Business versus Social Good

McKinsey Quarterly Debate Zone features a discussion titled “Should social entrepreneurs adopt the language and practices of business?”  While there are many comments by experts and readers alke, I believe this debate is mixing up two questions:

Q1. Are business models that seek profits but not profit-maximization an effective way to address socio-economic issues?

Q2. Are there mainstream business practices that NGOs can benefit from applying to social work?

To me the answer to question 2 is a no-brainer.  No matter how passionate and humble an NGO leader, their work can benefit from applying selected mainstream business practices such as how to scale operations (if that is an objective of the NGO) or how to maximize the impact of donor funds.  Having been involved in the NGO world for almost 20 years I see so many unfounded claims of “changing the world” that it is saddening.

Question 1 requires deeper contemplation and a philosophical debate.  I believe that there are a category of problems that can be solved by profit-seeking (but not profit-maximizing business models), particularly those ventures that aim to increase incomes of the poor rather than the ones that sell them products and services.

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