7 predictions for the social enterprise industry in 2014

Last year was a stellar year for social entrepreneurship. Some of the biggest stories that hit the headlines were: India becoming the first country in the world to make CSR mandatory, the continued rise of social impact bonds, Delaware signing a legislation to form public benefit companies and Pierre Omidyar’s decision to back ex-Guardian journalist Glenn Greenwald to launch a new media organization that promises to be free, fair and fearless.

This year promises to build on the good work that has been put in the last decade and make rapid strides. Here’s taking a hard look at the crystal ball to predict what might happen in 2014.

Read on to find out more.

1) The consumer will start to weigh in:

Have you heard of the acronym LOHAS? No it isn’t a top-secret government organization or the short form for Lutherans Outside Houston Acting as Santa. It stands for Lifestyles of Health and Sustainability. These are a segment of consumers who will drive the future of social enterprises through their collective buying power. The size of the LOHAS market globally is around $500 billion.

As more and more of these socially and environmentally conscious consumers, start to buy from companies that respect their sentiments, social enterprises with a triple bottom-line focus are bound to benefit. In advanced economies, like Japan and the US, consumers who fall under the LOHAS category can be between 10-30 per cent. In India, while the percentage of LOHAS consumers could be low, the overall numbers could see a dramatic increase as the young urban consumer base discovers products and services that are sold by socially and environmentally companies.

2) Governments will continue to play an important role:

Last year’s G8 Social Impact Investing forum was headlined by David Cameron who is a long-term ambassador for social entrepreneurship. He displayed his commitment for social entrepreneurship by unleashing a number of initiatives including a multi-million pound investment into Big Society Capital. The US president Obama was not to be left behind as he announced the National Impact Initiative that solidifies the commitment to bolster impact investing in the country.

This year should see new programs being launched and old ones strengthened. In India, the government has taken a few steps to boost social entrepreneurship, like the launch of the Rs 5,500 crore India Inclusive Innovation Fund. But more is clearly needed, including a social enterprise policy and new laws, that will define the regulatory environment for this fledgling industry.

3) Corporates will become smarter with their social entrepreneurship engagement:

MNCs have been dabbling in some sort of social entrepreneurship that goes beyond their corporate social responsibility. Danone for instance teamed up with Muhammad Yunus’ Grameen Foundation to launch Grameen Danone Foods in 2006, a social business that sells products that are targeted at communities at the bottom of the pyramid (BoP). Coca-Cola’s Coletivo initiative to build skills among low-income youth in Brazil has trained more than 50,000 young people in retailing, business operations, and basic entrepreneurship concepts since 2009.

This year, its highly likely that initiatives like this will only increase. It will be driven from the pressure from the LOHAS segment for companies to become more socially and environmentally responsible and companies trying to tap the estimated trillion dollar opportunity at the BoP. Government regulations might also prompt companies to launch social enterprises that could become million dollar businesses. They might take a leaf out of Korea, for example, where the biggest social enterprises are run by big conglomerates like Posco (POSCO Humans) and SK Group (Happynarae).

4) The rise and rise of the social intrapreneur:

In 2012, Ashoka: Innovators for the public launched a competition called The League of Intrapreneurs: Building Better Business from the Inside Out to identify social intrapreneurs working at corporations and recognize their efforts. Social intrapreneurs are individuals inside organizations who initiate social initiatives inside their organizations that can then become a separate business.

MNCs might start to cultivate social intrapreneurs so that they could be seen as being more socially environmentally conscious and as a way to retain top talent that might seek to launch their own social enterprises. They might also be motivated to draft a social intrapreneur policy so that employees might understand how they can become social intrapreneurs.

5) Collaboration will become critical:

In an article last year the Guardian’s secret social entrepreneur bemoaned the lack of collaboration among social enterprises by asking the question ‘Why isn’t social enterprise more social?’

It is a valid question to ask. Social enterprises are not hot on collaboration. This leads to many social enterprises spending a lot of time, effort and resources on reinventing the wheel. The reasons are many, but perhaps one of the most important reasons being that it is difficult for knowledge to flow across geographies, given that social entrepreneurship is still a relatively new industry that’s constantly changing.

This should hopefully change as social investors insist on social enterprises cutting costs and improve efficiencies through the right partnerships and alliances. New emerging collaborative platforms and conferences should also contribute to increased collaboration.

6) Successful social entrepreneurs will play an important role:

In Silicon Valley successful entrepreneurs go on to launch new enterprises, invest as angels, start tech incubators, launch their own VC firms and nurture other entrepreneurs by mentoring them.

The fact that there are only very few social entrepreneurs who have had big successes and they are spread across many cities and not concentrated in a few areas makes it difficult for social entrepreneurs to share their knowledge and experience. This year should see more successful social entrepreneurs start anew, mentor, incubate and invest in other social enterprises. The network effect of this is bound to be a big shot in the arm for the social enterprises industry.

7) Spread of social stock exchanges:

Last year the UK took a cue from Singapore’s Impact Investment Exchange and launched its own version with Social Stock Exchange. Considering that other countries like the US, Canada, Australia usually end up following in the footsteps of the UK when it comes to social entrepreneurship practices, expect social stock exchanges to proliferate.