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Business Beyond Profit Motivation

A. Reasons to do Business beyond Profit (as cited in Jerusalem, Palencia, & Palencia, 2017)

1. Profit is an output, not a purpose - A business must have reason to exist beyond that of
making money and maximizing shareholder value. Profit cannot be the goal, vision, or
the purpose of an organization. An organization that posts great year-end results doesn't
automatically earn the title of being a great company.
Seeking profit as a primary business purpose is like building a house of cards or building
a house on sand-it will eventually lead to collapse. Profit is too temporary to guide a
business by.

2. Companies with a purpose beyond profit tend to make more money - One of the
paradoxes of business is that the most profitable companies are not those that are most
profit-focused. Because satisfied customers are the only source of long-term success,
measures need to be related to purpose as defined from a customer point of view. When
they are, employees can see how well they are doing and how they might do better.

3. Business needs Purpose than Profit to Make It Through - Many corporate and
business strategies now include sustainability. In addition to the traditional environmental
'green' sustainability concerns, business ethics practices have expanded to include social
sustainability.
Social sustainability focuses on issues related to human capital in the business supply
chain, such as worker's rights, working conditions, child labor, and human trafficking.
Incorporation of these considerations is increasing, as consumers and procurement
officials demand documentation of a business' compliance with national and international
initiatives, guidelines, and standards.

4. What is the purpose of doing business if it is not being profitable?

The starting point of great companies is Purpose. There are four main types of purposes
according to Nikos Mourkogiannis, the author of Purpose: The Starting Point of Great
Companies.
a. Discovery has rooted in intuition that life is a kind of adventure. Example: Apple and
their goal to always come up with the new/ most innovative products.
b. Excellence implies standards and purports the belief that excellent performance in
our role in life represents the supreme good. Example: Warren Buffet
c. Altruism is a purpose built in serving its customers in a way that is beyond standard
obligation. Example: Body Shop.
d. Heroism demonstrates achievement, often with a charismatic and visionary leader.
Example: Ford, Microsoft
5. Business with a strong sense of purpose are more successful - Stand for something
beyond simply increasing profits. A true vision for a business rests on foundations of
both purpose and values. The people within the business have to be passionate about
what they do and why they do it. The business goals must then align with this foundation.
Without a clear foundation, a business will never be truly strategic.

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6. Other reasons for your business to look beyond profit

a. Purpose and values motivate and unify management and staff.
b. Purpose and values give a company a solid foundation from which to make decisions.
c. Purpose and values provide a navigational compass to all elements of the business.
d. Customers will have more to buy into and engage with.
e. Purpose and values encourage loyalty of both staff and customers.
f. Purpose and values encourage a strong culture and ethos within a business.

B. Ethics Endorsers: The Influencers

Albert Einstein observed, "The problem we face today cannot be solved on the same level of
thinking we were at when we created them."
Jack Welch remarked: "The hero is the one with ideas."
But ideas are not enough. To succeed in any business enterprise, one must always explore how a
business ethics program helps owners, managers, and how professional advisers meet these
standards. For their unique enterprises, these are:
1. Responsible business conduct: the choices and actions of employees and agents that foster
and meet the reasonable expectations of enterprise stakeholders.
2. Responsible business enterprise: an enterprise ·characterized by good governance policies
and management practices as well as by a culture of responsible business conduct. It is adept at
dealing with the challenges and complexities of its business environment but holds closely to its
purpose, core values, and vision, and
3. Business ethics program: a tool that owners and managers use to inspire, encourage, and
support responsible business conduct, by engaging enterprise stakeholders in order to foster and
meet their reasonable expectations, and designing structures and systems to guide and support
employees and agents.

C. The Boundary Spanning Leaders: Connecting, Building Trust

Christ Ernst, CEO of the Center for Creative Leadership is a boundary-spanning leader where
he suggests that one can use a number of different connecting tactics to link people to build
trust." The pitfall of connecting requires that you take caution when the members of one group
may feel a sense of threat or resistance when brought into contact with members of another
group. If there is a history of tension, conflict, or mistrust between groups, you could unwittingly
spark a "Great Divide" in the organization rather than achieve your intended outcome of building
relationships.

