Social Impact: The Business Model of the Future

Chuck Templeton

June 26, 2012 · 5 minutes read

Uncategorized

As I learn more about the world we live in, paradoxically, I realize how little I know. But I do know we face huge economic, social and environmental challenges that will require new business models, new ways of solving problems, and unprecedented cooperation if we want to overcome them.

The world is changing at a pace and scale never experienced by humans. Our obstacles include the impacts of climate change, diminishing natural resources (water, fish, soil, forests, etc.), income inequalities, unprecedented species loss, growing government debt (international, national, state, and local), aging infrastructure, increasing costs of crises with a reduced ability to respond, and a population topping seven billion.

As these problems grow, we need to reimagine our current economic system or the laws of physics will push us to do so whether we like it or not. Government alone cannot solve these challenges. Non-profits alone cannot solve these challenges. I believe it will take for-profit business models, and the involvement of entrepreneurs, capital, and resources, before these challenges have a hope of getting resolved. The good news is that big challenges mean big opportunities for smart citizens, entrepreneurs, and investors alike.

It is not enough for businesses to “just make money.” They must also address today’s societal or environmental needs. In the future, companies that are able to both make money and have impact will be the ones that succeed. They will be most competitive, have the best chance at attracting talent, get greater access to capital, and will be the most profitable.

This is the reason why I got involved with Impact Engine, a new 12-week accelerator program for entrepreneurs who want to make the world a better place through for-profit business models. I want to bring my entrepreneurial experience to companies that are going to make a difference in the future.

These businesses will offer investors the biggest returns in both impact and capital. For most people, it is hard to believe that a “socially responsible” business can be more profitable than an for-profit only business. But more and more, I am seeing creative entrepreneurs develop innovative solutions, business models and returns.

It might be easy to dismiss the paragraphs above as being written by some “rich person” who “made it” and is now trying to give back. But this is not a message about being philanthropic. It is message about being strategic and competitive by going where the profits are going, capturing the best talent, and using business principles to solve the world’s problems.

In fact, we’re already starting to see promising examples in the business world:

SeeClickFix
Funded by: Omidyar Network, O’Reilly Alpha Tech Ventures

SeeClickFix allows citizens anywhere in the world to report and monitor non-emergency community issues ranging from potholes and planted trees to garbage and graffiti. Launched in 2008, it empowers citizens, community groups, media organizations, and governments to work together and improve their neighborhoods. Through mobile web, web, iPhone, Android, and Blackberry apps, the SeeClickFix platform is the most widely-distributed citizen reporting tool in the country.

Embrace Innovations
Funded by: Khosla Impact, Capricorn Investment Group

Embrace has developed an innovative, low cost infant warmer for vulnerable babies in developing countries. Over 20 million low-birth-weight and premature babies are born every year around the world, and over 4 million die within their first month of life. Temperature regulation is a key problem among many of these infants. Embrace has developed an infant warmer that costs a fraction of the price of existing solutions, and that functions without a continuous supply of electricity.

Better World Books
Funded by: Good Capital

Better World Books is a for-profit social enterprise that collects and sells books online matching each purchase with a donation, book for book, and with each sale generating funds for literacy initiatives in the U.S. and around the world. With more than eight million new and used titles in stock, Better World Books is a self-sustaining company that balances the social, economic and environmental values of its stakeholders. Better World Books diverts books from landfills by conducting book drives on thousands of college campuses and libraries. Since its founding in 2003, the Mishawaka, Ind.-based company has raised over $11 million for libraries and literacy, donated over 5 million books; re-used or recycled over 70 million books and achieved 29,000 tons of carbon offsets through carbon balanced shipping.

Sanargy
Funded by: Eirene

2.6 billion people do not have access to adequate sanitation. The resulting disease and water pollution cause 1.7 million deaths & loss of $84 billion in worker productivity each year. In Kenya’s slums, 8 million people lack access to adequate sanitation. The long term objective is to build and scale viable sanitation infrastructure in the slums of Nairobi. The model involves four parts: (i) building a network of low-cost sanitation centers in slums, (ii) distributing them through franchising to local entrepreneurs, (iii) collecting the waste produced, and (iv) processing it into electricity and fertilizer. At each step, this model creates jobs and opportunity while simultaneously addressing serious social needs.

What can you do to make your business more competitive? How can you get involved? Come join the Impact Engine tribe. If you have an early stage business that makes money and addresses a societal or environmental challenge, consider applying to our accelerator by June 30th. Contribute to our community. Build a business that stands for something besides just making money. To find out more, http://www.theimpactengine.com.

Chuck Templeton is keynote speaker at Technori Pitch tonight.

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