Can Corporates Make Social Enterprises Their Role Models…and Should They?
Ooooby is a social enterprise delivering fresh local and organic food to consumers and paying fair prices to small-scale farmers
Thoughts from the Social Enterprise World Forum 2016
At the Social Enterprise World Forum (SEWF) 2016 in Hong Kong this week, hundreds of social enterprises, corporates and policy makers from across the globe convened to advocate and debate the role of social enterprise (SE) in our future economy. One statement that latched on to me was:
“Corporates should make social enterprises their role models.”
This wasn’t from a social enterprise; this was from PwC Network Vice Chairman Richard Collier Keywood (image below left). Yes, a corporate that makes a living delivering outcomes for corporates.
Ok. The fundamental question: Can commercial organisations really subscribe to this statement? Obviously, PwC does. But how realistic is it for publicly listed organisations to adopt the principles of a social enterprise? And how advisable?
First step: come to an understanding of what social enterprise really is. The prevailing perception I’d distilled from admittedly limited exposure is that the social enterprise sector comprises a band of idealists bent on disrupting business as usual, favoring social impact over profit. In other words, while corporates do well, social enterprises do good.
I knew going into the Forum that this understanding was simplistic, but more importantly, by the end of it, I realised it was just plain wrong. Social enterprises have to be just as if not much more entrepreneurially savvy than corporates to simply stay alive. Social enterprises have to do good AND do well. They need to return social impact AND stay in business. Oh, and their goods and services need to be as strong and probably stronger than those of traditional businesses.
Take corporate MacDonald’s – each year they return billions in profit and still the pangs of hundreds of millions. DC Central Kitchen (image below left: CEO Mike Curtin) – one of the social enterprise speakers at SEWF in Hong Kong – on the other hand returns much more modest profits, but also serves nutritious meals to scores of disadvantaged communities, integrates local farmers into its supply chain and provides employment opportunities for formerly incarcerated talent.
It’s a far harder gig than most realise. While the mainstream start-up crowd laments their long hours and crusades for venture capital, social entrepreneurs sleep even less and rely financially on debt or slower organic growth, as most VCs conveniently see social enterprise as “not our sweet spot.” And that’s just “starting up”; to say nothing of “staying up.”
A new understanding value and success
So back to the question: Can corporates be expected or expect themselves to do well and do good and at the same time deliver shareholder value? After listening to the trials and tribulations of scores of social enterprises at SEWF, my take is: not quite yet, but very soon.
From taking in the content at the SEWF, the fundamental challenge I see is that SEs need a larger, more knowledgeable and more committed ecosystem backing them – an ecosystem with some alternative if not divergent thinking about the what “value” and “success” mean.
Generally speaking (as the social enterprise scene is vastly different across markets) when it comes to engaging SEs, VCs are reluctant, governments are timid, corporates are often clueless (including myself), consumers are indifferent and shareholders can be adamantly opposed.
The ecosystem necessary to catapult the social enterprise sector into the mainstream has been conditioned for decades if not for centuries to understand success as revenue, share price, monetary return, growth and market share. Not until a new, shared understanding of return – based at least in part on social impact – becomes standard will the greater required ecosystem mobilise to scale the social enterprise sector. VCs and shareholders will need to reimagine return, governments their citizen services, corporates their business models and consumers what it means to have a delightful experience. No mean feats.
Yet we know this is coming. There is momentum – what customers and employees are demanding of an organisation is rapidly evolving. Corporates are already mobilising – if not to become more social-enterprise-like, at least to directly support them by recruiting them into their supply chains, providing mentors and volunteers and advocating their causes.
SAP, for example, has been engaging social enterprises worldwide through its Social Sabbatical programs, where top talent from across its global operations team up to inject expertise into promising social start-ups.
Not for profits are also scaling their enablement of social enterprise. In the UK for example, contributions from charities to incubate or scale social enterprises went form 17% of spend to 38% in just two years.
SAP employees taking part in social sabbatical in Sydney, Australia.
But for the corporates to reimagine success, social enterprise can’t be just a CSR program. This has to be a COO, CFO and CEO program – integrated into the culture, vision, mission and strategy of an organization.
Speaking of big, bold statements…
As established as the social enterprise sector is – decades really – in most markets it hasn’t scaled, and until our measures of success change it won’t reach its potential.
I think we’re still grappling with awareness; hence this post and others to come. I’m no “thought leader.” I’m on a journey to understand, and I hope the stories I share will entice others not so experienced in the social-enterprise sector to join me. More importantly, I hope those who are experienced in this space will comment, correct, guide and inspire me and others to learn moreand build that better understanding.
SAP has made a big, bold statement of its own around social enterprise, taking on a role as leading partner for the Social Enterprise World Forum 2017, held in Christchurch New Zealand from September 27 – 29. We’re privileged to support our CSR partner Ākina Foundation, a social enterprise with charity status working with social enterprises across New Zealand, who have officially taken on stewardship of SEWF 2017. They are an amazing group of innovators, providing SAP and other corporate partners guidance and expertise on the one hand and best practice for budding SEs on the other to meaningfully scale this sector – in New Zealand and globally.
Much of the intent of SAP’s relationship with Ākina’s is to build awareness and understanding within our ecosystem, helping others and ourselves reimagine what it means to run a successful organisation.
I’d appreciate your thoughts and experiences on how your organisation is either working with social enterprises or changing its own practices to operate along the social enterprise model – doing well and doing good. Please do comment and share.