The growth of social business - whereby the aim is to make profit while serving a social good - is a growing challenge to the model used in the traditional capitalistic market by for-profit enterprises.
Such businesses will be forced to reinvent themselves as consumers change the way they understand and appreciate brands.
According to findings contained in the Ericsson Social Business Report released recently, the traditional business models have not really met social needs - such as employment, instilling social values, optimal use of ICT - at a time of huge unemployment and poverty levels.
The report by Ericsson, a multinational networking and telecommunications company, indicates that social businesses are also likely to impact non-profit organisations by creating a new space in the intersection between society and the market.
“The emergence of social business is the result of a multitude of converging factors, which will only increase as technological advances continue,” the report stated.
“The networked society, where new methods and ideas can be accessed instantly, is the ideal platform for social entrepreneurship. As social business gains momentum, it’s intriguing to think about what consequences this may entail, because for every social business that is started, a traditional is not.”
For traditional businesses, it will become increasingly important to show how they contribute to a better world, such as their vision, mission and values, and this must be grounded in the very core of the business itself.
And to recruit talented people, businesses and organisation will have to show their mission very clearly as people seek companies whose visions and purposes are grounded in genuine values.
Equally, the report indicates that Information, Communication and Technology (ICT) is central to the development of social businesses.
“Access to different ICT platforms makes it possible to start a social business, as minimum investment is required for the tools needed. By being connected, the business also can access resources and build a network in their community,” the report reads.
The study was based on field research in Nairobi and Medellin in Colombia.
It found out that, with about 45 per cent of Kenyans still living under the poverty line, the government, traditional businesses and NGOs are perceived to have failed in addressing the basic needs of citizens.
In this context, the report says, a grassroots movement of social entrepreneurs has emerged, which uses and adapts technologies to locals needs.
This empowers Kenyans to develop solutions that meet the critical demand for basic services.
“Social entrepreneurs often struggle with an unstable political environment and the frustration of a developed technological infrastructure that is running below capacity,” the report reads.
In comparison to Medellin, the report notes that the scene for social businesses in Nairobi has reached a certain level of maturity.
It indicates that there is an existing grassroots community of social entrepreneurs and technology start-ups addressing social issues around them.
Meeting spaces, like the iHub, have played an integral role in creating a welcoming environment and supportive atmosphere for young entrepreneurs.
Additionally, local role models for social innovation such as Ushahidi, a crowd sourcing tool that originated from post-election violence in 2008, has shown that it’s possible for Kenyans to develop global success stories.
Philip Walton, Chief Operating Officer at BRCK, a hardware and services Tech Company based in Nairobi said “in an environment like Kenya, if you are doing business here and selling to customers, it is almost natural that you start to look at where the needs are”.
“They are often at or near the bottom of the pyramid. So to me, it’s not intentional – It’s just natural. You can’t live here and not want to make a lasting impact,” said Mr Walton.
The report further credits Nairobi’s history of social work for the growth of social businesses.
International organisations and NGOs have been present in Nairobi for decades, making it a centre for non-profits in Africa.
“The United Nations alone has more than 15 offices and is accompanied by other institutions like the International Monetary Fund (IMF) and the World Bank. The impression is, however, that there has been very little sustainable impact considering the millions of dollars invested,” the report noted.
Saruni Mara co-founder of Taka Smart, a recycling initiative said: “If we don’t fix them, there’s really no one else to do it. We can’t keep waiting for the UN to offer support. We can’t keep waiting for the WHO to do this and do that.”
“So that’s why you find most people have made the decision to actually come up with these start-ups to solve the problems around their communities because these things are affecting us directly.”
And with the highest concentration of undersea fibre optics in East Africa, a bandwidth that doubled between 2014 – 2015 (to 1,624 GB), and an estimated 30 million Internet users, Kenya has become one of the most connected countries on the continent.
The report says there are still huge disparities as data access is often expensive and is not a priority. “The technological infrastructure is in place, but the uptake is not,” report stated.
And with higher mobile penetration than fixed online accessibility, many ideas coming out are more mobile-based than online.
Equally, social entrepreneurs recognise that technology and digitalisation of data has the potential to increase transparency, which is highly sought after in a country with a history of corruption.