INCREASING THE FLOW OF CAPITAL FOR GOOD - INVESTING AND GIVING
If I ask you to think about social enterprise leadership, you will likely call to mind a host of founders of social change organisations, whose names are often better known than the organisations they founded (and very often still run).
In the last 30 years, the hunt for the social entrepreneur has been relentless and successful. Organisations like UnLtd and the School for Social Entrepreneurs have democratised social entrepreneurship, giving people the confidence, skills, networks and cash to take the first steps to starting new organisations. At the other end of the spectrum, the Schwab and Skoll Foundations, the Echoing Greens and Ashoka’s of this world have played their part in endowing these entrepreneurs with a near-mystical prestige.
The cult of the social entrepreneur has been so successful that much of the world now uses “social entrepreneurship” inter-changeably with “social enterprise”; a linguistic obfuscation I compare to confusing the 100 Best Newcomers List with the FTSE100 Index.
But a realisation is now dawning, especially amongst social investors, that as well as those who start organisations, we are in great need of those who can build and those who can run them – there three categories are often very different types of people.
This realisation is closely entwined with the ongoing scale debate: very few social enterprises are growing big. This is not only limiting the movement’s collective impact, it is also creating difficulties for social investors, whose models traditionally rely on minimising transaction costs by focussing on relatively few, relatively large investments.
When investors do find likely targets, I am increasingly hearing that a significant barrier is the organisation’s leadership capacity; unsurprisingly, social enterprise leaders with a track record of building and running organisation are few and far between.
Growing and managing social enterprises is difficult. In fact I believe that, compared to a traditional business or charity, starting a social enterprise is relatively easy but growing and running one is comparatively difficult. An incredible amount of good will can be harnessed for most social enterprise start-ups; grants, volunteers and incubator programmes abound, but once the novelty of the proof of concept has faded, the really difficult part of leadership begins.
So what does it take to successfully build and run (and not just start) a social enterprise? Julie Battilana and Matthew Lee from Harvard Business School have argued that you need some business experience, but not too much. It’s almost as if working in business for too long leaves you too rigid, maybe too dogmatic. (I suspect the same argument can be made about spending too much time in the charity or public sectors as well.)
This supports our view at On Purpose (www.onpurpose.uk.com) that managing a social enterprise is not just about managing a business-with-social-knobs-on, or for that matter a charity-with-commercial-knobs-on. It is a distinct discipline requiring its own know-how, skills and, above all, real social enteprise experience that needs developing early one. This is why our leadership programme focuses on attracting and developing talent at an early point in its career; and we make our participants do full time work inside a wide range of organisations, complemented by intensive class-room and 1:1 support.
In our first four years we have found five principles to be helpful in developing future social enterprise leaders:
- Hire on intrinsics: We hire based on attitudes, behaviours, problem solving ability and interpersonal skills – most of the rest of what is needed can be taught relatively quickly
- Train broadly: Bring in knowledge from all sectors, avoid definitional dogmas – we work with corporates, social enterprises, the public sector and commercially minded charities
- Invest in the personal: Leadership is as much about leading yourself as leading others
- Build meaningful networks: Leaders will be more successful if they contribute to and can rely on the support of diverse, personal and non-virtual networks
- Broaden horizons: Make leaders feel part of and responsible for a movement of change beyond their organisation – this will accelerate innovation and system change
After five to ten years, we hope our participants will be building and running successful social enterprises. In the mean time though, we are aware that social investors can’t wait that long. Finding and developing credible, compassionate and committed senior leaders is a pressing issue now and so many will be imported from elsewhere. This will not be an easy undertaking. Above all, it will require humility on all sides.
So, as members of the social enterprise movement, social investors or philanthropists, what do we need to do to help find and develop the senior leaders we need both now and in future?
- Stop talking about social entrepreneurs and social entrepreneurship and start talking about social enterprises. We need to focus on growing sustainable and successful organisations
- Avoid importing paradigms wholesale, be they from business, charity or the public sector. If social enterprise is to fulfil its promise we need to recognise it is qualitatively different
- Develop a talent mindset so we value attracting, developing and progressing the very best at all levels
- Celebrate leaders and their colleagues who successfully build and run (and not only start) social enterprises
- Think and act beyond your own organisation – system change requires leaders with wide horizons
If we don’t succeed in attracting and retaining the world’s best talent, social enterprise will remain an interesting but ultimately quaint relation of its cousins in the worlds of big business, charity and the public sector. But if we succeed in taking a more rigorous and pro-active approach to talent, we can help social enterprises deliver on their incredible potential.