Read about the rise and fall of Capitalism - and the innovative solution set to change the face of business.

Read about the rise and fall of Capitalism - and the innovative solution set to change the face of business.

By Nikki de los Santos

It’s pretty safe to say that shoppers are getting smarter. And by smarter, I’m not referring to getting the best deal for your buck. Shoppers are not necessarily getting cheaper – rather, they are becoming much more aware of where their money goes and the values that they support through the businesses and brands they patronize.

Nowadays, there are a growing number of socially-conscious shoppers who place value on "meaningful brands" and whose spending behaviors have matured beyond immediate consumption to include the value of purpose. More people want to know if their make-up is made by cruelty-free companies, if their morning cup of joe is a product of fair trade, if their side salad is free from chemical pesticides, if their new laptop was made under dignified working conditions, or if their new pair of shoes will send a poor child to school.

But I can’t help but wonder: How on earth did this happen? After 23 years of living in a market economy, I personally cannot imagine being governed by anything other than Capitalism, and now the Capitalism I had known is changing its course. The Capitalism I had known taught us to aspire for wealth because wealth brought the power to thrive. Aiming for the stars meant catching up to First World countries, because that, as we were taught, was the ultimate dream. Helping people with the money we earned was good and noble, but these were secondary priorities. Now, businesses have started to consider progress that is not purely profit-driven along with the social aspects of inclusive growth and development.

So what changed? What caused the movement away from the plain and simple patronage of popular products made for profit and gave rise to more socially conscious businesses? What produced a more thoughtful breed of consumers who want to be well-informed and ensure that their purchases, however small, make a meaningful difference?

It’s an interesting story that begins with the rise of the very businesses we all dreamed would sell us the good life – but does not quite end with their fall.

 

The Rise and Fall of Profit Idols

When we think business, our minds are instantly colored chrome by the world of New York City, the fast-paced technological races of Tokyo, the rise and fall of local and foreign stocks, and the ultimate fight to stay in the lead. International business giants were not called “first world countries” for nothing – in this mad race towards bigger industries and faster technologies, they were at the forefront of economic growth. In terms of capital, supply, and demand, they knew how to thrive in a market economy and make a profit in the process - with little (if any) regard to the detrimental effects on the environment or the growing gap between the rich and the poor.

For the longest time, there was no question about it: these were the countries to emulate if developing countries wanted to prosper because prosperity required wealth and these giants had tons of it. That is, until this race came to a startling halt and we were forced to think alternatively.

So when these seemingly infallible countries were hit by the worst financial crisis since the US Great Depression, it came as a surprise not just to these global powers, but also to the rest of the world, whose paradigms for success were now collapsing. Suddenly, the rest of the developing world had no more economic models to emulate – survival of the fittest somehow no longer applied as the fittest began to sink in layoffs and debt.

With their economic models in question, developing countries were forced to rethink their entire notion of development. In a black-and-white world, the aspirations were obvious: money is better than poverty, education is better than illiteracy, and pushing pencils at an office is better than begging for alms. And no one had a better understanding of deprivation than the significant percentage of the world who had fallen behind in the economic race their entire lives: the poor, the have-nots, the bottom-of-the-pyramid who could barely get past the starting line in the race of the fittest.

The fact is, the poor were not the only victims of these overturning profit and growth-driven ideals; their consequences were literally palpable through global warming. While it is very unfortunate that economic collapse and climate change were what finally prompted a global reform in consciousness, the opportunity was ripe for newer, alternative values and ideals to enter the picture.

 

Sustainability and the Social Prefix

It was within these strange and uncertain years that the ideal of profit began to make room for that of human prosperity, exclusive economic growth was questioned for more equitable human development, and smoky manufacturing plants were challenged by proponents of an environmental revolution that was here to stay.

