On the Evolution of “Social Business”

When Andy McAfee coined “Enterprise 2.0” in 2006, he deliberately avoided using the term social to describe the new ways digital technologies were helping organizations collaborate and communicate.

Why?

In part, executives tended to associate the term “social” with water coolers, parties — and more generally, employee idleness.

Despite his reluctance, many writers and managers now use the term social business to refer to what McAfee described as Enterprise 2.0 activities and organizations. We don’t hear the term “Enterprise 2.0” so much nowadays. Even the modifier “2.0” has lost cachet. The world, as it tends to do, has moved on.

Today, the term “social business” may be losing, if not its prestige, then possibly its coherence. For one thing, it used to be easy to describe the concept of social business that the MIT SMR Big Ideas initiative addresses by contrasting it with the way Nobel prize winner Muhammad Yunus uses the term in his 2009 book, Creating a World without Poverty — Social Business and the Future of Capitalism.

Back then, when recruiting academics to participate in our research, some hadn’t heard of social business or would ask what exactly we mean by this phrase. In response, I would say that Yunus uses the term social business to describe organizations that directly pursue important societal or ethical or environmental ends, whereas our work with social business focuses on new forms of collaboration and communication that companies are developing with social media. [I do adjust how I describe our work at MIT SMR based on the audience.] Usually, that distinction helps people understand what our research focus is. Even when that contrast didn’t clarify what our social business research is about, most understood what it isn’t about.

However, the emergence of companies in what has come to be known as the sharing economy, the Zipcars and airbnbs, is making it more difficult to maintain that contrast. These companies tend to have business models that rely on people collaborating, sharing or buying a wide range of stuff. Airbnb, for instance, enables people to rent rooms in their house or apartments to other people, creating a travel industry segment that bypasses traditional hostels, bed and breakfasts, and motel and hotel chains. Airbnb has more rooms to rent than the inventory of many hotel chains.

Last year, I spoke with Robin Chase, a co-founder of Zipcar, about her new venture, Buzzcar, which enables regular people to rent a neighbor’s car for a period of time. It’s the same idea behind Airbnb, but applied to the transportation sector. At the time of the interview, Buzzcar was being piloted in France (insurance issues prevented a pilot in the U.S.). For Chase, Buzzcar and Zipcar’s car-sharing business model directly addresses some of the big environmental issues facing society.

Today, each shared car replaces 15 to 20 cars because 40% of [Zipcar] members decide to sell or avoid buying a car, and each member drives about 70% fewer miles then they would have had they owned their own car. Last year Zipcar had 10,000 cars and probably 730,000 members last year, so that would have meant about 150,000 cars not bought or avoided being purchased and a lot less driving, resulting in 1.1 million metric tons of CO₂ not put in the atmosphere, because people are not driving. And that is one week of New York City’s CO₂ output. One week that did not get put into the atmosphere because of Zipcar.

But Chase’s pride in these results is mixed with deep reservations about climate change and the urgency of doing something about that. She adds:

It turns out the climate change models that predict the highest temperature rise and worst-case scenarios in 2100 have done a much better job of predicting the historical data than any other model. These models predict that by 2100, we’ll have a something like 11-degree Fahrenheit average global warming over land. The last time the planet was this warm was 20 million years ago when humans didn’t exist. So is this an issue? Yeah, I’ll say. So we have, 85 years before we drive ourselves out of existence. We need to decarbonize the entire world economy in 30 years just to attain a 50-50 chance at staying at 4 degrees (Fahrenheit) warming, just to get to a spot where we don’t all end up no place. So how do you walk around with that kind of information? The best I can do is to know that I’m personally trying every day to address the situation. So I can’t look back and say, I didn’t try hard. I tried hard, every single day I tried hard.

Chase’s Buzzcar is a “social business” in both Yunus’s sense of the term social business, but also has significant features of Enterprise 2.0/social business.

Let’s be clear: I am not arguing that the phenomenon of social business is going away. Far from it. Rather, the argument here is that online tools and organizations are enabling new forms of social arrangements with a commercial twist that, in turn, make it more difficult, and less useful, to assign the term “social business” to a “saving the world” category or an “improving a business” category. For a growing number of companies, it’s about both.