It sounds like yet another business buzz-word.
But before you tune out and disregard social entrepreneurship along with "paradigm shift" or "growth hacking" you might want to read on....
We are at the beginning of a business revolution that can be characterised by creativity, innovation and compassion. This revolution is the result of the ongoing global struggle with capitalism and free-market ideologies.
The global community has consistently struggled to make scalable progress to solving problems such as climate change, sanitation, obesity, poverty, income inequality, health and sustainability.
But, that is beginning to change with the global entrepreneurs that have discovered the power and profit in social entrepreneurship as the future economic and social driving force it is.
What's wrong with the current model?
Currently, the greater part of the global community employs a model of problem solving that harnesses non-government organisations (NGO's) and government organisations (GO's) as the primary driver behind change. Whilst they have been able to make some progress at the wheel, they have only been able to achieve incremental improvements.
If we as a global community want to make a significant impact and improve the world of the future, it is essential that we adapt the way we attempt to solve our problems. We need to alter our course to get to our destination, and put social entrepreneurs in the driver's seat.
5 Reasons Why Social Entrepreneurship is the Solution
1. NGO's and GO's cannot scale
NGO's and GO's lack the resources necessary to eradicate or greatly reduce the problems they are tackling. There is simply not enough tax revenue or charitable donations to make it possible.
2. Businesses create resources
Businesses by nature create resources when they are able to meet a need at a profit. Profit generation increases household incomes, which then increases people's ability to make charitable donations, and increases the tax contribution. All of which increase the availability of resources within the economy. It is only businesses that have this ability, other institutions only have the ability to consume or harness, not create resources.
3. Businesses can generate profit from doing good
Contrary to popular thought, businesses can in fact make a profit whilst pursuing a solution to a social problem. Conventional wisdom suggests there must be a trade-off between business seeking morally righteous outcomes and wanting to generate profit. It has made us believe that environmentally friendly production decreases profit margins; labour laws benefit employees at a cost to the business and that increasing the middle classes income will have to come out of big businesses pockets. This however, is far from the truth.
Environmentally conscious production can often reduce costs by increasing efficiency. Labour laws reduce illness and injuries, increase safety and job satisfaction, subsequently leading to increases in productivity and retention rates.
Finally, increasing the middle class income would stimulate consumer spending, stimulating growth and business. These are just some examples of the vast and cost efficient social solutions that pose an opportunity for businesses.
4. Social entrepreneurial solutions are self-sustaining
Unlike NGO's or GO's, social entrepreneur solutions can be self-sustaining; that is they generate profit and therefore can operate financially independent. NGO's have to rely on charitable donations, while GO's are dependent on income from taxes. As a result their ability to create change is dependent on the collection of taxes or donations received within a given period.
Social entrepreneurial businesses have the potential to generate profit that enables them to continually operate and infinitely scale through self-funding.
5. Customers and employees care
The newest generation breaking into the workforce and consumer markets are the Millennial's. More than any other generation previously, they care about where their products were made, the conditions of the employees who made them and where the inputs were sourced. They not only care about which companies they choose to support with their money, but also who they work for and what that company represents.
Getting there...
With all the benefits and opportunities of social entrepreneurship, it's almost baffling that more people aren't buying into the idea. But then you are reminded that since the Rockefellers and the Carnegies, businesses have been viewed as capitalist money-hungry vultures. They themselves have often felt that the responsibility of social problems does not fall on their shoulders. But, it's time for a paradigm shift! It's time for businesses to change how they view themselves and how people view them. Once accomplished, we can truly break down this divide and begin to see extraordinary social progress.
About Samantha Saunders
Samantha is a dedicated business professional who will graduate in December 2015 with a Bachelor of Commerce, majoring in International Business. She will be graduating with a diverse portfolio of entrepreneurial experience from San Diego State University, University of California Los Angeles and the University of Canberra. Currently interning at Lighthouse Business Innovation Centre, post-graduation she plans to begin work as a global entrepreneur helping starts ups, and eventually start her own consulting firm.
