Social businesses cannot rely on good feeling alone

Social businesses have much to offer as a form of economic organisation.  In fact, I believe they are vital to our economy. Firstly, the cause-related nature of these firms gives them a certain dynamism often lacking in mainstream businesses.  Such dynamism, and the enthusiasm it elicits, benefits social businesses.

This is particularly true during the earlier entrepreneurial phase of development – resources are low and this energy may be the only “reserve” on which the company can draw.

Social businesses are also smaller than mainstream businesses.  Staff and the management are therefore more closely connected to the needs of the market in which they operate.  This is a concept I will explore in a later blog.  They are also more agile, partly as a result of their size, which enables them to respond more quickly to changing market circumstances.

In fact, social businesses, as a construct, are uniquely well-suited to today’s environment in the way they utilise the market-based/capitalist system to meet clients” needs.  Observers may criticize the system and the underlying moral assumptions, but as a mechanism to identify and then deliver against customer needs, the market is hard to beat.  We may one day live in a world where the imperatives of the marketplace do not dictate so much of our daily lives, but this day has not yet come.  Many have dedicated their lives to changing the system – I am too old to think about this and will work within this system to deliver the greatest potential social and financial returns.

An example of a social business which has responded to market needs is Divine (formerly Day) Chocolate Ltd., which has grown and prospered as a fair trade chocolate company.   In 1997, a cooperative of Ghanaian farmers decided to produce their own mainstream chocolate bar to compete with other major brands in the UK – this based on interest from some international customers.  Day Chocolate was formed with support from The Body Shop, Christian Aid, the NGO Twin Trading and Comic Relief.  However, consumer interest remained limited until management improved the product (in terms of taste) and adopted more traditional marketing techniques.  Now the firm has enjoyed rapid growth, is profitable and expanding.  The growing interest in fair trade by wealthier consumers in the “North” was undoubtedly a factor, but the response to the market’s other needs (good taste) was essential.

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