Rob Cross is a leading expert in the area of organizational network analysis, demonstrates that
the highest performing leaders tend to share three important characteristics: They forged ties that
bridge groups inside and outside their organizations; invest in relationships that cross boundaries;
and create trusting, high-quality relationships, not just big networks.

Daniel Sutton, the European director of CSR for global oil and energy company leads a strategic
cross-sector task force-the creation of a plan that would reduce greenhouse gas emissions by
30% by 2020 and pave the way for achieving carbon-neutral status by 2050. Connectors like
Daniel seek projects, roles, and opportunities that enable them to bring together to create a
balanced network with people of different backgrounds and sources of expertise.

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The Notion of Social Enterprise (as cited in Jerusalem, Palencia, & Palencia, 2017)

A. What is Social Enterprise?

A social enterprise is a business that trades for a social and/or environmental purpose. It will
have a clear sense of its 'social mission: which means it will know what difference it is trying to
make, who it aims to help, and how it plans to do it. It will bring in most or all of its income
through selling goods or services. And it will also have clear rules about what it does with its
profits, reinvesting these to further the 'social mission.

A Social enterprise is an organization that applies commercial strategies to maximize

improvements in human and environmental well-being-this may include maximizing social
impact alongside profits for external shareholders. Social enterprises can be structured as a for-
profit or non-profit and may take the form of a co-operative, mutual organization, a disregarded
entity, a social business, a benefit corporation, a community interest company or a charity
organization. They can also take more conventional structures. What differentiates social
enterprises is that their social mission is as core to their success as any potential profit.

1. History and Philosophy

The first description of social enterprise as a democratically owned and run trading organization,
that is financially independent, has social objectives and operates in an environmentally
responsible way was first put forward in the late 1970s and later written as a publication in 1981
by Freer Spreckley in the UK.

Modern formative influences include the Italian worker co-operatives that lobbied to secure
legislation for 'social co-operatives' in which members with mental or other health disabilities
could work while fully recovering. The first academic paper to propose worker co-operatives
involved in health and rehabilitation work as a form social enterprise was published in 1993.

Social enterprises are often regarded erroneously as non-profit organizations, although many do
take on a non-profit legal form and are treated in the academic literature on the subject as a
branch or subset of non-profit activity. Social enterprise can be characterized by open
membership and goals widely considered to be in the community or public interest, although
some social enterprises are more tightly held and can include proprietary organizations with
private membership. A useful although by no means universal perspective, created by social
enterprise consultants across four continents after a review by Social Enterprise Europe,
highlights three factors which can frame the business philosophy of a social enterprise:

a. The extent to which it engages in ethical review of the goods and services it produces,
and its production processes;
b. The extent to which it defines its social purpose(s), and evidences its social impact;
c. The extent to which it democratizes ownership, management, and governance by passing
control of its human, social, and financial capital to its primary stakeholders (producers,
employees, customers, service users).

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2. International Definition
Not for Profit is a misleading criterion. It is good practice for social enterprises to provide
incentives to workers, and social and community investors through dividends. Distribution of
profits or payments to individuals should not compromise the enterprises' value statement or
social objectives.

The field of social enterprise studies has not yet developed firm philosophical foundations, but
its advocates and academic community are much more engaged with critical pedagogies (e.g.
Paulo Freire) and critical traditions in research (e.g. critical theory / institutional theory /
Marxism) in comparison to private sector business education. Teaching related to the social
economy draws explicitly from the works of Robert Owen, Proudhon and Karl Marx with works
by Bourdieu and Putnam informing the debate over social capital and its relationship to the
competitive advantage of mutual. This intellectual fow1.dation, however, does not extend as
strongly into the field of social entrepreneurship where there is more influence from writings on
liberalism and entrepreneurship by Joseph Schumpeter, in conjunction with the emerging fields
of social innovation, actor-network theory, and complexity theory to explain its processes.

Social enterprise, unlike private enterprise, is not taught exclusively in a business school context,
as it is increasingly connected to the health sector and public service delivery.

