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.
Back in March, when we were first reacting to the lockdowns of the early pandemic, it became clear very quickly that the economic and social effects were going to hit the poorest people the hardest.
Our serial entrepreneur Gjergji is setting up a textile social business to create over 130 better paying jobs with exceptional working conditions for vulnerable women in Albania.
IKEA Foundation and Yunus Social Business carried out a 6-month joint research project, getting to the bottom of this question: With ever more organisations joining social-business ecosystems, how can we all start to plug the gaps in the support landscape?