If greed is the root cause of the current financial crisis (and others), then how can we cure ourselves of the root cause. This is the premise of a short editorial in the New York Times that underscores the importance of getting at the fundamental issue of our time.
Could an emerging social business (ref: social enterprise) sector become the antidote to this poison? As the editorial points out; the church, the government, and even popular sentiment has done nothing to curb the Gordon Gecko affliction. Imagine a world dominated by social business, where the most successful companies are providing either the most social return or the most return into a system supporting others whose social return is greater.
To be sure, an emerging or even dominant social business sector will not eradicate greed. But, it can marginalise both it and its effects on society. Furthermore, it could harness greed for good. Imagine a bunch of greedy financiers sitting around a table making decisions on how to improve their net worth while simultaneously improving the lives of others. Sound like Reaganite-trickle down economics? Think again. If these greedy financiers were operating social businesses, they would be operating triple bottom line companies. This would create a scenario where there performance was both rewarded handsomely and the social return was cared for.
Ok. Its utopian and some will find a way to exploit a social business framework to attain personal gain without social return. But, they would be modern day criminals and if there is one thing society has a good history of marginalising: it is criminals.
A couple of things need to happen;
1. Social business needs to get into the vernacular of common business people. This starts with the universities around the world. Make social business like economics 101, not a fringe indulgence of ivory towers.
2. The definition of social business by the press must expand. The press have a huge part to play in modern societies direction and it is only with their understanding of social business can we move the agenda forward.
3. The social business sector needs to get out of its own way. What? Yes, from where I stand, there is too much focus on puritanical ideologies and not enough enthusiasm for credible business ideas where the social return might not be immediately evident.
4. Compensation needs to be market driven. Too many social businesses are built upon the premise that you can get fantastic people for a pittance. This is a doomed approach. Greed is not going away, we simply need to harness it for good. And this harnessing may actually eradicate it.
The bad news; the sector is entrenched and the press is naïve for the most part.
The good news; credible players in the private sector with a longstanding tradition of social equity are now joining the ranks of social business. This includes the likes of Ronald Cohen (Second Bounce of the Ball) who built the largest venture capital firm in Europe (APAX) and has not turned his sites to social business.
Let’s push against our own glass box and invite others to join the movement.
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Can anyone show me a business that is NOT ’social’?
One that pays no-ones wages that provides no-one with identity and respect?
That meets no customer needs?
That creates nothing that is valued by anyone?
One that does nothing socially useful with any of its profits?
How can ‘credible business ideas’ not have an evident social return (create wealth, employment etc)? If they are going to screw up people and the planet then they are NOT credible!
It is nothing to do with legal structures, where profits go or being part of a ’social enteprise movement’. It is part of being a human being and being enterprising. How many billions was it that Gates popped into the Gates foundation? Rowntree, Kauffman, Carnegie, Ziff, Ford, Getty, Mellon, Packard, Wellcome, …
There is just ‘good’ business – ‘bad’ business and an awful lot of stuff somewhere in between.
Some businesses, and the social entrepreneurs behind them (there are no entrepreneurs who are not ’social’) start out ‘bad’ unsustainable, polluting, exploitative etc and become ‘good’.
Some that start out ‘good’ get trapped in never ending battles for survival and become little more than ‘miserable grant writers’.
And there is a whole lot of subjectivity in making the distinctions between good business and bad business.
There are lots of us who have set up ‘for profit’ businesses as the simplest and easiest way to drive forward our social missions – which we hold just as passionately as our ’social enteprise/not for profit distribution’ colleagues and get mightily chessed off at being not considered part of ‘the movement’.
Once we start to recognise that ENTERPRISE is a tremendous driving force for innovation and change; good and bad; not only in the the economy but also in societal and global development, and stop pretending that officially sanctioned, card carrying members of the ’social enteprise movement’ have a monopoly on ‘good’ we might start to get some traction on developing enterprise as a tool for progress.