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Can Businesses Provide a Solution to Social Problems?

People are increasingly becoming aware of the social problems we are facing and are trying to find solutions for them. Nonetheless, the progress is not fast enough. Why is it that we have to struggle to make progress? Can businesses provide a solution to this issue?

Solving social problems: a matter of scale

According to American academic Michael Porter, the main reason that prevents us from providing significant solutions to the social problems we are facing is that we can’t scale.

We are not able to implement the solutions we come across on a large scale; we endeavor to solve problems with small solutions that have almost no impact in the long run. By doing this we apply bandages but do not “cure” anything permanently.

He also highlights that this has nothing to do with will or competences, but with a strong lack of resources. A misunderstanding of where to find the required resources for solving the problems is another factor that contributes to this.

To implement efficient solutions on a large scale, we need to look at where the resources are created and how to access them. This leads us to businesses because a lot of wealth in our economy is created by companies; other economic agents use it to serve their own interests.

How can business help?

One of the main objectives of companies is to make a profit and this allows them to implement solutions on a large scale. The only issue when it comes to scaling is the budget, but profits can take care of this aspect. If this model is implemented, the solution can become self-sustaining!

However, this contradicts one of the main ideas in economics which says that there is a trade-off between economic and social performances. This is more a question of perspective. Solving social problems can actually be quite profitable for companies in the long run because it creates a model that is sustainable.

For example, take the case of pollution. Businesses are currently focusing on ways to make a profit out solutions that reduce pollution’s negative impact on the environment. A few years back, not many companies would have even considered working on a solution that could reduce pollution because it had always been more profitable to them.

The same scheme can be applied to work atmosphere and health conditions on the worksite. Today, providing workers with lucrative benefits is a way for companies to increase productivity, reduce turnover and, thus, increase profitability. This led many companies to start thinking about a way to implement this solution on a large scale and benefit from it.

The goal is huge because it will encourage companies to solve actual problems which, in turn, will lead to social and environmental progress. But to achieve this, the current mentality of businesses needs to change so that they to put social in the middle instead of on the side. It will help in meeting the social and environmental needs through products and services, using resources more effectively and improving the local business environment, among other things.

If you have any question regarding this topic or any service that is offered by SKEMA Ventures, feel free to leave a comment and to contact us directly via email.

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SKEMA Ventures is a business unit created by SKEMA Business School dedicated to entrepreneurship and innovation. Through a unique value chain, that encompasses teaching, coaching, incubation, and acceleration, SKEMA Ventures allows each SKEMA student and alumni to think, design, test and launch an entrepreneurial project in a global context, on six innovative territories on four continents, benefiting from the best of each local ecosystem. With SKEMA Ventures, GloCal entrepreneurship is born!
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