New Zealand companies doing better in the ‘social enterprise’ business
Nicky Jones discusses how two New Zealand companies have been taking notice of the ‘rise of the social enterprise’
Social enterprises in their purest form — enterprises created for the sole purpose of delivering social good — have been around for some time now. However, it feels like the ideals behind them are now blurring with more traditional business models.
Whether you are a customer, employee, stakeholder or investor, you are likely to be focusing on how businesses choose to operate and what they stand for, not just what they produce. Deloitte, in their 2018 Global Human Capital Trends, refer to this as ‘the rise of the social enterprise’ — the idea that businesses are being evaluated on the basis of their impact on society at large.
Socialised costs, privatised benefits?
The other week I had the privilege of attending an Institute of Directors breakfast where Rob Campbell, an experienced Director and Chair of a number of New Zealand boards, suggested that ‘Socialising costs while privatising benefits is unsustainable’. This suggests that it’s no longer viable for businesses to focus only on returning benefits to their stakeholders while expecting any social, economic or environmental costs of producing those benefits to be borne by society.
So how does this play out in the corporate world, where traditionally the focus has been on shareholder return at all costs? This topic is dear to my heart, as until a few weeks ago I worked for a bank. Over the past couple of years the banking sector in Australia, and to a smaller extent New Zealand, has been subjected to a number of reviews into their conduct. The issues are complex — but is it possible some banks have taken their eye off the ball in terms of the impact they were having, and the growing importance social capital has in shaping an organisation’s reputation? Losing sight of this runs the risk of destroying the goodwill and trust of customers, regulators and employees.
Social enterprise and social licence
At the base of the pyramid a business may have achieved only unenthusiastic acceptance or tolerance, while those who have worked to get to the middle level will have achieved more positive approval or support. At the top of the pyramid is the idea of ‘Co-ownership’, where an organisation has won the trust of local communities and other stakeholders, and works with them in something like a united front. Underground, below the base of the pyramid, businesses that have achieved no level of social licence at all may be facing legal challenges, boycotts and shut-downs.
Co-ownership is unlikely to be most businesses’ ultimate goal. However, achieving the middle level of approval and support, where the organisation is seen as a ‘good neighbour’ by the community in which it operates, will be important in attracting and retaining quality investors, customers and staff.
New Zealand companies climb the social licence pyramid
In recent weeks two major New Zealand organisations have upped their place in this pyramid — the Warehouse Group and SkyCity Entertainment have both come out with their plans for carbon neutrality.
The Warehouse Group, under the tag-line ‘We must work together for the wellbeing of everyone’, is carbon-neutral already, through a process of behaviour change, buying credits and planting trees. The company has published a target of reducing emissions by 32% by 2030.
SkyCity has made a commitment to getting to carbon neutrality by the end of 2019. CEO Graeme Stephens is quoted on their website:
‘Climate change is recognised as one of the biggest risks facing the planet, and we have a responsibility to our investors and communities to take action and play our part’.
To me, that is what it is all about. Big corporations don’t themselves have to save the world, but if everyone played their part collectively, we would have a better New Zealand and a better planet.
The Single Organising Idea — a powerful tool for successfully combining economic and social purpose
In his book Core: How a single organising idea can change a business for good, Neil Gaught looks at how some of the world’s businesses manage to deliver sustainable economic and social benefit, unite people, attract investment, inspire innovation, pioneer new efficiencies, and enjoy a positive reputation. Neil works with corporations from all around the world, helping them to not only define their ‘SOI’ (Single Organising Idea), but to also audit how this shows up in their current practice. He supports them to ensure their internal and external practices match their goal.
The face of work is changing amidst other historic changes in our world. There is now greater pressure on our environment, our economy is becoming less stable, natural resources are becoming scarce, and we are facing a change in the demographics, and therefore the expectations, of customers and employees.
These are all good reasons for organisations to start thinking about their true reason for being. This process needs to be more than just a branding exercise — it needs to be a strategic management tool that combines economic purpose and social purpose into one to guide all your business decisions.
This month I will have the opportunity to work with Neil Gaught when he comes out to New Zealand to share his thinking with us. The Single Organising Idea is a powerful tool that is taking off around the world. With New Zealand’s reputation for being innovative, socially aligned and environmentally responsible, it feels like it will fit in well here too. If you are keen to know more, get in touch.
About the Author
Nicky Jones is an organisational development professional with expertise in the Future of Work. She is passionate about supporting organisations to meet future demand by ensuring all of their people practices support their strategic priorities. In particular she has immense experience in strategic alignment, strategic workforce planning and talent management.