A friend shared with me a fantastic story that emphasizes the lesson from my recent post, though in a very different way than I originally put forward. If you missed it, here is the general take-away from that post:
When norms, policies, and institutions fail to evolve and stay relevant, people develop new norms and institutions that align with their needs and beliefs and compete, often "illegally," with the established frameworks.
My friend works for a corporation that has been struggling to understand and leverage social networking technologies within the company in order to build a stronger sense of community and facilitate information-sharing. They have tried a few officially-sanctioned tools, but nothing has really worked due to lack of adoption by the employee population.
Recently, however, a rogue group of employees began to build a company community using another, free and publicly available technology that works much like Twitter for the enterprise. Perhaps not surprisingly, people took to it.
The community grew rapidly, reportedly with over 10% of the company's employees opting in over the course of less than a week. The growing popularity of the tool, however, and the fact that it was not controllable by corporate IT, created a stir. Within days of catching the wind of the non-sanctioned corporate community, the company blocked access and threatened to take action against any employees caught using it in the future.
Amazing. Textbook, in fact. Relating it back to our above lesson, you can see how Corporate IT (i.e. government) failed to keep up with employee needs to communicate and share information, and provide tools that employees found relevant and useful (i.e. norms and institutions), and so employees went outside the system to have their needs met. In this case, however, "illegality" was not left to fester and produce long-term negative dynamics/norms. Nor did institutions adapt. Instead, the corporation apparently had the means, at least in the short-term, to enforce existing policies and quash the "illegality."
Certainly, it will be interesting to hear how this develops. Will the norms and institutions developed by the employees prevail? Stay tuned!
We need to continue working toward a fair, net measure of impact - to include social, environmental, and economic impact - so that we can more holistically judge an organization's success
Until we have more holistic measures for impact that are reliable and fair, we need to be very careful about placing social enterprise on a pedestal above traditional business. We can't assume that social enterprises are always generating more positive impact simply because they have grand mission statements and self-identify as "social." The proof, as they say, is in the pudding, and experience has shown us that even the best of intentions only get you so far.
I started this post many weeks ago after watching this fantastic TED Talk on how we define success:
I was reminded of it and inspired to finish it - sort of - after reading a recent post from Nathaniel Whittemore on Silicon Valley's future ability to change the world. Nathaniel's post is interesting and insightful, and also a bit provocative. It particularly touches on a hot-button issue for me; that is, whether/how we judge social vs. traditional enterprises.
I posted a long comment on his post that I am republishing here because it outlines my basic thoughts on the topic. Enjoy!
"Reading [Nathaniel's post] makes me think there is a storm brewing in Silicon Valley. Is there a growing divide based on the perception that a get-rich-quick culture is starting to replace the idealism of the past? Where is the angst and animosity coming from?
'...this hyperbole is why the nonprofit sector can have such a hard time interacting with the corporate world. It's hard to spent time with groups like Samasource that are trying to fundamentally shift the paradigm of outsourcing to create real growth and development opportunities for the developing world, or the Acumen Fund that is investing in local market solutions to water distribution, and then to be told that easier, faster, funner consumption of stuff is in the same ballpark. It's not even the same sport.'
