License to Operate: Do Good by Doing Well

I believe that a company is founded in order to serve a cause, fix a need, and make a contribution all the while churning a profit. A company is created in order to improve the welfare of humanity, be it the owners and their families, employees, or society in a broad context. The end game of an enterprise isn’t necessarily only to make a profit, but profit does make all of the ends and aims possible. A profitable enterprise can be an engine for technological growth, innovation, social improvement, employment, and more. I like how Peter Drucker outlines this concept by saying, “Profit for a company is like oxygen for a person. If you don’t have enough of it, you’re out of the game. But if you think your life is about breathing, you’re really missing something.” Clearly, there’s much more to business than inflating the bottom line.

So where do social enterprises come into play? How can larger companies with a more ‘traditional’ business model learn from the new guys on the block that are out to solve society’s major problems through enterprise?

It all starts with a world-class product or service. The big international players have things like Coca-Cola, or extravagant shoes, or fancy watches, or luxury cars. The movers and shakers in the world of ‘social enterprise’ find significant areas of need and manufacture solutions. They are effectively creating a world-class product because it’s exactly what fixes somebody’s inconvenience/discomfort/pain. But a social mission alone will not do the trick, and a company of any size cannot simply rely on a few words written on their website. There is a necessity to generate a significant customer base in order to have significant impact, which means selling something good. It would be a mistake to look at a social mission as something that changes the way a business functions – but that mission does make a business all the more legitimate.

In classes on the subject we talk about the transition of large companies into more socially aware entities. Corporate Social Responsibility branches have been developed within companies, and some are even taking steps in integrating this social awareness across all functions of business. Maybe the social enterprises have helped to pave a way for business model adaptation, and large ‘traditional’ companies see merit in the notion that ‘you do good by doing well.’ In my opinion, companies are slowly moving full circle into what their founders had traditionally created them for – aiming to create jobs, develop employees, provide a return to shareholders, and better serve the communities and environment in which they function.

The landscape of earth is ever changing, and the landscape of business fluctuates too. With communication capabilities and technologies where they are today, the landscape of business is most definitely different than it was 20 years ago. We need the social innovators to continue to innovate; we need to continue to set high goals for companies to meet societal needs; and we must strive to close the gap between social enterprise and ‘traditional’ business so that one day the license to operate depends on more than just NI and ROI, but RTS (return to society) too.