Corporate social entrepreneurship initiatives, usually the work of intrapreneurs (entrepreneurial executives within the corporation) keen to solve social problems, have important macro- and micro-economic implications. They create value for people who are not current stakeholders – and they create opportunities to innovate and diversify. There are, however, barriers to their development. A model that counters the conventional logic of the organization and puts financial sustainability before growth could be the solution.
Many large companies have developed corporate social entrepreneurship (CSE) initiatives. Examples include global management consultants Accenture, French cement, concrete and aggregates company Lafarge and Swiss pharmaceuticals multinational Novartis.
Often referred to as ‘social businesses’, CSE initiatives are usually started by employees who want to help underprivileged people. Motivated partly by personal experience, these social intrapreneurs can be found at any level of the corporate hierarchy – from the CEO down. Unlike their commercial counterparts, they’re primarily interested in creating rather than capturing value.
They are externally focused – seeing outcomes for the firm as of secondary importance. This can put them at a disadvantage when it comes to getting their ideas accepted and resourced. How can social intrapreneurs succeed?
Analysis of this nascent field suggests a four-step model:
1. Gaining authorization: Unlike other intrapreneurs, who tend to hide their initiatives until they establish ‘proof points’, social intrapreneurs benefit from getting a licence to operate – a temporary right to exist and access the skills of others – early on. By spreading their ideas through informal channels and networks they’re able to reach like-minded individuals elsewhere in the organization. Their ‘case’ can be strengthened if they emphasise their own professional credentials and differentiate the initiative from philanthropic efforts in the organization, effectively positioning it as a ‘higher form’ of capitalism.
2. Mobilizing resources: Lacking a clear rationale – e.g. a profit motive – the CSE initiative will be subject to multiple interpretations. Social intrapreneurs can use this ambiguity and confusion to their advantage, increasing the possibilities to ‘connect with’ organizational members.
To attract funding for their project, they will often engage in ‘framing actions’ that change the criteria for evaluating success and failure and, crucially, construct new criteria for what’s considered strategic. A CSE initiative to provide services for the poor may, for example, initially be framed as a way of entering an emerging market that may be considered part of an existing strategy. Once it’s gained access to some resources, it may then be re-framed as a way to engage with governments in these markets, which may previously not have been part of the strategy. In this way, the initiative is continually being reframed as an opportunity.
3. Developing the business model: The challenges of serving a new and marginalised group of people cannot be tackled effectively from a distant HQ. Social intrapreneurs develop concrete solutions by familiarising themselves with the context in which they seek to create value and engaging in on-the-ground business model experimentations. They have to be practical – and they also have to be realistic. They need to resist the temptation to try to solve all the problems of the target group and instead ‘think small’ and develop highly context-specific solutions. These solutions will help the initiative to be judged positively and therefore help sustain access to resources.
4. Growing the initiative: If solutions don’t break even and cover the costs of resources, they’re likely to be pulled when the company experiences a downturn. To secure the future of the initiative, therefore, the intrapreneur will have to put financial sustainability before scalability. They will also have to communicate the meaning of the initiative and the value it’s creating for the target group. The ambiguity and confusion that helped kick-start the idea will now need to be replaced by clarity and focus.
Integrating the performance review of the CSE initiative with the performance review of the rest of the organization may increase the mobilisation of talent and therefore help the initiative to grow. At the same time, however, the intrapreneur will want to avoid pressure to comply with performance criteria that may threaten their work. The challenge will be ‘mainstreaming’ the initiative while keeping it ‘different’.
CSE initiatives allow businesses to create ‘shared value’ – to do good while doing financially well. Leaders can accelerate their development by:
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