By Diana Peacock
In recent years, we’ve seen a torrent of axioms from the tech start-up world flowing into the social enterprise space: “fail fast,” “move quickly and break things,” “there is no speed limit.” While these mindsets encourage the type of experimentation, learning and evolution that many of the most successful organizations adopt, they can shroud the marathon nature of tackling social problems.
For those who set their sights on solving social problems at the magnitude they exist, celebrating quick wins is critical to building momentum and inspiring others, BUT maintaining commitment to your long-term, bold goals is also critical. For example, knowing whether a strategy has contributed to truly ending multigenerational poverty cannot be conclusively determined in a year or two—it takes a generation by definition.
To realize true impact – a significant, sustained change to the status quo – social enterprises must incorporate long-term sustainability into their DNA.
Over the last 15 years Community Wealth Partners has directly helped hundreds of nonprofits (1) consider whether social enterprise is right for their organization and (2) establish, implement and grow earned-income revenue. Through our direct work, as well as our research on the topic in partnership with the John S. and James L. Knight and Annie E. Casey Foundations, we’ve identified five key drivers of organizational sustainability. Each driver, equally as important as the others, is interrelated and critical to the enterprise’s long-term success, which we define as profitably delivering on social impact goals.
1. Social Impact: Why do you do what you do?
This is the result of programs that address social problems and produce a change in attitude, behavior or condition for the target constituency.
2. Focused Business Strategy: How do you do what you do?
This is the choices an organization makes about how to accomplish its mission. These decisions include articulating a clear vision and goals, what are the products/services that deliver value to a target customer, and what is the business model that drives the work.
If they wish to take on big problems and measure their progress, organizations must (a) define with clarity and precision the social impact they are trying to achieve and then (b) develop a business strategy that defines how the organization will get there. Central to this strategy is ensuring that the organization delivers real value to its customers. And, in a double-bottom line business, this often means ensuring a strong value proposition for both (a) the paying “customers” and (b) the “clients” or people for whom the business is intended to benefit (for example, in workforce development social enterprise “customers” receive tangible products or services while “clients” develop marketable job skills). Developing a focused strategy is essential because, in the environment of limited resources that we all face, it is just as important to define what the organization will not pursue to achieve its goals, as it is to define what it will.
3. Economic Viability: What drives what you do?
This is the financial health of the organization – liquidity, profitability, revenue growth, revenue sources and resource allocation.
The business model that flows from this driver forces organizations to make trade-offs between (a) maximizing programmatic contributions to advancing social impact and (b) maximizing profits that are essential to the economic viability of the organization. A social enterprise by definition can achieve both, but cannot generally maximize both.
4. Capacity to Deliver: What supports what you do?
This is the human resources, infrastructure and operational systems needed to produce social impact and execute a business strategy.
The economic viability of an organization is further solidified by ensuring that it can capture prices that will fund the necessary capacity to deliver on its promise to customers – the requirements of which include skilled talent, adequate infrastructure, and the processes and systems to manage overall performance, including evaluation of its double-bottom line – measuring whether it indeed met its social impact goals profitably.
5. Adaptability: When do you change what you do?
This is the ability to drive innovation by updating and/or developing products and services in response to changes in customer needs, behaviors and the competitive landscape.
The most successful social enterprises experiment, learn and evolve (i.e. let ideas and approaches fail fast) with an intentional focus on growing their impact, their economic viability and their capacity to deliver (i.e. their long term sustainability strategy).
For those leaders committed to using their social enterprise as an engine of transformational change, I encourage you to remember that achieving your goals will require a long-term effort and you must build these five drivers of sustainability into your business model. And finally, incorporate one of the most important lessons of social enterprise: remember that your personal sustainability is critical as well.
Note: this post originally appeared on UnSectored.