The Profit Distributing Social Enterprise?

In a recent McKinsey article veteran researcher and business thinker Daniel Yankelovich reports that executives today in corporate America overwhelmingly agree that their businesses must not only make money, but must also serve the public good. Some 68% of executives believe that their business does both – only 48% of consumers agree with them.

It is clear that the ‘for profit distribution’ strategists are split over the role of ‘public service’ and ‘corporate social responsibility’ in the strategic mix. However the pendulum is clearly swinging in the direction of doing ‘public good’ as a core component of business strategy. The ‘profit distributing social enterprise’ is just around the corner – if it is not here already. Some would say that companies like SERCO, running everything from hospitals and prisons to railways and business support organisations, are already building this type of business structure – delivering ‘public good’ from a for profit platform.

What advantages will the third sector retain when more of the ‘for profits’ demonstrate a strong track record in providing public good? They might include:

  • the ability to release and channel the power of volunteerism in support of service delivery
  • the potential to attract philanthropic investments to fund the work
  • and perhaps most importantly a genuine passion for delivering the mission. A belief in doing it because it is the right thing to do; because it is an expression of what we value as human beings and not simply a preferred mechanism to increase return on investment to shareholder.

If we are serious about social enterprises challenging the dominant private enterprise model it is perhaps in these areas that strong management and leadership skills will be required.