Learning from leaders of social enterprises

by Daniel Altman

Daniel Altman, Director of Thought Leadership

Social enterprise is hot. The idea that organizations can be run like businesses and still create benefits for society has captured the public’s imagination – just witness Jacqueline Novogratz, the head of Acumen Fund, appearing on the cover of Forbes magazine. Buzz is not enough, though. Like all businesses, social enterprises need to be financially viable. To find out what made the successful ones tick, Dalberg joined a team from Harvard to create its first-ever Survey of Social Enterprise.

Our first step was to reach out to leaders of enterprises that we perceived successful, including members of the Aspen Network of Development Entrepreneurs, the Vodafone Foundation’s “World of Difference” program, and The Resolution Project. We didn’t set out to collect the experiences of everyone involved in social enterprise; the field is so enormous that generating a representative sample would have been almost impossible. Instead, we wanted to hear what these leaders thought were the keys to their success and the most important challenges that they still faced.

The leaders consistently cited recruiting and retaining skilled and motivated teams who shared their own visions as an important foundation for success. Another critical ingredient was preparation before launching an enterprise, with a strong emphasis on putting financing in place for enough time for the organization to find its footing. We also asked the leaders about how they made their cases to potential partners, investors, and employees. Most relied on data more than storytelling, and the vast majority said they were interested in the new tools for standardizing their results – GIIRS, IRIS, Pulse, and the like.

We saw some striking differences in the structure of successful social enterprises across industries and with respect to their sustainability. Non-profits were far more likely to rely on government contracts, grants, or donations, and they were also less likely to anticipate escaping from dependence on outside funding; these enterprises were most common in the fields of education and health. By contrast, for-profit social enterprises, particularly those in energy and consumer goods, saw financial independence as an important and reachable goal.

The report is filled with more observations like these, and it also contains quotes with guidance from the leaders themselves. All of them overcame obstacles on the way to success, and many said they were still trying to improve – even refining their business plans on a regular basis. For anyone starting a social enterprise, reading their recommendations would be an excellent place to start.

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