In a recent survey of Stanford grads, 91% said they want to work for impactful companies — ones that make a difference — and would even take less money to do so.
A yearning for purpose coupled with the multitude of widespread problems we face today — globalization, environmental degradation and extreme poverty — has led to the rise of social entrepreneurship. This emerging small business trend is quickly gaining support and challenges the current business paradigm to shift to a more innovative solution that generates profits in addition to long-term, meaningful social change.
Why? Because it offers entrepreneurs a chance to make a difference and make money doing it. Because your customers want to support impactful businesses. And, most of all, because it’s a win-win system key to solving some of the problems we face on a global scale.
If you’re thinking: “Isn’t that what charities and nonprofits do?”
Well, when it comes to helping those in need, charities are good and nonprofits are better, but business is best.
Fulbright Professor Dayle Smith uses an old Chinese proverb to accurately describe the current vehicles of social change:
Charity: “Give a man a fish and you feed him for a day.”
Nonprofits: “Teach a man to fish and you feed him for a lifetime.”
Social Entrepreneurship: “Provide a man access to capital to create a sustainable fishing business at a fair rate of return and change the world.”
Now which one of those sounds best? I like the last one…
Creating Shared Value
The best social entrepreneurs create businesses with the “Triple Bottom Line” in mind.
People + Planet + Profit
Will my business make money? Will it help the environment? Will it create long-term change or help socially empower people? These are the types of questions social entrepreneurs ask before starting up. It takes a lot of time, dedication and creativity to come up with the innovative solutions necessary to be impactful.
Oliberté has done an amazing job of addressing the Triple Bottom Line. What started as a tiny footwear company with a few partnerships in Africa has grown to become a large brand that helps empower communities to overcome poverty. Instead of simply donating money and supplies to the people they serve, Oliberté provides fair jobs in their factories that ensure a stable monthly income and boost the local economy, which sets the community up for long-term success. They also source all their materials from local markets and are the world’s first Fair Trade Certified footwear manufacturing factory.
Let’s take a look at a few more important social enterprises that balance profit with purpose.
One of the first, real social enterprises, Grameen Bank micro-finances the rural poor of Bangladesh, providing loans, saving accounts and pension plans. Founded by Muhammad Yunus in 1983, the bank aims to increase self-sufficiency and decrease poverty by giving out small, low interest loans for local entrepreneurs to start their own businesses. The bank has brought in a net income of more than $10 million, while helping over 8.4 million people and landing Yunus a Nobel Prize along the way. Since its inception, Grameen Bank has inspired other organizations to microfinance and empower deprived entrepreneurs around the world.
The story of Toms shoes is an interesting one, chock-full of controversy. When they first launched, led by serial entrepreneur Blake Mycoskie, Toms had an attractively simple “One for One” business model: For every pair of shoes sold, a pair would be donated to someone in need. Toms exploded onto the scene and people were thrilled with the company’s purposeful mission.
However, despite the company’s good intentions, critics questioned Toms’ “One for One” business model and pondered if new shoes were what underserved people truly needed. People argued that the resources could be better used to solve the complex social problems occurring in these communities. The shoe company was even accused of potentially harming the communities they served by undercutting local producers and hurting the local economy with their charitable donations.
Since then, Toms has made significant strides to become much more socially aware and focus on solving long-term issues within the communities they serve.
Since its inception, Warby Parker has had a strong vision for its social mission. Operating on a similar “One for One” business model, the eyewear company obviously learned from Toms’ early social shortcomings. They’ve created a sustainable system in which micro-entrepreneurs are trained to give eye tests and sell glasses to their communities at affordable prices. Promoting self-sufficiency, alleviating poverty, and giving the gift of sight — all while turning a profit? Brilliant.
Not all social enterprises have to help people in some far-off developing country. There are plenty of amazing companies doing amazing things for people in need, right here in the U.S. Greyston Bakery is most known for providing Ben and Jerry’s Ice Cream (also a social enterprise) with the delicious brownies that are featured in a variety of their flavors. However, as CEO Mike Brady states in his TED Talk, Greyston focuses on two things: 1) Making high-quality, profitable products and 2) Helping to eradicate extreme poverty in their community of Yonkers, New York. They utilize an open hiring policy that provides opportunity to people who otherwise have nowhere else to find work. Everything is focused around creating positive change within the local community where they live and work.
Little Fish, Big Pond
So right about now, you may be thinking, “Well, most of these companies are larger, international companies that have the funding, resources and time to focus on becoming more socially impactful. My small business could never do something like this, right?”
LSTN is a small headphone company with a mission to change the world through the power of music. For every pair of headphones sold, LSTN helps restore hearing to someone in need as part of their “Giving Back. Amplified.” campaign. Despite having only a few full-time employees, in just two years, they’ve helped over 15,000 people around the world hear for the first time.
Bureo is a small company of three friends who turn abandoned fishnets, a major form of oceanic pollution, into awesome recycled skateboards. Recently backed by Patagonia (one of the original social enterprises), Bureo’s “Net Positiva” campaign cleans the ocean while supporting local Chilean coastal communities.
It’s inspiring to see small businesses devoting valuable time, money and resources towards good causes. There are millions of ways to make a difference — all it takes is a little bit of creativity and some serious commitment.
Looking to the Future
At this point, social entrepreneurship is much more than just a trend; it’s a full-on movement proven by thousands of companies… and it’s here to stay. The only uncertainty lies within our will to change. Do we continue forward with only personal gain and profits on our minds? Or do we try to redefine how business is done, change the world and still turn a profit?
The pioneers of social entrepreneurship have laid down the foundation for a massive paradigm shift. Now it’s up to the next generation of innovators to pick up where they left off and create a new business environment where success is no longer measured by who makes the most, but by who does the most.
What do you think? Share your thoughts in the comment section below.