When quality and price are equal, the majority of consumers globally (53% to be exact) will choose a product or service that offers a social good impact, or a product from a company that is investing in social change. Current consumers now prefer social innovation business models to the standard, profit-driven models that most companies were founded on. With so many channels of information available to the general public, people are not only aware of social and environmental problems, but are taking action to stand by and promote businesses that are socially driven. These companies are reaching their customers through effective social good marketing and authenticity.
The Importance of Having a Social Purpose
Authentic social purpose is an advantage for any company regardless of industry because it establishes a track record of sustainability and care for customers. A socially driven business that does good while making money is a step up from the method of corporate social conscience. Rather than exemplifying large companies that make money and donate or invest into social projects, the social mission is inherent in the business itself and cannot be separated from the company’s business model. Social purpose business can often be more sustainable and effective than a non-profit or charity, which depends on funding from other sources and whose goals and operations are often too dependent on availability of funding.
Apart from investment, social change requires time, trust, and understanding. A successful social investment entails much more than creating a problem-solving product or service. Reaching out to contacts in the industry, establishing strategic partnerships with groups that may be outside the designated market, as well as collaborating with non-profit organizations and governments are all a part of success in social business. Social investments targeted to developing countries can be especially sophisticated from a legal standpoint, and often require extensive legal expertise.
Key Ingredient: Passion
Founding a socially focused business allows entrepreneurs to integrate their passions with professional business acumen. A great example of socially driven leadership is Blake Mycoskie who, in 2006, founded TOMS Shoes, a stylish shoe company built on the buy-a-pair, give-a-pair business & social model: for each pair of shoes the company sells, it donates another to disadvantage children in poor parts of the world. The company was inspired by Mycoskie’s personal travels to Argentina, where he saw that a great number of children were in need of shoes. To date, the company has given away over 35 million pairs of shoes, while recording whopping sales that have turned what once used to be an ambitious startup into one of the most popular and best loved casual shoes companies. The company has now increased its range of products to clothes, accessories, and eyewear, and gives away eyeglasses and eye health care when a pair of sunglasses is purchased.
Without Blake Mycoskie’s merging of passion and dedication, TOMS could have never achieved this amazing success. It is important that the founder, leadership team and core involved parties fully integrate and believe in the potential success of investments for the social good. Financially and morally rewarding as they are, investments for the social good involve challenges and difficulties that must be overcome by team driven by business success and social good.
Questions to Ask Before Making an Investment for the Social Good
Whether you plan to invest in an existing social purpose business or create your own, there are several crucial questions you should ask yourself:
Does my product or service solve a problem?
Is there a market for the product and service I am offering?
What values do I strive for?
How do I measure the social impact of my product or service?
Do I have a sustainable social innovation business model?
Only after you have clear answers to these questions should you move forward in making your investment.
The Bottom Line
Investments for the social good are inspiring, whether they are made by companies or individuals. But like any investments, they are not without their challenges and risks – in fact, such investments often turn out to be more difficult and demanding than traditional investments. On the upside, they are much more intrinsically rewarding. The majority of people who make a purchase today are motivated by a social impact strategy, so it is worthwhile for companies to establish these initiatives, and to fully integrate them into their business philosophy. Social entrepreneurs are business-minded but are also firm on creating change in the world. For more information about social entrepreneurship, see the work of a successful social entrepreneur utilizing online social platforms for change.