• Wait — which kind of social business?

    By Bianca Bartz, Editor in Chief of SocialBusiness.org

    When I tell people I write about social business, most people ask “what’s that?”

    A few know I write about businesses striving to make profit to further a social cause, but a good chunk think that I write about businesses that use social media. Although they’re wrong about what we do, it’s a fair assumption. Here’s why:

    Particularly in the last year, the term “social business” has been widely used to describe businesses that regularly integrate social media into their business practices. Makes sense.

    ImageBut prior to that, most online references to “social business” were connected to the ideas of Nobel Peace Prize winner Muhammad Yunus. The “Banker to the Poor,” as he’s often referred to, started Grameen Bank, which began offering micro loans in India in the early 80s. Today versions of the model are found in 100+ countries, all geared at helping entrepreneurs launch businesses so they can lift themselves out of poverty and stimulate their economies.

    Professor Yunus helped bring the term “social business” into popularity after publishing the book Creating a World Without Poverty: Social Business and the Future Of Capitalism in 2007. In a June 2010 Forbes interview, he defined it as such:

    I define social business as a non-loss, non-dividend company dedicated entirely to achieve a social goal. All profits, or “surplus revenue,” is ploughed back into the venture for expansion and improvement. In social business, the investor gets his or her investment money back over time, but never receives dividend beyond that amount.

    Our definition is similar. (You can read it here.) Like Yunus, we love the idea that, unlike charities that have to work with low overheads, have little budget for innovation and expansion and that rely completely on fundraising, social businesses are self-sustaining and have the opportunity to grow exponentially.

    As Yunus said to Forbes, “A charity dollar has one life; a social business dollar has endless lives!” 

    Social Business: Social Media vs Social Enterprise

    ImageBut back to the confusion. Last fall we noticed the term “social business” gain traction online, particularly on Twitter, and soon after in blog posts. Unfortunately, it wasn’t because more people were talking about using business for good. It was around the time IBM came out with a big social business campaign focused on making businesses more social online with their customers. Then we read about the Social Business Forum, based on the same concept. Shortly after, Fast Company wrote an article based on IBM’s initiative, and interviewed Ethan McCarty, IBM’s Senior Manager of Digital and Social Strategy. Here’s how Ethan defined social business:

    Social media is about media and people, which is one dimension of the overall world of business. With social business you start to look at the way people are interacting in digital experiences and apply the insights derived to a wide variety of different business processes.

    Others started adopting the term faster than we could track, and we were suddenly unable to monitor online references to “our” version of social business anymore. Dang. Frustrated that the term was being diluted and losing context, and passionate about clarifying the difference, our community manager, Tia, pitched Fast Company on an article detailing the growing confusion. Unfortunately, we still haven’t heard back. That’s OK though. We’re defining it now.

    Social Business: How it’s Perceived Online

    Not to get too nerdy, but I wanted to show you an example of how search terms — and, accordingly, online perception – pertaining to “social business” have switched largely from references to Yunus’ type of social business to IBM’s. I took screenshots from the top news results in the US for “social business” in 2011, and the same for “social business” in 2008.

    In 2011, only the last result pertained to social enterprise, the result were social media focused.

    In 2008, there were few results, but all were about social enterprise.

    At the end of the day, I love both types of social business and work in both industries. In fact, we’ve merged them at SocialBusiness.org, using our Facebook, Twitter, LinkedIn, Google+ and even Pinterest to help promote purpose-focused businesses. I just wanted to clarify the difference :)

  • Cause marketing vs social business: looking at the soul of shoes

    By Bianca Bartz, Editor in Chief of SocialBusiness.org

    The purpose of this blog post is to highlight the emerging opportunities that ethical consumerism is bringing. It’s also to illustrate the difference between cause marketing and true purpose-driven business, or social business.

    A recent study showed that 94% of consumers will choose a cause-oriented brand when faced with the choice between two similar, equally-priced products, when the other has no social/eco impact. Another study from StatsCan showed that Canadian men are just as likely as women to make a purchasing decision (either buy or boycott) based on ethical reasons. It also showed that people with higher educations tend to be more politically involved, and in turn are more likely to make purchases based on ethical reasons — 41% of university grads made purchasing decision based on ethics  in 2008 vs. 8% of high school grads.

    But there is a new motivator beyond education that is spurring consumers to buy cause-supporting brands, thanks to a gamechanging business model. You have heard of TOMS, right?

    Image

    TOMS Shoes has become famous for its one-for-one giving model, a creative way to do business while also doing good. Blake Mycoskie, who founded TOMS, launched the social business after a trip to Argentina where he saw how many children live without shoes, and are thus left vulnerable to disease, not to mention discomfort. Not letting a lack of knowledge in the footwear industry hinder him, he launched TOMS in 2006 with a promise to give a pair of shoes to a child in need for every pair sold. He’s kept his word: by September 2010, TOMS had put shoes on one million deserving feet.

