Social Entrepreneurs Must Achieve Not Survive
The sector needs to shift the definition of success from organizations that survive to organizations that actually achieve their missions.
Every week, I read about another social entrepreneur contemplating closing down business due to the recession. Imagine a world where that could be good news. In fact, imagine a world where on the same day a social entrepreneur launched their organization, they closed it down.
Farfetched? Maybe not. We’ve all been to a fund-raising dinner where the executive director wraps up his speech by boldly saying, “Our mission is to put ourselves out of business!” The emotional audience jumps up and applauds. The leader basks in the praise. But what if a business owner really did that—intentionally?
In his book The 7 Habits of Highly Successfully People, Stephen Covey says to “plan with the end in mind.” When I trained as a FranklinCovey coach, I learned an exercise that carried the point: We all had to write about our own funerals: Who was there? What was said? It sounds morbid to some, but by clearly envisioning how we see the end of our life, we can become more intention-driven in the present. The same could be said of world-changing leaders.
When social entrepreneurs came on the scene in a big way in the ’90s, they were reformers not institutions. They pledged to lessons of the business world to address injustice and change systems. Ironically, the part of corporations they’ve most imitated is the desire to build an organization and keep it alive at all costs.
Businesses are built to last; social entrepreneur efforts should not be—they should shed light on necessary reforms, offer solutions, and change systems.
Social entrepreneurs’ priorities typically shift over time. When they begin, the priorities often look like this:
1. Create awareness of injustice
2. Create a model that remedies injustice
3. Raise the funds to fund the program
4. Build the talent to implement the model
Over time, the mission creeps away from tackling the injustice to institutionalizing the model the company created. The new priorities:
1. Raise money to keep the program going
2. Hire staff members who can raise money
3. Keep the program going sufficiently to raise money
Ultimately, many nonprofits exist purely to fund-raise. The world-changing model has become like the set on an old movie—it’s just propped up to put on a show. The commitment shifts from changing systems to paying the bills. All things related to fund-raising get elevated, while program concerns and changing policy fall by the wayside.
Imagine what would happen if social entrepreneurs announced on their organization’s launch day, “We will increase literacy in this city by 5 percent over the next 10 years. We’ll succeed or fail with our reforms, but either way we’ll shut down in year 10.” There could be four big benefits:
1. Donors would be more likely to invest funds, because they know there’s an end game.
2. Social entrepreneurs would stay focused on long-term strategic systems change.
3. Funding for the next generation of social entrepreneurs would be freed up when their older, sister organizations shut down.
4. When organizations did shut their doors, we could celebrate their great accomplishments and disruptions instead of shaking our heads in sadness as we often do now.
Keeping the focus on the mission—not the institution—may not be as hard as it sounds. Michigan Corps, founded by Anuja and Rishi Jaitly, launched as a nonprofit in 2010 with a seed grant by Eric Schmidt, the former CEO of Google.
Redefining social entrepreneurship, they announced their mission as purposely bringing local and global Michigander’s together to change their home state. From there, the Jaitlys intentionally moved out of their leadership roles and into advisory roles—they moved to the organization’s board after year one.
They saw results quickly. Last spring, they were heralded by former President Bill Clinton at his Global Initiative Conference for fostering a first-of-its-kind connection between Michigan social entrepreneurs and Kiva, the world-famous micro lender. The organization has also set in motion countless instances of leaders collaborating in new ways.
When I asked them how they see Michigan Corps in existence, they said: “We built the organization in response to unlocked potential among pro-Michigan leaders everywhere; as the engagement of Michiganders evolves, our organizational role must necessarily shift too. We need to keep our eyes on the mission and off the perpetuation of one entity.”
By creating an organic organization that rises up to meet challenges and goes away after it fosters connections, the Jaitlys are offering a new way for social entrepreneurs to address issues.
Maybe social entrepreneurs don’t need to announce on day one when they plan to shut down. But the sector needs to shift the definition of success from those organizations that survive to those that actually achieve their missions.
So the next time you hear a social entrepreneur say an organization’s mission is to put itself out of business, ask the obvious question: “When?”
Rich Tafel is founder and CEO of Public Squared a leadership and policy training organization for world changing organizations. He serves on the board of Michigan Corps.
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COMMENTS
BY Elizabeth Kronoff, Insaan Group
ON September 15, 2011 01:37 PM
This is an interesting take on an old problem. Essentially what you are suggesting is not having organizations, but loose groups of freelancers that do projects alone.
In a way, that makes sense because since funders often only fund projects (rather than services) and have short-term funding cycles, any organization which strives to exist at any time outside of that one to five year funding model is going to have issues if they are not profitable enough to maintain their own essential staff.
