The late Peter Druker once commented that most of the interesting work would be in the social sector, as that is where the unresolved problems rest. I wonder if he fully anticipated how non-profits are not the only enterprises focused on social issues. Many for-profit companies are headed there as well.
Google is enabling educational advances in very poor areas and we all witnessed how Twitter gave voice to Iranian protesters. Donna Fenn, best selling author of Alpha Dogs and Upstarts and contributing writer for Inc. comments that business start-ups among young leaders is at all time high with Generation Y. And most of these, she shared at the recent Wisconsin Early Stage Symposium, are involved in social entrepreneurship in some way. HP and P&G are among the many Fortune 500 companies that are also finding market opportunities in social issues in developing nations.
We used to divide the world easily into two parts: for-profits who generated wealth and income by creating value for their customers and non-profits who addressed social issues through donations, grants and to a far lesser extent earned income. Today, there is a blurring between the segments in all but the tax code.
I’d argue that for-profits have always been for social benefit–a strong economy has been the best anti-poverty strategy to date. It is only with the maturing of so many categories that product innovation because increasingly about “frills” and less about social need. The need for greater energy efficiency finally enables more products to solve important unresolved problems e.g., airline engines that use less fuel, not just save us time getting to the UK.
We don’t have enough volunteers or grant money to take on the many challenges facing our communities–so let’s innovate to find entirely new approaches, as entrepreneurs do. In a recent talk I gave at University of Wisconsin Madison’s Communiversity (a coming together of non-profits and UW students and faculty through the UW Madison School of Human Ecology), I challenge non-profits to find earned income approaches to generating needed resources. I also encourage them to find entirely new ways to solve social problems. One example I give is to stop trying to fix the poor school performance of low-income children solely through classroom volunteers. Team up with gaming companies, University experts and cell-phone companies to identify technology-based solutions to close learning gaps. The solutions would be more scalable and exportable to other communities (for a profit) than our current use of volunteers in the classroom who increasingly look they are holding their fingers in the growing cracks of a dam to prevent flooding.
For profits should remember that Generation X and Y want to work for companies doing meaningful work and that consumers across all ages prefer buying from the company that supports important causes when everything else is equal. Committing to causes is therefore vital if there is at least one other company out after your customers or talent. Figuring out how you bring your competencies to bear in solving social and environmental problems in ways that also generate great income is the win-win approach you should aim for. The anesthesia systems company I worked for made anesthesia dramatically safer for patients—we made the world better and we grew our market share and market size dramatically. Shareholders, hospital and physician customers, patients and their families, and employees all benefited.
The biggest mistake all too many leaders make is leaving their business model strategy decisions to history, patterns set by others in your industry or serendipity. Resources in the “new normal” economy will fall short of need in either sector if you and your leadership team ignore business model innovation.
What is your for-profit company doing to make the world a better place? What is your non-profit enterprise doing to break through the constraints of donations to find new resources for your worthy aim?
Kay Plantes, Ph.D., is an MIT-trained economist, business strategy consultant, columnist and author with expertise in business model innovation, strategic leadership and smart economic policies. She resides in Madison, Wis., and Oslo, Norway. For additional information, visit www.plantescompany.com.