Flowery ideas like social responsibility and environmental sustainability were terms that had previously been considered by corporate key players in passing acts of charity or reparation, but rarely did they surpass the jurisdiction of non-governmental organizations (NGOs) or thrive long-term in a realm beyond corporate social responsibility (CSR) programs. But as the times quickly changed, so did these ideals take more precedence. The social prefix and the concept of sustainability no longer insinuated merely reparative actions – they were beginning to be recognized as substantial core values, upon which it was actually possible for a nation to build new models for growth and development.

The timing was perfect for change and there was never more urgency for these new economic models to give rise to social businesses: corporations and enterprises with the consciousness to consider and serve the most deprived sectors of society in all of their profit-generating actions, while preserving the value of environmental sustainability. It was not as simplistic as telling big corporations to grow a conscience. Rather, it required passionate individuals with a heart for society and an entrepreneurial spirit to come together and invest their energy and resources in building businesses from the bottom-up, to tackle specific social concerns and promote growth for all.

And the best part? The everyday change-makers who stepped up were not out to wage a war. Instead, these social innovators were ready to extend and devote their ideals, skills, time, and creativity to build a new world. A world that is more socially aware, socially inclusive, and socially just in its vision for progress.

 

The Hows of Post-Traumatic Development

The initial question that resulted from the global financial crisis was: How do you proceed, when your leading economic models have run their course? The solution was simple and kind: Create new sustainable models that not only benefited the rich, but also allowed the poor to earn a share in – as well as increase – their nation’s wealth and prosper with dignity.

Social entrepreneurs took this cue to step up and be part of the solution – not by revolting against business and Capitalist ideologies in anger, but by utilizing their best-learned business strategies and economic know-how to shape a world that is capable of providing dignified living conditions for all. Key players and laborers of this model were chosen among the deprived and equipped with valuable skills and tools with which they could fulfill their potential in exchange for fair and honest wages. This led to the sprouting of numerous socio-environmental companies and enterprises, whose main thrust was a resolute commitment to stand with those who were left behind and help them get back on their feet so that they may flourish.

While this new economic model was inherently kinder and more sustainable than its predecessor, it posed a secondary question: How can this model be adopted on a global scale? This solution was a bit more complex because it required the art of persuasion. How do you convince the forerunners of a still-predominantly profit-driven world to focus on optimizing profits in the interest of uplifting the poor they had left behind? Once you expose corporate giants, influential policy-makers, and big-name investors to the flaws of their economic model, how do you convince them to consider genuine social development and more sustainable (often pricier) modes of production and profit?

The short answer? Show them that it works. Once you get them to listen, prove to them that profit with a purpose will work in empowering the lowest of the low, that fair wages will provide dignified opportunities and uplift morale, that compassion is a more humane drive than competition, and that innovation is key to shaping a sustainable world for future generations to survive in without squander.

 

On the Creative Viability of Social Business

The ethos of social business itself is not entirely revolutionary. It would not be fair to make a sweeping generalization that all businesses are inhumane profit-generators that need to be stood up to by rallying activists. Many corporations have undertaken inclusive measures to secure the wellbeing of their most marginalized population in their growth, just as many socially active organizations have adopted progressive market strategies to increase their visibility.

It has been done before. The marriage of profit and social impact has forged working relationships of equity and trust between shareholders and stakeholders around the world. Bangladesh’s well-known Grameen Bank was established in 1976 as a “bank for the poor” by founder Muhammad Yunus, who reversed the customs of conventional banks and invested capital in providing microloans to serve, train, and empower the women of rural poor communities, instead of the commonly targeted demographic of wealthy men. By 2011, 95% of the bank was owned by poor borrowers with an impressive loan recovery rate of almost 97% - a successful indicator for even conventional banks. Within these years, 68% of borrowers’ families managed to get out of poverty, while the bank continues to profit.

Social business – which Yunus describes as business “based on selflessness"– is ultimately an economic model wherein human creativity is applied, with money as its means, to solve targeted social problems. “By opening the gate of social business,” Yunus explains, “[We are] making a link between the creative power and solving problems.”