One thing that is missing here is how long-term these missions are, though. Insaan works in the field of entrepreneurship and education. In terms of education, we could never ask anyone to just educate for five years then shut down. We expect them to keep educating babies as they come along and grow up. And even in the case of the quickest models in the best markets, we are talking about three-year results (one or two years of education, and then making people are still employed for a year or two after an internship ends). We want to see that it’s working, but a short, project-oriented timeframe won’t work for that. And I am talking about for-profit institutions, like private “schools in a box”, vocational schools, etc. as well as community-based organizations that use income generating projects to support public schools.
As for entrepreneurship, I can see the sense in asking a social enterprise to be profitable within a certain timeframe or to shut down and come up with another business plan. However, this makes most sense with services for which you do not have to create a demand. Some social enterprises are about long-term social change (like getting people to pay a little more for fresh whole foods) and may only just be profitable in five years.
I think there’s a balance between asking social enterprises to be more goal-oriented and asking funding organizations to be more realistic in making plans to evaluate social impact. Dollars move in seconds, but human lives take time to change for the better.
BY Denny Wong
ON September 16, 2011 01:14 AM
Interesting article and comment from Elizabeth. I am interested in making a social enterprise profitable and durable. For how long you may ask?...
Is social enterprise destined to be a deficit business by nature? Often social entrepreneurship tends to be visionary and defend causes that are not commonly accepted (yet) by the mass. As in classic entrepreneurship, the competitive advantage of a social enterprise is the gap between the commonly accepted way of doing thing compared to the NEW way of doing. The moment this gap is closed - the ‘raison d’etre’ of this social enterprise is achieved. In classic entrepreneurship this marked the end of a product cycle - time to move on.
The question is then, how long is the life cycle of the social company? or how quick is change taking place in the domain that the social enterprise? 10 years? a generation?
Secondly, once the changes they defended started to take hold, who should continue to diffuse and promote it? Is a possible ‘exit plan’ for the social enterprise is to handover their ‘cause’ to policy maker (politics) who then institutionalized them? But in classic entrepreneurship, this is typically the moment where one reap the ‘investment’ of the market development and start making money…. Again what is the time line?
So, does this mean that social company whom are active in the early adopter phase are doom to be deficit and will need external funding because they do not have sufficient ‘mass’ to be self sufficient?
Any thoughts?
BY Dean Furbush
ON September 16, 2011 07:03 AM
I’m president of an organization that wants to continue and to continue improving the work we do—and it’s true, I do spend considerable time fundraising. So, I have to admit that I’m reading this more as metaphor than actuality.
BY Kristin Majeska, Founding Partner Philanthropic In
ON September 16, 2011 07:32 AM
Totally agree with the headline, the need to constantly focus on achieving the mission and that a social enterprise going out of business may often be the best outcome. Boards are too often guilty of feeling they need to “take care of the organization” rather than focusing on what’s needed to achieve the mission. Taking care of the organization is imperative but must be the MEANS to the end, not the end itself.
However, Rich’s example, of an organization that succeeds in reducing illiteracy by 5% in 10 years then shuts down is a perfect illustration of the short term focus that is a major structural problems in the social sector today. Once a program has shown itself to be successful, funders tend to look elsewhere for a new, more sexy idea rather than funding a program with a track record. If a group has managed to reduce illiteracy by 5% (with a cost effective solution of course) why shouldn’t the group keep running… and receive funding so that it can achieve another 10% reduction in the next five years or can collaborate with other struggling communities? If the organization doesn´t hit that next goal or a better solution has proven itself, then going out of business may well be the right answer at that point… but not when it´s effectively achieving its mission!
BY Aaron Hurst
ON October 8, 2011 04:27 PM
Like to agree with this piece but it sadly doesn’t add up.
1) The nonprofit sector was intended to address niche needs and serve as R&D for the government to scale solutions that work. That is no longer the case. A large part of the sector is now charged with defacto providing the core services we expected the government to do in the past. These are not 10 years and out issues and this trend doesn’t appear to be changing.
2) The nonprofit sector and its leaders need a strong voice in society. Having a sector filled with young organizations without communications and lobbying infrastructure basically means that we continue to let corporate America fully own the hearts and minds of the people.
3) We increasingly need expensive skills to run a nonprofit. The starting wage of an engineer in Silicon Valley is close to $100k. Few nonprofits can afford this unless they get to scale or use pro bono resources.
4) Getting Clinton to mention you at CGI only means you have connections and a story. Kiva for Michigan is a nice idea but the odds of it being a game changer?
And, more fundamentally your observation about the lifecyle isn’t aligned with my experience in the SE world (DRK, Ashoka, etc.). The model is more like:
- See a gap in the community and have an idea to address it
- Come up with a plan to build a program that can scale to meet the challenge
- Realize that you can never as a nonprofit be big enough to make much more than a dent with your direct services
- Shift focus from trying to scale to trying to enable others to learn from your work
- Become more of a thought leader, innovator and advocate as more and more organizations adapt their work based on your learning