Wednesday
May 18
2011

Marcio Jappe

Running a Social Business: More Rollercoaster Than Mountain Climb

Editor’s Note: This post first appeared in NextBillion Brasil. The original version in Portuguese is here.

Five years ago, I began to work and learn with social businesses, alongside the development of the concept itself and the emergence of the first models of this nature in Brazil. With this article, I intend to share some of the day-to-day lessons of working with social businesses.

Beginning, Making it Happen and Being Open to Learn through Experience

Intellectually conceiving a business model that combines profitability and positive social impact through its core activity and goal is in itself a huge challenge. What is there, then, to say about taking it from the “ideal” field (that of ideas and ideals) and making it happen? Despite the almost paralyzing effect of this reflection, daily and directly supporting social Businesses shows that taking the first step, regardless of how trivial and obvious it might seem, already entails a large portion of success in itself.

Social susinesses whose teams are engaged in rapid, intense and frequent reflection-action-learning cycles obtain significantly better results than those who concentrate on intellectually perfect concepts of plans, systems and tools, who prefer to wait for “the perfect moment” for implementation/action. This idleness yields few lessons and, thus, few improvements. “Before” and “let’s do, let’s learn and let’s do again” tend to be better than “later” and “still not the perfect time/moment/system/tool.”

Excellent Businesses Don’t Need Excellent Models: The Difference is in the attitude (and Track Record) of the Team and the Leader-Entrepreneur

Although at first glance this subtitle sounds like bit of hyperbole, nothing surpasses following social businesses daily to reveal what’s obvious (and also when it’s not so obvious.) Ever since I studied management, I used to think that an excellent model was essential for a successful business, but as I observed the development of different social businesses, today I believe that an optimum model may still be very helpful, but the attitude and track record of the team and the entrepreneur/leader are even more important.

Social businesses with teams and entrepreneur-leaders with “shine,” focused on realization and genuinely open to (re)learn, develop faster than businesses with other apparently “rounder” models and more “formally” trained teams. The model evolves in response to daily learning, from the focus on action and, in the end, from the fact that, in minor teams (most usually in start-up Social Businesses), the ability to do and “learning by doing” make a huge difference. Without denying the importance for a business model that cares for the needs of the market with adequate product(s) and/or service(s), we can safely say that people who are doers, open to learn and focused on action make all the difference.

Sell, Sell, Sell = Cash Generation, Lessons, Improvement of Products and Services, Knowledge of the Market and Therefore More Sales and More Social Impact!

Especially when we think of a reality for large businesses and for traditional business administration training, we usually believe that in order to sell we need to conduct large amounts of intense market research, redesign the product or service countless times, and only then proceed to market launch. Working with limited resources and with markets that traditional research market companies do not fully know yet, as is the case of most social businesses with which I have worked, makes it necessary to refine this logic.

Selling is vital to generate cash, lessons, improvement and more sales. Selling allows direct contact with clients to understand impact on their lives, how they use and value products and services, and how it is possible to adjust them to their real needs. Selling is important for the survival and development of any business. Focusing on sales, being open to learn directly with clients and speedily translate new market knowledge into improvements and even more sales and impact, are more important than having a perfect product.

The Importance of ’Shaking’ Entrepreneurs and Their Teams

Some believe, mistakenly in my opinion, that a perfect metaphor to endeavoring is a huge mountain climb: lots of struggle and suffering, and reaching the summit is the way to recognition and “glory.” However, riding endlessly on a roller coaster seems a metaphor closer to reality: a constant cycle of ups and downs, fear and excitement, frustration and accomplishment, anxiety and relief.

Beliefs such as that of the climb may limit the development of social businesses. There are countless other examples, such as not relating financial performance to social impact, pricing according to cost and not to value, neglecting lessons from traditional businesses, lack of ambition for the growth of the business, and even a passion for the product that leads to ignoring client feedback for its improvement. From time to time, it is important to “shake” entrepreneurs, to challenge them to contemplate other perspectives and to observe facts that challenge their beliefs (even common sense), but which can help elevate their businesses to other planes.

And Now? What Else is There to Learn from Social Businesses?

What I wrote here is but a few of the lessons. There is still much to learn from directly working in the development of ventures that combine profit and social impact through their core activity and goals. One of the best things about working in a developing field is that new challenges and lessons seem endless! Share your lessons, so that we can write the next part of this dialog. What will the lessons be in “Part 2”?

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Categories
Entrepreneurship
Tags
Management, social enterprise