Top Six Traits Of A Social Business
There is a whole lot of confusion between what is social media and what is social business. Whereas social media is a set of tools and technologies, social business is a way of doing business. An interesting definition of social business defines it as an organization that focus on benefiting its entire ecosystem (customers, employees, owners, partners) by operating through collaboration,sharing of information, and a permanent readiness to innovate.
Even though social businesses are connected with social media and can use social media to improve the organization, we are speaking about different things. Social media is commonly understood in the context of communication. It is a tool largely used now in marketing by all kinds of businesses. But a social business is much more than that.
Social business was first defined by Prof. Muhammad Yunus, in his book written in 2007: Creating a world without poverty—Social Business and the future of capitalism and Building Social Business—The new kind of capitalism that serves humanity’s most pressing needs. Yunus, who is widely know as the pioneer of the concepts of microcredit and micro finance, is a Bangladeshi social entrepreneur, banker, economist and civil society leader who was awarded the Nobel Peace Prize for founding the Grammen Bank.Quote by Muhammad Yunus
In his book Yunus defined a Social Business as businesses created and designed to address a social problem. Such business is a non-loss, non-dividend company that should be financially self-sustainable and that has an interesting approach to profits. These should be reinvested in the business itself (or used to start other social businesses), with the aim of increasing beneficial social impact. This could be done for example by expanding the company’s reach, improving the products or services or in other ways that sponsored the social mission.To his eyes a Social Business is unlike a profit-maximizing business, as its main goal is not to maximize profits (although generating profits is desired). Furthermore, business owners are not receiving any dividend out of the business profits, if any.
Yunus mentions that by controlling the energy of profit-making, by shifting that energy to the objective of fulfilling human needs, social business creates self-supporting, viable commercial enterprises that generate economic growth even as they produce goods and services that make the world a better place.
In 2010 Yunus wrote a new book: “Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs” describing how social business has gone from being a theory to an inspiring practice, adopted by leading corporations, entrepreneurs, and social activists across Asia, South America, Europe and the US.
Social Media and Social Businesses
With the advent of social media, many companies have adopted the terminology of social business, even though they use social media still and mainly as a communication and marketing tool.Social Business/Social Media. Image Source: Brian Solis
An important key aspect of a social business is communication. Communication has changed. The new communication platforms are driving new behaviors, new activities, and provoking evolution and social change. There is a whole set of new values that are increasingly heard in society and in social media walls, such as openness, empathy. social justice, compassion. These words have a place as well in the business world. Social businesses know that the way they talk and interact through the new communication channels, such as Facebook, twitter google plus, is very important and makes a difference. The increasing transparency and loss of privacy that ethnology has brought to the current times, demands as well from businesses that they comply with their agendas of being engines of beneficial social change.
What can be considered the main six traits of a Social Business? According to SideraWorks, a collaboration and social business consulting firm these are:
Balancing speed of response, communication and information sharing with thoughtful coordination and long-term scalability.
Communicating with less friction across organizational lines, in ways that distribute and improve access to knowledge among stakeholders. Acknowledging and rewarding innovation, creativity, thoughtful feedback and collaboration.
Allowing communities to self-organize within the business to solve business problems and share insight and trusting decision-making to happen at the margins of the organization.
Sensibly integrating and deploying technology that removes barriers to communication rather than creating them, and improves the information flow among customers, prospects, teams and partners.
Listening and using established as well as new sources of information. Leveraging data and analysis not just to track activity but to actively inform business decisions and feed intelligence back into the business to improve products, services and processes.
Designing an organization that is flexible to the needs and demands of employers as well as customers, and believing that continuous adaptation and evolution is not only critical to survival but desirable in order to stay ahead of the market.
Looking at what Prof. Muhammad Yunus and Hans Reitz, the co-founder of Grameen Creative Lab consider as the traits of a social business and other sources, it seems that there is still a bit of confusion out there and that maybe we moved out of the focus of what a real social business should be. For Muhammad Yunus a social business follows seven principles:
- Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization
- Financial and economic sustainability
- Investors get back their investment amount only; no dividend is given beyond investment money
- When investment amount is paid back, company profit stays with the company for expansion and improvement
- Environmentally conscious
- Workforce gets market wage with better working conditions
- Do it with joy
One way or another it is interesting that companies are so willing to adopt the terminology of social business, evidenced by the massive way these have been embracing new social media platforms, and a whole set of vocabulary and values. It is though important to remember thst social media is just “social” because of the people and their social relationships.
There, resides the core meaning of a social business: a business that benefits the whole of society in general and that thrives through the main new vocabulary that defines the world of today: connectedness, share, trust, and relationship.
Maria Fonseca is the Editor and Infographic Artist for IntelligentHQ. She is also a thought leader writing about social innovation, sharing economy, social business, and the commons. Aside her work for IntelligentHQ, Maria Fonseca is a visual artist and filmmaker that has exhibited widely in international events such as Manifesta 5, Sao Paulo Biennial, Photo Espana, Moderna Museet in Stockholm, Joshibi University and many others. She concluded her PhD on essayistic filmmaking , taken at University of Westminster in London and is preparing her post doc that will explore the links between creativity and the sharing economy.