Social Enterprise’s Missing Factor: Is There a Soul in the Corporate Machine?

May 10, 2018; BWPeople.in

A report from Deloitte entitled “The Rise of the Social Enterprise” certainly gets some things right, but it gets one very fundamental thing wrong—its retro framing of the whole topic. In fact, it appears to make the assumption that becoming a social enterprise has almost nothing to do with ownership and, well, we just do not agree with that. There also appears to be a heavy dose of wishful thinking. The Deloitte report cites a statistic that 65 percent of CEOs rated “inclusive growth” as a top-three strategic concern, more than three times greater than the proportion citing “shareholder value,” but we’re guessing that “shareholder value” gets more play than “inclusive growth” when it comes to those quarterly investor meetings.

What they get right are some of the forces at work that indicate an appetite for social enterprise. They describe the three factors they identified this way:

• Growing power of millennials. Millennials comprise a majority of the workforce in many countries, and their power is growing over time. Millennials are actively questioning the core premises of corporate behavior and the economic and social principles that guide it. Social capital plays an outsized role in where they work and what they buy, and 86 percent of millennials think that business success should be measured in terms of more than just its financial performance.
• Widening leadership vacuum in society. Across the globe, people trust business more than the government. Citizens are looking to business to fill the void on critical issues such as income inequality, health care, diversity, and cyber-security to help make the world more equal or fair. This expectation is placing immense pressure on companies, but it is also creating opportunities. Organizations that engage with people and demonstrate that they are worthy of trust are burnishing their reputation, winning allies, and influencing or supplanting traditional public policy mechanisms.
• Changing technological landscape. Advances in artificial intelligence (AI) and new communications technologies are fundamentally changing how work gets done, who does it, and how it influences society. People increasingly realize that rapid technological change, while holding out the promise of valuable opportunities, also creates unforeseen impacts that can undermine social cohesion. However, at the same time, technological advances will open up new opportunities for businesses to have a positive impact on society.

But what they get wrong in our opinion is that this can all be done without altering the ownership of the workplace to any great degree, which is, in our opinion, a good strong pillar on which a more equitable economy might be built. Apparently, we are supposed to trust existing Fortune 500 companies to manage stakeholder relationships in a fair-minded way, rather than—as the trend of the past 50 years would indicate—to further concentrate wealth at the top. In short, in Deloitte’s formulation “social enterprise” is simply another form of corporate governance to replace past forms such as “managerialism” or “maximizing shareholder value.”

Not getting much if any play in this report are worker-owned businesses and businesses built on non-extractive, community-renewing principles of development. In the end, this is what bothers us about a good number of the conversations about social enterprise in this country: They do not necessarily believe that the old core assumptions of business (growth, domination of markets, etc.) need to be altered to make way for authentic new principles that share wealth and decision-making.—Ruth McCambridge