Social business ? The bigger, the better
Friday, April 18, 2008
Responsible companies can learn a lot from social entrepreneurs about selling to the poor, but first they must understand how their core business contributes to social and economic development.
Big companies coming to the field of “social entrepreneurship” for the first time could be forgiven for feeling a little lost.
While the term social entrepreneur has been around for about 30 years, few can agree on what it means. Add “social business” and “social innovation” to the mix and most company board members will be left scratching their heads.
The jargon is unfortunate. Put simply, social entrepreneurs are individuals that use entrepreneurial methods to achieve social change. They run social businesses, sometimes at a profit, that seek to address market failures. Their goals might include access to expensive or hard-to-get medicines, or sanitation and agricultural irrigation for the poor. And their ideas for creating affordable products for these underserved markets are examples of what is called social innovation.
Social entrepreneurs attract column inches because they offer a novel approach to tackling poverty that does not involve government or charity handouts. The classic social business is microfinance, the brainchild of Muhammad Yunus, who founded the Grameen Bank in Bangladesh in 1976. He proved that if you give poor women small loans to help start their own businesses, and work their way out of poverty, they will pay the money back.