Social Entrepreneurs: Creating the future of business?

Social enterprise: exciting, impactful and the future of business.

| 6 min read

We are all aware of problems in the world around us – entrenched poverty, increasing inequality, environmental degradation – and traditionally we’ve turned to philanthropy and charity to address these challenges. However, centuries of charitable work have not solved poverty; decades of conservation work have not protected the environment. Social entrepreneurs are forging another path: taking the methods and mechanisms of mainstream business and adapting them to drive social and environmental change. At the Cambridge Centre for Social Innovation at Cambridge Judge Business School we work alongside social entrepreneurs from all walks of life, from inside and outside the university, to help them grow their ventures and their impact.

On a daily basis we interact with businesses, many of us spend our working lives within businesses and businesses have more freedom in how they operate than either the public or voluntary sectors. Business is powerful. Social entrepreneurs use the tools of business and the power of markets but adapt their models to prioritise social and environmental outcomes. This not an entirely new phenomenon: some entrepreneurs have long seen opportunities to do good with business. For instance, in the 19th Century many poor women working in match factories suffered from a severe condition known as ‘phossy jaw’ brought on by their contact with yellow phosphorous. William Booth, founder of the Salvation Army, opened a factory making matches with the safer, but more expensive, red phosphorous and improved conditions for workers. This business traded on its social impact, calling the matches ‘Lights in Darkest England’. It thrived and, in time, yellow phosphorous was banned.

Social entrepreneurship has begun to flourish again over the last couple of decades as the challenges brought about by neo-liberalism have become more apparent. Students across at our business school see social innovation as an exciting field and many have ambitions to build socially aware careers. They see that simply building a business without trying to address the societal issues within which businesses are situated is no longer a sustainable or sensible endeavour.

So, what sort of things do social enterprises do? Some sell products directly to consumers. For instance, Harry Specters sells award-winning luxury chocolate, and YOU Underwear sells organic cotton underwear. While these may seem at surface level to be mainstream commercial enterprises, both have embedded social impact into the heart of their business. Harry Specters exclusively employs people with autism to make their chocolates and run their factory, creating employment and work experience opportunities for a particularly disadvantaged group of people. YOU Underwear makes underwear out of organic cotton – which is significantly less harmful to the environment than non-organic cotton. They also create jobs for women in India, donate underwear to women and children in need on a ‘buy one give two’ model, and are careful to avoid all plastic throughout their supply chain. Both businesses demonstrate there is a better way of doing business, and that social enterprises can be viable – customers will pay for quality products delivered in a socially impactful manner.

Whilst underwear and chocolate are both low tech, there are many social entrepreneurs working at the cutting edge of technology, particularly at the interface between health and tech. For instance PlayPhysio is developing a medical device which helps young people with cystic fibrosis to better perform the breathing physiotherapy exercises that they need to undertake regularly, whilst LatchAid is using interactive 3D animations to help more mums to breastfeed more successfully. Social entrepreneurs are arguably particularly well-placed to undertake innovation in health where trust is important, and where there is often public concern about the motivations of big businesses. Successful social ventures in health can be the result of a patient, a parent, or an NHS clinician seeing a problem and wanting to solve it. Innovation is notoriously difficult within the NHS system, and a social enterprise approach is a good fit for the motivations of such entrepreneurs.

Some ventures explicitly support local communities in the UK. For instance, CommunitySparx has created a platform to enable the better running of community car share schemes. This facilitates the kind of in-community volunteering that has profound implications for the wellbeing of the places we live in, particularly for older and more vulnerable people. Meanwhile African Origin Oils is benefitting communities in Southern Africa by producing a natural oil from a crop that grows wild in an area of the Kalahari which is no longer cultivatable due to climate change and where employment opportunities have constricted significantly.

At the Cambridge Centre for Social Innovation we are conscious that conventional business wisdom leans towards a ‘bigger is better’ mentality. And there are a lot of big problems to solve in the world! However, different sized ventures can make different kinds of impact, and large organisations often make compromises to reach scale. Our view is that the world is not necessarily best served by a small number of large businesses. We are interested in understanding the ‘right’ size for the social enterprises we work with and in celebrating the small and the local, alongside the larger and more scalable.

Social entrepreneurs are running businesses, not charities, and they create models not reliant on philanthropy. The variety in the products, services and business models operated by social entrepreneurs also leads them to have different legal structures for their businesses and to raise finance in different ways. Of the ventures mentioned here, some are ‘for-profit’, with their social purpose enshrined in their legal structure while retaining the ability to pay shareholders some return; others have ‘not-for-private-profit’ structures where shareholders cannot receive a return. Some have or will raise money through equity investment, some through loans – but all will drive revenue through sales to customers.

Social entrepreneurs run organisations that vary in business model and geographic focus, in scale and ambition, in customer types and in the legal structures that underpin them. What holds them together is a belief that business can be done differently, it can be done in a way that is beneficial to more people and the planet.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

Social Entrepreneurs: Creating the future of business?

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