My post on Friday speculating that Groupon could emerge as a multibillion dollar social enterprise was a hit on twitter and generated a number of responses. While much of the response was positive, one issue that bothered some people was my use of the term “social enterprise”.
Reader David Geilhufe:
“I think we need to be a bit more deliberate in applying the social enterprise label… But I do agree this could be the emergence of a multi-billion dollar corporate citizenship program AND virtually every corporate citizenship program would benefit from aspiring to be a social enterprise. But calling these things social enterprises takes away from the folks who build businesses from scratch for social impact.”
Reader Carrie Varoquiers:
“I do also wonder how we collectively define a social enterprise. By including Groupon it seems that we should also include Chevron as social enterprise since they provide us with the energy we need to turn on our lights and fuel our stove tops and power our cars in order to heat our homes and feed our children and get to our jobs every day. I would argue that Chevron has a much stronger purpose than Groupon, in terms of actual societal value. What about Genentech? Or Google? Are they social enterprises? If you are going to call Groupon a social enterprise, then my answer is definitely yes.”
The definition of social enterprise has been debated many times. While some people feel that only a nonprofit should be considered a social enterprise, I believe that the term has come to mean an organization that exists primarily to create social impact. The tax election that the organizations chooses should not matter, but their goals should.
Since I do not believe that Groupon’s primary goal is to create social impact, I probably shouldn’t have used the term social enterprise so loosely. But I do think that what Groupon is doing is fundamentally different than corporate philanthropy and the G-Team concept has the potential to bake social impact into the corporate DNA of Groupon.
In her post about G-Team, Christine Egger of Social Actions wrote:
“Groupon and The Point are two sides of the same coin, grounded in a shared theory of change: people’s resistance to doing something that benefits communities/businesses/themselves diminishes when they know in advance that they will be joined by others who want to do the same thing.”
Because Andrew Mason founded The Point first, then realized that the same concept could be used in a for-profit context and now is bringing The Point’s social impact focus to Groupon via the G-Team, I think it is fair to argue that social enterprise activity is taking place.
Look at it this way. The Point is clearly focused on social impact. If Groupon can serve as a dramatically more powerful platform for social impact via G-Team, the fact that G-Team is embedded within a for-profit doesn’t make it less worthy of praise.
It is for this reason that David’s statement that “Calling these things social enterprises takes away from the folks who build businesses from scratch for social impact” rings flat for me. I couldn’t care less if someone struggles with a good heart to try to achieve social impact. I care about the actually achievement of social impact. If it can be achieved at a higher level and wider scale within a for-profit company that mints money for its shareholders, I’m far happier with that outcome than if the concept stays within a definitionally pure “social enterprise” whose leaders “built it from scratch.”
Unlike a for-profit entrepreneur who might make a ton of money and then go searching for something good to do, Groupon is effectively the outcome of a social entrepreneur figuring out how to create social impact, then going looking for how to make money using the same concept and then returning to social impact.
The journey highlights the way that for-profit organizations have access to significant capital while nonprofits do not. The fact that Andrew could attract the capital needed to build the fastest growing business in history using the same “theory of change” that drove The Point, but could not attract that sort of capital while running The Point illustrates the disadvantage nonprofits have when it comes to growth capital.
It seems to me that building Groupon was probably the best way for Andrew to create social impact, because doing so gave him the capital he needed to grow The Point via G-Team.
I’ll leave the debate over the semantics of “social enterprise” to others. But Groupon’s G-Team is a project to follow and Andrew Mason is a social and for-profit entrepreneur to watch.
It’s a good corporate strategy (some could say good CSR) that incorporates a bit of money, engages volunteers, and drives people into their community, through their core platform.
Some will say that isn’t SE, or that it goes beyond philanthropy, but regardless of how the definitions are spliced, diced, and debated, I think the program is innovative, smart, has the potential for impact, and one that should be followed closely by anyone working with the the broadly defined CSR realm.
Because if it does succeed, then perhaps this will serve as a model for how others should structure their strategies for leveraging their platforms to do more than just kick off profits (and the yearly “CSR” program)
Yes, I think you’re right on the mark.
Sean – I couldn’t agree more and in fact your latter conclutions are exactly what I meant in my original comment back on Dec. 20 on Sharon’s blog:
“This is a very interesting and well thought-out argument. I would have to, however, disagree slightly as I belong to the school of thought which defines a social enterprise as any organization (for profit, non-profit, a hybrid of the two, or something else altogether) that fulfils its primary social or environmental mission (emphasis on primary being key) using business methods. That said, I see Groupon as the next evolution, perhaps the ultimate evolution, of a triple bottom line business. A world where all businesses, whether mission oriented or not, do not stop at “do no evil” and if fact actively contribute to the proliferation of solutions that work. And it’s ok if the profit is the primary reason as long as the business remembers that it operates in a community, not a vacuum. So Kudos to Groupon!”
Sean, I agree wholeheartedly with you that “David’s statement that ‘Calling these things social enterprises takes away from the folks who build businesses from scratch for social impact’ rings flat for me.”
Rather than belittle the more commercial aspects of Groupon as lacking ideological purity (gag), can we learn from the hybrid beast?
