The true nature of the social enterprise

When we use the phrase social enterprise, we all intuitively understand that is in some way different from an orthodox view of how industrial enterprises operate, how they are organised, what is their role and purpose, by which I mean whom do they really serve? And, how in part they make their money. We have to ask therefore – what is the true nature of the social enterprise?

Its nature starts with the idea that enterprise is designed around what makes us human and our humanity. The social enterprise seeks greater mutuality, serves the collective good, is more adaptive, flexible and distributive of wealth and knowledge. It uses social capital as a resource, and it offers multiple benefits for those that work with a social enterprise. The social enterprise always is built upon the foundations of trusted participatory cultures. It uses different forms of human interaction, tools, technologies that are inherently social and open.
With, not for in a networked world.

Another aspect of a social enterprise is the likelihood that it has a horizontal hierarchy of networked relations – this means the emphasis is on collaboration not coordination, or in other words working with, not for.

What drives this transition or I + We = why?
Those that are interested in ‘what’s next for business?’ must understand there are multiple factors driving this shift. Firstly, we have to understand that technology only succeeds if it meets fundamental human needs – if the universal communication technologies we are using today are inherently social then we have to ask what is humanity needing that the industrial world cannot give it?

Why are we wrapping an interactive socially orientated communications membrane around the earth?
The answer is that human beings are meaning making creatures, narrative the stories we co-create in all aspects of our lives constructs meaningful identities and meaningful lives. And in that act of co-creation we also construct more cohesive societies. Culture, as Professor Henry Jenkins argues, is today participatory. ‘We create, we share, we collaborate, we consume, we discuss’,1 he says, adding that convergence is a cultural rather than a technological process. Jenkins’ conclusion is that we’re seeing the emergence of a new form of participatory culture as everyday people take media in their own hands, reworking its content to serve their personal and collective interests.
When people consume and produce media together, pool insights and information, mobilise to promote common interests and function as grassroots intermediaries, their personal media becomes communal media or social commerce that’s part of their lives in communities, whether face-to-face or over the Net.2

Our communications revolution offers the ability for more meaningful human connection which is natures default setting. In many cases we have forfeited our humanity for industrial efficiency. Of course there is always a trade off but we have arrived at a point whereby the fundamental capitalism that has dominated our lives for the last 30 years which is neither truly redistributive of wealth or social good is now doing deep damage to us. As the Economist John Kay wrote, ‘capitalists are capitalisms worst enemy especially the market fundamentalist kind that have been in the ascendency for the last 30 years.’

System upgrade
We are forcing into consciousness an alternative view of society a rejection of top down, hierarchical organisations to an emphasis on collective participation of many individuals over the strong leadership of the few. We are saying a better world is created by what we share. We are in short in the process of a systems upgrade, upgrading our world and enterprise with it to a human centric OS (operating system). Then we have to ask what does this operating system want it wants greater opportunity, freedom, empowerment, mutualism, diversity, efficiency, independence, and beauty.

The social enterprise in practice
Let us take something we all understand – a car company Local Motors is a comprehensive example of a social enterprise and revolutionary approach to the design, engineering, manufacturing, sales and marketing of cars.
Local Motors has been shaped to have long-term, sustainable profit potential in addition to an eco-friendly production process and end product.  Local Motors now has the world’s largest community of car designers and engineers who embrace open collaboration to develop innovative cars. In one year 44,000 designs were submitted to Local Motors, and 3,600 innovators have shared their knowledge and insights.

Local Motors is open and collaborative with its community and customers. ‘We don’t guess; we ask and we collaborate’, Jay is of the view that deep context is the only way to build a sustainable, flexible business. ‘This experience is engaging with our customers to feel a deep connection’, he says. ‘It becomes an investment in the community and car which is the product of their personal effort.’

The economic benefits are that Local Motors cars are developed five times faster than traditional cars, and with 100 times less capital. It fundamentally changes the relationship to supply and demand by rethinking and redesigning the process from conception to production. The benefits for Local Motors working as a social enterprise therefore are
Harnessing a distributed knowledge network which is both hyperlocal and superglobal.

Making excellent use of open source and Creative Commons in the business.
Innovating through engaging enthusiasts who are passionate about car design and engineering. In one year 44,000 designs were submitted to Local Motors, and 3,600 innovators have shared their knowledge and insights.
High velocity: this company can design and build a car five times faster than a conventional manufacturer can.
Cooperative competition as both risk mitigator and innovation accelerator.

Lightweight; built to be adaptive and flexible.
Less capital-intensive than its conventional peers. Normally, it takes $200m to take a car from conception to full-scale production. Local Motors achieved the same result with £1.5m. That is 100 times less capital.
Fostering regional development. Rather than building another car plant, Local Motors is building micro-factories, so that money flows into local communities, and creates local jobs.

Finally, learning is seen as a constant daily process, and so the organisation is a learning organisation: learning to evolve and to grow and learning what work and what doesn’t.

