Text by Tony Lai
Image by Freepik
There was a time when volunteering a day to clean up the beach or clearing trash from an old lady’s home was considered good work. Then, the idea got extended and this time it was about building a house in a foreign city over three days. That was great too. Many felt a sense of achievement. Many felt that they had done some good.
Happiness was short-lived because criticisms followed quickly. Words like “unsustainable” and clichés such as “teach them to fish rather than give them fish” were used as harsh judgements against any effort to help victims. Some stood taller over others and exclaimed the need for a new breed of socially focused entities that needed to be run like a business.
And so began a wave of activity. Individuals started ‘founding’ social organisations. Students started creating social platforms, social conversations, social business and of course social enterprises. For each social dilemma in society, there are now more than 50 social organisations attempting to provide solutions with individuals working in departments and drawing salaries.
What just happened? In economic theory, this is reminiscent of the industrial age after the First World War when the theory of the firm was created – to explain the behaviours of organisations as economic entities. Organisations were created in order to organise behaviour with the use of scarce resources for an economic outcome. Organisation theory then explains how people are organised into work groups and structures that deliver outputs. But all these have been about business and economics. Do social problems require social enterprises when historically in economic theory, that is the role of governments? What happens when governments are constrained? Does this justify the emergence of social enterprises?
Apparently that ship has sailed. It now appears that social enterprises are now expected to resolve these deep social issues with their newfound organisation. Really?
For an organisation to be relevant and meaningful, I believe it requires two major components – (a) the business model and (b) the operating model. They are perhaps the most important because they define the role and purpose of the organisation and how resources should be organised to deliver intended outcomes. Let’s review both in the context of social enterprises.
On the business model front, I believe social enterprises have made some decent headway to earn the reputation of being ‘promising’. Most of these enterprises have taken a page out of business books and worked out a decent revenue model in order to generate returns for their social activities. Good examples of such efforts are The Thought Collective in Singapore, YCAB in Jakarta and Proximity Designs in Yangon. These organisations have also been reasonably sensible on their cost structures by keeping wages fair and finding competitive rental locations. Notable innovations can also be seen in the supply chains or logistics model of the aforementioned organisations.
However, where the rubber meets the rope for business models in social enterprises is typically at decision points that conflict two opposing aspects – if you designed a product that is meant to improve livelihood of farmers for example, how do you price the product in a way that is affordable to them and yet makes sense to the organisation from a cost perspective? This is especially challenging if reality is such that the delta is huge. If it were not so, market forces would have taken over.
It is on the operating model front that I believe social enterprises have the toughest problems and unfortunately I think that their reputation in this area is rather ‘unsophisticated’. Many have designed their organisational structure (the basis for execution) without a clear view around how they want things to be done. Hence, the thinking has been largely driven by designation-based hiring (i.e. one manager and perhaps two executives) rather than through meaningful operation design (i.e. what capabilities do we need internally, and which parts of the organisation would outsourcing make sense such that we keep to a sensible cost structure?). Added to that is the inability to attract individuals with adequate experience and skills to take on core functional areas such as business development and marketing, two essential aspects that drive revenue and hence bloodline of the organisation. There is a dearth of such talent since the industry is still in the infancy stage and salary levels are not yet comparable to that of other sectors. As a result the organisational structure of these social enterprises comes down to a team that is made up of generalists who take direction from vision-inspired leaders who in turn face the task of bridging the distance between vision and execution.
How can this chasm be bridged? Perhaps it is worth re-looking at the established relationship between the business world of start-ups and leading universities. From San Francisco to Boston, London and even Singapore, universities have played a major role in creating start-ups (organically through students), supporting start-ups (purposefully through joint research and providing facilities) and accelerating start-ups (purposefully with the involvement of academics and research institutes). This ecosystem has been so well established that it has even resulted in geographical proximity between business start-ups and universities. However this has not occurred for social enterprises and many find themselves without an ecosystem for their sustenance. Social enterprises are merely close to their consumers and/or beneficiaries and that is it.
The cross-pollination that universities enjoy with companies and start-ups needs to be established for social enterprises for the sake of building solid organisations. Universities can play an active and applied research role in helping these enterprises build substance through seconding talent/academics and also thinking. The returns would be new knowledge for research development and possibilities for new curriculum to emerge.
The structure of social organisations can meet substance and best of all; the distance is not too far because it could be your friendly neighbourhood university. The challenge remains around which city you come from because sociologists remind us that distances are also measured by perceptions.
About the author:
As the Chief Strategist for the Institute, Tony Lai provides leadership on all areas with regard to strategy development and execution from a business and organisation perspective. His role covers the annual workplan planning, the Southeast Asia country insight process, regional marketing and engagement and capability programmes that target adults and undergraduates. He is also the non-executive director of The Idea Factory – an innovation strategy company that moved its global operations from San Francisco to Singapore in 2002 to focus on Asia. Tony’s experience in both strategy and business has seen him hold positions in the past such as the Chief Operating Officer with APM Pte Ltd (a property management subsidiary of the ARA Group) from 2013-2014, Managing Director of Experiences at Mediacorp Pte Ltd in 2013, Assistant Chief Executive with the Singapore Tourism Board from 2009-2012 and CEO/Managing DIrector of The Idea Factory from 2001-2009.
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