This way, social entrepreneurship is, in my eyes, the perfect mix of market and social goals.
These, of course, are only my appreciations and may well be changed or reinforced after this awesome event.
PS: Let’s not forget that we, as consumers, can pressure companies to stop having negative effects on society and the environment. Will all companies be socially oriented one day?