No one prepared me for the gray areas inherent in do-good social business. It’s time to get real about the nuances and tough questions.
Let’s get straight into it…
Social business is a tricky space to navigate.
Not tricky-as-in “how does one balance profit and impact?” (the question we love to ask). But tricky as in “woah there’s a lot of gray area and no one’s thought about how to do this shit.”
To-date, I’ve spent my career working for for-profit social impact organizations and companies. By that, I mean profit seeking enterprises whose primary reason of being is the creation of social good. I’ve worked for a total of five, to be exact, across three continents, including a company of my own creation. Some (including my current role), involve working for large-scale companies that span multiple countries. Others are small scale companies that operate more like community-based organizations.
However, in each case, I found myself facing problems that no one had quite prepared me to handle. These weren’t problems of execution or operation. Rather, they were philosophical problems. Problems like, “how do you reconcile imperfect internal culture with seemingly perfect external impact?”, “how do social businesses tend to perpetuate neocolonialism?” or “what is the role of growth and scale in a business designed for social good?”.
As someone in my early 20s when I first started working in this space, let me be clear that I was not prepared to deal with, let alone answer, these questions. I’m still not. However, what frustrated me more than the apparent lack of answers to these admittedly tough questions, was the general lack of spaces where such nuances could be discussed.
To say that there is immense pressure on social impact companies to be perfect, is an understatement. If a social impact company takes a misstep, it risks not only losing the trust of its users, but breaking the spell of the win-win business narrative that has been popularized in the public imagination. While we are eager to believe in a feel-good alternative to traditional for-profit business, we are equally quick to dismiss the entire notion as “too good to be true” the moment we see a company misstep — and to view all social businesses with a skeptical eye henceforth.
What has resulted is a performative culture among social businesses that leaves little space for honest discussion, hard conversations, or saying “I don’t know”. Despite shiny headlines in the press celebrating yet another impact narrative, the reality is that no one really knows how to best “do” social business yet. How could they? The idea of social enterprise is a fairly recent one, and execution of the concept is even newer.
Let me give a few examples of some of the grey areas I’ve encountered:
- In classical business theory, a company with profits can either pay out dividends, or re-invest it in growth. However, a social enterprise has a third bucket of resource allocation available to it: investment in its impact operations. How should resources be most strategically allocated across all three buckets? For example, should we assume that re-investment in growth will also lead to the scaling up of impact? Or does impact merit standalone investments on its own, regardless of business growth?
- We (meaning press, consumers, and investors) all talk about how great social enterprise is. But do we put our money where our mouth is? Having been close friends with many social impact founders, I was initially shocked by how many struggled with depression and mental health. While the media loves showcasing social impact companies as a gold standard in the world of business (“They’re doing good, and they’re doing it at a profit!”), they tend to omit the fact that most investors don’t want to put money into risky new business models doling out money to “do-good” causes with low financial return. And when celebratory press stories about your stellar company are contextualized against the reality of having only 1–2 months financial runway in the bank… the mental strain is immense. How do we start getting real about the cognitive dissonance faced by founders in this space?
- For most traditional companies, measuring success ultimately comes down to measuring revenue and profit growth. However, we’ve gotten so used to defining business success in terms of quantifiable, measurable financial figures, that we want to repurpose this frame of thinking to apply to impact as well. For instance, how much “impact” can you generate per dollar of spend? What is the “return” of your “impact investment”, and how can that be maximized? This is not to say that we should not be conscious or intentional about how we build and create social good. However, I’m not convinced that the language of success pioneered by the financial world is a perfect translation for how we should be talking about social good. It leaves no room for capturing the broad reaching, network dependent, intuition-led, and messy space that often encompasses impact. At the end of the day, how do we balance spending resources trying to measure impact (which often resists exact calculation), rather than investing in impact itself?
I believe that the process of working through these “I don’t knows” is some of the most important work we can be doing right now. Not only because social businesses typically work for the greater good, but because our collective answers to those questions can help build a new economic paradigm in which businesses contribute something more than profit to society.
That’s exactly what I’ll be doing in this space — raising questions that I’ve struggled with in the social impact space (including the ones above), while exploring alternative approaches to neoliberal capitalism. To be clear, I am not an expert in social impact. I don’t have answers to the questions I raise, and I’m not even sure they are the best questions to ask. However, I hope this space can become one of the forums I’ve always looked for — a place where grey areas can be considered, where tough questions can be asked, imperfect solutions hypothesized, and where the good, the bad, and the ugly regarding alternative approaches to capitalism and neoliberalism can be discussed.
If you’re curious and want to come along for the ride, welcome aboard!