Social Infrastructure For Small Businesses 

We recently heard the phrase “Palaces for the People”, which was coined by steel tycoon Andrew Carnegie. Usually portrayed as a ruthless capitalist, Carnegie also had a softer side: He was deeply committed to building social institutions which were open to the public, and allowed any person to “read, think, and achieve something that they felt proud of.”

Over the course of his life, Carnegie provided funding for more than 2,500 libraries, 1,795 of which were in the United States. To put some perspective on this number, by 1920’s Carnegie had provided funding for about half of the public libraries in the country.

We heard of the phrase on a 99% Invisible podcast with Eric Klinenberg, social scientist and author of Palaces for the People: How Social Infrastructure Can Help Fight Inequality, Polarization, and the Decline of Civic Life. In the book, Klinenberg showcases how social infrastructure – public items such as libraries, parks, and schools can, as 99% Invisible puts it, make us either “more likely to interact with people around us, and connected to the broader public.” Conversely, without social infrastructure, people tend to “grow more isolated, which can have serious consequences.” 

One such case study is that of the 1995 Chicago heat wave, which killed more than 700 people. When looking at the death patterns, a puzzling pattern emerged:

“There were a number of working class neighborhoods that demographically appeared as though they should have fared very badly in the disaster, but actually proved to be strikingly resilient, and even safer than some affluent neighborhoods on the North Side. Even more interesting, there was a pair of neighborhoods where the demographics were identical…They were literally neighboring neighborhoods, but one had an astronomically high death rate and the other was one of the safest places in Chicago.”

On the surface, this doesn’t make much sense. However, upon further investigation, Klinenburg found the answer in the prevalence – or lack – of social institutions. From 99% invisible:

“he observed that the places that had low death rates turned out to have a robust social infrastructure. They had sidewalks and streets that were well taken care of. They had neighborhood libraries and community organizations, grocery stores, shops, and cafes that drew people out of their home and into public life. What that meant was that on a daily basis, people got to know each other pretty well and used the social infrastructure to socialize. When this heat wave happened in Chicago, neighborhood residents knew who was likely to be sick and who should have been outside but wasn’t. This meant they knew whose door to knock on if they needed help. Meanwhile, in the neighborhoods that had really high death rates the social infrastructure was depleted. There were a lot of abandoned properties, empty lots, and abandoned houses. Sidewalks were often cracked and broken and there was very little commercial life. This all meant that people were likely to stay home, and this was a deadly thing to do during a heatwave.”

While Klinenberg’s work focuses on the physical conditions that facilitate social capital (i.e., relationships), we see corollaries with what we are trying to build at Chenmark.  For instance, we believe being the owner/operator of a small business can be an extremely lonely job. While CEOs of all companies ultimately make difficult decisions, leaders of larger companies have a suite of executives on their team who can act as a sounding board when issues arise.

Small business operators, on the other hand, can sometimes be more isolated when grappling with the strategic needs of their business. And, when you are in an extreme situation – whether it be a heat wave or a cash crunch- isolation can be deadly.  So, as we grow, we are allocating more resources to creating the connective tissues between our operating companies. This means taking responsibility for creating the “social infrastructure” – i.e., strategic off-sites, dinners, etc. – that will foster a broader community of business operators.

While our efforts are not yet of Carnegian scale, we do believe the network effect of our ever-growing team of small businesses means that when a company stumbles, they are checked in on by their peers, and offered support that can help avoid disaster.  In addition, perhaps more importantly, there is also a community to celebrate wins when they come our way.