Chuck Blakeman

Author, speaker, and founder of the Crankset Group.



Why Capitalists Need to Embrace Social Entrepreneurship

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This article was published on January 09, 2010. So far, 10 people have left their thoughts. Share your own thoughts.

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Some capitalists seem to be very threatened by the idea of social entrepreneurship either because it has the word social in it (too close to socialism for comfort), or because they think they’ve always been socially responsible and this new phrase does not recognize that. It’s not new and it’s not socialism, but it is different than what many capitalists practice.

Where I sit – I’m a capitalist who believes that social entrepreneurship (it’s not a great use of the word entrepreneur, but I’ll go with it) is the surest route to making more money. If we focus on the needs of others first, we will, over time, do better than those who put their own interests ahead of others. Greed does work in the short run, but it is never sustainable in the long run. I believe a majority of capitalists would agree.

Where I stand – Every dollar earned by anyone in a legal way does some social good by creating a ripple effect behind it from the spending it also creates throughout the economy. This is a real, tangible social benefit that is at the root of my fellow capitalist’s argument that they don’t need someone to tell them they need to become a social entrepreneur. The term irritates them because it implies the economic impact of their business doesn’t already create massive social good. And it absolutely does.

But the difference between the social effect of traditional capitalism and the social effect of social entrepreneurship is the difference between passive and active.

As a capitalist, I understand very well that I don’t have to do a thing beyond sell something, hire someone, make a profit and begin spending to create a significant wake of passive social good with my business. But how much more powerful could my impact be if I was actively and intentionally using my business to do good beyond the passive revenue effect?

The fact is that a large minority of business owners has always been intentional about both making money and making an impact in the world around them. A good segment of businesses have always been actively involved in non-profits, building businesses in disadvantaged neighborhoods, hiring people others wouldn’t, giving better benefits to their employees and looking for ways to use their businesses to do intentional acts of sustainable kindness.

But these are not the capitalists I know who have problems with the term “social entrepreneurship”. It’s largely those who are passively social via revenue production who have trouble with it.

I think the term has real positive value in recognizing those business owners who go beyond the clear and undeniable passive social benefits of just creating a healthy business. Those companies that are much more intentional and active in creating significance in the world around them should be recognized for going the extra mile. It might be clearer to call all business owners social entrepreneurs and just put the word passive or active in front of each as it fits, but that would introduce even more political correctness to an already overly corrected world.

All businesses are socially beneficial. I believe those that are socially intentional and active beyond the generation of revenue are much more likely to make a bigger impact and also more money. Even if a capitalist doesn’t have altruistic motivations, they should practice social entrepreneurship just so they can make more money. We’ll all be better off.

You either live in a world of abundance or a world of scarcity. Whichever one you choose affects every decision you make.

Live well by doing good.

Every capitalist business owner would make more money if they did.



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Jeff Brown

01/09/10

Hi Chuck,

You and I seem to have the same heart beat when it comes to business. It’s great to make money; but there should be something more than that. You hit it right on the nail Chuck. We do need to “Live well by doing good.”

Brilliant insight as usual. It’s great to be connected with you.

Jeff


Chuck

01/09/10

Jeff,

Nothing is by chance as you know – I look forward to meeting you in person some day soon!


Gary

01/09/10

Chuck:

The last two sentences of your post are timeless. Both should be proclaimed far and wide throughout this country.

Best regards,

Gary


Chuck

01/10/10

Thanks, Gary. That’s what we plan to do throughout the world, starting in London, Ireland, and Kenya next month, transforming one business owner at a time.


Brian Rants

01/11/10

Chuck,

As the Executive Director of The 1010 Project, and your partner in seeking to foster social entrepreneurship in Denver and Nairobi, I couldn’t agree more.

Not only is it potentially more rewarding financially, it is absolutely more rewarding personally. As Muhammad Yunus pointed out in “A World Without Poverty,” we aren’t one dimensional beings, simply motivated by profit. Or as you would say, “Making money isn’t a compelling vision.”

