Throughout the twenty-first century, social enterprise has emerged as a global phenomenon aimed at meeting individual and community needs that have arisen amid evolving environmental, economic, and social developments. Driven by a new cadre of innovative, pragmatic, and visionary social activists and their networks, an unprecedented wave of social entrepreneurship has been growing internationally over the last decade. A survey of social entrepreneurship activity in the UK conducted as part of the Global Entrepreneurship Monitor suggested that new social start-ups are emerging at a faster rate than more conventional, commercial ventures. More remarkably, the impact that social enterprises are achieving today is much more ambitious than ever before. By influencing social behaviour for the good, social entrepreneurs are also initiating systemic changes around the world.

What is social enterprise?

The term “social enterprise” was first used in 1975 to distinguish the types of marketing activities used by governmental and cooperative enterprises from those used by the private sector. Since then, both academics and global practitioners have made a handful of attempts to describe social enterprise but have not agreed yet on a singular definition.

For the purposes of this article, we will define social enterprise as a business venture created for a social purpose, one that intends to mitigate a social problem or a market failure and to generate social value while operating with the financial discipline, innovation, and determination displayed by a private sector business.

The social purpose is created to generate change by making a positive impact on a social problem or market failure. The enterprise approach uses business tools including entrepreneurship, innovation, market-driven approaches, strategic orientation, discipline, and determination that drive for-profit businesses.

To put it simply, consider the motto of Greyston Bakery in Yonkers, New York: “We don't hire people to bake brownies; we bake brownies to hire people.”

Social enterprise in Scotland

In the United Kingdom, the concept of social enterprise debuted within the community regeneration sector and cooperative movement. Due to multilevel complexities, the UK does not have a consistent national social enterprise policy, and neither is there a legal definition of social enterprise, even within Scotland.

Scotland has a separate political culture and social heritage compared to other parts of the UK, including distinct legal and educational systems, as well as its own church. Re-established in 1999, the devolved Scottish Parliament took responsibility for the third sector in their country and have been committed to its growth and expansion.

In 2013, Senscot (Social Entrepreneurs Network for Scotland) provided ‘The Voluntary Code Of Practice For Social Enterprise In Scotland’ (see Appendix), which lists the criteria, values and behaviours of a social enterprise.

Although some people would still like to describe social enterprise as “not-for-profit” organisations, Scotland-based academics Declan Jones and William Keogh believe this description is misleading because, in reality, social enterprises operate to make a profit in order to stay in business and to advance their social mission. The key difference is how their profits are used. Therefore, Jones and Keogh suggest perceiving this sector as “more than profit,” leaving the not-for-profit label for traditional charities and those dependent on public funding rather than trading in the market.

You have to understand the rules of cricket in order to understand the game and to enjoy the excitement of the game. In addition to observation, you also need interpretation. The flip side of this, however, is that if you focus too much on something, if you are too keen on a certain interpretation, then you might miss something else. Or, in the words of American journalist Walter Lippman, “For the most part we do not first see and then define, we define first and then we see.”

The absence of a unified definition is in fact an opportunity to liberate ourselves to see more. As for myself, I always “find pleasure in intelligent dissent, rather than in passive agreement, for the former implies a deeper agreement than the latter” (David Grahame-Smith).

Challenges facing social enterprises

Despite any disaccord on definitions, the third sector agrees that social enterprises are facing a dilemma: on one hand, customers or service users expect products or services to meet or exceed the standards of other organisations. On the other hand, social enterprises require financial sustainability. Maintaining a balance between these potentially conflicting aims could be problematic, a challenge unique to social enterprises. Therefore, it is not surprising that the Scottish social enterprise sector has yet to achieve a definitive agreement regarding how best to reconcile these tensions.

The reasons the social enterprise sector has difficulty achieving win-win scenarios comes down to the dynamics involving its various actors: funders, investors, employees, and customers. Funders and donors may not want to give money to profit-seeking organisations. Investors may not want to invest in organisations that are not designed solely to maximize profits. Employees may be confused about what the organisation’s top priority actually is. And customers may be at loss about whether they are the actual beneficiaries and expect to get what they want and what they paid for.

Social enterprise may not be a panacea for all of the world’s domestic and international problems; however, “Nobody expects this to happen overnight, but decisions made today matter much longer than often appreciated” (Dr. Joeri Rogelj).

To know more about social enterprise, read my new book 'Invisible Hand with Visible Heart'.

Stereotypes exist. Whether in the mind of a naïve six-year-old girl, or a well-educated, mature professional, we tend to picture certain type of people in a certain way.

If I had been asked the question, ‘What makes a successful business leader?’ last summer, my answer would probably have been, ‘a sophisticated and rational male or female behaving like an ADULT, i.e. Ambitious, Dispassionate, Uncaring, Longing for money and Tough’. In this way, he or she can maximise profitability and/or share price of the company. Biased as I may sound, I’m not alone. The characteristics people conventionally related to leaders are often masculine with those adjectives used.

However, after the MBA and being exposed to various lectures, professors, guest speakers and articles, my perception has changed radically. Now, if I were to give advice to someone who wants to be a great leader, I would say, ‘Lead as a KID’. By ‘KID’, I mean to Keep it simple, make seemingly Irrational decisions, and Dare to be yourself. The rest of this essay will explain each of those points further.

Keep it Simple

‘Simplicity is the ultimate sophistication.’

----Leonardo da Vinci

Some people may argue that we are living in an ever-changing VUCA (Volatile, Uncertain, Complex, and Ambiguous) environment, therefore it is impossible to keep it simple. However, it is for this very reason that a leader needs the competence to simplify the complexity. In fact, it takes more effort and harder work to simplify things than to complicate them.

