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What do the words “social enterprise” mean?

This is something Rachel and I have been discussing over the last few days, as I try to familiarize myself with the work of KeoK’jay (which, by the way, is blowing my mind so far!)

I am genuinely interested in what you think, so tell me what comes to mind.

“Social enterprise” (a.k.a. “social entrepreneurship”) has become a pretty hot idea recently in the world of business and also in development. I was just asked by my alma mater, Chapman University, to speak to the class of incoming freshmen (via Skype) about this very topic.

Because I haven’t thought about it in any kind of an academic context in over a year, I decided to prepare a bit. I consulted Wikipedia (woo!) and was really happy with this definition:

“Social enterprises are social mission driven organizations which apply market-based strategies to achieve a social purpose.”  Then there was some more stuff…blahblahblah… but the bottom line, at least for me, was this: “Rather than maximizing shareholder value, the main aim of social enterprises is to generate profit to further their social and or environmental goals.

This makes a lot of sense on paper, but it’s a pretty unbelievable concept to someone with a background in market-driven economics or someone who has been a member of the American work force. Let me illustrate how this plays out at KeoK’jay.

So you may already know that the 9 women that make the products at KeoK’jay work from home. On Monday mornings, they come to the shop with all of the products that they made, Rachel pays them and assigns them new tasks for the week.

This week, one of the women brought nearly 40 new crocheted headbands. Of the forty, only TWO were done well enough that we could actually put them in the store. TWO! The rest weren’t horrible, but the sizing was a bit off and the colors didn’t quite match… in general, the pieces weren’t standardized. They weren’t usable.

Disappointing (to say the least), considering how long Rachel had spent training the women on how to make this piece just the week before. But this is not a rare occurrence. In fact, from what I understand, this happens on a semi-regular basis.

What did Rachel do in this circumstance? She paid the woman her weekly salary and assigned her the task of taking apart the 38 headbands. She then showed her (for the third time) how to make the headband correctly.

This is a good spot to pause and mention that this isn’t the case EVERY time. If the product in question is something that the women have made many times before and obviously know how to make correctly, major mistakes result in a deduction in pay. But, needless to say, Rachel’s leniency is HUGE compared to other bosses.

It also probably goes without saying that this business model is inefficient and expensive. To maximize profit, a business consultant would suggest some of the following:

1.)    Hire a more skilled workforce

2.)    Have the women work at the shop, where you can supervise their progress and catch mistakes early on

3.)    Don’t pay the women for flawed products, so as to create incentive to do things right the first time

All good suggestions…. IF what you’re trying to maximize is profit. But, while profit is definitely the end-goal (like Wiki said, to further advance the mission), no part of KeoK’jay’s mission will be compromised in pursuit of profit, because as a “social enterprise”, it aims to maximize social benefit rather than profit.

Because the mission of KeoK’jay is to provide HIV positive women with training and a comfortable work environment in which they can produce environmentally sustainable products and be paid fair wages for doing so, here is our response to the imaginary business consultant:

1.)    A more skilled sewer can find work elsewhere. A woman that has not had the privilege of an education or previous training, especially when she is infected with HIV, cannot. Simply put, KeoK’jay’s mission is to provide employment to women that would otherwise be un-hireable.

2.)    The women sometimes work at the shop, especially while learning to make something new, but ultimately they are more comfortable working at home, where they can take care of their families and take care of their health. The mistakes they make while working there do result in higher cost of production, but the higher cost is worth it for the sake of the mission.

3.)    “Fair wages”, which is a key element of KeoK’jay’s mission, means a wage on which these women can live, and they will not, no matter how many mistakes they make, be paid less than that.

In summary, the social mission of KeoK’jay cannot be met by following traditional business practices. This is what makes our fashion green and fair and, apparently, cutting-edge! 🙂

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Posted August 18, 2010 by Sasha in Uncategorized

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