We are designed to do something significant…and social entrepreneurship is, for me, the definition of significance!

Brian Rants


Chuck

01/11/10

Thanks, Brian. You exemplified social entrepreneurship when you were running a for-profit business, too, which is just more evidence of how committed you are to living well by doing good!


Chuck

01/11/10

Does your definition imply that the venture is self sustaining economically without donations or subsidies? That would have to be part of the definition for me to avoid the specter of socialism.

I once received a newsletter about “Community Wealth”… it was about how local governments could steal the profits of business by new and creative socialism. They considered that “entrepreneurial”.

In my definition also, entrepreneurs create through creative service. At best, socialists only steal through coercive means.


Chuck

01/11/10

Chuck – yes, definitely I’m assuming the social entrepreneurship is a money-making, self-sustaining activity, quite different than a non-profit or a community based organization funded from the outside. It’s about hard-core business with an intent to make a significant impact in the world beyond the velocity of the dollar.


Adam Delp

01/12/10

Enjoying the discussion here related to people, profit, capitalism and social entrepreneurship models, descriptions, and definitions.

I’d like to share a couple of comments:

-Personally, I classify myself as a social capitalist.

-The 1010 Project employs the following definition of social entrepreneurship: “someone who recognizes a social problem and uses his or her own initiative to organize, create, and manage a venture to make positive social change.”

-The individual leaders of the community-based organizations that The 1010 Project partners with incorporate traditional social sector funding (gifts, grants, donations etc.) with profit-motivated (private sector-esque) ventures and enterprises (ie businesses, investments, etc.). In many respects, this is somewhat of a hybrid funding model that is absolutely within the realm of social entrepreneurship.

-From my perspective, nothing is permanently sustainable. Businesses succeed and fail and require risk. Social entrepreneurship is an ethos that is resilient at heart.

-My hope is that the worldview and principles of social entrepreneurship and social innovation would be applied responsibly and appropriately in ALL sectors: private, public, and social (aka nonprofit)

-I think we all could agree that “Live well by doing good.” is a tagline for the essence of social entrepreneurship.

-A couple of somewhat relevant reads:

Bill Gate explains what “creative capitalism” means to him
http://www.time.com/time/business/article/0,8599,1828069,00.html

Lindsay Clinton from Social Edge discusses briefly hybrid models, structures, and regulatory responses to social entrepreneurship
http://www.socialedge.org/discussions/business-models/the-social-and-commercial-two-step

2008 Social Capitalist Awards
http://www.fastcompany.com/social/2008/index.html


Chuck

01/14/10

Let me clarify the above comment – I expect to partner with some non-profits to kickstart businesses in places that would never get a loan. So I see nothing wrong with using donations or subsidies to get something started. It’s the dependency culture of continuing subsidy and lack of ownership that would keep such ventures from becoming social enterpreneurship.


Adam Delp

01/20/10

Enjoying the discussion here related to people, profit, capitalism and social entrepreneurship models, descriptions, and definitions.

I’d like to share a couple of comments:

-Personally, I classify myself as a social capitalist.

-The 1010 Project employs the following definition of social entrepreneurship: “someone who recognizes a social problem and uses his or her own initiative to organize, create, and manage a venture to make positive social change.”

-The individual leaders of the community-based organizations that The 1010 Project partners with incorporate traditional social sector funding (gifts, grants, donations etc.) with profit-motivated (private sector-esque) ventures and enterprises (ie businesses, investments, etc.). In many respects, this is somewhat of a hybrid funding model that is absolutely within the realm of social entrepreneurship.

-From my perspective, nothing is permanently sustainable. Businesses succeed and fail and require risk. Social entrepreneurship is an ethos that is resilient at heart.

-My hope is that the worldview and principles of social entrepreneurship and social innovation would be applied responsibly and appropriately in ALL sectors: private, public, and social (aka nonprofit)

-I think we all could agree that “Live well by doing good.” is a tagline for the essence of social entrepreneurship.

