The Identity Crisis of Social Entrepreneurship.
People confuse them for charitable organizations, and that’s more than a branding challenge.
Tell someone you meet that you are a social entrepreneur and you will notice their confused look. They do not know if they should admire you or feel sorry for you. Tell a venture capitalist that you are a social entrepreneur, and you will very likely hear words such as “There is no such thing as social entrepreneurship.” Another VC says “You can’t be a for-profit social enterprise — keep charity separate”, he advises. In general, social entrepreneurs will spend a lot of time explaining how and why they are not running a non-profit organization.
When you hear of social entrepreneurship you will hear the term change-maker, but not money-maker. Sustenance for entrepreneurship comes from profits. Even a social entrepreneur needs to make net profits to stay in business.
Even a startup can be proactive in the nurture of ‘Goodwill’ as an asset.
The difference between a social entrepreneur and the normal (that’s a deliberately chosen descriptor) entrepreneur, I suspect, is the social entrepreneur’s ability or willingness to recognize early in the entrepreneurial lifecycle, that one can be proactive in the development of goodwill as an asset in one’s community.
The mindset of a social entrepreneur is fundamentally different from that of the organizer of a non-profit or a charitable organization. The social entrepreneur is an entrepreneur by nature. She wants to be able to move swiftly to address market opportunities. She may not want the rigidity of a non-profit organization’s regulations. She may prefer a for-profit status and yet create something that is good for people, and something for which people will gladly pay a market-price. She may cherish being able to retain creative control of what she is building. She may enjoy business ownership. She may believe that one can do well and do good by delivering economic value to the community.
Social entrepreneurs may be perfectly fine with self-imposed rules of how they will price their products for reasonable profits and growth, while simultaneously focusing on products that contribute to a society’s betterment. Or they may be willing to charge a high price as a signaling mechanism that they are creating a premium product, while giving away a lite-version for free to still make a difference in the community.
Social entrepreneurs may not want the rigidity imposed by laws that govern non-profit organizations, but they may be perfectly fine to step up and become more transparent as an organization, as seen with B-Corporations or with some startups that are extremely transparent.
Social entrepreneurship is a choice that such entrepreneurs exercise — to allow market forces to determine the value of what they are building.
Social entrepreneurship is a choice that such entrepreneurs exercise — to allow market forces to determine the value of what they are building. It is a choice they make to embrace the efficiencies that come only when customers speak with their wallets. A non-profit, by separating funding sources from customer delight, inherently dodges the rigors of efficiency, productivity and money-for-value that is forced upon it by an unforgiving market. The concept of money remaining in the budget that “must be spent” by the financial year-end does not or should not exist in a social entrepreneurship.
However, social entrepreneurs, if they do not brand themselves with clarity, can cause themselves expensive detours, avoidable heartaches and needless runarounds because no one will take the time to explain to the social entrepreneur that they simply ignore emails from a social entrepreneur who has not established a not-for-profit organization.
The reality is that social entrepreneurship is misunderstood. There is a consequent lack of societal support systems that non-profit organizations have come to take for granted over the years.
The confusion is so pervasive that a major entrepreneurship conference recently recognized a non-profit organization’s Executive Director as the ‘Social Entrepreneur of the Year’. To add to the irony, the non-profit’s founder had passed away decades ago, even if one were to define a non-profit as an entrepreneur’s creation.
From a branding perspective, entrepreneurs should be selective about when and where they refer to themselves as social entrepreneurs.
A social entrepreneur must only be involved in community service under clear organizational banners that can fit into known categories — such as a for-profit, a non-profit entity or a charitable organization — because our society does not know in which slot social entrepreneurs fit. They are floating without direction in a no-man’s land.
Social entrepreneurs must create and own a clear definition of how the world should slot them.
Social entrepreneurs can never compete with non-profits on an economic footing.
Otherwise, their startup brand’s perception can get lumped with non-profits, or charities — in which case they lose out. They lose out because they can never compete with non-profits on an economic footing. Civic policies and corporate policies do not yet recognize the social entrepreneurs’ startups as purpose-driven enterprises that cannot collect donations to sustain themselves.
However, there is a bigger risk with social entrepreneurship. If the social entrepreneur does not strive for clarity in how her brand gets perceived, her brand risks being perceived as a wolf in sheep’s clothing.
Wearing a brander’s hat, my recommendation to social entrepreneurs is to use the ‘social’ prefix with discretion — because, on the one hand, it may hurt your venture and on the other it may not help the cause you care about.
The only place where the ‘social entrepreneurship’ moniker might help is in recruiting mission-driven talent. Save the term ‘Social Entrepreneurship’ for your job ads.
Let the ‘social’ flavor of your entrepreneurship be your secret super-power as you keep building your goodwill faster than your competition. You will start seeing results not just in better hires, but in better relationships in the marketplace, better customer retention and better customer evangelism for your brand.
Let your entrepreneurial venture’s actions in the community you serve determine how such community wants to define you — whether as an employer, or a vendor, or a buyer. So long as you are profitable and are staying in business, you are in good shape to continue to be purpose-driven. So long as you are doing good in society by building something that makes lives better and creates jobs and feeds families, your brand will be thought of fondly. You may even be considered a social entrepreneur — whether referred to as one or not.
The author Ramesh Sambasivan is the principal designer and program lead at SiliconGlades, a business innovation and design firm that helps startups with product marketing viewed through a social-impact lens, and helps more established organizations uncover their Sales DNA to achieve growth through giving.
This story is published in The Startup, Medium’s largest entrepreneurship publication followed by 319,583+ people.
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