“Bill Ackman said the goal of the program is to encourage social entrepreneurs. ‘Big problems need big thinkers and courageous entrepreneurs,’ he said. ‘We hope to draw upon a broader range of entrepreneurial young people as we work to identify young leaders who wish to make a difference in the world,’ he added.”
From an article about funding for social entrepreneurship programs. Social entrepreneurship is an interesting idea but I am still with Joseph Steig about just making money. It’s a straightforward way to plan and to measure success. Handling social problems is for other aspects of society and a well-run business would already take the well-being of its stakeholders into account. You can’t effectively maximize performance while having a second mission.
It’s also confusing to try to do so. A company that has to clean up after itself is already failing. Does the company make a profit or clean up its oil spills? If it were making a real profit, it wouldn’t have social aims to achieve to make up for its externalities.
I agree that competition can be harsh but it also weeds out people who want to be participating in it, as opposed to building their own system and succeeding there. Business is about making the best thing or providing the best service. Most of the fair trade, socially responsible stuff that I see is also of poor quality.
An African woman who asked Richard Branson for $300 and then returned his investment is a good example. She just wanted the money and knew exactly what she was going to do with it, and she provided a return that she clearly defined after making a decent product. There weren’t excessive emotional strings and there wasn’t a narrative about how awful her life was – charity was unnecessary. [From Business Stripped Bare.]
Two bad things happen when we mix business and charity:
- Business fails to deliver the best output that it can;
- Business takes over sectors of society and of nature that it has nothing to do with other than what that relationship would be if the business created real value.
Stakeholder management prevents both of these things from happening. If a business defines its success in a way that includes accountability to stakeholders – not a separate mission but just not creating externalities – it performs optimally and its profits are real value that it has created for human beings. Stakeholder management also prevents business from taking up too much space, and for assuming stewardship or ownership over things that it has no right to and has historically mismanaged.
EPS should include stakeholder management considerations and businesspeople should abandon narratives about helping or about being enlightened. Business and the paradigm in which it exists already to some extent caused the suffering that microfinancing is trying to alleviate. You can’t take someone’s land and then call yourself a friend for giving back 1% of it at a 5% return to yourself.
Business involves a different kind of fairness, one that works well within appropriate boundaries and that otherwise cheapens human relationships when it tries to seem more about them than it is.
Workaholism and the constant compulsion to be busy – and a desperate need to seem to have lived a life – are behind “socially responsible entrepreneurship.” Instead of having real friendships, we’ll buy the trust and love of people who have no choice but to give it to us.
So I remain profit-oriented and I prefer to evolve business using the tools already in it – financial reporting and the decision making of management.
[I’ve changed MABBH to May All Be Happy because it’s shorter and snappier.]