Creative Capitalism + Social Innovation = New Social Enterprises that Make Money and Change the World

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We need more (and more innovative) social enterprises and I really want to see a top tier MBA programs with specialization in Social Enterprises. Call it B-school needs S-school. There are so many problems out there and sometimes we feel we are almost giving up. Our capitalist system is not adjusting well to these shocks. It is almost pointless for these endless debates on how things got to this point and who is to blame. The point remains: We’ve got to change it—and change it fast – and change it for the better.

The last thing we want to replace these problems with a set of newer problems, I’ve seen in many case when smart people think they have a solution, but they are simply migrating the problems. There is hope. The good surprise is that business—the same institutions that bear a fair amount of the responsibility for the current situation—is also the most potent force for bringing change. No government alone can make that happen. Businesses are powerful, if we can align the forces. There are hundreds of social enterprises which are doing exactly that.

Who invented the social enterprise? Or the better idea is how do we reinvent social enterprises so they can be good business and good citizens. Not good business and bad citizens or bad business but good citizens. Peter Drucker argued that in this post-capitalist society (not sure I agree with that term), managers must learn to negotiate a new environment with a different set of work rules and career expectations. Businesses exist to serve social purposes, they have to function in ways that make sense to the society in which they are situated – and in the case of multinational corporations, they often have to function in ways that make sense across more than one society, at a deep level.

Social enterprises can change the world for the much, much better. If social entrepreneurs can navigate around the challenges and become some of the most popular brands of the world. For now, they need to improve the odds and make sure that they can proof that it works. I am very convinced that the concept works, it is just exceptional challenges are needed to be overcome. Some realities. I don’t know the success rate of social enterprises. I don’t think it is higher or lower than the average business. Like any business, social enterprises fail—because businesses fail. But how come social enterprise didn’t scale—like many other businesses with successful business models?

The way I see it, it is not uncommon that traditional social enterprises did not attract the best and the brightest entrepreneurs, many are into the mission and not interested in the business. The other reason is there is a lack of appetite or aspiration for them to take it global or to a larger scale. And then there is the question of capital availability and time frame to achieve scale. Too many are forced to think survival, rather than innovation and growth. There needs to be series ambitions to make sure the social enterprises leverage their mission and commitment to changing the world and transform our future. That’s a big mission. And it is not mutually exclusive to pursue the mission and not ignoring the competitive dynamics of the industry that you operate in. What’s the best example? Here is one.

Rubicon Programs is a $16mm social enterprise in SF focusing on helping with employment. It started initially as a drop-in center in Richmond, California, for very low-income people with severe disabilities. Their first social enterprises were very small programs that were seen more providing with some training than anything else. Today Rubicon has evolved into an organization that today serves low-income, homeless and mentally disabled people in the businesses, housing and services it provides. About one-third of the people currently served have a mental health disability, so its original focus is still a part, but not the largest part, of what Rubicon does. It is a one-stop shop for those trying to escape poverty. It not only helps clients find homes and jobs but also offers career, mental heath, and family counseling, as well as technological training and money-management programs.

Take Rubicom Bakery as an example, they produce a range of delicious cakes and tarts. The high-quality and handcrafted products are baked from "scratch" recipes and use only the best of ingredients including fresh-grated carrots, Maine blueberries, real butter and Dutch chocolate. We use absolutely no preservatives and our products include no transfats. The bakery also serves as a unique training center, preparing people for employment with Rubicon or other employers. Job training, counseling, and peer support provided in a dedicated baking workshop, classroom with audio-visual capacities, and a job search center with computer terminals help participants develop their work and life skills. Everything integrated, almost like the Cornell School of Hotel Management. There is even an online store, too.

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