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Four Steps Toward A Greater Understanding Of Social Enterprise

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In Scotland last week there were two significant arrivals: the appearance of Abigail, the first storm to be named by the U.K.’s Met Office, and the visit by the actor George Clooney to an Edinburgh sandwich shop. Abigail quickly gave way to Barney, the next big autumn storm, while – after a rush of activity on Twitter, Instagram and the like - the excitement created by the appearance of the screen idol on the streets of the Scottish capital was quickly replaced by normality. However, it is unlikely that Social Bite, the sandwich shop in question, will ever be the same again. Suddenly, a business with a worthy purpose – the Edinburgh cafe and its sister outlets in Glasgow and Aberdeen donate all profits to good causes and a quarter of the business’s staff are formerly homeless people – is the toast of the nation. But Josh Littlejohn, who founded the business with Alice Thompson after meeting and being inspired by Nobel Peace Prize winner Prof Muhammad Yunus in 2011, appears adept at gaining attention. Back in 2013 he managed to attract Bill Clinton to speak at the Scottish Business Awards forum, an event he founded with the support of well-known Scottish business leaders, including Tom Hunter, Tom Farmer and Duncan Bannatyne.

Social Bite, with its emphasis on doing good rather than making money for its founders, is just one of many such enterprises springing up around the world. In fact, social enterprise is becoming an increasingly important part of business school programs. For example, Oxford University’s Said Business School has announced the latest winners of four scholarships to support individuals developing initiatives of this sort. Roger Martin, himself a business school academic and co-author of Getting Beyond Better (Harvard Business Review Press), said on a visit to London last week, there is a rising level of interest. He puts this down to a “need for more innovative solutions” in a world that is currently highly complicated. People, he adds, “gave up on” government’s ability to solve problems, while business – which had been seen by many as the answer – was still tainted by the financial crisis. There is a feeling that if the best aspects of government and business – the desire to improve society and enterprise – can be combined without being held back by more negative aspects – bureaucracy and an over-emphasis on profit – real progress might be made.

Martin and co-author Sally Osberg, president and CEO of the Skoll Foundation, which has invested in more than 100 ventures by social entrepreneurs and established the Skoll Centre for Social Entrepreneurship at Oxford’s Said school, see this as an exciting development that has the potential to carry on the improvements in society that in the past have tended to be the result of actions by either business – innovations such as the invention of electric light or railways – or government – civil rights reform, public health acts, access to education and the rest. Moreover, with a general acceptance that governments can no longer afford to solve all social issues, the need for a new approach is paramount. “It’s a way of thinking. I’m optimistic about it helping solve problems,” Osberg said at the London event organized by Thinkers50, at which she and Martin won the 2015 Social Enterprise Award.

However, it is increasingly obvious that it is not enough just to have a social conscience and decide to take a business-led approach to dealing with it. Many of today’s problems – whether in the developing world or in industrialized countries – are so complex that they require a whole new approach. Even where initiatives are in place to deal with problems – as with, for example, the U.K.’s National Health Service and welfare system – they suffer from being created in a different era and are arguably in need of a total rethink rather than the tinkering that is usually the case because the time horizons of politicians with elections to win can be as short as those of business leaders with shareholders’ interests to satisfy. To adopt the current vocabulary, successful social entrepreneurs are disrupters in that – as Arianna Huffington writes in her foreword to the book – “they focus their attention not just on the symptons of a social problem but on finding ways to address the root causes and bring about positive change on a grand scale in ways others can replicate”.

And this is where the book comes in. Martin is anxious not to give the impression that there is a formula for success, but he does suggest that there might be some ideas about what approaches might work best. This is sensible because if social enterprise is being seen as a key way of dealing with the world’s problems then it makes no sense for each entrepreneur to have to flounder around trying to work out what works if there are already a few examples they might follow. After all, conventional business school study is largely about learning from what has gone before.

The book’s origins lie in an article the authors wrote for the Stanford Social Innovation Review in 2007. That in turn was a response to their experience of sifting through the applications for the first Skoll Awards for Social Enterprise three years earlier. They realized they needed “a clearer definition of social entrepreneurship, a richer set of criteria for determining the profile for a social entrepreneur, and a way to distinguish between the qualities and achievements of different social entrepreneurs”, they write. A decade or so on, they have made some advances. The book sets out four stages that a social enterprise should go for in order to achieve real change.

  1. Understanding the World
  2. Envisioning a New Future
  3. Building a Model for Change
  4. Scaling the Solution

But Martin and Osberg admit that there are many – practical and theoretical – questions still to answer. Of particular importance, in their view, is the issue of what happens when the original leader leaves or the organization grows beyond its original focus. While noting that these can be difficult circumstances for conventional businesses, they say they are especially tricky for social enterprises because the personal stories of the founders are often crucial to the organizations they create and their values. Nevertheless, they are confident that there is now greater understanding of the factors for success in this increasingly important business sector. And that can only help society as a whole. “As more social entrepreneurs succeed in transforming injustice and righting the world, we all stand to benefit,” they write.