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Wonder what the experts say about a social-social business

posted on Saturday, February 06, 2010 06:07 AM

Today I went looking for the definition of Social Business. As we launch into full swing with the 10thousandgirl Campaign my mind has been somewhat on a see saw, thinking around how to position the opportunity for commercial organisations to partner with us: one side, writing in a business sense; the other, from a social perspective.


Their agenda is business. Ours is social. We both know the concept of return is pivotal for sustainability.


And we both know a business these days needs to be commercial, as well as more and more …social-social.


In my mission, I found two definitions of social business. One talks of social-impact, the other of social-socialising.


I think we’re on a pretty good wicket, as we can really offer value across all three of their agendas.

We'll see how we go!

Here are the definitions.


1) social-impact

A social business is a non-loss, non-dividend company designed to address a social objective. The profits are used to expand the company’s reach and improve the product/service.

Social businesses can be defined as follows:

Social business is a cause-driven business. In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors. The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way. The impact of the business on people or environment, rather than the amount of profit made in a given period measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s .

In his book Creating a World without Poverty - Social Business and the Future of Capitalism, Professor Dr. Muhammad Yunus defines what a social business is and what it is not. It boils down to the following requirements:

1.social objectives: it needs to have positive social objectives (help comes from the altruistic social services that the business provides to the poor): e.g. health, education, poverty, environment or climate urgency
2.non-profit distribution: investors cannot take profits out of the enterprise as dividends.
A social business is driven to bring about change while pursuing sustainability. Although from a strictly profit-maximizing perspective it seems inappropriate to pursue a goal other than profit, social business’s aim is to achieve certain social and environmental goals.

Professor Dr. Muhammad Yunus, a key proponent of the social business model, argues that capitalism is too narrowly defined. The concept of the individual as being solely focused on profit maximizing ignores other aspects of life, religious, ethical, emotional, and political. Failures of this system to address vital needs, that are commonly regarded as market failures are actually conceptualization failures, i.e. failures to capture the essence of a human being in economic theory.


2) social-socialising


Anne McCrossan has delivered a cogent summary of social business design – in the sense of socialising and relationship focused.


Social business design sits at the intersection of organizational development and marketing, and can loosely be described as the practice of developing communities of engagement to develop ideas, activities and outputs for commercial and social benefit.
As organizations adopt the principles of social business design, intangible, soft assets like brand value, purpose, human resources, processes and capabilities come to the fore. Social business design is about engendering involvement and it’s inbound.
Slightly differently, marketing services and ‘broadcast’ media operate on the basis the message and transaction are the means to the end. Marketing services communicate primarily outbound.

Cited from http://metarand.com/2009/09/10/social-media-design-birth-of-a-new-industry/

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