The caring conundrum – beyond badges for social enterprise

save the earthGreen not working? Try chocolate...

At a loss for how to explain what I do for a living, my sister once described my work as “something to do with pyramid schemes and poor people.” I can laugh at it now (the base of the pyramid is an awful phrase for a number of reasons), but the incident highlights how contradictory most people find the combination of capitalism and doing good for the world.

Even when familiar with enterprises that use “capitalism for good”, most people generally call to mind a class of companies that fill a small, though often profitable, niche of eco- or socially-conscious consumers. By in large, growth in those markets is defined by how much you can make people care (about the planet, about people, about pandas).

Green badge: Do Good, Buy Now!

There’s another class of companies, however, who may use green means, but who don’t rely on consumer sentiment about society or the environment to sell their stuff. Among these are many of the companies I have worked with in recent years, where the name of the game has been catalyzing massive new markets, primarily in the so-called base of the economic pyramid. While they used inclusive means to serve poor communities, these companies’ goals were those of growth-seeking, profit-oriented enterprises.

For example, in Kenya, SC Johnson is scaling a business model and experimenting with product lines that are focused on cleaning community latrines: shared pit toilets that the majority of the world uses. It turns out that Toilet Duck will only get you so far. SC Johnson has developed a business that both empowers local entrepreneurs and builds on a critical community health need, but the end goal is to create an enormous growth market for the company.

Buying In - the Secret Dialogue Between Who We Are and What We Buy

Or consider a couple of examples closer to home: in his thought-provoking book “Buying In”, New York Times reporter Rob Walker describes the companies American Apparel and Method, who build ethics into their products rather than their marketing.

Making ethics central to the product, but not the product's image, pretty much inverts the way most marketers thought about how ethics plays in the marketplace. By and large, most have focused on something closer to a 'badge' strategy - positioning eco-awareness or concern about labor issues as a form of status, through a barrage of niche products and subbrands.

Walker goes on to discuss the positive impact the two companies achieved by focusing on green means, rather than ends:

Given how many consumers claim they want to buy green, you might think the brand might have made that the core of its image. But Method's owners--like [American Apparel's CEO] Charney--evidently decided that pitching their products on this basis alone (or even primarily) would not attract the audience they wanted. So the instead they emphasize design, and it's likely that this approach has brought their ethical product to a far wider group of consumers than an eco-badge approach would have.

Would either Method or American Apparel be considered a social enterprise? Maybe, though probably not by everyone’s definition. How about eBay or oDesk, two companies that are neither socially motivated, are clearly profit-driven, yet still create significant income generating opportunities for people all over the world? Probably even less likely.

But what if we used a broader definition?

For me, a social enterprise has come to mean a business that creates positive net growth for people or the environment, regardless of its green means or ends. And while that net growth is critical, whether or not the company touts it is not. In fact in my experience the company’s growth - and therefore its impact - is often limited by how much it depends on consumers caring that the company is green. And while the green badge companies may be making a big impact, nobody claims it's big enough: a caring market can only support so much.

Amory LovinsAmory Lovins: "The stone age didn't end due to a lack of stones."

I have often heard sustainability guru Amory Lovins use the quote “The stone age didn’t end due to a lack of stones” to illustrate the point that by in large, the world changes when better options become available, not when the old options become untenable. Just look at the Internet, which has exploded far beyond what its original champions had ever imagined.

The Net didn’t grow because our old forms of communication and doing business weren’t working, nor did it grow because we offered bigger, cheaper pipes. The Internet grew because we figured out better uses for it.

Likewise, the world doesn’t have to end for green to become the better option, but as social entrepreneurs, innovators, and Peddlers of All Things Good, we do need to apply all our ingenuity to make green the better option.

The world may depend on it, but don’t depend on the world caring about it.