Entrepreneurs can help bring about change by putting people ahead of profits
- Boris Urban
With the rise of non-humancentric business models, empathy-induced altruism can boost wellbeing of employees.
At the dawn of 2021 we face a world in a state of disarray and uncertainty. The consequences of the Covid-19 pandemic and recent US Capitol Hill disaster have had a catastrophic effect on business around the globe. Governments and entrepreneurs are urgently seeking new solutions to the problems facing us in these explosive times.
After the Capitol Hill fiasco and the rapaciousness of Donald Trump’s response to this disaster, not only has the US image as a democracy suffered a huge setback but Trump’s association with entrepreneurship is demoralising.
This is a man who has been consistently connected with entrepreneurship in one form or another. He became a television celebrity for his role on The Apprentice and has written books such as Trump University Entrepreneurship 101. However, during his presidential tenure his behaviour has severely tarnished the image of entrepreneurship. In fact, Trump’s interpretation and style of entrepreneurship should serve as warning of what entrepreneurship should not be about.
Entrepreneurship is not about greed, eliminating the competition and narrowly pursuing self-interest. Businesses organised on Darwinian principles are places of constant rivalry and pointless posturing, obsessed with political manoeuvring. However, as Nobel laureate Muhammad Yunus has observed: “We act in business as though money is the only game in town. But there are other games in town.”
The most meaningful thing we humans can do is have a positive impact on the lives of others.
Indeed, the majority of entrepreneurs are trying to create good businesses by integrating people and improve their lives while serving their customers. In other words, entrepreneurs do more than focus on financial returns but also enhance the social value of their activities by remaining flexible and remaining in close contact with the communities in which they serve. What is more, entrepreneurs have demonstrated that the economy can be disrupted, by creating new business models to tackle socio-economic and environmental challenges.
Another Nobel prize winner, Joseph Stiglitz, agrees: “Development is about transforming the lives of people, not just transforming economies.” The concept of purpose-driven entrepreneurship or social entrepreneurship is a simple and powerful idea that is steadily gaining traction. Purpose-driven entrepreneurs are mission-based businesses rather than charities, and focus on systemic changes and sustainable improvements. Social entrepreneurs have the potential to stimulate global improvements in various fields, whether they be education, health care, the environment or the arts.
Notwithstanding such promise, the humane approach to entrepreneurship has been criticised as naive and inconsequential, particularly at a time when businesses are experiencing an accelerating speed of technology and we see a trend of non-humancentric business models that focus more and more on robots and artificial intelligence.
However, entrepreneurs must not forget to inject humanness into their business practices. Small businesses must prioritise the wellbeing of their employees and the sustainability of their business practices. It is imperative to understand the characteristics of humanistic entrepreneurship, with empathy acting as an essential driving factor for employee engagement. Research shows that empathy-induced altruism can be used to improve attitudes towards stigmatised groups, improve racial attitudes, foster actions towards people with Aids, the homeless and even convicts. Such empathy-induced altruism has also been found to increase co-operation in competitive situations.
Empathy is often thought of as the “starting point of design thinking,” and a more inclusive vision of entrepreneurship is critical action that can contribute towards equity. Entrepreneurs need to treat individuals in a fair and equal manner, specifically in the SA context where it is essential to understand that not all individuals are starting in the same place because of historical, embedded discrimination. The challenge for entrepreneurs, policymakers, researchers and employees is to consider the purpose-driven entrepreneurship model carefully, specifically ensuring entrepreneurship is cultivated on the foundation of empathy.
Not all capitalism or profit is equal. Profits involving a social purpose represent a higher form of capitalism, one that will enable societies to advance more rapidly while simultaneously allowing business to prosper. According to Harvard professor Michael Porter, such shared value will unlock the next wave of business innovation and growth as it can connect business and society success in ways that have been lost through narrow management approaches.
Certainly, the Covid pandemic has highlighted the growing need for a more equitable model of balancing economic and social needs in societies. The problem in SA is not a lack of raw entrepreneurial energy but rather the ability to channel it into purpose-driven entrepreneurship. In business, government and education we need to change our mindsets regarding business and entrepreneurship and recognise that we need to build a system that brings out the best in people, not the worst in people.
Boris Urban is a Professor at the Wits Business School. This article was first published in Business Day.