Similar microfinancing programs around the world have invested their resources in building stronger economies from the bottom up by developing local rural communities. They work by tapping into the potential of the world’s poorest people, honing their creative power, and equipping them with valuable skills through training programs. Oikocredit International is an organization that funds microfinance partners, fair trade cooperatives, and small enterprises in over 70 countries; inclusive growth and social impact are integral to their economic models. Their Bolivian and Bulgarian models, for instance, focus on developing economies by funding agricultural products, training women in developing eco-conscious behavior, and ultimately protecting the livelihoods of small farmers.

There has been a push for private businesses in Asia to become more inclusive in their business paradigms, as well. In a 2013 study by the Asian Development Bank, agriculture was found to be the most tapped sector by inclusive businesses in the Philippines. Dizon Farms, one of the country’s largest fruit and vegetable wholesalers, sources high-quality produce from selected farmer-owned farms and provides training in farming techniques while providing fair wages. Coffee for Peace is a company that sources its coffee at fair prices from indigenous people in the conflicted region of Mindanao, thereby participating in peace-promoting activities and developing their local economy. Even the country’s biggest food and beverage companies have also begun to transition into more inclusive business methods in their growth. The hugely successful Jollibee Foods Corporation sources onions and other ingredients for their fast food chain from small scale farmers in Nueva Ecjia, providing long-term support and technical assistance in this arrangement.

These blueprint initiatives – while still in their early stages of finding lasting solutions to societal problems – are working testaments to the viability and readiness of the Philippines as a promising venue for inclusive growth; however, most noble corporate efforts still remain at a minimum. A vast majority of private corporations still clutch at First World aspirations despite the changing business world around them. They still have a long way to go before fully integrating inclusive values in their models for growth – providing an opportune avenue for bright social entrepreneurs and enterprises to take the lead in promoting national development by developing the nation from the grassroots.

 

The Promise of Social Business

Social business has already begun to find its niche in the Philippine market through emerging social enterprises and entrepreneurs, and it is urgently making its way towards becoming the staple model for development. Our social offerings are no longer limited to middle-to-upper class acts of convenient charity or intermittent relief – they are rapidly expanding in scope to include the lowest income classes in our collective efforts towards national growth and development. By giving the bottom-of-the-pyramid employment and training opportunities to build up their capabilities, the fruits of each one’s labor can be equally earned and fairly rewarded – rendering the model mutually beneficial for both shareholders and stakeholders alike.

All it really takes is a little time and an enormous amount of trust – trust in a Third World nation’s ability rise above the failures of their wealthy idols, trust in the creative capabilities of our most creative social innovators, and most of all, trust in the poor who until today have been undervalued and dismissed as inutile within a system that rendered them placeless.

Amidst all the hope and optimism that radiates from the social business model, a question still lingers at the back of our minds: Could you be wrong in your model for building a kinder new world? Frightening as it may be, the fact is there will always be that possibility. After all, eager proponents of the Industrial Revolution were just as convinced that their technological breakthroughs would solve the world’s problems at that particular point in time. Historically, we have always pushed for whatever worked for the time being. But somewhere along the line, best practice as key to economic growth became markedly defined by non-values of exclusivity and exploitation as means to short-term, unsustainable capital and wealth. It is time to explore better ideas and create newer values – and the call for innovation has never been more urgent.

The promise of social businesses and enterprises lies in the hope and affirmation that social innovation, creativity, and action have the potential to use what worked from past models to rise up from the shambles and create global progress that works and delivers prosperity for all – while never losing sight of the core values and ideals that drive this new world.

 

Would you like to learn more about how social business is changing the face of the development? Join some of the world’s most innovative change-makers from all over the world at the Social Business Summit 2013: Inclusive Growth in the Asian Market on October 2-5, 2013 at the Gawad Kalinga Enchanted Farm Village University in Bulacan, Philippines. Register here on or before August 30, 2013!

that not only benefited the rich, but also allowed the poor to not only earn a share in their nation’s wealth, but to help increase it and prosper with dignity.