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Social business models – Why should you care as a business leader?

Aktualisiert: Sept 8

Our society is currently facing a variety of enormous challenges. It is more important than ever that we join forces and NGOs, governments and philanthropists are not the only ones who proactively tackle these challenges.


We must start harnessing the power of businesses to combat climate change, utilise digital tools in a meaningful and ethical way while ensuring that no one is left behind, handle shifting demographics and mass migration, fight social inequality, provide sufficient education, strengthen solidarity, and shape health of tomorrow – to name only a few areas in which businesses can shape the future of our society.


As a business owner, it is within your power to decide whether your business is part of the problem or part of the solution to these challenges.


Social business models are considered one of the most effective ways for businesses to sustainably contribute to overcoming the mentioned challenges. And there are a lot of good reasons why adding social business models to your core business, will not only serve society and humanity on a greater scale but will actually be the only way for your business to thrive in the future.


1.    Employees of today and tomorrow


The war for talent is an omnipresent challenge for businesses today. Baby boomers are considered the most purpose-driven generation of employees and increasing numbers of millennials are seeking jobs that are not only in line with their values and moral understanding but allow them to have a positive impact.

The people of tomorrow expect your company to contribute positively to society before they consider working for you. Social business models and purpose-led businesses attract, motivate and retain talent in the pursuit of meaning.


2.    Thinking outside your box and leveraging fresh perspectives


Companies that engage in this different understanding of doing business shift perspectives, become more agile and discover new insights through experimentation.

Rethinking new product lines and services under the social value maximisation, rather than shareholder value, stretches your thinking and encourages advanced creativity. This, in turn, leads to a transformation in your corporate culture and in working habits.

Pioneer companies have reported spillover effects from thinking about social value that benefitted completely unrelated business units.


3.    Social innovation as a competitive edge


Innovating with a social purpose allows businesses to set new standards in their customer market and generates competitive advantages against other players. Corporate citizenship has been identified as one of the key factors influencing buying decisions in today’s economy, which allows companies to radically improve their market position when building social business models.

Customers of businesses with social business models are also likely to experience increased utility. This is because implementing social business models requires your business to understand social and human needs in enormous depth. Delving into the needs assessment methodologies that are necessary for setting up social business models will significantly increase your abilities to master human-centered design in all your offerings.


4.    Positive image effects


Harnessing the power of business for social good is not a new idea. However, there are still not a lot of businesses standing out for taking the bold step of implementing social business models.

So there is a lot of potential for first-mover benefits with regards to positive image effects and authentic identification with the brand. Nearly all stakeholders (employees, customers, and investors as well as governments and the media) are looking for businesses that take a stand and genuinely understand themselves as problem-solvers rather than creators.

Establishing social business models shows that your intentions go beyond half-hearted CSR investments and greenwashing.


5.    Meeting customers on eye-level


Social business models allow for new eye-level and trusting business-customer relationships. Customers reward transparent wages, bonuses, and investments with an increased willingness to spend money and loyalty.

Beyond that, operating with social business models has the potential to harmonise the ever-lasting wrestle of producers desperately trying to maximise profit margins and consumers chasing after bargain prices. Social business models encourage the fair valuation of goods and services, eliminate cheating, and promote equitable and fair trade.


6.    Finally: Your legacy


As you can see, there are a lot of good reasons to start shifting focus now.

It is on you to decide whether you want to be remembered as the one who invested in preserving the status quo or as someone who invested in the future.


Think about your personal legacy. What do you want to leave behind?



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