by Nikolaus Hutter

The last two decades have seen extraordinary technological change and the emergence of new industries, created by entrepreneurs and the companies they founded. Personalities like Steve Jobs or Elon Musk are icons of popular culture and often more widely recognized than many political, cultural or religious leaders. This development is likely to accelerate further with technologies like Internet of Things, Big Data or Artificial Intelligence – already reshaping our economies, societies and polities.

Technological progress and its flipsides 

Despite all the technological progress and the possibilities that come with it, one dimension is often absent – morality. The flipside of the positive advances is an unprecedented concentration of financial wealth and spiraling inequality. This trend is likely to continue as many of the most dynamic industries today exhibit winner-takes-all characteristics. Technology’s big four today – Amazon, Apple, Facebook and Google – are an example of what is to come. In that light, not solving the pressing issues of today – addressing poverty and healing the planet – while solutions are available is fundamentally unjust. Unjust not simply in the sense of fairness, but also illogical and morally corroding. With all the available technical possibilities, the boundary of progress today is not technical, it is moral: not what is technically feasible, but what is morally required.

Game changer – a new generation of entrepreneurs 

Fortunately, a new kind of entrepreneur is stepping up to the challenge – social impact entrepreneurs addressing social and environmental problems through business solutions. What started over 30 years ago is now a global movement including social start-ups in industrialized and developing countries alike. Mature conscious companies that were on the alternative fringe a mere decade ago and are now leaders in their field, as well as mainstream multinationals like Danone and Unilever, who are focusing their strategies and integrate impact into their core. 

Impact investment – creating social, environmental and economic value 

Investing for social and environmental benefit and financial return is one of the most dynamic growth segments. At the core of this development is a changing definition of value and prosperity, with deep implications for the underlying contract between business and society. While the past 30+ years were characterized by the maximization of financial profit to drive shareholder value, impact companies and investors apply a more holistic approach to creating value – social, environmental, and economic. Today, we are rapidly moving into a world where companies will not be able to turn a profit, without demonstrating positive impact. 

Emerging economic and social paradigm shifts 

In the future, companies that do not demonstrably create social and environmental benefit will struggle to attract the resources, mainly talent and capital, they need. Moreover, increasingly conscious consumers will stop buying products that are exploitative and polluting. Governments will regulate against unsustainable practices, driven by the same consumer preferences expressed at the ballot box. In a mere 5-10 years, the majority of the global workforce and consumers will be millennials who have fundamentally different preferences than the currently dominant Generation X and Y. Last but not least, the carrying capacity of our plant is at its limits and nature is already pushing back. 

The initial effects of all this can already be seen: 

  • Tesla launched the Model 3, it sold $7.5 billion worth of cars in 24 hours
  • many of the coal-fired power plants that Donald Trump announced during his campaign did not materialize because they failed to find investors, and 
  • Larry Fink, CEO of the world’s largest Asset Manager BlackRock, recently sent a letter to Fortune 500 CEOs demanding that they “demonstrate social impact or … risk losing our support”. 

The concept of (future) social entrepreneurship

We are therefore entering a world where – once again – entrepreneurs are the drivers of progress, but in a very different way. By offering products and services that address the most fundamental human and environmental needs – from clean cookstoves in developing countries to work integration of the marginalized in industrialised countries, from human-centred elderly care to universal access to education through technology – companies we now call social enterprises are creating a new reality by building better businesses – not just better morally, but also commercially. 

In the future, there will be no need for the qualifier “social” as every entrepreneur and every business will create positive societal and environmental benefit or be out of business. Business will be just business – but not as usual. 

About the author 

Nikolaus Hutter is the founder of New Paradigm Ventures, an advisory firm focused on accelerating the shift to an impact driven economy. He is an Advisor on Impact Ventures and Investment to the World Wildlife Fund in Switzerland, a Director of UK-based Impact Catalyst firm Angello Capital Ltd. and serves on the Board of US based Development NGO Heifer International.