I’m going to tell you a secret.
When Paul Polak and I co-wrote The Business Solution to Poverty, it was clear in my mind that the sort of business Paul and I were writing about was a social enterprise. In Paul’s view, not so much. In fact, Paul had somehow developed a strong aversion to the term. And I’m not sure the phrase “social enterprise” is to be found anywhere in the book except for a passing reference or two. That’s because Paul feels very strongly that the business solution to poverty is only feasible if we can raise substantial amounts of capital from the sorts of investors who sneer at the very idea of social enterprise—people who want their investments to generate handsome returns and will have nothing to do with any venture that smacks of humanitarian (read “philanthropic”) scruples.
Paul and I both believe that only business can bring an end to world poverty. It’s just that I believe the only sort of business that can accomplish that is social enterprise.
Let’s be clear: We’re not talking here about business as usual. The ventures that Paul and I write about are mission-driven businesses, single-mindedly focused on serving $2-a-day customers in such a way as to enable them to lift themselves out of poverty. These businesses must maintain an equally strong commitment to earning big profits; otherwise, they’ll fail to gain the large investments from mainstream investment funds and high-net-worth individuals that will enable them to go to scale. But if they don’t also manage their companies in a socially and environmentally responsible manner, they’re likely to find that they will be unable to do business at all in many places in the Global South. (If you think the marketplace in the US has become hostile to companies that exploit their workers and the environment, just take a look at India!) The leadership of this new breed of multinational companies must be committed to what we call stakeholder-centered management—which means that when its management makes business decisions, it takes into account the interests of all its stakeholders (customers, employees, contractors, communities, and the environment as well as its investors). You may be more comfortable thinking of that as pursuing the Triple Bottom Line. But Paul hates that phrase (and it therefore appears only in one place, and in passing, in our book).
In my view, a social enterprise is a venture that:
- is mission-driven, that is, dedicated above all to delivering a socially desirable product or service
- is committed to sustainability (another word Paul doesn’t like) in its broadest sense that encompasses not just environmental but also social justice concerns
- can be either a for-profit or a nonprofit organization, but if it is a for-profit company, it must be equally dedicated to fulfilling a social mission and to earning profits that make its continued operation and expansion possible
I’m well aware that others have different, and in some cases wildly different, definitions of the term social enterprise. Naturally, though, I think I’m right!
So, what do YOU think?