Local Motors is an example of a lightweight, flexible and adaptive system that can work at velocities that are unprecedented, and where sociability is embedded into the very fabric of the organization in a multiplicity of ways, both in the digital realm and in the everyday.

From me to we
In 2002 C. K. Prahalad and Venkatram Ramaswamy, writing in ‘The co-creation connection’, explained the difference when one engages with the principles of co-creation. Whereas the traditional company-centric view says that the consumer is outside the domain of the value chain, they state that the consumer-centric view says the consumer is an integral part of the system for value creation. Similarly, while in the traditional model the enterprise controls where, when and how value is added in the value chain; the model centered on the consumer accepts that consumers can influence where, when and how value is generated. Where value is created in a series of activities controlled by the enterprise before the point of purchase in the traditional system, a consumer-centric approach says that the consumer need not respect industry boundaries in the search for value. And finally, while in the company-centric system, there is a single point of exchange where value is extracted from the customer for the enterprise, the consumer-centric one allows that the consumer can compete with companies for value extraction. The other advantage of the consumer-centric view, they say, is that there are multiple points of exchange where the consumer and the company can co-create value. For example Lego is an organisation that has evolved from we produce, you consume, to we co-create better products and services together. While the rest of the corporate and commercial world slept, LEGO was hard at it learning that there existed a better, more agile, more sustainable, more relevant model for an organisation in today’s networked world. They have arrived at a model where customers, are designers, co-creators, who share in the recognition of their efforts and revenue with the Lego cuusoo platform. LEGO has connected to and become part of the LEGO community – the LEGO community has become part of LEGO.
And that process is still evolving.

Both these examples demonstrate human centricity as the epicenter and fabric of the enterprise, they demonstrate that people will engage and give their creative best if they believe their effort is worthwhile and will be recognised – their motivation is not monetary but more importantly it is based upon meaningful connection and recognition. It requires a new literacy.

And they are by far not the only ones – in banking finance, healthcare, education, scientific research, the management of urban environments even, socially orientated enterprises are demonstrating a better world is created by what we share. That we can deliver that better world socially, organisationally and economically by upgrading enterprise to a human centric operating system – this is the direction our world wants to go, this is the true nature of the social enterprise.
Alan Moore.


Based upon the book No Straight Lines: making sense of our non-linear world
Published by Bloodstone books
Available at Amazon:

You can read a review of No Straight Lines by Business Editor Phil Birch in the August Edition of the3rdimagazine – here


About Alan Moore
ALAN MOORE is described as someone who has a firm grasp of the significant and disruptive trends which are currently reshaping our world. Through his most recent project No Straight Lines: making sense of our non-linear world Alan looks at organisations that have created transformational change or transformational businesses that also serve the collective good, and which demonstrate new organisational, economic and innovative capability designed around the needs of humanity.

With his unique insight, Alan enables organisations and companies to address the challenges we now face to develop transformational and winning ways for ‘what next’ practically looks like.

He is the founder of the innovation consultancy firm SMLXL and co-author of “Communities Dominate Brands”: in which he coined the phrase ‘engagement marketing’ and explored the significant implications for business and organisations of living in a wired-up, networked, socially orientated world.

He sits on the “board of inspiration” at the Dutch Think Tank Freedom Lab. He acts as “Head of Vision” for the Grow Venture Community, and is as a special advisor to a number of innovative companies and organisations including NGO’s, publishing, mobile, the theatre and finance.


First published August 2012

1 Comment on The true nature of the social enterprise

  1. Karen, There’s a distinction between this interpetation of social enterprise and how my deceased colleague. His 1996 paper describes a “people-centered” model of economic development saying:

    “There is nothing wrong with individuals becoming wealthy. It is only when wealth begins to concentrate in the hands of a relative few at the expense of billions of others who are denied even a small share of finite wealth that trouble starts and physical, human suffering begins. It does not have to be this way. Massive greed and consequent massive human misery and suffering do not have to be accepted as a givens, unavoidable, intractable, irresolvable. Just changing the way business is done, if only by a few companies, can change the flow of wealth, ease and eliminate poverty, and leave us all with something better to worry about. Basic human needs such as food and shelter are fundamental human rights; there are more than enough resources available to go around–if we can just figure out how to share. It cannot be “Me first, mine first”; rather, “Me, too” is more the order of the day.”

    In 2008, he makes the distinction between business which engages social media and the meaning of social enterprise which goes beyond traditional capitalism to address the needs of those who fall between the cracks:

    “Allowing that some people do not matter, as things are turning out, allows that other people do not matter and those cracks are widening to swallow up more and more people. Social enterprise is the first concerted effort in the Information Age to at least attempt to rectify that problem, if only because letting it get worse and worse threatens more and more of us. Growing numbers of people are coming to understand that “them” might equal “me.” Call it compassion, or call it enlightened and increasingly impassioned self-interest. Either way, we are all in this together, and we will each have to decide for ourselves what it means to ignore someone to death, or not.”

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