A couple of somewhat relevant reads:

Bill Gate explains what “creative capitalism” means to him
http://www.time.com/time/business/article/0,8599,1828069,00.html

Lindsay Clinton from Social Edge discusses briefly hybrid models, structures, and regulatory responses to social entrepreneurship
http://www.socialedge.org/discussions/business-models/the-social-and-commercial-two-step

2008 Social Capitalist Awards
http://www.fastcompany.com/social/2008/index.html


Chuck

01/20/10

Adam,

Thanks for the great comments and the relevant reads. I liked them all. Here’s another that has become a favorite for me:

http://consciouscapitalism.com/ – click on “resources” to see many of the leading books on the subject. I highly recommend Strong’s book “Be the Solution…”

I like Mackey’s “conscious capitalist” description simply because I think “social” and “entrepreneur” are both highly misunderstood and mis-used. Example “Social Networking” to describe never seeing some one face2face; just typing “at” them digitally like I’m doing right now. (Isn’t meeting a business associate at a golf course or a friend at a bar much more aptly described as social networking?). See another blog post rant on this here: http://bit.ly/3ogIdK

I don’t quite understand the use of the word “social” as synonymous with “non-profit”. Maybe you can help me with that. To me, social (as confusing as the word is to me), would mean doing good, preserving truth, or creating beauty – in general improving the world around us, which of course is the responsibility of all of us, whether non-profit, profit, family member, or part of a soccer team.

And entrepreneur is possibly the most mis-used word in business. By dictionary definition only a very small minority of people who start a business are entrepreneurs. The word is always understood as synonymous with building a business, so it might be an uphill struggle to re-define a word very commonly understood differently than organizing, creating, and managing a venture to make positive social change. I like it, just think we might be walking people backwards out of their known understanding of the word before we walk them forward into ours.

I especially like the use of the word “conscious” because it has much more intentionality embedded in the word than “social”.

It also clearly describes for me the difference between someone who does passive good by simply making money (which all legal exchange of money does to some degree or another), and someone who goes well beyond that to intentionally guide the making of money to deliberately do good, preserve truth, or create beauty.

All of these are small nuances that shouldn’t detract from “getting there” together, which is why I didn’t say much about the more commonly used “social entrepreneur” in writing this post. Although in the future I will likely use “conscious capitalist” more for myself. As long as it gets us to the same train station, who cares what we call it! :)


Jeanne Male

03/01/10

Chuck,

You’ve created some interesting discussion. In your own words, quite simply and elegantly: “To do well by doing good” IS “conscious capitalism”. It works, it’s powerful, and we need more of it!

So you keep beating the drum and I’ll walk in step behind your band clapping reverberating cymbals.


Chuck

03/03/10

Jeanne,

Thanks for your consistently supportive and instructive “voice” in the world around you!


Rich Anderson

05/11/10

Chuck

As always you are right on the mark and I really appreciate how you always bring clarity in a sometimes fuzzy world!

Rich


Chuck

05/11/10

Thanks, Rich!

FYI – I’ll be part of the Conscious Capitalism conference in Boston, May 24-25 to further the ideas that capitalism focused on doing good is more powerful than any other approach to solving social problems, and is more profitable anyway. Great book out there on this – Firms of Endearment – studies 60 very big companies and shows that the 30 focused on something bigger than making money returned 6-10 times more to their investors than the 30 focused on simply making money for their investors.

It’s time to live well by doing good.


Jeff Mowatt

03/17/11

Hi Chuck, I manage a group on Linkedin and a discrete SocialGo site on social business and here is a blog describing our evolution as a social enterprise:

http://socialbusiness.socialgo.com/magazine/read/you-me-we-ethics-and-people-centered-economics_5.html


Chuck

07/19/11

Jeff,

Thanks for sharing this with all of us.


Tim Goeders

05/12/12

Hi Chuck,

Very well said.

Tim




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