A Battle to Define Social Business: A David and Goliath Story

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The Battle for “Social Enterprise”

I dare you: define social businessLast summer I was invited to moderate a panel at the massive Dreamforce conference put on by Salesforce.com each year. I didn’t know it at the time, but I had inadvertently stepped into a David and Goliath struggle for the meaning of “social enterprise.”

To call it a David and Goliath story probably isn’t fair. Goliath after all, was a huge, mean brute. And while Salesforce has certainly gotten huge, you’d be hard pressed to describe its CEO, Marc Benioff’s behavior in this struggle as mean or brutish. You see, he and his company had been feverishly transforming their Customer Relationship Management tools to take fuller advantage of the social web. They’d also been working hard to move more fully into the market for enterprise corporate customers. So, perhaps Benioff and crew can be forgiven for a little myopia in trying to merge the words “social” and “enterprise” to create a new meaning that would distinguish themselves in the market.

In steps David, played by Peter Holbrook, the CEO of Social Enterprise UK. The social entrepreneur community was concerned that Salesforce’s use of the term would create confusion around their already well-established usage of “social enterprise.” And so, when Salesforce applied for a trademark on the term in July 2012, Social Enterprise UK formed a coalition called “Not in Our Name.” They carefully aimed their stone, and let fly with an open letter asking that Salesforce cease “to use the term ‘social enterprise’ for private profit.”

Not long afterwards, the title for our Dreamforce panel was discreetly changed from “Social Enterprise for Social Good” to something without any reference to “social enterprise.” I didn’t know the reason at the time, but within a week or so came this public response from Salesforce:

“It was never our intention to create confusion in the social sector which we have supported since our founding. As a result of the feedback we received, salesforce.com has decided to withdraw its efforts to trademark the term ‘social enterprise’ and plans to discontinue its use in our marketing.”
Marc Benioff CEO, salesforce.com

To their credit, how many companies do you know that would make this same call, and so quickly and decisively? I worked with Salesforce for several years in my last job. While legal and PR considerations no doubt played a role in this decision, I can  tell you that this company does care about the social sector, and I’m betting that was a real factor here.

A New Front: Define Social Business

As this saga illustrates, there is a struggle going on right now over how we use the term “social” within the context of business. For technologists “social” means people’s social connections – as in social networks and social media, as well as tools for engagement and relationship management. For social entrepreneurs,”social” means “societal” – as in societal impact and societal good.

Muhammad Yunus works to define social businessThe battle over “social enterprise” may now be decided, but the struggle to define social in business continues – with yet another David and another Goliath. At stake this time is the term “social business” and here the ‘Goliath’ is tech giant IBM while David is played by Muhammad Yunus, the Noble Prize-winning economics professor who pioneered the field of microcredit.

In 2007, Muhammad Yunus published Creating a World Without Poverty: Social Business and the Future of Capitalism, where he first tried to define social business in detail. According to him, social businesses address societal objectives, and because they are businesses, they are what Dr. Yunus describes as “non-loss” generating. In other words, unlike philanthropy-supported nonprofit organizations, social businesses must be able to financially sustain themselves through their own earnings potential. In addition, the Yunus brand of social business is what he calls “non-dividend,” which is to say that once its investors are paid back, all profits are reinvested back into the business. This non-dividend aspect of the social business maps very closely to the notion of “regenerative business” that is so central here on The Vital Edge.

Right around the same time that Dr. Yunus was working with Dannon to build a proof of concept for his brand of social business (in the form of a joint venture yogurt business in Bangladesh), IBM began organizing itself around the market for social technologies. IBM has a long history of developing knowledge management and collaboration tools, and they began to see social tools like blogs, communities, microblogging, bookmarking, and wikis as a natural extension of this work. A new software category was emerging – some called it “Enterprise 2.0” while others called it enterprise social software. IBM embraced the social framing and began describing this technology revolution as “social business:

“From marketing and sales to product and service innovation, social is changing the way people connect and the way organizations succeed.”
IBM Social Business website

How Does “Social Business” Impact You?

Social in BusinessSo how do these different definitions of “social” in business affect you as a leader of mission-driven business? The short answer is that both definitions are important; in fact, they strengthen each other.

Technology terms come and go like fashion. In the nineties, it was e-commerce. That technology hasn’t disappeared, of course. It’s just become so ubiquitous that we no longer define companies by their use of it. We don’t call Amazon an e-commerce giant. It’s just a retailer; a huge, online retailer. The same will soon be true for “social business.” To succeed in business, you will be social – in the IBM sense. It’s just that we won’t call you a “social business” as if that were some separate category of business. In order to compete, all businesses – including yours – will be using social tools and strategies. It is the new nature of business.

More importantly though, social technology is particularly important to social entrepreneurship. Dr. Yunus is keenly aware of this importance, even devoting a whole chapter to it in his book:

“The new IT’s unique contribution comes from one fundamental fact: it is creating new relationships among people.”
Muhammad Yunus in Creating a World Without Poverty

Social technologies do create new relationships – and help companies put those relationships to work. Arguably, these tools may even be more important to businesses like yours that care about their impact in the world than they are to regular businesses.

Mission-driven businesses have an edge over regular businesses when it comes to engaging people because they draw upon the power of purpose. This sense that we’re contributing to something bigger than ourselves is a powerful intrinsic motivator that almost always outshines the drive for money, prestige and power in building deep and lasting commitment. Combine that with social technologies, and you have an amazing engine for engagement – a ‘platform’ through which people inside and outside the organization can contribute both economic and social value.

Companies that practice stakeholder principles draw on a much broader set of relationships than most normal businesses. They build healthy partnerships not just with customers, distributors and suppliers, but with all of the people with a stake in their work. Relationship management and social technologies will play a particularly critical role in helping firms like yours manage this complexity so that you can maintain the vitality of these relationships over time.

SlingshotIt’s unclear whether the social business championed by Dr. Yunus will ever reach the scale and profitability of the enterprises targeted by IBM’s use of the term. And perhaps it doesn’t even matter. For one of the most amazing attributes of social technology is its ability to make the small look and act large. Social technologies open the firm to outside contributions in ways that help them scale much more quickly, nimbly and cost effectively than traditional firms. Think, for example, about the relative ease with which Twitter and Facebook have risen to such prominent status in our economy and our society. In this sense the social technologies now redefining business are the ultimate equalizer for bringing down the giants of an old economic order – a slingshot for the many Davids of social business.

All it takes is a little courage and some good aim.

David and Goliath photo
Yunus photo:  

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