3. Social Enterprise in the United States

The Social Enterprise Alliance defines a "social enterprise" as "an organization or venture that
advances its primary social or environmental mission using business methods."

In the U.S, two distinct characteristics differentiate social enterprises from other types of
businesses, non-profits, and government agencies:

Social enterprises directly address social needs through their products _and services or through
the numbers of disadvantaged people they employ. This distinguishes them from "socially
responsible businesses," which create positive social change indirectly through the practice of
corporate social responsibility (e.g., creating and implementing a philanthropic foundation; ·
paying equitable wages to their employees; using environmentally friendly raw materials;
providing volunteers to help with community projects).

Social enterprises use earned revenue strategies to pursue a double or triple bottom line, either
alone (as a social sector business, in either the private or the non-profit sector) or as a significant
part of a non-profit's a mixed revenue stream that also includes charitable contributions and
public sector subsidies. This distinguishes them from traditional non-profits, which rely
primarily on philanthropic and government support.

In the United States, "social enterprise" is also distinct from "social entrepreneurship," which
broadly encompasses such diverse players as B Corp companies, socially responsible investors,
"for-benefit”. ventures, Fourth Sector organizations, CSR efforts by major corporations, "social
innovators" and others. All these types of entities grapple with social needs in a variety of ways,
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but unless they directly address social needs through their products or services or the numbers of
disadvantaged people they employ, they do not qualify as social enterprises.

4. Social Enterprise in the Philippines

In December 1999, a group was organized called Social Enterprise Network. Its members, based
in Metro Manila, include entrepreneurs, executives, and academics who believe in social
entrepreneurship (setting up businesses by creating opportunities for the poor). SEN served is a
networking opportunity for like-minded individuals to share their interests and pass on their
experience to others. One of its projects eventually was adopted by the Foundations for People
Development. It is called the Cooperative Marketing Enterprise. CME is devoted solely to
providing the need for cooperatives, micro, small, and medium enterprises for the marketing of
their products.
From the academe, a course "Social Entrepreneurship and Management" was first offered at the
University of Asia and the Pacific School of Management in 2000. This course was developed
and taught by Dr. Jose Rene C. Gayo, then Dean of the School of Management. It was offered as
an elective for the senior students of the Bachelor of Science in Entrepreneurial Management. In
March 2001, a seminar on "Social Enterprises: Creating Wealth for the Poor" was held at the
University of Asia and the Pacific.
A social enterprise in the Philippines is GKonomics International, Inc., a non-stock, non-profit
organization, incorporated in 2009. They are a Gawad Kalinga partner in social enterprise
development. Their mission is building a new generation of producers.

B. Poverty Alleviation: GKonomist Manifesto

It's time.
I am a young Filipino and I am now making a stand.
A stand for God, my country, my people.
A stand against poverty.

I will end the #1 poverty of all in our country: poverty of the mind & heart.
I will replace my colonial mentality with a proudly Filipino Bayanihan mentality.
God did not make a mistake in creating me Filipino.
I am honoring God's plan for me as a Filipino by loving my country.

I am joining the fight to end poverty, Not just in words, but more so in action.
I will not stand by idly as millions of my fellow Filipinos go hungry while I pursue my
dreams and build my riches.

I will take on the dream of those who have lost their capacity to dream. I dream of a
prosperous, slum-free Philippines.
A people who will not merely be consumers, but also producers.

I dream of Filipino brands which will be globally recognizable, Filipino brands that do
not leave the poor behind. I will produce such a brand.

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Through entrepreneurship, I will make this dream come true.

Not just ordinary entrepreneurship, but inclusive entrepreneurship.
Living in a country so rich in natural resources, and being among gifted people,
no reason exists why I should fail.

I will be my brother's keeper.

I will help the poor become unpoor.
I will make the poor a dignified partner in my business.
I will end poverty by creating wealth
not just for me and my family but also for the poor
because the poor is my family.

I will use my TIME to make productive the time of the poor.

I will use my TALENT to help the poor uncover theirs.
I will use my TREASURE to invest in the poor
and together we will build a worthy treasury for all.

