What does it mean to be a Social Business?
I had an economics professor in college whose teaching style drove me crazy. It wasn’t until years later that I would realize the brilliance in which he taught.
The class was Managing in Complex Environments and was required curriculum for all freshman business majors. The goal (I discovered later) was to shatter any preconceived notions that we had about the relationships between business, economics and politics in an attempt to reveal the true complexity therein.
My professor took great joy in introducing paradoxes and ironies of business ethics, globalization, taxes, etc. At this point in my life, I was a black and white kind of guy; my professor illuminated the gray all around us. Back then, I liked to think that A plus B always equaled C. But my professor liked to point out that while sometimes A + B = C, other times it equals D or E or X.
Almost a decade removed from that classroom I see my professor’s teachings coming to life all around me. Eurasia Café is a growing social business with domestic operations and a global reach. As we grow, we are constantly wrestling with what it means to be a social business. Each day we realize that just as my professor promised – we are operating in complex environments. This realization raises difficult and interesting questions, below are just a few such questions:
- How does a social business make wise purchasing decisions? – In a profit-driven business[i] the answer to this question is simple; whatever vendor is going to maximize profits. As a social business there are other concerns such as, which vendor has the best labor practices? Which vendors are giving back to their communities? Which vendors are environmentally responsible?
Unfortunately for the social business, the vendors who are meeting the latter requirements are also the most expensive, which leads to another question:
- How does a social business compete with profit-driven businesses that have lower prices due to subpar business ethics? For years the average consumer has looked at two typically mutually exclusive variables when making purchasing decisions – price and quality. We measure price and quality on a scale that we call value. A product with high value has a high quality relative to the price[ii]. The social business adds another element to the value formula – social impact. Social business entrepreneurs see value as an accumulation of price, quality and the positive or negative social impacts of the product or service.
Value is extremely subjective and becomes even more subjective when a social impact component is added. This makes it difficult for the social business to market its value. Wal-Mart expresses its value as having the lowest prices, Apple defines value through its accessible and high quality products and Gucci markets its value as a hallmark of wealth and success. Non of these preformed expressions of value are sufficient for the social business, which raises yet another question:
- How does the social business market its value in an accurate, concise and accessible way? Talk to any passionate social business entrepreneur and they will tell you, “Give me an hour of your time and I will change the way you think about purchasing…” water, coffee, clothing or whatever else they are selling. The problem is, we seldom get an hour (or even five minutes) to explain the issues that have caused us to change the way we do business. When we do get the time to share our stories, many times we leave the audience feeling guilty, overwhelmed or both. Guilt is a terrible long-term motivator and being overwhelmed paralyzes people, it does not lead to action. The social business needs to find a way to impassion, empower and equip people through its marketing to engage them in long-lasting and meaningful ways.
These are just a few of the questions and complexities that come with the territory of operating a social business. My hope in this series of blog posts is to shed light on the questions above as well as raise other questions that the socially conscience person needs to be aware of. I am writing not only to the social business entrepreneur but also to the socially aware consumer. You are the true difference makers – you are the ones who change the world everyday with where you spend your resources whether they be time, money, your creative energy, your voice, etc.
I believe that the social business is a piece of the puzzle that depicts a better tomorrow. Social businesses are not a replacement for non-profit organizations, personal action, volunteerism, community centers or church ministries. Instead they are another way that we can join in the movement to bring about a better life on earth for the marginalized and the oppressed.
Let us learn together how to make that future a reality.
Operations and Finance – Eurasia Coffee & Tea
[i] In the real world – there is no perfect distinction between a social business and a profit-driven business. Socially minded businesses still seek profits and many profit-driven businesses have social programs. However, for this series of posts I will discuss the social business and the profit-driven business as an ideals that are mutually exclusive…there is the black and white part of me acting up again.
[ii] This definition of value is simple and in some cases incomplete, for example it does not take into consideration perceived value, which is driven by marketing, branding, and culture. For simplicity sake, I will use this definition of value to help shed light on two of the major factors that drive consumer’s purchasing decisions.