Research: Designing a Social Business that Benefits the Core
Research: Designing a Social Business that Benefits the Core
This post was originally published at bcg.perspectives. By Douglas Beal, Florian Dahl, Sophie Eisenmann, Daniel Nowack, and Frauke Uekermann
A growing number of companies around the world have launched social-business subsidiaries as part of an agenda to bring about positive change. Such businesses are designed to solve a social problem, such as unemployment, malnutrition, or hunger. Unlike a charity, a social business aims to be financially self-sustaining; profits are reinvested to advance its social mission. It is notable and encouraging that large corporations, in particular, are joining this movement, given their deep expertise and ability to scale up initiatives rapidly.
Since 2012, BCG has been partnering with microfinance and microcredit pioneer Muhammad Yunus—a recipient of the Nobel Peace Prize and the founder of Grameen Bank and Yunus Social Business—to advance social-business initiatives. In the course of this collaboration, we have discovered that a social business does not just have a positive impact on the community it is designed to serve. It also delivers tangible benefits to the parent company. (See The Power of Social Business, BCG report, November 2013.) While some of these benefits are to be expected (such as positive brand perception and strong employee engagement), others are perhaps more surprising. We have also learned that companies do not automatically achieve these benefits when they launch a social business. They must be earned through careful upfront planning and thoughtful execution.
We took a holistic, expedient and humane approach to support smallholder farmers in Colombia
On 20 March this year, Luis Miguel Botero discovered that his social business, Pomario, faced an existential threat. It was the day that a nation-wide quarantine in Colombia was announced, which was ultimately extended until the end of August. For Botero, as for many business owners, this presented the threat that his social businesses’ revenues would disappear overnight.
Social Business Spotlight: Impact Water
Over 9 million Ugandans lack access to safe drinking water, that equates to the entire population of London. Without access to clean water, it is estimated that 440 children still die every week due to waterborne diseases.
The Life-Savers Now Need Saving
Corona has already delivered a punishing blow in Germany. In developing countries, it’s hitting like a Tsunami. The economy has been brought to its knees. Half a billion people could slip deeper into poverty. Social businesses are part of the solution.
