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Former White House Social Innovation Director Sonal Shah's Advice On Starting A Social Business

'People don't want to work in companies that don't have a social impact.'

16/07/2017 18:12 | Updated 18 July 2017

If there’s anyone who can talk about social business it’s Sonal Shah.

The Mumbai-born American economist served as the director of the office of social innovation at the White House and, more recently, founded the Beeck Center for social impact at Washington DC’s Georgetown University. 

In an age where it seems every corporation has a CSR department, and where big businesses are often called out on the extent of their social impact work, HuffPost UK sat down with Shah to find out what role business should play in today’s society - and whether non-profit and for-profit can ever sit side by side.

 

Chivas The Venture
Sonal Shah at the 2017 Chivas Venture competition in Los Angeles.

How important are social businesses to society?

This is my career, so it’s going to be hard for me to say anything different...

...But I think the concept of social business is growing and I think it’s becoming more and more important over time and I think if we can change the conversation in the business world from just being about for profit to being about for profit with social good, we will have made a difference.

 

How difficult is it to tack social side onto an already established organisation?

I think it’s extraordinarily hard. Chivas [Regal, a whisky brand] is unusual because they’re giving grant money for social impact [through its start-up competition ‘The Venture’], but I think most financiers are looking for finance first, social later. And during the [Chivas] competition some of the finalists said they’d had a hard time finding investors who care about the social and the financial. And some of them have said no to money. It’s hard but I give them a lot of credit for saying we’re in it for both. The scrutiny on social business is much greater than on traditional business.

 

Can social business and big corporations every marry?

I think it’s changing. Right? You look at the companies around the world now, and you see a Coca-Cola buy a social enterprise. Or a Unilever think about its business differently, or you see a Chivas invest in social enterprises. More and more you’re seeing people say they can do things differently. And they may not come up with the idea, but they can acquire the idea. Which you couldn’t have said that five years ago. And that’s a huge difference.

 

Does the role businesses play differ in developing countries to developed countries?

In the developed western countries we’re having a much bigger conversation around the role of business and what it is. I think in developing countries because it is such a start-up space that it’s interesting because many times they can leapfrog and they’re not waiting once they’ve made the changes, they’re starting now, to incorporate social impact in the process of it. And that’s a huge opportunity.

 

Is there still an issue with parachuting a social business into developing countries? How important is it to grow these businesses organically within developing countries?

This is an age old question. Before it used to be, are the development agencies going in for the right reasons. I think what’s fascinating is you’re finding that businesses, even those coming in from the West, there are a lot of really good local entrepreneurs or organisations working with them, they don’t have access to the capital in the same way the internationals do, so they’re able to bring that to the table.

I’m kind of like - if you know what problem you’re solving, and you know with whom you’re doing it, and you’re working within the country context and hiring people locally, which I think is more important, I’m OK with that. I don’t think we should get too caught up in who’s doing it, I think we should be thinking are we solving the right problems. But we should be thinking ‘is there the right mix of people on the teams?’.

 

Do businesses have a bigger opportunity to “do good” in today’s political climate?

The trend that governments have not had enough money to solve social problems has been growing for the last 10, 15 years. I think this [government] is just a manifestation of that trend. I think what you’re seeing is people saying ‘we can come up with different models to solve problems’, and what the social enterprises are doing is coming up and challenging the traditional models, from for profit and non-profit, from government and business, and they’re saying ‘we can do it differently’.

So I think that’s what you’re seeing. And I think that trend is only going to increase. And I certainly hope that every person thinks it’s their responsibility, their right to come up with a new idea. We should be more creative and less agnostic. And that’s what the opportunity is today. A lack of government also means more opportunity.

 

The environment is one of, if not the, biggest issues of our time. Do big businesses have a responsibility to take action?

I think we all have a duty and responsibility, and business is one part of it, but I think individually we do. It’s our generation’s biggest challenge, to make sure we conserve the environment, and I don’t think we can just put it on business to solve that problem, I think each of us needs to take that responsibility, both individually, and collectively. And business is a big part of that too.

 

What advice would you give to people looking to start up a social business?

Know what you’re trying to solve first. Don’t just try to come up with a business idea for the sake of a business idea. Because if you don’t know what problem you’re solving, it’s extraordinarily hard to sell your business. I’ve seen a lot of entrepreneurs who are just in it for the entrepreneur idea, and not for the solving a problem idea. It’s hard enough to be a social business, so if you don’t know why you’re solving it then you shouldn’t be in it. So that’s number one.

Two: know your business. Know what the market is, the potential size of the market, know what is right for your customers, because if you don’t know that - it’s not enough.

Siam Organic: they’re in Thailand, they understand they can increase the incomes and yield of farmers in Thailand, and they’re changing the way the business model work there. They’re frankly using an old model: cooperatives.

Recycle Points: Looking at her own community in Nigeria and saying ’I can change recycling. And she’s going door to door collecting recycling. And I think, in the West, we don’t understand how important that is, when you go to Lagos, you understand how important that is. And she’s making recycling cool. Which is a big deal.

When you look at what the emerging markets are doing, it’s amazing what the opportunities are.

 

What’s behind this seemingly sudden boom in social business?

You are. Millenials. The generation change. I think people do not want to work in companies who do not have a social impact, who are not thinking about the social side. More and more the data is showing amongst the millenials they are willing to leave jobs if they don’t feel fulfilled. And the social aspect of businesses is a big part of that. They’ll join a start-up, they’ll go start a non-profit, they’ll join a social enterprise. Look at the top business schools in the country right now: the social enterprise competitions are some of the best.

People are willing to go to a Harvard, Yale, Stanford and say: we’re going to start a social enteprise. That marketplace is changing and people are saying ‘we should be able to solve our problems, and we’re not uncomfortable with business and a non-profit working together’. Right? And that’s a huge generational shift. In my generation, you still see it right? People are like ‘Are you for profit? Are you non profit?’ And they’re sceptical if you’re trying to be a for profit and a non profit, and y’all don’t see the barriers. And I think that is amazing.

 

Sonal Shah was a panel judge at 2017′s The Chivas Venture competition.

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