A case for social business

Five years ago I was lucky enough to hear a Nobel laureate speak to a packed Sydney audience. And it changed the course of our company.

by | 12/09/2015

Five years ago I was lucky enough to hear a Nobel laureate speak to a packed Sydney audience. The Sydney Peace Foundation had the good foresight not only to bring him back out to Sydney, but also to award him eight years before the Nobel Committee got their act together.

His name was Muhammad Yunus, and I’d just finished his book, Creating a World Without Poverty. Yunus had written in compelling terms about the capacity of business to orient itself for social purposes. It’s one thing to write a compelling case for a more conscious capitalism. It’s another thing entirely to see the scale of the network that the Grameen Foundation has established over the decades. From its microfinance roots to services in health and nutrition, Grameen has helped people lift themselves out of poverty.

Philanthropy has its limits, and we see in human development the huge gaps between what investment is needed, what funds are promised, and what ends up being delivered.

And yet, here was an organisation not tied to philanthropy but a sustainable revenue derived from delivering products and services that delivered positive social returns.

It was a pivotal moment.

I decided to embark on a process that would turn a small, modestly profitable for-profit creative studio into a non-profit, cause-driven social business. Problem being, as widespread as Yunus’ name had become, business advice, let alone business structures, weren’t exactly forthcoming.

I wanted to take a business that had worked with a number of charities in the past, to focus exclusively on projects for human development, sustainability and human rights.

We were a small team working on some great campaigns at the time, for some exciting companies. But like many in the creative (read advertising) industry, it felt like our efforts far too often went simply to selling one business over another, one smartphone over another. It felt, at times, a fairly purposeless pursuit.

We thought there might be space in the world for a creative studio that specialised in communicating issues of human rights, and making the case for a more sustainable, equitable future.

 

What exactly is a social business?

No one I talked to seemed to know what a social business was. And that’s fair enough.

We hear a lot about social enterprise, social ventures or other forms of orienting business for purpose. In fact, it’s quite confused territory. From social bonds to socialed-up CSR campaigns, stages are being filled with people talking about a plethora of ways that business can change the world.

If we wanted to be for great causes, surely we could just dedicate a portion of profits, or a percentage of revenue, and give that away. It’s true. And it’s a noble pursuit. Many of the world’s greatest companies make a lot of money, and give a lot of it away. Many of the worlds greatest philanthropists have made sizeable individual contributions to human progress.

But Yunus is more compelling still. Rather than business as usual, he defines the business itself as a sustainable, ongoing organisation that itself keeps on delivering social benefit.

Each day you’re in business, you’re working on projects that actively improve the lot of others, that advance our common cause.

Beyond an individual career, a business has the potential to outlast the founding team. Now I think every business should be evaluating their social impact and contributing positively to a better world. And there’s nothing wrong with profiting from hard-fought investment into businesses.

But for those who want to start businesses for social outcomes, I can’t think of a better way than to dedicate your collective work.

Limit your options, focus your business.

We eventually settled on a constitution that limited our company. We can’t pay dividends to shareholders, we can’t pay profits as bonuses to our staff, nor can we profit from the sale of the company. (Still thinking of working for us? We’re right here waiting.)

We’re profitable, but those profits are dedicated, purposed to the objects of the business. Why limit yourself? That was the first question from our lawyers. And it’s worth asking.

Going non-profit changed our company. But those limits cleared up the any ambiguity about the purposes of the company.

Focus is the greatest benefit which this structure brings. Our shareholders aren’t motivated by maximising their returns, our board is able to invest back into growing the company, and employees know that everyone’s in this together.

Social business isn’t a silver bullet for solving boardroom conflicts, or employee satisfaction. But every morning when our employees walk into the office, they know the social contract. That each day, whatever the current deadline, we’ll spend it working for incredible people who fight for a more just and equal world.