Patagonia is a social enterprise. It’s in the business of saving the planet. With $1 billion in sales, they produce premium outdoor clothing in a highly sustainable way. Their products use nearly 90% recycled materials. To counter the waste generated by fast fashion, they produce long-lasting products and even offer a repair and reuse program. Their entire US business uses 100% renewable energy.

They are heavily into climate activism and give away 1% of their sales for preservation of natural environment. Their founder has decided to direct all future profits to protecting the global environment.

Organisations the world needs

Would you agree that the capitalistic business model that singularly aims to maximise shareholders’ returns is flawed and has run its course? That, single-minded pursuit of profits ignores social and environmental costs; relentless and high velocity action creates a stressful work environment; and lack of clarity of organisational purpose leaves employees unfulfilled.

On the other hand, the social-sector does hugely meaningful work but is constrained in many ways. Their dependence on external funding, inability to attract talent and often lack of efficient systems hampers their effectiveness and scalability.

What we need is a business model that focuses on solving social problems in a financially sustainable way. One that serves as a link between the efficiency and scale of market-based systems and the social impact of philanthropy. Where the financial goals are important, but do not in any way undermine societal goals. We need more social enterprises!

Social enterprises and the power of purpose

Social enterprises are deeply mission-driven organisations. Where the purpose of their existence is not an add-on objective, but is at the very heart of their everyday work. Where ‘doing well’ follows the pursuit of ‘doing good’.

Their sense of purpose is also more motivating and fulfilling for the employees. This matters even more to Millennials who make up nearly 50% of today’s workforce. They find their job more fulfilling when they have opportunities to make a positive impact on social and environmental issues. Many of them are also questioning the Bill Gates’ model of a two-phased professional life. Capitalist for the first part and philanthropist in the second. They recognise the world can ill afford to delay what’s good for the world.

And consumers prefer social enterprises too. According to an Edelman Earned Brand study, 30% of consumers across 14 major markets, including the U.S., China and India, are belief-driven buyers. They will buy a brand, switch from it and avoid it, based on the brand’s stance on a social issue. These numbers skew higher among Millennials (60%) and Gen-Z (53%).

Their breed is growing

Although few in number, social enterprises are fast growing globally. Some of them are gaining scale too. Neste is the world’s largest producer of renewable diesel, refined from used animal fats and cooking oil. TOMS shoes invests one-third of their profits for grassroots good and sustainable change. d.Light offers affordable solar products and has reached 125 million people. There are others, like Beyond Good in enhancing returns for  African farmers, Compology in waste management measurement, ME to WE in fairtrade products and Much Better Adventure in positive impact adventure travel.

Closer to home, Amul is a well-known and hugely successful milk cooperative, that was founded to support the farmers get their due. Following principles of inclusive capitalism, Fabindia links over 55,000 rural artisans, who have ownership in the business and 64% of whom are women, to urban markets. Grameen Bank profitably provides financial services to over 10 million under-resourced individuals. There are others, like EnglishHelper, an impact-first Edtech organisation that has reached over 25 million children, Aavishkar Capital that invests in socially relevant start-ups and No Nasties in sustainable clothing.

What will you choose?

If you are a budding entrepreneur, do think about the purpose of your new organisation. Why does it need to exist? What real social challenge would it address? If you are evaluating job options, consider what work would meet your Ikigai criteria. Besides what you are good at, enjoy doing and what pays, reflect on what social need would it serve? Likewise, you can explore how to better address any social issues in your current role.

The world and you might be better off for it!