The New Table Stakes of Business

Back when I was doing my Masters, some of my classmates and I had the privilege of taking part in the Hult Prize competition. Looking back, it was an incredibly eye-opening opportunity to realize how critical social entrepreneurship is for the future. Just looking at the world today, despite our magnificent advancements in technology and infrastructure, problems around climate change, poverty, and refugees – to name a handful of the multitude of these problems – are prevalent.

Fortunately, problems can be reframed as opportunities that serve as avenues of addressing an unmet market need. It’s for this reason, businesses are stepping up to the plate, assuming responsibility, and providing innovative, sustainable, and comprehensive solutions to these problems in ways charities and not for profits cannot.

Entrepreneurship That’s Changing the World

I briefly touched on social entrepreneurship in my second post, discussing how creating both economic and social value simultaneously are central to the operation of the business. One of the aspects that makes discussing social entrepreneurship so exciting is the contention people have with what defines a social problem.

For example, my good friends over at Spur Deal have developed a platform to aid restaurants in achieving steady revenue during non-peak hours by issuing timed deals to consumers. An argument can be made that providing students with affordable meal options, generating a spike in revenue for local business owners, or contributing to the economy, in general, could be spun off as social causes. Though these assertions can be made, intuitively, it would be unjust to par them in the same category as Curiato, a company dedicated to the eradication of bed sores.

Defining “Social”

As alluded to above, matters get sticky when trying to pinpoint what is classified as a social problem due to the inquisition over the domain of the word ‘social’.  Even I had a hard time identifying differentiation criteria and it’s for this reason, I owe a huge thank you to my former social entrepreneurship professor, Nada Basir, who provided me with some clarity on the matter. Nada, if you’re reading this, thank you! Also, finish Homo Deus so we can chat about it!

Essentially, social problems, are those that affect a population due to circumstance rather than choice, impact a chunk of society or all of it, and are interrelated to a series of other problems. Let’s deconstruct each of these with one of our examples above.

In the case of Curiato, contracting bedsores is not an individuals choice. They develop due to stifled mobility as a result of another illness. The breadth of their tribulations affect a large majority of terminally ill individuals in hospitals and the ramifications of bedsores permeate beyond individual suffering; they cascade through multiple levels of a system. For example, contraction of the disease demands more resources from the healthcare system, prevents the patient from returning to work, and due to the associated casualties, can lead to financial, emotional, and social distress for families.

In contrast, though food vendors do not choose to have non-peak hours, they do set the price of their goods. Now if Spur Deal can solicit customers to purchase a good while still offering businesses a positive profit margin, it suggests that the good is elastic and that customers are sensitive to its price. Therefore, this is a conscious decision made by business owners; they can choose to lower the cost but do not. Though a vast majority of restaurants may face this challenge, it’s simply a function of life that we eat at specified times. Finally, the layers of impact this problem has is limited to the business owners and customers, contrary to the several stakeholders impacted by bedsores.

Alternate Avenues

While a social problem serves as the nucleus of social entrepreneurship, influencing all aspects of the business model, it does not mean that traditional, for-profit businesses are completely out of the picture with respects to addressing world issues. Though the metrics of success will be different, they can engage in corporate social responsibility (CSR) practices. According to the World Business Council for Sustainable Development, CSR is defined as:

“The continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce, and their families, as well as the local community and society at large.”

Crucial to this concept is that CSR activities are voluntary initiatives set out by a business. Ergo, the decision to make charitable donations, invest in clean energy, and take up a triple bottom line approach are actions a business can take, but are not mandatory in delivering their value proposition to their customers. That being said, consumers continue to expect more from the companies they interact with. If they are not proactive, they may rue their lack of goodwill and transparency as customers will snuff out grotesque business practices. Case in point: Volkswagon. By the end of 2015, their stock had lost nearly 62% of its value due to their emissions scandal.

Why This Matters

If we examine the workforce, Millennials are now the dominant demographic in the United States. Though they may have a bad reputation in the workplace for being narcissistic, entitled, and lazy, one glowingly positive characteristic of this generation is the importance they place on social responsibility. Ninety-seven percent of Millennials seek out jobs that enable them to have an impact on the world. Even in comparison to others, this cohort exhibits a tendency to favor socially conscious organizations, as 75% of Millennials would be willing to take a pay cut to work for a socially responsible company compared to the US average of 55%. Further supporting this is that 64% won’t take a job from a company that doesn’t have a strong CSR policy, as opposed to the American consensus of 51%. Finally, 83% would be more loyal to a company that helps them contribute to social and environmental issues Vs. the US average of 70%.

Not only does our world demand businesses to become increasingly more social through their policies and solutions, but the labor force does also. For a generation that has been slandered with so much negative management material, the key to their productivity, happiness, and motivation – which in turn will yield success for the organizations they work for, set a new standard of business, and improve the outlook of our future – lies in but one word: social.

Key Takeaway: Social entrepreneurship is where a business develops economic and social value simultaneously. For traditional for-profit businesses, developing a strong corporate social responsibility policy is how positive impact can be achieved. Both are key ways to galvanize the new dominant demographic in our workforce.