What’s your definition of social business?

This was the question I asked a business network 3 years ago.   As I’d observed,  the concept of social business advocated by Muhammad Yunus, of business with a primary social goal had been circulating since publication of his book on Creating a World Without Poverty  in 2007 and earlier in a presentation paper, which claimed ‘Social Business Entreprenuers are the Solution’

Let me first offer 3 broad definitions:  A social entrepreneur is someone who applies business solutions to a social problem and is supported by foundation grants and stipends. Social enterprise is a business which invests the majority of  its surplus in a social objective but may also be supported by grants.  Social business is a self-sustaining, non dividend distributing business with a primary social purpose.

In 2008, I started the Linkedin group on Social Business and For Benefit Corporations,  which was aligned with the Linkedin definition, though many of those self-ascribing this as a skill seemingly had no connection.

Another interpretation was developing however, that of social media business rather than social purpose business and IBM seemed to be in the driving seat.

Our founder who died in 2011 had an anecdote about IBM .  Apparently after he’d started to distribute his paper on business for social benefit in 1996, two guys from IBM showed up at the restaurant he frequented. They’d sought him out with the aim of deconstructing his work and discovered he was no pushover. Apparently he’d turned it around on them so severely, that one of them left in tears.

THINK IBM was not only a corporate slogan.  It also became an item of desk furniture in the 70s and 80s,  in case anyone thought outside their particular box, their mantra that ‘nobody got fired for buying IBM’

In his 1996 paper, Terry Hallman described how the dawning Information Age, presented an opportunity to share information and develop business and economics for the benefit of humanity, concluding:

Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.

in 2008, asking “what is social enterprise?” he’d said:

“There is so far no commonly agreed definition. Is an enterprise social if it produces some sort of social benefit? If so, in that sense, many or indeed most traditional businesses for profit can be considered social enterprises. Business enterprises typically produce something of value for clients and customers, otherwise they would cease to exist as business enterprises. Earning thousands or millions of customers can by definition be considered social benefit. Social refers to groups of people, as contrasted with one person. If a company produces a product or service, it has to benefit a group of people sufficiently for them to use that product or service. Owners and stockholders benefit from financial profits gained by the enterprise. Stockholders range from individuals owning relatively large percentages of a company to ordinary pensioners relying on income from micro-investments into the company. Profits from almost any large public corporation are shared among wealthy individual stakeholders to humble, modest households who have holdings in the company through an array of mutual funds managed by government-regulated financial managers.”

Today, as if IBM has suddenly come round to realise that it’s not just about social media, an article in Fast Company magazine bears the headline ‘Move over Social Media: Here Comes Social Business.

It’s still about traditional capitalism, however and the maximisation of profit.

Id comment on the Fast Company article but the site tells me that I’m blocked from making a new comment. They’ve already realised that I differ greatly on this issue and the way to force their view is to control rather than share infomation. It takes me back  to a paragraph from the 1996 paper:

As Alvin Toffler predicted in Power Shift, where once violence and then wealth were dominant forms of power, information is now becoming the dominant power. Those nations with the greatest freedom of information and means of transmitting it have now become the most powerful and influential, and the strongest economically. Toffler also predicted the collapse of the Soviet Union would come about due primarily to its authoritarian control and limiting of information. Unfortunately for Russian citizens, this old habit has continued for them beyond the collapse of the former Soviet Union and will at the least make an interesting case study on the survivability of a once strong nation which still remains committed to limiting and controlling information.

My concerns  3 years ago,  that business with tradirtional profit maximising objectives would undermine the concept of social business are now being echoed within the EU where recently it was observed that:

“They rebranded themselves as social innovators and entrepreneurs because these are the new tags to get the ears and funding of Brussels. The Commission ended up opening the floor to every stakeholder claiming a place at the table.”

This is more than a little ironic since within the EU itself a group of  ‘experts’   described as GECES seem to have branded themselves  as arbitrators.  Their definitions,  EU Commissioner Barnier claims, have been made through ‘high level’ consultations  None appear to be idenfiable as practitioners  of social business however.

In 2011, I included the description and history  of our P-CED business model in an application for the EU sponsored  social business competition in Naples.

Aside from definitions, there’s also the concept of forward investment in an  EU Social Entreprenuership Fund (EUSEF), a concept proposed in our 1996 white paper, our 2004 business plan and more relevantly, the  proposal for microeconomic development and social enterprise, I submitted to the EU Citizens Consultation in 2008.