I’d argue that it is precisely the lack of purity that has made Groupon so successful: it was the spa deals, haute cuisine and lake front tours that drew eyes and hearts to Groupon, giving it a platform and a successful business model that, let’s be realistic, ballet subscriptions and museum memberships alone never would. This is exactly what I think of when I think about creative uses of the marketplace to accomplish social good.
Let’s leave aside the labels and what is in Andrew Mason’s heart and focus instead on effectiveness. Can you think of how G-Team could be (even) more effective in leveraging its platform for social benefit? That’s the conversation I really want to be having…
Woah. Way to lay down the gauntlet. I’ll have to noodle on what G-Team could do to be even more impactful. That’s a great question.
Sean, if you’re as good at tacking a sailboat as you are a conversation, let me know when you decide to enter the America’s Cup. I want to be on your crew.
I really do admire the shift here away from a “what is social enterprise?” question. imho, Sharon’s suggestion on where to take the conversation next is spot on: What can any online giving program be doing to amplify its positive social impact, and what potential can we help uncover for this particular program, given its roots and reach?
In the post you linked to above and in its comments, I’ve started brainstorming around how to increase points of participation for sourcing the Groupon/The Point-type matchings. Two examples: allow Groupon coupon-buyers to propose social actions, linking to existing campaigns or creating their own on the spot; or filter and select from the thousands of social action campaigns that nonprofits and individuals are already putting online through http://socialactions.com/actionsources platforms and elsewhere.
Just one tiny piece of the conversation-mosaic. Here’s to finding & exploring even more…
Sean, Spot on!
All I can add is:
CSR (Corporate Social Responsibility) is dead – Long live CSO (Corporate Social Opportunity). [you heard it here first!]
I have to admit Sean that what I see doesn’t register as social enterprise in any deliberate sense. What I see is something resembling another site called LetsBuyIT.com. I do acknowledge however that most business has a social dimensions.
When faced with an unfamiliar audience several years ago, we’d made the point of stating an operational definition in the context of a development strategy to be shared on the web: .
“Enterprise is any organizational activity aimed at a specific output or outcome. Once the output or outcome – the primary objective – is clear, an organization operating to fulfill the objective is by definition an enterprise. Business is the most prominent example of enterprise. A business plan, or organizational map, provides a reference regarding how an organizational scheme will operate to produce a specific outcome: provision of products or services in a way to create profit. Profit in turn is measured numerically in terms of monetary gains, the “bottom line.”
“This is the function of classic capitalism, which has proven to be the most powerful economic engine ever devised.
“An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.
That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise. “
Isn’t all entrepreneurship social? (job creation, creating steady income for employees, lowering the cost of a good or service, plugging a gap, etc…)
Since no one can define an “unsocial enterprise” (save the gratuitous examples like starting a landmine company), I find it difficult to believe that we are still playing semantics when there is so much work to be done.
Impact first? Investment first? Blended multiple lines? Triple-axle return? All convenient ways to ensure that the debate remains academic and those that engage in it do not actually have to go out and get their hands dirty.
If all entrepreneurship is social, then there is no reason to even discuss social impact. Yet we’re seeing lots of ways that business is becoming more aware of their social impact and adjusting practices as a result.
I’ve always found that suggestion that debating what should be done is an excuse to not actually “do” to be a way to try to shut down debate rather than seek the truth. Healthy debate is highly important to achieving your goals. If instead you shut out discussion and focus only on doing, you end up blind to dissenting opinions.
Yes it is Tom, in that it produces value for many of us. It’s a point we make in an older version of our website:
” 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. ”
It goes on to conclude that it’s the extent to which we help each other that really matters.
In the post above, relating to a strategy plan,, it was necessary to define the scope of what was meant by social in the context of that plan.
The research and campaigning which preceded this was very much an in country hands on experience. Anti social business in this case is reflected in activities which siphon up to 80% of resources from the most vulnerable in state care which gave rise to this:
Getting back to the concept of Groupon, since writing I realise that it is probably incompatible with what we do, which is to offer our product with a 66% discount to charities and social enterprises. The revenue funds the core mission to leverage support for abandoned children. As a Groupon offer, to the extent that I understand it, 50% of,our social investment would be redirected to Groupon instead.
The great myth about social enterprises is that if they are pure, they do not profit from their endeavors. I think your definition — primary mission is social good — is much more accurate. Many, many entrepreneurs start for-profit businesses that address social issues. Making a profit gives them access to more money to do more good. In fact, much to my delight, JPMorgan Chase has suggested that impact investing be deemed an \”emerging asset class.\”. With B corps, low-profit limited liability company (L3C), and recognition as a legitimate investment rather than charity, this could be the start of something big for values-driven businesses.
Geri, Interestingly something big happened just yesterday and it was Marc Lane from the LC3 Connect group on Linkedin that drew it to my attention. Harvard seems to be on the same page all of a sudden:
The Linkedin group of just under 600 members that I manage aims to represent all these forms including the UK CIC and Yunus non-loss, non dividend distributing model with a primary social objective. It’s called ‘Social Business and For Benefit Corporations’
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