The distinction between the business and social sectors is becoming increasingly fluid. Corporations are seeking to more actively address the challenges faced by society, and they are leveraging their business expertise to do so. Social organizations are looking to companies in the private sector for the best practices, skills, and know-how needed to deliver greater value to populations in need and to increase operational efficiency.
New approaches such as impact investing, hybrid value chains, and shared value are emerging at the intersection of the social and business sectors, aiming to blend the best of both worlds. In 2011 alone, 60 impact investing funds were created, raising the combined total capital available for social investments to an estimated $40 billion. About 2.8 percent of U.S. workers are already involved in hybrid social enterprises. And the European Union estimates that 25 percent of all new enterprises in Europe can be considered social enterprises.
Within this context, the concept of “social businesses”—companies with a primary objective of solving a social problem by applying business principles—has attracted particular attention. This report takes a closer look at social businesses from the perspective of a corporate organization. It highlights the value of the concept and how companies can develop a social business, with a special focus on the lessons and best practices needed to succeed.
While the report focuses on best practices for social businesses, many of the same lessons can be applied more broadly to other ventures at the intersection of the social and business sectors.
The report has been written in collaboration with Professor Muhammad Yunus, Nobel Peace Prize Laureate 2006, founder of the Grameen Bank, and early developer and implementer of the social business concept. It is based on an analysis of the lessons learned from ten social businesses that operate in Bangladesh today, each tackling a different social problem affecting people at the bottom of the economic pyramid. (See Exhibit 1.)
Many of the social businesses described are joint ventures between a Grameen organization and a multinational partner such as Danone, Intel, Veolia, and BASF. While several of the businesses are still in the learning stage, others—such as Grameen Shakti and Grameen GC Eye Care Hospital—have already achieved social impact, significant scale, and financial self-sufficiency.
The contents of this report are based on on-site workshops with managing directors and key staff, site visits and customer interviews, interviews with corporate partners, a web survey of the managing directors, and a detailed data analysis.