At a strategy level, simplicity means that, when outlining the strategy or vision of a company, use the most straightforward words people can understand and easily communicate. The mission statements of some companies are so complicated that even the CEO him/herself cannot explain. This does not only apply to internal employees, but also to external customers. When the employees do not know which mountain they are conquering, it is doubtful if they can reach the top. Similarly, when the customers do not understand the product/service in plain language, they tend to get confused and not buy in. For instance, people can effortlessly label Google as a search engine and Facebook as a social media platform, but not for Yahoo.

At an implementation level, simplicity with mutual trust can generate efficiency and save costs. When Tesco Bank suffered from cyber-attacks last November, instead of going through layers and layers of reporting and approving, Benny Higgins the CEO adopted the simplest approach of asking for help from the people who knew the best and listened to the advice of the floor staff, which fast tracked the problem solving process and worked really well. Another case in point is the human resources stance at Netflix. Along with their ‘Unrestricted Holiday’ principle, which makes most employees more productive and responsible, the company’s expense policy is in five words only: ‘Act in Netflix’s best interests’. Employees are empowered and expected to spend company money austerely, as if it were their own. The result has been highly positive and actually reduced costs, compared with lengthy rules and prescriptions.

Make Seemingly Irrational Decisions

‘Make mom proud.’

----Box Inc. Value

The era of big data and artificial intelligence is coming. Business leaders are presented with increasing amount of numbers in financial reports, profit/loss statements and utility analyses, and endeavour to make the most rational and logical decisions. However, is this really the case and by being ‘rational’ do we just maximise the digit next to the dollar sign, then tick the box? How about those intangible things such as laugh, love and life? Surprising as it may sound, life does have a financial figure under the rationality rule. For example, Ford was reported to be aware of the design defects in its Pinto models that made crash-related fires more likely to happen. However, after an evaluation of all the redesigning benefits, including the prevention of around 180 deaths (approved figure of $200,000 per casualty) each year, Ford concluded that the costs of $11 per automobile outweighed the benefits. In consequence, lives were lost due to this so-called rational decision. Similar things happened at Toyota again in 2009-2011.

Reflections have to be made and lessons to be learnt. Admittedly, we are no better than computers when it comes to calculation or data processing. Our strength actually lies in emotional intelligence, such as passion and compassion, which machines find it difficult to acquire and learn. The ironic fact is, while data scientists are making efforts to add emotions and sympathies to robots, we as human beings are abandoning them to become more cold-blooded and proudly brand it as ‘rational’.

The role of quantitative analysis in leadership through accounting and financial reporting is undoubtedly indispensable, but great business leaders look beyond numbers and data because they are conscious of the flip side of it, i.e. short-termism. While people understand soft goals and trade-offs, algorithms will pursue a specific objective single-mindedly. Machines may be intelligent, yet intelligence is not the same as wisdom. With long-term vision in mind, leaders are wise enough not to make the ‘most rational’ decision. Instead, they embrace obliquity and go for the ‘seemingly irrational’ route for comprehensive welfare and sustainability.

Here comes an acid test. When facing a business dilemma, just ask two questions: 1) Can I sleep well at night after making this choice? 2) Would my mom be proud of my decision? If both answers are ‘yes’, then congratulations. And if more ‘irrational decisions’ like these could be made, there may not be so many ethical issues and CSR (Corporate Social Responsibility) may not be such a heated topic as it is now.

Dare to be Yourself

‘Be yourself, because everyone else is already taken.’

----Oscar Wilde

Let’s face it, it takes considerable courage to be oneself, especially for business leaders. Be genuine and authentic to both yourself and other people is a luxury in today’s business world. It is difficult to resist the temptation to copy and follow other people’s leadership styles, especially if it is encouraged and praised by the mass media and becomes a fashion. A popular motto suggests, ‘fake it until you make it’, but not all fakes have a happy ending. It is not a bad idea to learn from successful leaders, but if it does not truly fit you it could take up too much energy and have a counter-effect on your own feelings and people’s perceptions of you being pretentious. You will be struggling with this self-contradiction in the deep mind, and tend not to have consistent behaviours. This cognitive dissonance will impede your progress to becoming a great leader.

This issue is more prominent for female leaders, who have tried hard enough to cut through the glass ceiling but found their stereotypically feminine traits such as kind, gentle and affectionate may not be perceived as popular/valuable or even become weaknesses. ‘Lean in’, Sheryl Sandberg the COO of Facebook urges. But what if I do not want to? Can I still serve as a great business leader while being true to myself? Although the thorns of a rose could be inconvenient, they also make the flower unique. As Sun Tzu mentioned in the Art of War, while over-played strengths become weaknesses, weaknesses can also be transformed into strengths. Therefore, be kind with principle, be gentle but decisive, show affection through understanding and compassion is a better strategy than pretending to be hard, harsh and heartless for the sake of it. The choice is all yours in terms of ‘lean in’ or ‘lie down’ for leadership style, as long as you feel confident, comfortable and content.

Conclusion

Whether you are an English blacksmith making swords in 1717 or an American CEO in a company producing guided missile systems in 2017, certain core values, basic principles and human nature apply throughout the history and grow even more prominent with the lapse of time. The world has not changed as much as it may appear to have done.

‘Lead as a KID’. Keep it simple, because sometimes the simplest things are the most powerful and we can easily forget that. Make seemingly Irrational decisions for a sound night’s sleep and to make mom proud. Dare to be yourself. Just as ‘no two leaves are alike’, no two leaders are alike, and we embrace different leaders to make our world more diversified and dynamic.

The road to becoming a great business leader can be rocky, and requiring support from the team. Remain humble as a kid, while being confident to exert influence and do as little or as much as you want, to change our planet for better or worse. You are the boss.