[This is the text of the speech I gave on 3/31/10 at the Simmons College series on Enterprising Women. The title of the seminar was: Entrepreneur CEOs Working their Social Mission]
What’s the difference between a socialist and a social entrepreneur?
Neither one was familiar to John Adams when he wrote the Massachusetts constitution in 1780, but he was familiar with the idea of social responsibility. He believed that both public and private institutions have a mandate “to countenance and inculcate the principles of humanity and general benevolence, public and private charity, industry and economy, honesty and punctuality, sincerity, sobriety, and all social affections, and generous sentiments, among the people.”
One key difference between the socialist and social entrepreneur stems from private companies’ freedom to create flexible economic models for social programs. The socialist relies on compulsory taxpayer contributions to finance social programs while the social entrepreneur entices the customer to purchase goods and services where a portion of the revenues fund social programs.
It was in the spirit of John Adams’ call for social responsibility that TNB founded the Hutan Project. We partner with Orangutan Foundation International for the conservation of the world’s fastest disappearing rain forest. The United Nations Environmental Programme projects only 2 percent of the Indonesian rain forest will remain in 2022. Our partnership helps preserve 1,800 square miles of rain forest and protect the habitat of 6,000 orangutans – the largest protected population left in the wild.
For the first year of a new service contract, we contribute 20 percent of the total fee to OFI. Our goal is to contribute $50,000 annually to OFI to be used to acquire threatened rain forest in Indonesia, to repair damaged rain forest, and to support patrols to preserve the habitat of 6,000 orangutans. Implementing this project replaced our sales program, meaning we eliminated two sales positions. Since then, we have added three engineers and a sustainable services coordinator to help administer our social ventures.
Prior to implementation, we created 3 ground rules for The Hutan Project and other major social ventures at TNB:
Rule 1 – The customer cannot bear the cost for the program. My staff was especially concerned about this, but it has not been a problem. Our pricing remains competitive, and our credibility allows us to promote the program without causing clients to worry about increased costs.
Rule 2 – There must be a tangible business benefit. This is not cause-related marketing; in a business to business market, cause-related marketing is not a good option. Hutan has become an emblem of our social responsibility programs and a symbol of our sincere dedication. It helps us retain customers and, more importantly, recruit and keep talented employees.
Rule 3 – In looking beyond the Hutan Project, we must develop business mechanisms that promote social responsibility. We promote the idea that nonprofits and businesses can build social responsibility into their purchasing decisions. Wal-Mart has become a leader in promoting this idea as well with the introduction of their supplier sustainability assessment. Our efforts to assess our suppliers’ sustainability only became successful when we started mailing reminders with check payments.
So what is the difference between a socialist and a social entrepreneur?
The socialist builds electoral consensus that the government should create a more just distribution of society’s resources.
The Social entrepreneur builds a consensus in the marketplace that it is the role of business to build economies that are local, green, and fair.
I know that John Adams may never have heard the phrase “social enterprise.” But in days when the tea party is alive and well, perhaps it is our answer for building a great society.