    People want TOMS shoes. Badly. That’s not necessarily because they’re the most beautiful shoes; in fact, TOMS are quite simple in style, inspired by the South American alpargata shoe. They’re revered for being comfortable, but the leading reason people flock to these shoes is for their story, and because they let the customer be part of something bigger than themselves. “When I bought these shoes, TOMS gave a pair of shoes to a kid who needed them.”

    As happens when an idea hits it big, spin-offs start to arise. In the case of TOMS, other social entrepreneurs began adopting and adapting. I recently featured an article of 10 Shoe Brands With Soul that covers footwear businesses that have incorporated social impact right into their business models. What I omitted from that article were limited edition shoes that benefit charity. I was just looking at the social businesses: the ones with giving in their DNA, not just in their marketing plans.

    There’s a big difference there.

    Yes, other social entrepreneurs were inspired to use the one for one model to give back using business principles. That’s cool, because they were inspired by the idea of making an impact while also making a living. But not everyone was inspired in the same way: some companies saw the TOMS story of success and wanted the same attention, so adopted the model as a cause marketing initiative. See how they differ? It’s all about the original intention. At the end of the day, however, people are helped, yet the karma points don’t stack up the same way — and increasingly, consumers are looking at those stacks.

    ImageTake BOBS for example. All you need is a glance at the name to see where this Skechers line got its inspiration. They also adopted the alpargata design TOMS uses, as well as the one for one giving model. Not surprisingly, people were quick to critique BOBS, including  Fast Company and Digital Mom Blog. Why? Because they immediately recognized it as a marketing stunt.

    Of course, even TOMS has received flack, but never because people questioned its will to do good. The key criticism has been that the shoe drops have taken away income from local shoemakers, and thus the economy. That was never Mycoskie’s intention, of course; he wanted to help, and he does — if he had already reached a million kids by fall 2010, imagine how many have been touched now. Nevertheless, the model wasn’t perfect (what is?), and it left an opportunity for innovation.

    ImageEnter  TWINS for Peace. The founders of TWINS were inspired by the TOMS story when they launched their social business, but they also examined the product and what was being said and used it to tweak their model. Instead of a simple design, they opted for edgy and high quality, crafting sneakers from Italian leather. They use 90% recyclable packaging. They pay fair wages at a family-owned factory in Portugal. And they provide income-earning opportunities in different countries. As I wrote previously:

    Each collection of TWINS for Peace shoes supports a different NGO-led Shoe Project—and rather than simply making the second pair at the factory in Portugal, the donated pair is made in the country of the according Shoe Project. This not only allows shoemakers to tailor the shoes to the children, but also provides employment at a local level.

    As I said in the beginning of this post, my intention here is just to highlight an opportunity, and to clarify the different ways businesses can give back. I barely touched on the environmental side of ethical consumerism, but the bottom line is simple, and it comprises three parts: honour people, planet and profit (aka the triple bottom line). Consumers increasingly care about a brand’s impact on the world, so to remain favourable in the eyes of their customers, businesses will need to focus on purpose. Genuine purpose. The next gen has a radar for it – if it’s not genuine, I promise, they’ll sniff it out, and call you out.

  • Buddhism meets business

    By Bianca Bartz, Editor in Chief at SocialBusiness.org

    For the longest time I wondered how I could do good in the world, while still earning a good living. Was that even possible? Would my yoga practice be my way of contributing to peace and kindness, and volunteering on the side be my way to give back?

    (CC) narsul-the-elf via Flickr

    No. That wouldn’t be good enough. As soon as I made the decision I would find a way to do both — to feed my entrepreneurial spirit and my desire to make a positive difference in the world — I stumbled upon the Buddha’s Noble Eightfold Path, his formula to escape suffering. What stood out for me was #5, the Path of Rightlivehood.

    In its most obvious definition, rightlivehood means we earn our livelihood the right way. But what is right? According to the Buddha, the right way is one in which no harm is done to others, nor to the planet. While he broke it into doing no harm to living being (like prostitution, slaughtering animals, dealing weapons) and not selling harmful substances (like alcohol, drugs), his main premise was that we should not create more suffering.

    Wouldn’t the Buddha love the idea of Social Business? And B Corporations? Companies that aim to meet the triple bottom line — people, planet, profit? And what would he say about the booming popularity of social innovation studies at major universities like Stanford and Harvard? It makes me smile.

    Thich Nhat Hanh

    In 1998, in The Heart of the Buddha’s Teaching, Vientamese Zen teacher Thich Nhat Hanh wrote:

    “To practice Right Livelihood (samyag ajiva), you have to find a way to earn your living without transgressing your ideals of love and compassion. The way you support yourself can be an expression of your deepest self, or it can be a source of suffering for you and others.”

    And those are exactly the types of businesses we feature on SocialBusiness.org. Not only do they not induce any harm on others, but they actually benefit society and/or the environment.

    As I started learning more about social enterprise, and reading about the social entrepreneurs who were building incredibly cool companies while doing good, I was overjoyed to see example after example of successful companies making huge, positive impacts. For these people, the better business runs, the more good is done.

    And once I realized that, there was no going back.