Commissioner Barnier claims, in spite of our own transparency,  that he was not aware of our work, that these concept have evolved in the last decade from various sources.  He cannot seem to offer any example.   A year on from his suggestion of  “a fruitful collaboration on these matter in the future”  there is no indication that this can ever be expected.

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One thought on “What’s your definition of social business?

  1. Eimhin says:

    Thanks again Jeff, good solid reading. The encounter of your groups founder and the two plants from IBM sounds like the meeting of Confucius and Lao Tzu!

    One thing above that sparked something for me is the lack of understanding of the imperative nature of ‘information exchange’ to human development. Refering to Alvin Toffler above you write:

    “information is now becoming the dominant power. Those nations with the greatest freedom of information and means of transmitting it have now become the most powerful and influential, and the strongest economically. ”

    This misses the point of what is actually going in beneath the surface. Now I hope I dont lose you while I present a few threads by which to weave some understanding out of this issue…

    The premise is that the rate of information exchange at any given time, and among any given group, dictates the rate of development of that time/group.

    Simplistically you might take for an example the rate of change in human civilisation prior to the wheel, with that after the wheels invention. The deciding factor is not the wheel itself, but the effect it has on the speed at which information can travel from a to b. The same applies to the printing press and to the internet, naturally.

    Looking at it from an energy systems perspective, and remembering thermodynamics, it is useful to hold in mind that all ‘closed’ energetic systems tend toward equilibrium (pendulums come to stillness and people die…or get enlightened, then pass). Paradoxically, further generation of complexity increases exegy (or negentropy, or energy capacity-the capacity for more energy to change from a higher to a lower form) and this hastens the movement to equilibrium also, and thus the universe is conspiring with fate and chance to increase the complexity and capacity in our present. This is the process of dissipation well known to thermodynamics.

    Now, take a smaller ‘closed’ energetic system, like a pot of water on an electric hob. According to thermodynamics: if you increase the energy input into a system the system has to adapt new behaviours to deal with that energet influx. In the lingo of energetic systems these are referred to as thermodynamical ‘gradients’. And so you turn up the heat to, say, 3 on the dial and the water begins to move faster, to 4 and the water moves faster still. Each ‘setting on the dial’ implies that the level of change within the system (here the speed of the movement of the water) will increase to a new threshold and hover there. These thresholds are called ‘attractors’ in complexity theory. At around 5/6 (for simple exemplary’s sake), and after some time, the energy capacity of the system in its current form will reach an upper limit. That is to say the water will no longer be able to hold its form because it can no longer create new gradients/attractors in the medium- the water. And so you have a ‘phase change’ in the medium: the water begins to boil and becomes steam.

    Now lets go back to information exchange and its effects in human civilization. Think of human civilization as a closed energy system itself, and of information exchange as the energy input to that system. As the rate at which information is exchanged increases, so too does the rate of change inside that system. Humans are learners and adapters. Over time this makes sense of the various contexts of the agricultural age, the industrial age and the information age and also of the various threads using technological advances to describe the evolution of human civilization. It also makes sense of collective intelligence and network theory.

    If you take any body of organized information, say particle physics or social business, the whole is an impersonal present state of information that persists in time like a wave. Individuals “standing on the shoulders of” the giants before them reach the crest of this wave and thus ‘surf’ any given paradigm in the present. According to this notion, ideas are impersonal and are based on sufficient conditions…this sheds light on why scientists unconnected in different places come up with the same physical laws at the same time. Conditions of the present are, in these cases, sufficient for the next ‘gradient’ in knowledge to be achieved.

    I hope this was kept cogent enough that you are with me here.

    This information exchange, its working historically, and its current work in networks and ‘collective intelligence’ projects deserves serious mention. If we can understand that information, through feedback processes, is refining itself impersonally, and work with That, then the route to the future need not be so daunting. Suddenly the obviousness and simplicity of things like ‘open governance’ and ‘crowd-sourcing’ attain a kind of simplicity.

    Anyway, thats quite enough from your friendly closet genius for now…

    All the very best Jeff, if you ever need someone to work on something with a flair for the ‘how and why’ of things, let me know.

    Peace brother.

    Eimhin

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