The state of the social enterprise field
May 18th, 2010
Social enterprise, the effort to use business related activities to make a social impact, is at a cross roads.
I’m writing from theannual conference here in San Francisco. In terms of sheer numbers, it is the largest gathering of leaders of the social enterprise movement (more on what that term means below) and includes individuals from around the world. I came as a member of “the press” – I now am the proud owner of my first “press badge” – to cover the conference and provide you with some insight into the movement.
I’m a relative outsider to the movement and I decided to engage the conference deliberately with the eyes of a total novice. This post is meant to reflect that posture. The leaders of the movement (which have been unfailingly gracious and accomodating to me) may or may not dispute what follows as reflecting the reality on the inside. But what I’m trying to show is how the movement appears to those on the outside.
Defining the movement
When I asked various leaders to define “social enterprise” -- the very term that undergirds the organization and this conference -- 9 out of 10 times the answer began with a sheepish smile and the phrase, “Now, that’s a very good question…”
This response has nothing to do with my skills as a journalist and everything to do with the reality that this is a movement with a good deal of fuzziness.
The term “social enterprise” should not be confused with the term “social entrepreneur” which is the defining label here on the Social Edge. The latter label (which has quite a bit of fuzziness of its own) generally refers to someone starting any sort of new activity with social good in mind. “Social enterprise,” as best as I can summarize from interviews with leaders here, aims at a more restricted subset: it refers to formally organized operations that integrates social good with some sort of business oriented activity. "Mission meets marketplace" is the tagline.
Show me the money
Now, to the average person, the concept of the "marketplace" is rather meaningless if it is not about making money, and preferably more money than you spent. Regardless of what the IRS terms the enterprise, making a "profit" (whether it goes to private parties or just back to the enterprise) is the widely understood hallmark of a "marketplace" activity."
But at the conference, there was curiously little about making money - much less a profit. If the attendee list of the signature event of this movement is any indicator of self definition, then the movement is still overwhelmingly non profit in identity. The programming was also heavily skewed to nonprofit issues. Almost all the booth displays were from the nonprofit sector. I didn't see a single display that was based on the appeal, "Let us help you make more money!" Nothing on sales or sales training.
Put it this way: take a random nonprofit executive from somewhere in the country, set her down in this conference and she would have felt right at home. Take a random business executive from somewhere and plop her down in this conference and she would have felt lost.
A good example of this was found in all the different seminars on marketing, of which I sampled almost every one. For a business person, marketing is the lifeblood of their operation; and it has one overarching aim: get people to buy your product. Yet at the conference, every marketing seminar was essentially about marketing one’s social cause, not one’s product. I didn’t hear anything about the key elements of business marketing: understanding the competitive landscape, positioning one’s product in terms of features and pricing, building brand equity, choosing the right distribution channels, and more.
Someone at one of the seminars said “our cause is our product.” But if the movement is defined by the absolute equation of cause=product, then it just about loses its defining quality as a “business oriented activity.” It becomes indistinguishable from nonprofit activity in general.
"Mission" showed up en masse, but "marketplace" seems to have skipped the meeting.
Why the movement's identity matters
There is a great deal of creativity and talent happening in the movement. But the movement has to resolve the question of its identity: is social enterprise really "mission meets the marketplace" or is it "mission... with a bit of marketplace on the side?"
Without this clarity, the movement is fuzzy and outsiders like policy makers, funders, and media members sporting their first press badge don't grasp just what is so special about it.
And that would be a great shame. Right now, it seems to me that the notion of "mission meets the marketplace" is getting shaped by the corporate world and its desire to demonstrate some positive social impact. That’s a desirable development. But it is incomplete because that movement is essentially corporations bolting on social impact to an already constructed commercial structure and motivation. Left to them, social enterprise is going to mean "marketplace... with a bit of mission on the side."
McDonalds developing more environmental packaging, Microsoft donating laptops, or Goldman Sachs traders building Habitat of Humanity homes wearing sackcloth - all fine and good. But the world will be missing the kinds of creative ideas that I know were present at the conference. Ideas to develop a business model from scratch with Rawandan orphans as a key part of the supply chain - and make it profitable as well. Ideas to run concession stands at major sports stadiums by hiring at risk youth and use it as the context to get them to college.
But without a more precise and disciplined public identity, these ideas are going to face doors closing to their vision. They are going to find themselves approaching a local mayor with a desire to start doing social enterprise in his city, and then having the mayor reply, "Oh, we're already working on that with nonprofit X or corporation Y."
We need the Social Enterprise Allaince to lead the way in demonstrating that it is a new and different movement: not just another nonprofit and not just another corporation. If it can mark out that space, I'd love to meet up there.