Social enterprise: A new model for business innovation

We have been hearing about the need for business innovation from leaders in all sectors, from President Obama in his State of the Union speech to Commissioner Daniel Esty of Connecticut's new Department of Energy and Environmental Protection Agency, who spoke before the Hartford Metro Alliance Partners' Economic Development Council on the first of this month. I couldn't agree more.

But after talking about the need for innovation what we are most likely to hear is a plan for providing economic incentives to spur that innovation. The thinking is that if we give the private sector enough incentives, they will innovate for us. It's like the old Skinner Box--reward the mouse with food pellets and it will run the maze.  But as Einstein suggested, problems can't be solved at the same level of thought used to create them. And since business is often the heart of the problems we face today, it seems wishful thinking to expect that business will solve them--especially if it's business as usual.

Fortunately there is a different business model that offers promise. It's called social enterprise, and it's really not that new. Think no further than Newman's Own--Paul Newman's line of food products from spaghetti sauce to lemonade--and you will see an example of a business that uses the power of the market to make positive social impact.  It's a simple concept. Business can be about making a contribution rather than simply a profit.  Profits are important of course, because without them a business cannot operate never mind accomplish anything positive. But profits can be a means to achieve a more satisfying, sustainable goal rather than the be-all and end-all.

The idea of social enterprise is simple, but its impact can be profound.  We've all grown up assuming that the only reason for someone to run a business is to make wads of money. But there is really no reason why entrepreneurs couldn't set up shop in order to combat homelessness, say, or create cheap, clean energy. They need to make a living of course, but their driving motive could be to make a difference. For those of us who grew up with a business menu limited to one of two choices--commercial or nonprofit--this hybrid choice of social enterprise represents a paradigm shift. Could we really have an economy that embraces a goal of giving back as a legitimate reason for being in business rather than just an afterthought, or an extension of marketing? Why not? And increasingly this hybrid model is demonstrating itself to be viable, and full of potential.

Newman's Own is doing it. Grameen Bank and Ten Thousand Villages are doing it.  My own company, Walker Systems Support, is doing it, as are many others. We need to spur innovation at the very core of how we do business, and encouraging social enterprise would be a great place to start.

People still stuck in the Skinner Box say the only way to effect change is through economic incentives. Let me ask you this: What makes you volunteer, join teams, worship, raise families, adopt pets? It's not money. Think about the last time you left work feeling really good about your day.  Did it have anything to do with money?  Think of something you love to do.  Would you love it more if I paid you to do it?  Research has shown that you would actually enjoy it less.  Yet in the business world we've talked ourselves into believing what we know in our hearts is not true: That money alone counts.   Fortunately the research is showing that kids coming out of school today have seen enough of the damage done by business as usual and they want something different.  They understand we can't go on as we have been, pretending that there is an endless supply of natural resources.  They want to make a difference.  They want to be part of the solution.

So while I agree with Mr. Esty that we need innovation I don't think tax incentives are the first thing to think about.  Like mice in the Skinner Box, it may create a certain kind of behavior that looks like innovation, but as soon as you let up on the food pellets, the mouse stops. We're looking for a more lasting and profound change.  We need to encourage a different approach altogether.  And the really exciting thing about social enterprise?  It doesn't put a drain on tax revenues.  Social enterprise gets started out of passion and caring by people who want to fix the problems we face today.  They don't need an economic incentive to put their ideas to work, they just need the opportunity.  It also appeals to the young people who have been leaving the state in droves.  Create a state in which social enterprise can flourish and we retain and attract this vibrant talent pool.

So when you think innovation - think social enterprise.

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