NGO Business as a Social Enterprise or an Inclusive Business — Reflection on a journey

Social enterprises are organizations that apply commercial strategies to maximize human or environmental well-being. Why it is so hard?

Originally published December 7, 2017

Almost 5 years ago I departed from the private sector to go into private sector development hoping to bring business mindset and support social entrepreneurship and inclusive business growth. And I both did and didn’t. In the UN Development Private Sector team we were just advocates for the inclusive business strategies, and tremendous business opportunities tied to expanding your go to market or target audience to the bottom of the pyramid. But now when I am really trying to do it, I wake up with too many challenges and dilemmas on my 6th month of the social start up life.

When I was in NYU — Abu Dhabi program Venture Launchpad — one of our mentor, who was very enthusiastic to the idea of my start up — asked to the audience “What is better? First, make some money and then do good? Or just do good but never build anything too cool?”

The majority of the participants fully agreed on the first choice, acknowledging how much more can be done if keeping the business acumen all along from the very beginning, and I argued that they are pathetic and just wish to stay within their comfort zone — where money is: throwing fin-tech, blockchain, AI into their pitch decks, and getting put off with the words vulnerable youth and refugees — that was in dominance in mine.

Almost three months later this is where I found myself thinking. It takes a lot to build a product — business process. Services are rarely scalable and NGOs and quasi-NGOs, i.e. including many social enterprises, prefer this space as they come with the mindset of servitude and public service in general. It is a ‘sexy’ space, easily picked up by media because of all of us want to do something good with our lives. But they rarely scale because building franchisable system or working businesses processes that some service companies, like advisory firms, do require a lot of investment in talent so to increase the bottom line that is just often not there for/in NGOs. Understaffed and hungry for funding they often run themselves into trying to sustain as opposed to improve.

In my ideal world:

• business people are driven by increasing share-holder value, thus very concerned in choosing best and most efficient ways, best vendors, and driving customer demand.
• the social ecosystem, even if rely on funding, should be run with the very same ways but driven by the principle of social good — firm belief in the ideal, igniting just the same perseverance within them.

But in my opinion, the second version has not been achieved. Somewhere along the way, the original ideal just gets forgotten, the ‘musts’ became ‘shoulds’ or ‘maybes’. People have become very comfortable.

In parallel, businesses are opening up to inclusive models and it is a promising trend. Microsoft, Google, L’Occitane, IKEA… But the reason, why the inclusive business is easier than a social enterprise model, because they ALREADY built their processes with the grind of the business and not of the social sector. They invested themselves to build something from scratch driven by the ideals of markets first, and not with the ideals of empathy and servitude.

So, now I am rethinking on what the audience responded back then in September. I no longer find them pathetic, I find them smart. Indeed they can achieve more, because they won’t be put off with the inefficiencies, challenges and obstacles along the way — they would build a working system, working process, market-driven product first, and find the ways to integrate social impact when their run way, confidence and safe space to socially innovate would get to another level. They won’t run themselves and most importantly their processes into dependency of NGOs that dominate that ecosystem. Instead, they will come later, with the working system.

Thanks for reading my reflection on this bumpy journey of a start up. And I no longer want to add “of a social enterprise”. The best to do is to take a social challenge and make it into a business opportunity. It can be a bit harder and you need to stretch just a bit more than the regular, but make it a business. Not a quasi-NGO. The social impact part can be your lighthouse on your way to energize you when things get tougher, but still make it a business.

Cheers,
Karina