The rise of the social enterprise

Hi, thanks for joining us, I’m Bob Hughes, a Director in our Human Capital Practice and am delighted to be joined by Dimple, a Global Leader for our Organisational Transformation practise and one of the authors of our 2018 HC Trends Report.

Dimple, I’d like to first start by asking about the HC Trends Report - the report was published in May this year with a common thread of the rise of the social enterprise running through it. For those who may not be familiar with the concept, could you summarise what it means and why it’s important for businesses to think about it?

Sure. It’s a very good question because we, as the team of authors, spent quite a bit of time thinking through what the theme and title of the report should be, so let me first define by what we mean by rise of the social enterprise.

A lot of people may misinterpret it given the word ‘social’ in the title. What we really mean by a social enterprise is one that combines revenue growth and profit making, which of course are both still incredibly important for organisations, alongside the need to respect and support its environment and stakeholders externally. A social enterprise listens and it invests and manages the changes that shapes today’s world. A social enterprise doesn’t just sit on the side and worry only about how it makes money, it really thinks through why its commercial objectives are important and how it goes about executing on that to have a positive impact on society, community, stakeholders, the environment and the rest of the world. So, ultimately, it shoulders the responsibility of being a good citizen, a role model and collaborates. To me this is the definition of a social enterprise.

Great, thank you, and what would you say are the underlying characteristics of an organisation that is a social enterprise?

To make it come to life I think the way to think about it, and if you can visualise with me, is a graph which has an X and a Y axis. So the Y axis is at the bottom and is where you have the internal view. As you go up the Y axis the idea is that a social enterprise has climbed to have a far stronger external view. By that we mean these are organisations that move the focus from being internal to being more external, to running the organisations by thinking of them as part of an ecosystem, by increasingly engaging the external stakeholders beyond employees and consumers to society, investors, partners and even competitors.

On the X axis is the internal view which is moving from a very functional siloed organisation to one that actually operates in a very symphonic way, a very collaborative way. We think this is absolutely critical because the kind of challenges that our society and organisations are facing today, you cannot approach them in a siloed way. So working in a symphonic way, cross-functionally, cross-geographically, is very very critical. Being a social enterprise would mean that you are approaching the top end of the Y axis and the right end of the X axis to actually be mindful of the ecosystem and responding to them and doing that whilst operating as a very synchronised collaborative team within the organisation.

Great thank you, that really helps I think illustrate it. Can you think of some organisations that exemplify that trend of being a social enterprise?

Yes, I think there are quite a few organisations out there who think about their purpose and mission as an organisation in that way. The example that comes to my mind because it’s one of my clients, a FTSE 10 company and a consumer business organisation. From a Deloitte perspective it’s a key account and to me is an organisation that exemplifies being a social enterprise. Let me explain why.

Their business policies and practices all stem from what’s at the heart of the company’s ‘Sustainable Living Plan’. For example when they think about their supply chain and what improvements they want to make there, it’s done within the context of running and maintaining a clean environment, saving water and electricity, and ethical trade. So all the suppliers for example will be people who have passed those, if you like qualifiers, to trade or do business with them. This is the same from a marketing perspective. In some recent ads they talk about and, if you like, use brand ambassadors from the LGBT world. Also as far as HR is concerned and all the policies around recruitment and other processes, I know that they absolutely live and breathe all aspects of diversity. For instance and if you walk into their office which is around the corner from ours, it actually is one of the most diverse businesses I work for.

But this is not just about people practices it’s about your supplier practices, it’s about how you go about marketing. I know and I won’t name the sites, but they have refused to advertise on certain sites because they know that those businesses don’t live up to the same values as them. They are a strong, very purpose driven organisation, in fact all the 660,000 people have recently gone through a purpose workshop so they can see how an individual’s purpose marries with the company’s purpose and tries to find them projects or roles which match that. Just so that every human being in that organisation can live their own purpose through the organisations purpose and there are many such examples, I could go on and on, but I think those few describe for me that the company is actually a social enterprise.

That’s something I hadn’t heard about so thank you for sharing those examples. What do you think are some of the challenges that organisations will face when becoming social enterprises?

That’s a very good question and I guess a deep question for a lot of organisations because there are so many angles to this. I’ll explain a couple.

I think one of the things some organisations will find challenging is answering the question of how do you continue to make money whilst having a positive impact on society? We know there are lots of organisations and practices out there which don’t necessarily do that, and at the end of the day most of these public organisations have shareholders to answer to, so how are they going to strike a balance between keeping the shareholders happy whilst doing what’s right for the world, for society and for our communities?

