Social Enterprises are organizations with a social purpose that earn some, or all of their revenue, from commercial activities. The definition of social enterprises is still evolving as the industry becomes more in flux, but leaders of these organizations do seek to innovate in ways that traditional business models don’t. Some of the causes social enterprises are founded upon include a very heavy environmental component (i.e. creating services and goods that have a very low carbon footprint while also benefiting some domestic producer).
Another key component, on the business side of things, is that social enterprises have to leverage markets in order to survive and remain financially sustainable. These organizations try to find gaps in the market they are entering and then enter in a responsible and ethical way.
Having a foundation in good research science
Social enterprises wouldn’t be anywhere today without the experts on the ground who have studied, and perhaps received advanced training and education in a particular topic. The research really serves as the understanding for the root problem that exists in a community, and why a viable business solution turned into an enterprise might work. This is why research especially in the fields of solar and renewable energy are so important.
Nokero, which is a Denver based social enterprise, was started first by an engineer Steve Katsoros, who was able to build his own small, portable solar lamps. He knew that having portable lamps people could use would be hugely advantageous, as they are convenient and easy to carry around. The lamps are also affordable. The social and environmental benefit for those who have adopted the lamp in Namibia, is that dangerous kerosene is not being burned, or being burned less, resulting in less chronic health conditions later in life for communities.
Without proper research and investigative techniques into new markets, business plans tend to die out pretty rapidly. Organizational leaders need to know the science behind why something is working and why it is not in today’s complex operating environment.
Here are two other social enterprises that successfully merged their research and background studies with a successful business model:
Abundant Water—An Australian organization that helps local potters in Southeast Asia sell their goods to water filter manufacturers, which the organization helps with training. This business model is a win-win for potters, who have increased their market share, and for the health of citizens who have access to more clean water filters.
The Plastic Bank—A pioneer in the global plastic pollution crisis. The organization helps build recycling infrastructure in vulnerable economies. They use blockchain technology to offer secure incomes for collectors who intercept plastics pollution on its way to the ocean and can trade this litter for a living.
The Nature of Experimentation
The research doesn’t stop with the founding of these organizations and seeing how well they in the first quarter. Many of these organizations start small, and even with a good business plan backed by solid research, need to experiment a little bit to test their product and the sometimes risky markets they are about to enter. From a financial perspective, more research can be conducted on these new markets being entered, which represents a whole new way of thinking about how important social enterprises really are.
This is the nature of experimentation. It is hard to ignore the fact that even if a social enterprise is not a purely financial success, much economic research can be conducted as to how a product performed in a market that is not mature yet, and what this means at the macro level.