A social business is an umbrella term, due to its varied and multi-faceted nature. Within a business, it falls under many departments and processes.
In his book, Social Business and the Future of Capitalism and Building Social Business, Professor Muhammad Yunus has defined a social business as an entity “created and designed to address a social problem”, operating at “a non-loss, non-dividend” and “is financially self-sustainable”. Profits garnered from a social business are “reinvested in the business itself (or used to start other social businesses), with the aim of increasing social impact, for example expanding the company’s reach, improving the products or services or in other ways subsidizing the social mission.”
Social business processes are all about collaboration, transparency, flexibility, consumer engagement, peer-to-peer models, changes in management, and people-centric programs.
A social business, or a social enterprise, is simply a company that’s created to solve a social problem. Like an NGO, it has a social mission, but like a business, it generates revenue to cover its operating costs. Aside from the possibility that initial investors might see a financial return, all profits are reinvested into the same social business or other enterprises.
An Evolving Term
Today, ‘social business’ has garnered a second definition. Mark McDonald from Gartner, one of the world’s leading information technology firm, defines a social organization as “one that is able to bring together all the talents, interests, experience, insights, knowledge of their people in ways that are independent of the vertical top to bottom hierarchy or end to end process orientation to create sustained value”.
Four dimensions of social business
So what exactly makes up a social business, as defined by McDonald?
Well, there are four main components at the heart of this type of organization: technological, behavioral, management, personal dimension.
1. Social technology
Today, as with almost any business, media (and specifically social media) are at the foreground. These networks, platforms, and tools include anything from Twitter to public forums, to blogs. For a business to thrive in the present corporate climate, it needs to use social technologies and applications to further its business purposes. Things like social collaboration and customer-facing processes are most prominent and effective in social businesses today.
2. Social/behavioral Perspective
A social business, as you would expect, also has a behavioral aspect. This refers to the dynamics and catalysts of phenomena driven by social media, as well as its impact on consumer behaviour.
The emergent term of “gamification” is central to today’s social business, whereby the customer takes center stage, sharing, networking and crowd sourcing. This empowers consumers and allows their voices to be heard and brings together communities around shared interests.
3. Process and Management
A third component involves a business’ management style and processes. It involves new business models and changing ways of working. It aims to construct responsive teams and create decision-making processes beyond traditional management structures. Essentially, this means transforming existing models to become more efficient and free flowing. A social business aims to adapt processes for better communication within the organization and to customers, as well as becoming a more adaptable and flexible enterprise.
4. Human dimension
Lastly, there is an emphasis on human principles in today’s corporate world. This is the link between the original definition of a social business, and the new definition. The human dimension of a social business is having people-centric operations. In other words, increasing the organization’s focus on human values and social responsibility. It focuses on the psychological needs of consumers; the need for acknowledgement, equality, trust, inclusivity and authenticity.