The old business model is leaving many people cold — literally — and the rest of us are feeling the pain in one way or another as well.
As companies continue to lay off the people they once called their “greatest assets,”we, as consumers get less and less service and satisfaction from our purchases. It’s brought into question the traditional business model with its laser focus on profits.
There must be a better way.
Social Enterprise is a new business model that seeks to fill this void. By putting people and purpose above profits, social enterprise offers a way to do business that may be more satisfying and sustainable. The traditional business uses market forces to make a profit. A Social Enterprise, by contrast, is any organization that uses market forces to make a social contribution.
As the founder of a mid-sized IT services firm, Kate Emery decided several years ago that she wasn’t comfortable with the traditional model. So she moved Walker Systems Support to the Social Enterprise model and changing practices to embrace Social Enterprise principles:
• Participative Governance — Rather than making all the decisions, Walker Systems has developed a culture where Action Teams made up of cross-departmental groups help make policy on everything from dress-code and telecommuting to what to do when the economy hit them hard in 2008. “Not all decisions can or should be made through the democratic process,” says Emery, “but whenever possible it makes sense to have everyone who will be affected by a decision to be able to weigh in.”
• Transparency — Walker employees get detailed financial and strategic information at regular meetings and can ask questions and discuss relevant issues. While the traditional model imposes a “need to know” approach to sharing information, at Walker there has to be a need that requires limiting access to information. While specific salary information isn’t shared, information regarding company finances and salary bands are available to all.
• Socially responsible, ethical business practices — Walker operates by the golden rule, and considers the Seventh Generation when making business decisions. (This is an Iroquois philosophy where each decision made by the tribe should benefit the seventh generation of descendants). Emery says, “We want to do more than protect our community and the planet — we want to leave it better for our having been here.”
• Fair and equitable compensation — Everyone at Walker is on one of 15 tiers of compensation and these tiers overlap. “This prevents the executive pay discrepancies like you read about so often in the news,” Emery says. “Hopefully someday we’ll all get ridiculous compensation, but it will all of us or none of us together.”
• Profits distributed to all contributors — Any profits distributed by Walker must be split equally between employees, investors, and the community. “In the traditional business model, shareholders are referred to as owners, which is really an awful misnomer which has had catastrophic results,” Emery says. “Public shareholders are really just investors, and so too are the employees who spend a good part of their day, their energy and their intellect for the benefit of our clients and of Walker. That makes them investors in my eyes. We also believe that we have a debt to the wider community in which we thrive.”
According to Emery, “The ironic thing is that when you move away from profit as a focus, you will often become more profitable. We’ve been very successful at Walker in good part because our business model attracts great people, and our clients benefit from this which ensures our future.”
There are many flavors of social enterprise and many organizations exploring their own unique brand of this new model. If necessity is the mother of invention, then we can expect to see many creative ideas coming forward.
Mary Jo Keating handles marketing and communications for reSET, the Social Enterprise Trust, in Farmington. Reach her at 860-805-4565.
Forum Explores Issue
Interested in learning more about Social Enterprise as a business model? A June 2 breakfast forum — entitled Beyond Business as Usual — will feature panelists Kate Emery, founder of Walker Systems; Bob Forrester, CEO of Newman’s Own Foundation, and Joy Anderson of Criterion Ventures. The event will be held at The Hartford Club from 7:30-9:30 a.m. Cost is $30 ($10 for students) and includes parking. For more information and to register, visit www.SocialEnterpriseTrust.Org.
