James W. Robinson Secondary School
2nd Place, Virginia
Bridging the Gap: The Importance of Making a Profit and Making a Difference
The greatest improvements on life in the United States in the next ten years will not come from entrepreneurs who are completely focused on business and profits or from those who are completely focused on creating social change. It will come from entrepreneurs who find a balance in between. Those who will make the greatest positive impact on society will understand that creating a profit and creating social change are not independent and actually benefit from one another. Current trends already signify that these are the types of individuals who will change lives the most in the future. The success of socially responsible businesses, the lack of success of social organizations that are unfocused on profits, the growth of social enterprise courses within business schools, and the success of executives who solve problems from both a business and social perspective all demonstrate that the gap between success as a business entrepreneur and success as a social entrepreneurs is being shortened.
In the recent years, business entrepreneurs and organizations who set ethical objectives and implement corporate social responsibility have seen substantial benefits while those who refuse to embrace this concept have seen negative results. Although corporate social responsibility is still a developing concept in business, it can be loosely defined as an organization’s consideration of the ethical implications of its business activities. Businesses that act ethically and improve lives of others as a result of their operations often have a more favorable image in the eyes of the public. Scholars have found that their customers have a larger connection to the organization and its products since they identify with their cause and are happy to support a socially responsible business . These benefits eventually cause a business to increase its profit in the long-term even though socially responsible measures may be more expensive. Organizations that have not adopted responsible policies see the opposite effect, and they lose the support of their stakeholders as people refuse to be associated with organizations that make their lives worse. In the long-term, the profits of these organizations tend to reduce as a result. Therefore, profit generation and social impact are not exclusive and are instead intertwined. To make a profit, an organization will likely need to improve the life of others and vice versa.
Companies like Coca-Cola have extended their objectives to ensure that their products improve the lives of others not make them worse without pressures from customers and the media. Over the last decade, Coca-Cola reduced the negative impact of their famous soda on the environment by dropping the liters of water required to make a liter of Coke from three to two, after discovering the resources wasted by their production . It is now an aim of the company to reduce this number to one liter by 2020. Now, they are seen as a leader among large businesses in setting ethical objectives and still maintain one of the strongest brands in the world. Coca-Cola is one of many companies whose goals have expanded far beyond profit maximization. As a result, they are having a larger social impact.
Business schools have recognized this phenomenon and are including more social enterprise courses than ever before, because they understand that social and financial changes are not exclusive. In 2011, there were 11 times the number of students in the Harvard Business School’s Social Enterprise career program than there was in 1996. Between 2003 and 2009, social enterprise-related courses at the country’s top business schools increased by 110% . More young innovators are learning that there is no longer as large a distinction between financial success and improving the lives of others.
While business entrepreneurs who only strive for financial success are struggling, social entrepreneurs looking to influence social change are finding difficulties obtaining the funds necessary to achieve their goals . These social entrepreneurs and organizations are on the opposite spectrum from the financially-focused business entrepreneurs, and they are so concerned with affecting and helping society that they don’t factor in profit as much as they should. Being able to make a profit is also important in attracting investors and philanthropists to a cause, since profit often results from effective strategies, procedures and execution. Receiving major help from these groups give social organizations the greatest opportunity to initiate social change, but only those who effectively manage their finances will receive it. Profit that is made by the organizations of social entrepreneurs can also go back into the organization to expand or improve their methods. This approach not only makes the organization more sustainable, but also helps to better solve the social problem at hand. If the financial implications aren’t considered, a social entrepreneur can only have a limited impact on the lives of others.
In addition, executives that are the most successful at changing lives in the United States are those that can cross the boundaries between private and social sectors. Nick Lovegrove and Matthew Thomas argue in an article for the Harvard Business Review that individuals who are able to understand the perspectives of each side are the ones who ultimately create significant change in our nation and world . These types of people are able to eliminate the differences between the two sides and bring them together to be as effective as possible. The most effective solutions to problems will likely come from these individuals and they will improve life in the United States most in the coming years.
A balance between profit and social impacts must be made in order for an organization to achieve whichever is its ultimate goal since the two are not independent of one another. Entrepreneurs who understand this concept will be able to change life in the United States on a larger scale. Those who strive to be purely business entrepreneurs or social entrepreneurs will falter due to their lack of consideration of all the potential solutions, thus the change they cause will be significantly limited. In the coming decade, the lives of people in the United States will be improved by entrepreneurs who bridge the gap between making a profit and making a difference.
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Lovegrove, Nick, and Matthew Thomas. "Triple-Strength Leadership." Harvard Business Review Sept. 2013: 46-56. Print.
Milway, Katie Smith, and Christine Driscolll Goulay. "The Rise of Social Entrepreneurship in B-Schools in Three Charts." Harvard Business Review. Harvard University, 28 Feb. 2013. Web. 01 Nov. 2013.
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