My Value Impact Equation for Social businesses

Capitalism undoubtedly focused too much on revenue and not enough on impact. After participating in SenseCamp this weekend, I’m wondering to what extent are social entrepreneurs making a similar mistake and by not focusing enough on revenue?

The paradox of social entrepreneurship

I’m not the worlds best expert on social entrepreneurship so I invite others to contribute to the collective intelligence around this blog. SenseCamp brought together roughly 300 social entrepreneurs, mostly female, mostly under 30 and all driven by helping resolve the multitude of social challenges we face. The energy was great.

I co-presented an innovative new concept I’m working on with Michel Dekemmeter called Extrapraneurs. (This blog is not about that subject but for those who are curious, the goal of extrepreneurs is to build a bridge between the world of entrepreneurship (specifically impact entrepreneurship) and the world of existing business. Use the energy from people such as those attending SenseCamp, to innovate how companies create and sell value.)

One of the things that struck me about the people present was the difficultly they have in reconciling what some call the “old” capitalist economy with the “new” collaborative economy. Many of them have one foot in both. They have jobs in consulting firms or big corporations which pays their salary while trying to launch social businesses in parallel. They also tend to need some money to get off the ground and guess where they go looking for it …. in the “old” system where the money is of course. This is the paradox.

Firstly, I don’t like the “old, new” analogy as I believe we are in a transition where both co-exist and will do so for a long time. Secondly, I have no problem with that paradox. Using money from business angels who earned it though capitalism in order to create social impact and value seems absolutely fine by me. It’s about getting the balance between idealism and pragmatism.

Watch this video on one initiative happening in Paris at the moment:

Value, Impact Equation

While listening to the social entrepreneurs, I felt that most haven’t yet understood the difference between social entrepreneurship and social business. Many I spoke with seemed obsessed with helping others and were solely focused on creating “impact” without understanding how they would earn a living from this activity, enabling them to continue creating impact. My message to all of them is simple, money enables you to create value and the value you create results in impact. If you remove money from the equation you will end up struggling to create that value and therefore have little or no impact.

The goal of economy2dot0 and the reason I want to help develop extrapreneurs, is to help people and companies to put in place a business model which enables them to earn a living creating impact. That is not selling out on the goals you may have, it’s simply a way of ensuing that those goals are sustainable. Value is a subjective term and I believe part of the responsibility of social entrepreneurs is to associate social value with money.

Money + Value = Impact

Value, without money = less impact as you won’t be able to survive on thin air. You can of course go live in a commune and on a barter economy. You may even be happy there but the impact will still be less ….

To create impact, you need to build bridges with the capitalist economy

There are lots of start-ups which are currently disrupting existing business models, primarily in the “access economy” such as Airbnb, Uber. Those start-ups are the exception, not the rule. There are 1000’s of other start-ups that exist on the periphery of the capitalist economy and want to stay there as their values are completely unaligned with those of capitalism. I can understand that desire.

Collaborative Economy Belgium

Unfortunately, probably 99% of the people work in the traditional, capitalist economy and most of the resources we need to create social impact are also there. My suggestion is that if you want to measure success in terms of the impact you create, you need to start to tap into those resources and influence the people and companies who control them. This can be done either by disrupting them like Uber or by building bridges via Extrapreneurs.

To do the latter, DON’T JUDGE the “old” system, leverage it and take it on the journey with you.


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