C. Empowerment First, Profit Second (Amy Peterson, Co-Founder of Rebel Nell)

What truly is a social enterprise? To me, a social enterprise is one that prioritizes serving a
purpose or fulfilling a need over financial gain. Rebel Nell was established as a result of
living next door to a women and family shelter. While taking my dog on walks, I would stop
to chat with the residents of the shelter. Over the course of many months, they shared their
courageous stories about the challenging situations they left behind in hopes of a fresh start.
It was a light-bulb moment for me and my business partner to start Rebel Nell. Our business
model is mission-driven, with our priority being the empowerment of the women in Detroit.

All of our employees are, or were once, transitioning from women's shelters in Detroit. We
teach them how to make jewelry from fallen graffiti as a way to repurpose the city. When the
graffiti would otherwise seep into the ground, we give it a second life. Our profits earned
directly impact our programs and services that help our community of women: to lead self-
sufficient lives. At Rebel Nell, we operate under the "teach-a-woman to fish" mentality.

Sustainable and ethical fashion brands are few and far between in a multi-billion-dollar
industry that prides itself on creating trend-driven clothing for a low price. In a recent article
on Business of Fashion, writer Lucy Siegle explains that "we are, after all, children of the fast
fashion revolution, and breaking away from this phenomenon seems impossible." At the
intersection of social enterprises and the fashion industry are brands working hard towards
moving the needle and changing the standards of what is considered ethical. This type of
change is long-term and challenging, but doable.
Traversing the path of social enterprising has brought forth plenty of hiccups and roadblocks,
but along the way, I've developed three useful tips that are the backbone of the company.

1. Educate yourself - Marketing schemes can be very powerful and persuasive. Sometimes
you find that promotions are actually causing more harm than good. I always tell my
employees to be smarter than the average bear. Be wary of the brands that slap on descriptors

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like "sustainable" or "consciously made." It is our job as the consumer to ask questions and
follow-up. For example, when you're purchasing a necklace that raises money for a charity or
is socially conscious, are you asking how much of the purchase goes to benefit the charity?
Checking the labels? How was it made? Where is the change happening when you make the
purchase? Who is it directly impacting? As a consumer, you have the control to know what
you're doing when you're buying. Granted, not every decision we make is going to be 100%
ethical. The more we challenge the fashion industry's practices, the more we continue to raise
the standard for ethically made fashion.

2. If your employees are happy, your business is happy

It's important that you understand your employees' background. When we sit down and talk
with our ladies (most of whom are mothers,) they inform us of their past jobs that didn't
provide them with any flexibility. Previously, if a disruption like the flu hit their household,
they would be out of a job as a result of staying home to take care of their loved one. With
childcare services being unaffordable for many it left them with little or no choice. At Rebel
Nell, we decided it was important to offer our employees flexibility because we understand
the importance of family. The gratitude for allowing them to put their family first is reflected
in their work ethic. Don't just invest in your product, invest in your employees.

3. Be a conscious capitalist
Owning a social enterprise is not only about the capital return, it's about the social return. We
could be more profitable if we didn't take care of the people we hired. Our value proposition
lies within the women behind our jewelry. When you buy a piece of Rebel Nell jewelry, your
contribution is helping women receive a good living wage and resources to become
financially independent, like the financial literacy courses we offer. Financial stability is
important, but it's not the only way to become empowered.
We have set up a transitional system that enables them to stabilize their lives and reclaim
their independence. Behind every piece of Rebel, Nell jewelry is a story of a woman working
towards building a future for themselves and their families. Our goal is not to pigeonhole
them to be jewelry makers for the rest of their lives. At the heart of our social enterprise is a
need to make better employees, to restore their confidence and to provide the resources
necessary for them to realize their dreams and watch them come to fruition.

D. What is a Social Entrepreneur?

Social entrepreneurs are individuals with innovative solutions to society's most pressing
social problems. They are ambitious and persistent, tackling major social issues and offering
new ideas for wide-scale change.

Rather than leaving societal needs to the government or business sectors, social entrepreneurs
find what is not working and solve the problem by changing the system, spreading the
solution, and persuading entire societies to move in different directions.

