There are three basic questions: What? Why? How? Business wisdom states that you need to have a clear answer to these three questions to succeed. These past years as social innovation and entrepreneurship have become more established, the answers to these three questions have emerged and evolved, shaping what we produce, why we produce it and how we do it. In fact, social entrepreneurship is making traditional businesses question their own answers. Here is how as social enterprises we are redefining the what, why and how of doing business.
First, we have realised that what we were doing until now needed to be changed, and this could be changed through achieving positive impact. As solutions started to emerge we realised they could be classified in any number of ways, we found that what could mean a number of different things as I paraphrase below from Brian Trelstadt’s recent HBR article,
- Place: Projects that exist in places that can benefit a group of people
- Process (Value chain or business model): Betterments in the value chains of production such as “fair coffee” or in the business model itself, such as the Tom’s shoes “buy one, give one”.
- Planet: Projects that have a clear and measurable environmental benefit.
- Product: Products or services that have positive social benefits.
- Paradigms: Ideas and projects that attempt to change an entire system for the better, for example, the sharing economy model.
Second, we have answered the question of why thoroughly, as academics and practitioners (such as the World Bank) agreed that intentionality is a core base for how social entrepreneurship comes about, and the solidity of frameworks such as the theory of change have proven that mission-locked companies have a business case based on its reason for being. Through powerful storytelling we have been able to shift the conversations and dialogues around companies and have explored the deeper why of founders, customers, partners and systems.
And thirdly, we have the how. This is the area where I believe we still have much more work to do. On the one hand, we have seen two things happen in the sector:
- An emergence of accelerators, incubators, and company builders, supported by companies, universities, or VCs themselves that have made an appearance in the scene at an exponential rate.
- However, the processes used to go from idea to action have stayed the same. Each of these seem to be based on the same principal of every single other startup, Paul Graham’s “startup=growth”, arguing that explosive (or fast growth) is the only measurement of success. We have devised economic and impact KPIs to measure a success that is principally- bounded by time, that is, a reward system that incentivizes the exact same parameters of the pre-social enterprise era.
Why is this how problematic? “We cannot solve our problems with the same thinking we used when we created them”, said Albert E. We have mainly taken this piece of advice into the what, and the why, but it seems we are using the same capitalistic, fast-process, agile growth methods that are seeing social startup failure rates at higher than 90%, not to mention the burnt out founders and employees that drop away disillusioned from a why and a what they had committed to, taken aback by an exhaustion to do more (money + impact) with even less (investments into social startups is only starting to kick off). In the words, as per Jennifer and Mara, we need to have an “emphasis on repairing, cultivating, and connecting rather than “disrupting,” “crushing,” “owning,” or “killing” it.”
And how can we change this how? The exciting part is that we do have a set of tools for this to take place. Communities of practice for different methodologies such as Art of Hosting, Dragon Dreaming, Sociocracy and Design Thinking have provided a wealth of knowledge into how we can use collective intelligence to generate value, and have conversations around more equitable and inclusive systems. We are looking at processes that define frameworks for everyone to be their potential as contributors, so that we can build tribes rather than unique heropreneurs. We need to openly put these practices into our businesses, into our management and growth strategies and into how we talk with our clients and customers. And if we really want to generate this deep change, we need to create a system that incentivizes a different style of investment, one that puts into value founders long-term visions, humane management practices and one that has a focus and rewards to those that answer all three main questions of what, why and how.