I don't agree much with this statement. I'm fine acknowledging they're different, but implicit is that one is inherently always better than the other. Is a social business with 15 employees and 50 customers automatically better than a company like Amazon.com just because it has a nobler mission? Amazon has created employment for 20,000 people and generated enormous wealth that can be re-invested in other businesses, perhaps some "social." It has also given small booksellers an outlet for making a better living, similar to eBay, which is a primary source of income for 1.3 million people (and being replicated in the developing world). Take intuit as another example. Why should they be less worthy? They have in my opinion done an admirable job over their history of democratizing ERP-like applications and giving small business the technology/tools they need to operate more efficiently. You no longer have to be able to afford an Oracle or SAP implementation to manage payroll and a chart of accounts. Likewise, Mint.com may have sold out in some people's estimation, but it has done an admirable job of improving financial literacy and helping individuals (including me) make better financial decisions. Imagine Intuit and Mint.com technology in the hands of social entrepreneurs around the world, allowing them to better run their businesses and make smarter choices. That would be world-changing, even if unsexy because it's payroll and accounting. In fact, it's not much different than a salesforce automation or internet search and advertising company helping social enterprises better measure their impact. Similarly, you say,"All due respect to Zappos, a better way to buy shoes is not the same as changing the world." But how different is Zappos from Tom's Shoes? A cynic could say Zappos is giving us a better way to buy shoes and Tom's is making us feel better about buying more shoes. Moreover, Zappos is one business decision away from being Tom's. I agree, however, with your other point. The most ambitious and talented young entrepreneurs are starting to migrate to the social enterprise sector, making it in essence the next "high tech" in its ability to draw the best and brightest. And so we are likely to see more and more amazing things from these individuals. That's fantastic and desirable. But that won't negate the need for innovations that are less strictly "social" in their orientation and more like Zappos and Netflix. Social enterprise may stand apart, but I disagree that we should think it stands above. And I really struggle with the idea that a "holier than thou" mentality might make non-profits and social enterprises look down on the accomplishments of these "other" companies. This has been the trend in the past, and I see little good that has come of it."
That's right. The business profiled yesterday is Wal-Mart. Apparently, though, this didn't really come as a surprise to those brave enough to venture a guess. I must be far more transparent than I had thought.
Anyhow, whilst I await my severe flagellation from the anti-Wal-Martians, here are those bullets again, with some specifics added.
Mission to serve customers who have not traditionally been beneficiaries of the innovations and successes of the broader economic system
Wal-Mart's initial mission was to serve rural communities that were in many ways excluded from the mainstream economy
Obsession with providing the greatest value to customers at price points they can afford
There mission statement is, "Save money. Live better." Finding ways to provide quality goods at the lowest possible prices is ingrained in the culture.
Meritocratic work environment that puts results and work ethic ahead of shining academic credentials and other factors that are more susceptible to "privilege." (The organization has consistently rewarded highly capable and hard-working individuals regardless of their level of formal education. Much of the company's leadership is made up of these individuals.)
Many executives and middle managers started as store or distribution center employees.
Works feverishly, both internally and externally, with industry groups and suppliers, to make improvements in "green-ness" of both internal operations and its supply chain
This has been a more recent push, in part thanks to Adam Werbach's efforts.
Has achieved amazing financial returns and successfully grown and scaled without sacrificing commitment to its original mission (see first bullet); puts some of those profits back into the communities it serves through philanthropic structures
Wal-Mart's financial success is self-evident. What is less well-known is that both Wal-Mart corporate's giving program and individual store managers are allowed discretion in putting money back into their communities.
Now, don't get me wrong. Wal-Mart should by no means be considered a darling of the social enterprise movement. Throughout its history it has made a number of questionable decisions, including but not limited to:
Providing uncompetitive wages and zero health benefits to store-level employees
Until recently, writing off green practices as unpractical and unprofitable
Using its hegemonic position to place extreme pressure on suppliers to engage in unsustainable business practices
Indulging Americans' insatiable appetite for consumer goods
I'm sure the list could go on, but I'll stop there.
The point of this exercise is not to lift up or cut down Wal-Mart. The point is to be provocative and make a point. Actually, a couple of points:
Through scale, BOP businesses can achieve both social impact and financial returns. And achieving both is ok. This was Prahalad's initial thesis, but is something that we seem to forget.
Classifying companies as social or not is inherently grey business, perhaps undoable, and maybe even undesirable or counter-productive.
Any self-proclaimed social business that makes it big will, at some point, be characterized as a sellout. Big companies, even those with the best of intentions, ultimately make some missteps. Also, their dominant position comes to be resented and viewed negatively by certain groups. If you're a social entrepreneur with larger-than-life aspirations, be ready for this.