Social entrepreneurs often seem to be possessed by their ideas, committing their lives to
changing the direction of their field. They are visionaries, but also realists, and are ultimately
concerned with the practical implementation of their vision above all else.

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Social entrepreneurs present user-friendly, understandable, and ethical ideas that engage
widespread support in order to maximize the number of citizens that will stand up, seize their
idea, and implement it. Leading social entrepreneurs are mass recruiters of local change-
makers-role models proving that citizens who channel their ideas into action can do almost
anything.

1. Why Social Entrepreneur?

Just as entrepreneurs change the face of business, social entrepreneurs act as the change
agents for society, seizing opportunities others miss to improve systems, invent new
approaches, and create solutions to change society for the better.
While a business entrepreneur might create entirely new industries, a social entrepreneur
develops innovative solutions to social problems and then implements them on a large scale.

2. Historical Examples of Leading Social Entrepreneurs

Susan B. Anthony (U.S.): Fought for Women's Rights in the United States, including the
right to control property and helped spearhead the adoption of the 19th amendment.
"I declare to you that woman must not depend upon the protection of man but must be taught
to protect herself and there I take my stand."­ S. Anthony
"Independence is happiness." -S. Anthony
"Men, their rights, and nothing more; women, their rights, and nothing less." -S. Anthony

Vinoba Bhave (India): Founder and leader of the Land Gift Movement, he caused the
redistribution of more than 7,000,000 acres of land to aid India's untouchables and landless.
"If a man achieves victory over this body, who in the world can exercise power over him? He
who rules himself rules over the whole world." -V. Bhave
"It is a curious phenomenon that God has made the hearts of the poor, rich and those of the
rich, poor." -V. Bhave
“What we should aim at is the creation of people power, which is opposed to the power of
violence and is different from the coercive power of the state.” – V. Bhave

Dr. Maria Montessori (Italy): Developed the Montessori approach to early childhood
education.
"The greatest sign of success for a teacher ... is to be able to say, 'The children are now
working as if I did not exist.'" - M. Montessori
"One test of the correctness of educational procedure is the happiness of the child." - M.
Montessori
"Establishing lasting peace is the work of education; all politics can do is keep us out of the
war." - M. Montessori

Florence Nightingale (U.K.): Founder of modern nursing, she established the first school
for nurses and fought to improve hospital conditions.
"I attribute my success to this - I never gave or took any excuse." - F. Nightingale
"Were there none who were discontented with what they have, the world would never reach
anything better." - F. Nightingale
"It may seem a strange principle to enunciate as the very first requirement in a hospital that it
should do the sick no harm." - F. Nightingale

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John Muir (U.S.): Naturalist and conservationist, he established the National Park System
and helped found The Sierra Club.
"The mountains are calling and I must go." -J. Muir
"The clearest way into the Universe is through a forest wilderness." - J. Muir
"Everybody needs beauty as well as bread, places to play in and pray in, where nature may
heal and give strength to body and soul." -J. Muir

Jean Monnet (France): Responsible for the reconstruction of the French economy following
World War II, including the establishment of the European Coal and Steel Community
(ECSC). The ECSC and the European Common Market were direct precursors of the
European Union. (www.ashoka.org)
"Make men work together to show them that beyond their differences and geographical
boundaries there lies a common interest." -J. Monnet
"People only accept change when they are faced with necessity, and only recognize necessity
when a crisis is upon them." -J. Monnet
"Nothing is possible without men; nothing is lasting without institutions." -J. Monnet

Reference:
Jerusalem, V., Palencia M, & Palencia J. (2017). Business ethics and social responsibility:
concepts, principles, & practices of ethical standards. Manila, Philippines:
FASTBOOKS Educational Supply, Inc.
Orjalo, V. & Frias S. (2016). Business ethics and social responsibility: principles, policies,
programs, and practices. Quezon City, Philippines: The Phoenix Publishing House, Inc.
Cortez, F. (2016). Business ethics and social responsibility. Quezon City, Philippines: Vibal
Group, Inc.

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