Debbie Sterling was having brunch with her friends when she realised what she really wanted to do with her career – inspire young girls to love and enjoy sciences, technology, engineering, and mathematics (STEM) subjects by designing engineering toys for them. So, she saved as much money as she could, quit her job, and focused on starting her own business, GoldieBlox. The only problem was the toy industry wasn't as receptive as she hoped they would be. She was told that while the idea was a good cause, it would "never sell." They were wrong.
Debbie launched GoldieBlox on crowdfunding platform Kickstarter and it became viral overnight, helping her not only reach, but exceed her fundraising goal. To date, GoldieBlox has reached millions of girls around the world, continuing its mission to bring them closer to STEM and shatter gender stereotypes within the industry.
Good causes can indeed sell – and they should. Sadly, however, not all entrepreneurs realise this.
The saying goes 'it's not personal, it's just business' but as consumers and employees start to demand businesses do more good for communities and the environment, will business remain as 'business as usual' for today's organisations? Or is it time to redefine and change business models by making them more personal and purpose-driven? And if we do, what does this mean for industries?
The business of tackling social issues
The rise of social enterprises is changing our perception of business, what it is, what they are for, and what they should be doing. Unlike traditional businesses that generate revenue for owners, social enterprises generate revenue for purpose. They are wholly centred in doing good and solving social issues, with profit only acting as an enabler. It's the free market mixed with purpose, and is proving so effective that some believe it is set to become the new standard for business models.
A recent report representing the most comprehensive picture of the global state of social enterprise to date, found that over 11 million social enterprises are already operating worldwide. It also describes social enterprise as "one of the largest movements of our time".
Going beyond social responsibility, social enterprises go deep to the passionate, and compassionate, core of people and society. They prove that it is possible to design business and commercial models where greater purpose and impact enhances revenues or profit, and vice versa. After all, every business is social. In every step of the supply chain, relationships with people, community and the environment matter.
In the past, many entrepreneurs would accumulate wealth in the private sector and pursue philanthropic endeavours later in life. But a new breed of social entrepreneurs are using their very successful businesses as a vehicle to tackle social and environmental issues in real time.
Dutch confectionery company, Tony's Chocolonely, was built to fight forced labour and slavery in the chocolate industry by ensuring its supply chain is free from exploitation. They created an open-source platform that can help other companies ensure their supply chains are 100 per cent slavery free and that cocoa farmers earn a liveable income.
Social enterprise Babban Gona's main goal is to feed Africa's most populous country and reduce the unemployment rate by supporting smallholder Nigerian farmers through various services such as training, education, financial credit, and agricultural input, together with harvesting and marketing support.
The return on investment
The beauty in social enterprises is the dynamic between purpose and profit is mutually beneficial. Deloitte identified six primary areas where a company's social impact efforts can drive business value: brand differentiation, talent attraction and retention, innovation, operational efficiency and risk mitigation.
Good citizenship and good governance qualities account for nearly 30 per cent of corporate reputation and, when given the choice between two similar brands or products, 71 per cent of consumers will purchase from a purpose-driven company over the alternative.
Even among businesses that have not (yet) shifted to a social enterprise model, some have started to support social entrepreneurs through partnerships and pro bono services, providing access to a company's talent and skills which can prove more valuable than money.
International software producer SAP launched its EmpowerU programme last year, using the power of pro bono consulting to develop "the next generation of SAP engineering leaders and to expedite world-changing solutions in the process." Teams of employees were partnered with social enterprise clients to develop quality solutions supporting refugees, rural healthcare, workforce inclusion and similar beneficial interventions.
While these are merely partnerships for now, could exposure to these kinds of experiences inspire our future leaders to drive the shift in industries to use a more purpose-driven model? The possibilities are exciting.
Amsterdam's city government is embracing 'doughnut economics', with the goal to put its residents in the sweet spot between 'social foundation'; where people have access to a good quality of life, and the 'environmental ceiling' – instead of letting GDP define their economic success.
Doing good to do well
All this being said, we have to acknowledge that not every company may agree to shift to a social enterprise model. But research does show that over time, companies will have to do good in order to do well.
Luckily, there are many different ways businesses – traditional or social – can use to do good. Social procurement – the process of considering social and environmental factors when procuring goods and services – is one of them.
In a recent study, the majority of companies interviewed considered social businesses to be competitive with traditional suppliers, especially on quality, supply assurance and price. With an estimated $13 trillion annual global procurement spend, there is great potential for scale.
Unlocking this opportunity will require building a social business infrastructure that supports its ecosystem of legal structures, sustainability metrics, accountability systems and funding opportunities. To be truly effective and transformational, these transitions must be locally appropriate and community-driven, while creating opportunities for disadvantaged people.
The challenge is, despite the steady growth of the impact investing market ($715 billion), the Global Impact Investing Network's 2020 survey found that social investors' concerns about possible deceptive practices (dubbed 'impact washing') were the most cited challenge that respondents expected to face in the next five years.
Business is personal
Social enterprise, like social transformation, cannot happen in the absence of passion; and passion lies in the purpose, values and ethics that businesses and its people hold. So, yes, it is personal.
This is why Debbie placed a huge sign in GoldieBlox's office that says: "The mission is greater than the company." Every once in a while, they check in with each other to see if they are on track with their goals or check if "they haven't become obsessed with profitability or cheapening things or lessening the quality". It is to ensure that they still are who they said they are. Their purpose is their identity.
What would our industries and communities look like if leaders and organisations begin to operate the same way as social enterprises do? With impact used as a measure for success... With their purpose put front and centre of every decision they make… With businesses seen not for transactions of goods and services but for the improvement of communities and even the whole world... The change could be phenomenal.
A good cause can become a good business with good people who truly believe in it.
