The question that looms large on the issue of shared value and social enterprise is simply this: is it really possible to run a profitable business and contribute to meaningful change in the community? The answer, if you speak to Katharine Hibbert, is a resounding yes.
She would know, having spent years researching, campaigning and writing about her field – the sheer number of empty and disused properties at a time of severe housing crisis in the UK – before founding Dot Dot Dot Property in 2011. Her social enterprise matches ‘property guardians’ with private and public sector landlords. The guardians pay a dramatically reduced rent to live in the properties, and sign up to doing 16 or more hours a month of unpaid volunteering in the local or wider community. Dot Dot Dot’s revenue stream comes from the fees the landlords pay (which would otherwise go to security firms) and from the financial contributions of the guardians.
“I created a business opportunity by becoming an expert on a very specific problem. That’s where the shared value business model really makes sense, because it allows you to look at something that is a social problem for everyone, fix it by creating something someone wants to pay for, and by offering a solution, provide value to a market wider than just the one you are serving.”
Katherine Hibbert shares the story behind Dot Dot Dot and her involvement with Investec Private Banking through Beyond Business
This fact is, she goes on to explain, equally attractive to potential landlords in both the public and private sectors: “public sector organisations have an inbuilt commitment to creating social value, which is reflected in their procurement choices. In the private sector, corporate social responsibility is huge, so that works in favour of social enterprises. Ultimately, both sectors want to work with a business that offers social value at no extra cost to you as a business owner and considerable extra benefit.”
Indeed even if there is a small extra cost, Hibbert adds that it’s worth remembering some “will even pay a premium” for a service or product that does wider good. “Look at fair trade food and coffee,” she suggests. “Adding social value is not necessarily a cost. You can use it to win more customers. Achieving social value can actually add value.”
This is also true when it comes to the internal workings of your company, where, Hibbert says, being a social enterprise can benefit your bottom line in more ways than one. “Practicing shared value means you get a positive feedback loop. If you have a bigger mission, staff engagement is higher and when you have a workforce that believes in the product you’re trying to sell, your business will thrive,” she assures. “Think how much responsibility you have to delegate to your staff every day – from answering the phone to much bigger corporate strategy and client relations – if they understand that they’re doing something worthwhile, they will make the right decision more reliably than if they are just doing it for the paycheck.”
For Hibbert, as for so many other social enterprises, the mechanisms by which a business achieves social value can also help meet business goals.
“Dot Dot Dot is signed up to the living wage campaign, and businesses that pay a living wage get a higher calibre of staff and better staff retention. We pay our interns this wage and create internship opportunities even if it won’t add as much value as it costs. We are also looking into apprenticeships as we speak… Doing the right thing is also right for your business.”
Here Hibbert hits on one of the key concerns facing social enterprises, and those considering starting them: whether it is ever ok to prioritise profitability over the core social ethics and ethos of the business itself. Ultimately, the answer comes down to principle (and a hearty dose of common sense). “As a social enterprise ourselves, we always try to ‘buy social’ where possible. Getting catering from other social enterprises, for example,” says Hibbert. “But the cost of doing things the ‘right’ way is higher than doing things the quick and dirty way.”
She admits that “there can be a trade-off between being socially run and bottom line profit, but I do believe very strongly that having your values running through all the decisions you make does make you a more solid business in the long run.” For her, the only time this principle is ever called into question is when ‘buying social’ would cripple the business financially. “In these situations, you have to prioritise sustainability as a business over anything else. At least then people can still benefit from Dot Dot Dot existing, which they wouldn’t if we went under.”
Entrepreneurs like Katharine Hibbert prove that the notion of social enterprises having to take a hit as businesses to achieve wider community goals is a myth. With a great idea, good governance, financial transparency and the desire to affect change – shared value businesses can both affect change and prove as profitable as any other SME. The bottom line can be every bit as healthy as the bigger picture.
Katherine Hibbert is founder of Dot Dot Dot.