What is social business and why does it matter?

Something profound is happening to the way some of us do business – so fundamental that the old left and right might even seek to claim it as their own but in truth it happened despite them, and certainly doesn’t need them. And in any case it’s a phenomenon that doesn’t conform to stereotypes or sectors but simply stands to change the world through business means.

Its bottom line is measured by the impact it has socially, somewhat disguising the efficiency and focus that is required to be truly successful, which is something often lacking from sectors that claim to be doing good. It appeals to people’s hearts in the sustainable good that flows; it appeals to their heads for the professionalism, business acumen, leadership and responsibility it demands. This way of doing business is what many call social enterprise or social business; it is not only life changing to those who benefit from its focus but also those who work to keep it so.

Jamie Oliver’s fifteen restaurants are a relatively recent but nevertheless fabulous addition to the social business world. Jamie’s vision is to inspire disadvantaged young people, who benefit from his training, alongside the aspirations it gives those who watch him on TV and the culinary delights for anyone lucky enough to enjoy eating at his restaurants.

The inspiration, the reach and the impact of fifteen is probably greater than any Government project that aspires to do the same thing and spends a lot of public money in the process of doing so. But the intriguing proposition is that this is not some fluffy good cause either, it’s a tough, focused social business, competing in one of the most cut throat dynamic parts of the economy. And it is sustainable largely because it is not seeking charitable sympathy – it certainly isn’t a pity purchase at $200 a pop - it competes for its survival with other top restaurants and holds its head up high because it is very good.

It also changes lives and when a young adult in Melbourne is heading for a life of substance abuse and long term unemployment turns round and says ‘I ain’t no one no more’, the magic of the social enterprise really shines through.

An international standard bearer for social enterprise is Nobel Laureate Professor Yunus from Bangladesh who has set out through Grameen the highly challenging aim of achieving a poverty free world. The Grameen bank now gives micro credit to one in three Bangladeshi’s, people who would otherwise be denied opportunities to better themselves and their families and in the past would have fallen victim to loan sharks had they tried.

But also Yunus provides a really enticing case study for how social enterprise can grow and infect other sectors with the social business bug. Last year I went to Bangladesh to see how social enterprises can be galvanised by effective partnerships. The one that really caught my eye was a partnership with Danone, the yoghurt (and much else) company.

The journey started when Yunus outlined to Franck Riboud, Chairman of Danone, that Danone could help to transform the health of the world’s poorest kids by doing what they do every day. Yunus suggested that for Bangladeshi kids who are malnourished, Danone could produce a fortified yoghurt with all the missing nutrients. Yunus also insisted that the yoghurt be affordable, be produced in tiny but sustainable factories, using milk from villagers who had single cows (often purchased with Grameen micro credit), and ideally the pot should be edible, because why should the poor pay for something they can’t use?

It’s a challenge that Danone has invested considerable sums of money into and according to their employees it’s a project that knocks normal corporate social responsibility into a cocked hat. For Danone it has created a more innovative culture and when you have clever motivated people solving social problems they also unlock possibilities in other parts of the business as well. It has also been a factor in managing to recruit bright young people from university on their graduate schemes.

There are also amazing examples of new and established social enterprises in Australia as well. Take the fabulous initiative in the Pilbara, where an Indigenous Australian social enterprise produces diesel oil from waste cooking oil and then sells the diesel to Rio Tinto for use in their blasting process. It creates employment, cash to the local community as well as an environmental solution.

Or CHOICE where I am CEO. A pioneering social enterprise for 50 years – with a compelling social vision, that Australians become the most savvy and active consumers in the world. It has a successful business at the heart of delivering that vision, with 200,000 people paying a subscription membership for magazines and online digital services. For all those companies and decision makers that have been on the receiving end of criticism from CHOICE, it is made possible because our independent means allows us to have an independent mind. Speaking out without fear or favour is our hall mark and the social business model is our ticket to do that.

It is easy to evangelise about social business because it combines many of the good things about the private, public and not for profit sectors, and puts limits on the bad things. It has the private sector’s focus; discipline and service but not the unfulfilling desire to deliver value to shareholders at all costs. It has the public sectors ethos of delivering good public services but is liberated to do so with sufficient resource and focus, without meddling politicians getting in the way. It sets out to solve social problems, just like the not for profit world, but it is not vulnerable to the begging bowl mentality that has dogged that sector – it knows its value and will not sell out to unstable Government funding, private sector whims or one sided public giving.

Later today I will be speaking to a conference organised by Job Futures; many of the attendees will be social business leaders in communities across Australia. Job Futures is one of Australia’s leading social enterprises, with a purpose to find employment for Australia’s most disadvantaged job seekers, directly and indirectly employing 30,000 people and revenue of some $70 million.

And for many of us in the world of social business, we feel lucky to be able to do business differently. We set out with clear goals to make the world better; we seek to attract the best people and ideas from all sectors; we are often at the cutting edge of new ways of doing things. In many ways these reasons are why many of us are reluctant to talk of a social enterprise sector, because it is the very liberation of not being a part of any particular sector that makes it so special.

Nick Stace is presenting at The Job Futures National Conference on March 31, 2011 in Sydney.