Social Business – making business work for social outcomes

On a beautiful Sunday afternoon, only a week after my last post, the motorbike is in for a service and so am I. It must be this schizophrenic weather, or too much hard work (that’s the version I will use at work), but I’ve got myself a good bug. It’s OK, I choose to see it as a positive, it allows me to catch up on years’ worth of Seinfeld episodes and to focus once again on my blog. Not a bad trade off.

About two weeks ago, my friend and colleague Jason McDermott (@jasonmcdermott), asked me be a guest contributor for his new media enterprise: TKLR. I know we have already established how awesome Jason is, and how awesome TKLR is, but I thought it was worth bringing up again, because not least, Andre Lovatt, CEO of the Arts Centre Christchurch, features in this week’s updates. Make sure you listen to the interview, Andre is a person whom I admire a whole lot and he’s really understood the power of leadership. Technical issues can be surmounted, even money problems can be surmounted, but neither are worth solving if you can’t bring people along with you.

Anyway, going back to last week’s updates on TKLR, you will find my article called ‘If only the French had a word for intrapreneur‘, a lame pun but also a nod to George W. Bush’s timeless remark. I am a big fan of ‘bushisms’, that is the only thing I can honestly say we will miss from that era of American politics though. Have a look at the article as well – and I don’t intend to rehash it here – but it is really about exploring the intersection between big business and entrepreneurial culture. I’ve been somewhat of an ‘intrapreneur’ over the past few years at Arup, but what I want to focus on today is an increasing awareness (on my part) of what entrepreneurship really is.

Within the context of entrepreneurship, I am particularly interested in people who take the plunge not only because they’re interested in large financial gains, but people who do it because they think it is the right thing to do. And if their idea, product, service or whatever has traction, then they make a buck but society benefits as well.

Let me start with two examples where the world of fashion has ventured into social business. As I mentioned in my opening paragraph for TKLR, my recent (or not-so-recent) trip to New York really opened me up to a new level of awareness as to where, how and who the people behind the much documented start-up movement are. I use the word movement deliberately, because it really gathers under its banner a whole range of people and ‘diverse’ is really the best way to describe it.

The reason I got up close and personal with it is because two of my friends, one from high school, the other from grad school, had left the ranks of full-time employment to give a particular enterprise a red hot go. I am not in a position to comment as to whether these have been overwhelming successes (and admittedly that would have to depend on what constitutes a success in your eyes), but it is fair to say that, in both cases, the businesses have been picking up traction and allowing my friends to devote all of their time to it, without needing supplementary employment.

The other commonality is that both business are focused on selling a product that raises a certain social awareness through the sharing of proceeds with not-for-profits or humanitarian working groups in the field. It’s an interesting tack, but undeniably, the fact that the purchase of the items is somehow linked to the improvement of someone’s life has got to be a winning sales proposition. It’s exactly the same proposition from the Fair Trade craze that broke out in the early 2000s and that Starbucks and others are still trading off of. Except that in these instances, I am fairly certain that the re-investment into the communities is fairly direct and the link between the disadvantaged community and the product are fairly obvious to see.

The first of these businesses is Origins Style x Nasozi, a home furnishing business that uses West African wax prints to make modern urban soft furnishings. I find this one interesting for many reasons, but mainly because the value proposition is that the fabrics are authentic and important from Senegal and the sowing is done in Brooklyn, in my friend Nasozi’s living room. One might question how scaleable something like this is, but for the time being, Nasozi’s been selling these online via Etsy and in person via DeKalb Markets and other outlets for a couple of years now. She’s really tapping into that emerging maker movement that helped sales platforms like Etsy really take off.

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The fabrics really speak for themselves, but as Nasozi puts in, she’s looking to normalise the ethnic and inject it into the NYC life. Also, even though she hasn’t publicised it yet, she is looking at channels to continue to support the women that make these wax print fabrics in Senegal beyond just paying them for their wares. If she is to be successful in this enterprise, she wants all women who supported it to share in that success as well.

