Case Study MS260

Social Sector


Case author

Dr. Antti Kauppinen

Learning objectives

After you completed this course module, you will be able to conceptually solve holistic management problems within a case study of the social sector.


Vaajakoski is a significant industrial center in Finland, with about 3,500 inhabitants. It grew from a small village into a remarkable location for sawmills in the 19th century. At that time, T. & J. Salvessen was the biggest employer in the village, and the company also generated a spirit of community in the area. The crucial thing was that people did things together—and this spirit still exists in Vaajakoski: people strive not only for their individual goals, but they also want to serve the broader—especially social—objectives in this area.

In 1916 the Factories of Vaajakoski (a subsidiary of a bigger company, SOK, Suomen Osuuskauppojen Keskuskunta) bought all the sawmills, but SOK also started to do business in other sectors, for example through factories producing matches and weapons for the army. This brought about changes in the local area because people needed to become employees of a business, rather than just being members of the community. In other words, business principles became important in the village, which was a considerable change from the previous daily work-related attitudes of the area's inhabitants. During their most productive years, these sawmills employed about 2,000 people. But SOK closed down the sawmill business at the beginning of 1980 and since then the factory buildings have been used by new companies coming to the area....

Workload units 2
Reading extract Social Sector Case Study


Some introducing thoughts on the social sector

The social sector is comprised of organizations with the end goal of serving the community. Red Cross and other non-profit organizations are considered to be a part of the social sector. More people are investing in the social sector because they recognize the return on investment when they engage in the community. Companies that are socially involved in their communities are trusted and will generate more sales because of the established trust.

Studies have shown that the process works. In fact, the social sector is growing in terms of their presence in leadership positions in the community. Companies like McKinsey are researching social sector CEOs and their organizations to determine the secret of their growth and success. Nearly every successful leader in the social sector was able to strike a balance between innovation and implementation. They have the ability to build top executive teams and collaborate to develop superior solutions.

Because of the focus on social sector, there is a 25 percent growth in the number of non-profit organizations in the past 10 years. While they are growing, they must focus on leadership to deliver their ideas efficiently to the community. Better leadership should lead to success on a larger or global-scale, but it all has to be based on empirical research.

Currently, in the United States, the social sector consists of more than a million non-profit organizations. They address issues such as education, the environment, digital literacy, and homelessness. They may also focus on developing arts and culture in addition to workforce development. According to the Urban Institute, the social sector is responsible for nearly $837 billion in products and services and also for 5.6 of the GDP. Social outcomes are expected to improve as rapid growth continues.

In the future, social sector is expected to direct its attention to mentoring and professional development opportunities. Many of the funders who have agreed to contribute in the future also have other important roles in the community.

The social sector is at-risk for a leadership deficit. The sector is seeking to groom more leaders to facilitate the growth in this area. They need leaders who have the ability to innovate and implement and to surround themselves with teams who are talented. They must also be collaborators and be committed to quality improvements.

The focus of the social sector is to keep the momentum going and to ensure that the industry grows on all levels. This can be difficult when people are not as aware of the social sector as they are the private sector. It can be a lucrative and fulfilling career, but it can be difficult to recruit talent who are matches for the positions.

Only time will tell where the social industry is going. Major players such as American Red Cross, the American Cancer Society, and the YMCA are no strangers to social invention. They have been at the forefront of creating new procedures, laws, or bringing new organization to how people interact in society.

Social invention leads to progress in society. Charity is a part of social invention. Law making is a part of social invention. Laws such as The Poor Law of 1388 and the Indenture of Children Act of 1601 changed the way we interact in society.

The invention of vehicles changed the way we interact in society. It made it easier to get help to people in need. The invention of the car made it faster to deliver news to the masses and to get people to the hospitals. This social invention changed the way that we operate in society and is one of the most important social inventions.

While the costs to society for operating vehicles is high because of road maintenance, pollution and public health, the benefits to society seem to outweigh the costs. The economic benefits and revenue generation opportunities seem to be at the forefront.

Our ancestors realized this in 1672 when they built the first steam-powered vehicle in China. While it was a model, it was clear that the need for such an invention, designed to make daily life easier, was present. The first gas-powered American car was built in 1877 by George Selden. He patented the vehicle, but it was never built. His patent was later challenged by Henry Ford, who is the person America typically credits for the invention of the car in the early 1900s.

The desire to make life easier and more accessible has always been there, but it required great leaders to have the vision to change society to do so. Any social invention requires desire. Desire must be backed by research.

Since less than five percent of new brands will never reach $50 million in the first year of sales, it's important that every organization perform due diligence in order to assure success. Companies lose billions of dollars every year because of failed products in the both the social and private sectors.

Research and development are instrumental to success in this industry. Best practices, resources, and technology must be identified in order to avoid failure. Companies that are improving innovation will need to focus on these aspects to improve profitability and success in their communities.

Other areas of focus for social inventors or innovators include: systemizing the approach for gathering and collecting ideas and finding new resources for neglected sources. You should accelerate your idea generation process and create data repositories for collecting new ideas. Knowing consumer trends will help innovators determine the relevance of the products and services in your communities and will also help leaders make more informed investment decisions. When ideas can be moved to commercialization faster and at lower costs, change and goals can be achieved faster. When people's needs are met, they are more pleased with organizations and their communities.

The social sector is growing in popularity and gaining interest from people who once had no interest at all. This is why it's important to keep informing the public of the importance of the social sector in society and social innovation. It has changed the face of our society and is expected to help others make great strides in the future.


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