I think the second challenge, and we say this as consultants, is the part that I mentioned about the X Axis on the characteristics of a social enterprise which is how leadership teams actually work together in a collaborative symphonic way. Whilst that sounds obvious we know there aren’t many organisations who actually are able to do this. I think that’s going to be a key challenge because it requires different ways of working, it requires a different mind-set and to me that’s going to be quite a key challenge.

And the third thing I think is important is to have CEOs and leaders in organisations who stand up for certain things. We see a lot of CEOs like the Blackrock CEO, like Walmart, like Airbnb, a lot of organisations have stood up for different issues. I think that’s what is needed without being very obviously activist. I personally do believe that CEOs and leadership teams and organisations as a whole need to take a stance on some of the societal issues and go after them.

Great thank you. The social enterprise was identified clearly in the HC Trends Report this year, how do you think that this trend will evolve over time?

I can’t look into a crystal ball and I’m not a technologist to be able to predict technology, which has been one of the key drivers of disruption and we are talking about organisations in the context of the fourth industrial revolution. But I’ll have a go at this Bob. I think the way this trend will evolve is, as we have already seen, lines between organisations, lines between functions, lines between employers and employees will continue to blur. This means it will be hard to say what it is that an organisation stands for, or what a job means or what it means to be a worker.

I think all those lines are blurring, so we will go through a phase where it’s going to be important to deal with ambiguity and that’s where being a social enterprise or having very clear values and are clear on what you stand for becomes important. Irrespective of what that disruption looks like or irrespective of how organisations evolve this will stand you in good stead.

It will be your north star in terms of what you should do and how you should go about it. I strongly believe the concept of employers and employees and work offices and jobs are going away, and I think they will actually melt away in the next three-four year. So we have to be ready for this in the future and it’s important that we as individuals and we as organisations work out how we are going to adapt to this change.

Great, how do we help our clients address these challenges?

If you read the report you will see we talk about three macro trends, so I will try and answer this question within that context, because there are so many ways to do this and not every organisation has to fulfil all definitions or descriptions that make up a social enterprise. But I think how we help clients address these challenges is to power of the individual.

We talk about how the workforce ecosystem has changed drastically and quite strongly, the gig economy is here, the US already operates with 50% of the gig economy and the UK is getting close to that. But we as organisations still don’t have policies and the government still hasn’t put policies and laws out there which help us cope with this change. So I think as consultants we can absolutely help influence government policies and we can help organisations define or redefine the policies and processes and the technologies and systems to help them cope with the workforce ecosystem.

The same also applies to people’s roles which we have also talked about in our report. For example, wellbeing programmes, which we see is more and more an expected given for organisations. Like I said the world is becoming more and more ambiguous and we have to think about how we can prepare individuals to be more resilient and not have all the answers. The world is not so black and white anymore.

The other area I can pick up to answer this question Bob is through technology. We have talked in our report about AI and robotics and I think organisations are still working out how they are going to leverage these to achieve their business objectives in a far more effective way. We have the expertise and we have the technology to help our clients on that journey quite easily, and we should absolutely be playing a much stronger role in that.

I think the other area that we can really have an influence is the hyper-connected workplace. We know organisations are overwhelmed with all the technologies we have, we ourselves are using Facebook Workplace which is helping us connect in a real time and informal way. There are other examples of course, but I think some organisations are struggling, so how do we help them actually deal with the hyper-connected workplace so that they can simplify ways in which they organise their virtual communities. And lastly people data - we know that we have created a lot more data in the last three years than we did in all of prior humanity, but organisations are still not really using data in a way that helps them from an insights perspective. Analytics has a huge role to play and again within Deloitte we have significant capability to help organisations with that. Those are just some examples.

Thank you Dimple. Lastly, where do you feel Deloitte is in becoming a social enterprise?

I think we have made huge progress and I think we have done some things significantly differently in the last few years which puts us on the path to becoming a social enterprise. No one is quite yet there and we aren’t either, but a few things I will pull out is our programme called One Million Futures. Given that we are a professional services firm it’s well within our abilities to help with employability and skills development for a lot of people out there, which helps them chart their future out and I think we have done some fabulous work in that space. I think a lot of things we have done to ourselves, like our new building at 1NSS, the collaborative tools we talked about earlier like Facebook Workplace. A lot of things we are doing from a wellbeing perspective like our Flourish programme and a few changes we are making to our promotion processes and award processes are all steps towards us becoming a social enterprise.

There is a lot for us to do around artificial intelligence, robotics and automation, I think that’s one space where we can do more. I think the open talent economy is an opportunity which we started doing well through our Associates programme but again there is a lot more we can do so I’d say, to summarise, that we are very well on our way. I think we have the basic foundation blocks, I think we need to move at pace and there is a lot for us to do just like our clients have a lot of ground to cover in the next few years.