The second business is similar yet different and relies solely on a Laotian community to find metal scrap in the post Vietnam war fields of Laos and turn them into easy to wear yet impactful jewellery for the socially minded hipster. Article 22 is the brainchild of Elisabeth Suda and refers to the eponym article in the Universal Declaration of Human Rights:

“EVERYONE, AS A MEMBER OF SOCIETY, has the right to social security and is entitled to realization, through NATIONAL EFFORT andINTERNATIONAL CO-OPERATION and in accordance with the organization and resources of each State, of the ECONOMIC, SOCIAL, andCULTURAL RIGHTS INDISPENSABLE FOR HIS DIGNITY and the FREE DEVELOPMENT OF HIS PERSONALITY. ”

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‘Peace Bomb’ is their laotian product, the purpose of which is to tell the story of the metal that has been used for the bracelets and to use the international marketplace as another channel for the cultural expression of the local communities and non-government organisations that brought this product about. The artisan communities of Laos that produced the bracelet are portrayed as a partner in bringing these products to Western cities and, it would be fair to assume, that they also see part of the profits as well.
Whilst I am in awe of these friends of mine for taking the plunge and putting their blood, sweat and tears into something they can ethically and socially get behind, I think it is fair to say that the ethical product has been done to death. What really excites me is the next wave of innovation, the ethical service and even more so, the ethical financial product.
Dan Hill once relayed to me a conversation he had once with his newly appointed financial adviser who unashamedly declared that on the whole, ethical funds tend to perform less well that non-ethical ones. And that says it all, doesn’t it. But recently, when I sat down to dinner at Toko as a Friend of Portable Studios, I had no idea I was sitting next to the man who was still willing to take on the challenge of making ethical financial products work. It takes an idiot like me not to recognise or twig that I was sitting next to Simon Sheikh, former Managing Director of GetUp!, but in a sense my ignorance served me well. I could ask completely candid questions and got some great answers.
Amongst other things, Simon is now focusing of creating an ethical Super fund. For those who are not in Australia, superannuation schemes are financial retirement products that are mandated by law and allow for people to contribute and manage their own retirement money. Annalie Killian, AMP’s famous Catalyst for Magic, once told me that AMP’s research shows that young people heavily discount their future and are therefore are not able to trade off the gratification of a dollar spent now against the knowledge that that dollar will grow by multiples if saved and invested.
In a lot of ways, the discounting of the future goes hand in hand with discounting the importance of the environment: if the benefits cannot be reaped right away, it is not worth investing in? The whole science of behaviour change has focused on getting the cause and effect of decisions that impact the environment as plain as possible to see so that these can be understood as cause and effect. Let me tell you, there is still a lot of work to be done there.
Simon’s vision is that ultimately, in a peak oil future, ethical and environmentally sustainable companies will be worth more and the investment via super or other means just MUST pay off. There is no other way it can go. And to some extent, I agree.
This is a classic example where there has been an alignment between the financial objective and the sustainability objective and the more often these two can be aligned the faster we will move to an economy that is based on what the planet can really afford.
Simon is not the only person pioneering in this space. Although completely different in its premise, James Moody has created TuShare, a company that seeks to match unwanted ‘stuff’ with people who want that unwanted ‘stuff’. It sounds like another version of eBay, but the real innovation behind TuShare is an entrenched belief that services, and not products, are an incredibly efficient way to run our economy, not least because the incentives for both parties, the buyer and the seller, is to minimise cost and therefore minimise resource use. It’s a bold idea and TuShare is more of a social innovation rather than a social business but it’s pointing in the right direction.
In the bigger and badder part of town, banks are also experimenting with such financial products. Social Impact Bonds (click here for good overview in Harvard Magazine) are bonds created to deliver on a social outcome that usually has a high cost to society and therefore to the government. Things like homelessness, or obesity. The proposition is framed around an ‘efficiency’ mantra for government: how can we have a greater impact for less money? It may seem a little mechanistic, but again, as a proposition it aligns motivations for involvement and therefore stands a good chance at succeeding. I know that many banks in Australia are looking into this model but I don’t have any definitive results to report back on. Something to keep an eye on.
So to conclude, I think it is fair to say that there is an interesting groundswell of businesses whose aims is to make money, or to save money, but to do so in a way that makes sense from a social and environmental sustainability point of view. In my view, this shouldn’t be innovative, it should just be, but so many people underestimate the market signals their purchasing behaviour sends (myself included). Let’s hope the start-up wave brings a wave of possibility for Social Business.
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